Targeting Internet Piracy Will Preserve American Jobs, Encourage Innovation and Uphold Free Speech

by Michael O'Leary 11/28/2011 14:46 (UTC-08:00) Pacific Time (US & Canada)

Online piracy is a major threat to our economy, consumer safety, and our national security.  Currently, many foreign websites that profit from counterfeit goods and stolen content are beyond the reach of U.S. law.  So, how do we target these dangerous foreign websites while upholding free speech, promoting innovation, encouraging commerce and preserving American jobs? 

The Stop Online Piracy Act (H.R.3261) in the House and the PROTECT IP Act (S.968) in the Senate provide measured, needed tools to go after these websites that are beyond the reach of our current laws and preserve millions of American jobs.  Everyone engaged in legal commerce on the Internet should welcome new tools to go after websites that illegally profit from American innovation and creativity.  While we can never stop online piracy, this legislation is a step in the right direction. 

Yesterday, the New York Times published an editorial on this legislation.   It rightly stated that piracy is “the bane of the Internet.”  However, it failed to mention the importance of copyright laws in creating the Internet of today and the jobs that are at stake if we don’t target online piracy.  Unfortunately, it also misrepresented many important parts of the Stop Online Piracy Act. 

Copyright protection laws have helped create the Internet of today, alive with free speech, innovation and commerce.  Foreign rogue websites that profit from stolen content and counterfeit goods are a danger to consumers and a drag on our economy.  Copyright laws in the U.S. uphold free speech while encouraging innovation by giving an economic incentive for artists and investors to create new content and distribute it on the Internet.   

The editorial rightly stated that piracy saps our economy but failed to give the full picture of the millions of American jobs at stake.  The editorial said, “Piracy’s cost is measured in less innovation and less economic activity, as creators lose hope of making a living from their creations.”  The creators of new content are not the only ones who depend on copyrighted material for their livelihoods. More than 10.6 million Americans depend on the copyright industries for their jobs.  That’s about 1 in 10 private sector jobs in the U.S.  And about 2.2 million Americans depend on the film and television industries for their jobs.  Many of these Americans work behind the scenes in good paying middle class jobs.  

The protection of free speech on the Internet by U.S. law and the signal it sends to other countries, especially China, is very important.  The New York Times editorial stated that we should think about the signal we send to China.  There is no doubt about this.  Our copyright laws already send a strong signal to China and the Stop Online Piracy Act and the PROTECT IP Act uphold the tradition of protecting intellectual property while promoting free speech.  

Celebrated First Amendment attorney Floyd Abrams has written that the Stop Online Piracy Act upholds free speech.  In a recent letter, he wrote, “The notion that adopting legislation to combat the theft of intellectual property on the Internet threatens freedom of expression” is “insupportable.”  Secretary of State Hillary Clinton has also written that “The State Department is strongly committed to advancing both Internet freedom and the protection and enforcement of intellectual property rights on the Internet.  Indeed, these two priorities are consistent.” 

Preserving safe harbors for websites that remove copyrighted material is important to enable innovation and commerce.   The editorial raised concerns that the legislation will undermine the safe harbors for domestic websites under the Digital Millennium Copyright Act.  This missed a key distinction: Those safe harbor protections protect legitimate websites, not websites that are dedicated to theft and have no intention of complying with U.S. law.  The Stop Online Piracy Act upholds and has no impact on these safe harbors because it is directed at websites that are dedicated to the theft of copyrighted works and the sale of counterfeit goods – sites that are ineligible for the DMCA’s safe harbors to begin with.  Websites that are engaged in legal commerce will continue to have safe harbor protections.  Opponents of the Stop Online Piracy Act should be careful about this distinction or it would appear that they are arguing that blatantly infringing websites that have no intention of complying with U.S. law should enjoy safe harbor protections.

The Stop Online Piracy Act follows established due process standards and targets websites that are dedicated to counterfeiting and piracy.   The site blocking techniques provided for in the Stop Online Piracy Act are not new.  They are currently used to combat all kinds of harmful behavior including spam, phishing, malware, viruses, and other forms of Internet crime, all without claims of Internet censorship or harm to the Internet.  In fact, some of the same experts cited by the New York Times developed these techniques for use in fighting those kinds of Internet wrongs.  They apparently believe copyright infringement is not a problem that merits the same kind of enforcement efforts.   

Combating piracy is important for the future of free speech, innovation, and commerce on the Internet.  We should work together to create legislation that targets piracy that is currently out of the reach of our laws.  Congress and the courts have crafted reasonable, measured techniques to protect copyrights while preserving free speech.  The Stop Online Piracy Act and the PROTECT IP Act continue in this tradition and help ensure that the Internet will continue to be free and open while preserving millions of American jobs.

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Our Thoughts on Google's Progress Report on Copyright Protection Efforts

by Michael O'Leary 09/02/2011 13:27 (UTC-08:00) Pacific Time (US & Canada)

Google’s progress report today on its steps to curtail content theft online is very encouraging for the millions of Americans whose jobs depend on film and television production.  For creators racing the clock to respond to deluges of illegal copies of their works online, the notice-and-takedown process can’t be fast enough, and revisions to auto-complete and AdSense that deter piracy are commendable changes.  If these efforts have indeed shown progress, they are undoubtedly steps in the right direction.

But here’s the real question: can Google and the tools it provides be conveniently and easily used to locate illegal content online?  Unfortunately, the answer is still "yes."  Clearly more needs to be done, and we look forward to working with Google to address these challenges as it continues to refine its approach. 

In particular, we would welcome Google to join the hundreds of other businesses, workers’ groups, trade associations, and law enforcement officials that support federal legislation – such as the PROTECT IP Act – aimed at preventing access to foreign rogue websites that serve up unauthorized content.  Notwithstanding Google executive chairman Eric Schmidt’s pledge earlier this year to "fight" this measure, we believe it could have a truly significant impact on online content theft.

Red Herrings

by Michael O'Leary 07/12/2011 06:09 (UTC-08:00) Pacific Time (US & Canada)

Yesterday, the Computer & Communications Industry Association (CCIA) released a report that aimed to measure the economic impact in the U.S. of what it describes as “fair use industries,” or “economic activity that benefits from copyright fair use and other limitations on the copyright regulatory regime.”

No surprise that the study turned up big numbers – Capital Trade, Inc., the firm that conducted it, found that one-sixth of economic activity and the jobs of more than 17 million workers in the U.S. could be attributed to these “fair use industries.”  

But what’s interesting is the us-versus-them language that’s all over CCIA’s announcement of the report, at least as it applies to the PROTECT IP Act and other efforts to prevent content theft.  This is from a statement by CCIA President and CEO Ed Black:

“Too often we hear about the cost of piracy without also considering the cost to legitimate sectors of the US economy of poorly targeted copyright enforcement measures like the pending Protect IP Act.  A better understanding of the costs of overzealous copyright enforcement should help policymakers make sure new rules, legislation and trade agreements protect rightsholders as well as innovation.” (emphasis ours)

Puzzling, because many of the “fair use industries” the report suggests would in some way be harmed by stopping the massive proliferation of online content theft include the people and organizations whose work and livelihoods are most at risk from that theft.  The version of CCIA’s report released last year, and we assume this one as well, counted the motion picture industry (that would be us) among the “fair use industries,” as well as independent artists, writers and performers; radio and TV broadcasters; software publishers; promoters of sporting events; and many others for whom copyrighted content is indispensable to their work.  (See Appendix I of the 2010 report.)  So what gives?
 
Here’s the real story.  Fair use and other recognized exceptions to the exclusive rights of copyright owners are important – but there’s an enormous difference between fair use and the blatant, massive, wholescale taking of intellectual property occurring online.  That isn’t fair use nor any other legally permitted use; it’s theft that robs the millions of people working in IP industries of jobs, retirement savings, and earnings to invest in future creations. 

It’s one thing to celebrate the clearly enormous contribution to the U.S. economy made both by those who create intellectual property and those who use it fairly as part of legitimate business models.  It’s another thing entirely to turn fair use into a red herring, obscuring the very real harm of content theft to our entire economy.

Ultimately, fair use depends on the availability of rich, creative, original content that is protected from infringement.  We welcome the support of the fair use industries – or should we say the other fair use industries? – as we work to pass legislation protecting from that theft the very same content on which they rely.

New Consumer Education Center on Impact of Content Theft Unveiled Today

by Michael O'Leary 07/07/2011 11:07 (UTC-08:00) Pacific Time (US & Canada)

If you knew that something you were doing was hurting someone else, you’d stop, right? 

Of course – it’s not even a question.  That’s why we think the real key to stopping content theft is information. 

Too many people in America don’t realize that bootleg videos and other forms of content theft hurt millions of people in all 50 states whose jobs are supported by the film, television, and music industries, and who rely on revenues from the movies, TV, and music to make a living or save for retirement.  These are the people whose names you see at the end of the closing credits, not on the posters in the lobby – people who often work job to job and whose livelihoods are seriously threatened by the wholescale theft of their creations. 

Internet users aren’t always aware of the increasingly sophisticated, global nature of content theft.  Websites that offer up stolen content are often based overseas.  Sometimes, these sites are so deceptively designed that users think they are legitimate, and don’t realize that they benefit criminals rather than the people who made the film or TV show or song to begin with.

Many people don’t recognize that downloading or streaming an illegitimate copy of a movie is just as wrong as stealing a DVD from the local video store – they’re just different kinds of theft.  Or a parent who owns an Internet account may not know that his teenager is using it to download unauthorized music or videos.

But we believe strongly that once people do realize those things, they’ll stop – and look for legitimate ways to watch and listen.  People want to do the right thing, and it always helps to make doing the right thing just a little easier.

That’s the thinking behind a new joint venture we’re launching today, in partnership with the music industry and Internet service providers.  We are different organizations with different interests, but we’re coming together because the problem of content theft is so enormous and so costly to our economy that it demands a collaborative, constructive solution.  To learn more about content theft and ways you can avoid it, visit CopyrightInformation.org.

One important element in the development of this agreement is a new Center for Copyright Information that will help educate consumers, more effectively than we’ve done before, on the importance of copyright and the impact of content theft.  The Center will provide Internet users with information and resources on a myriad of topics, including demonstrating the serious threat of content theft to the millions of jobs sustained by industries that depend on the protection of copyright and intellectual property and to the economy. 

Just as important, the Center will point consumers towards legitimate ways to watch movies and listen to music online.  According to a recent survey, 13 percent of adult Americans – 29 million people – have downloaded or watched unauthorized movies or TV shows over the Internet.  As Julia blogged this morning, there are more options than ever before to get movies and TV shows online safely and legitimately.  This new center will help consumers find them more quickly and easily, so they can keep watching and listening to the entertainment they enjoy. 

This new center will also help develop best practices for a new system of Copyright Alerts, messages similar to credit card fraud alerts that will make Internet subscribers aware that their accounts may be being used for content theft and help them identify ways to stop it.  It will benefit from guidance from consumer advocates and technical experts.

We’re excited about this new development and the ways we think the Center will help consumers and the economy. 

PROTECT IP Letter from Law Professors Didn’t Do its Homework

by Michael O'Leary 07/07/2011 06:44 (UTC-08:00) Pacific Time (US & Canada)

The letter on the PROTECT IP Act from a group of law professors that has been circulating around the blogosphere in the last day or so unfortunately seems designed more to get a reaction than to get its facts right. 

Beyond repeating the disingenuous arguments that the bill would somehow break the Internet (even though the technology it would use is widely in use today with no negative impact) or that it would turn the U.S. into a China-like censorship regime (how on earth is it censorship if the government protects the products of free speech from being stolen?), the letter makes claims that range from wildly misleading to downright inaccurate:

Conveniently Overlooks PROTECT IP’s Strong Court Oversight and Due Process Protections
The letter misses the critical point that PROTECT IP mandates a court’s approval before any partner in the Internet ecosystem – search engines, ISPs, advertisers, pay processors, anyone – has to take any action to prevent access to or stop doing business with a rogue site.  Using language like “credit card companies and advertisers … must stop doing business [with] any site that a private copyright or trademark owner claims is predominantly infringing” ignores the need for court approval. 

The writers also assert that “the Act would allow courts to order any Internet service provider to stop recognizing the site even on a temporary restraining order or preliminary injunction issued the same day the complaint is filed.  Courts could issue such an order even if the owner of that domain name was never given notice that a case against it had been filed at all.”

Yet the PROTECT IP Act clearly and explicitly requires notice to domain name owners by e-mail, postal mail, and “in any other such form as the court finds necessary” under the Federal Rules of Civil Procedure.  Only “if through due diligence the Attorney General is unable to find” a website or domain name owner can an action proceed without this notice, and as in each and every case under PROTECT IP, a court’s approval would be required before ISPs or other entities would have to take any action. 

As constitutional expert Floyd Abrams wrote, “[t]he procedural protections under the Protect IP Act are so strong, uniform and constitutionally rooted that it is no exaggeration to observe that any complaints in this area are not really with the bill, but with the Federal Rules of Civil Procedure Itself, which govern all litigants in U.S. federal courts.”  Read his letter for much more detail on the bill’s strong provisions for due process.

Ignores Years of Precedent
The letter argues that the PROTECT IP Act “fails [the] Constitutional test” of prior restraint.  “It authorizes courts to take websites ‘out of circulation’ – to make them unreachable by and invisible to Internet users in the United States and abroad – immediately upon application by the Attorney General after an ex parte hearing.  No provision is made for any review of a judge’s ex parte determination, let alone for a ‘prompt and final judicial determination, after an adversary proceeding,’ that the website in question contains unlawful material.”

This is simply wrong.  Injunctive relief, which is the judicial remedy the PROTECT IP Act provides, has long been recognized as appropriate and constitutional means to stop the theft of creative works.  Floyd Abrams addresses this point directly:

From the start, injunctions were one form of relief accorded to victims of copyright infringement.  (Courts applied the 1790 Act [Ch. 15, 1 Stat. 124 (1790) (repealed)], and its later amendments, to grant injunctions “according to principles of equity.”  Act of Feb. 3, 1831, ch. 16, 4 Stat. at 438 (1831) (repealed 1870) (cited in Kristina Rosette, “Back to the Future: How Federal Courts Create a Federal Common Law Copyright Through Permanent Injunctions Protecting Future Works,” 2 J. Intell. Prop. L. 325, 340 (1994)).  However, since injunctions in non-copyright cases have frequently been held to be unconstitutional prior restraints on speech, Near v. Minnesota, 283 U.S. 697 (1931); New York Times Co. v. United States, 403 U.S. 713 (1971), and for other reasons, the subject has arisen as to the application, if any, of the First Amendment to copyright principles.  See generally, Melville B. Nimmer & David Nimmer, Nimmer on Copyright Section 19 (2010).

The issue of whether and, if so, how certain elements of the Copyright Act should be read to accommodate various First Amendment interests remains open.  The law could hardly be clearer, however, that injunctions are a longstanding, constitutionally sanctioned way to remedy and prevent copyright violations.  Indeed, that premise was explicit in the critical concurring opinion in the Supreme Court’s most famous prior restraint case, assessing publication of the Pentagon Papers, which noted that “no one denies that a newspaper can properly be enjoined from publishing the copyrighted works of another.” New York Times Co., 403 U.S. at 731 n.1 (White, J. and Stewart, J., concurring).  Current treatises reflect this judicial consensus.  

…The evident constitutionality of injunctive relief for copyright violations does not mean, to be sure, that injunctions must automatically or always be issued in response to a copyright violation.  The Supreme Court has recently held to the contrary, warning against the error of a ‘categorical grant’ of injunctive relief for patent infringement in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 394 (2006), and the Second Circuit has applied that conclusion in a recent, celebrated copyright case, Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010). What no court has ever denied is that injunctions are a valuable and constitutional response to copyright violations.

Misunderstands the Point of the Bill
The letter includes a couple of claims about the PROTECT IP Act that are puzzling when compared with what the bill actually does. 

“Remarkably,” the authors write, “the bill applies to domain names outside the United States, even if they are registered not in the .com but, say, the .uk or .fr domains. ”  It’s correct that the PROTECT IP Act would ask U.S. companies to prevent access to or stop doing business with domain names outside the United States.  In fact, that’s the point of the bill.  When content thieves and counterfeiters set up websites that are based overseas, U.S. law enforcement officers and prosecutors can’t pursue the sites themselves because of limits on their jurisdiction.  But often these rogue sites rely on U.S.-based Internet service providers, search engines, and financial services firms to target American consumers.  If these companies stop providing access to and support for rogue sites, it will make it much, much harder for the thieves to stay in business. 

This sentence from the letter, however, is wrong: “[The PROTECT IP Act] even applies to sites that have no connection with the United States at all, so long as they allegedly ‘harm holders’ of US intellectual property rights.”  The sites to which the bill applies do have a connection with the United States – they use services provided by U.S. companies to stay in business and they target U.S. consumers.  That’s a pretty strong connection.

And finally, the letter claims that “even China doesn’t demand that search engines outside China refuse to index or link to other Web sites outside China.  The Act does just that.”  No, it doesn’t.  PROTECT IP applies to American search engines, American ISPs, American payment processors, and so on. 


Here’s a couple of facts we won’t misstate:  stealing creative content and profiting from it is wrong.  It hurts real people all across the country who work hard to make the movies and TV shows that rogue sites casually rip off.  And it jeopardizes future investment in the productions that will give those people their next job tomorrow or next year. 

The authors are right that the Internet is a powerful tool to bring people together and help us communicate in ways we’ve never been able to do before.  That doesn’t mean it should also be a powerful tool for theft. 

PROTECT IP and the Venture Capitalists

by Michael O'Leary 06/24/2011 14:44 (UTC-08:00) Pacific Time (US & Canada)

Yesterday, as you may have seen, a group of venture capitalists sent Congress a letter about the PROTECT IP Act.  Part of the letter repeated arguments we’ve heard before suggesting that the bill would somehow undermine the architecture of the Internet – many of which have been debunked here and here.  It’s clear that this bill would have no negative impact on the Internet.

But the writers of this letter raised another point that we wanted to address.  They wrote:

The bill is ripe for abuse, as it allows rights-holders to require third-parties to block access to and take away revenues sources for online services, with limited oversight and due process.

Revenues sources?  Here’s the thing: the bill doesn’t address any revenues that would be relevant for the ventures these investors support. 

Let’s take a step back.  The PROTECT IP Act is meant to put a stop to rampant theft of American-made movies, TV shows, and other content by foreign illegal websites, in two basic ways.  First, the bill would make it so that U.S. consumers can’t access those illegal sites in the first place, which in some cases not only stops theft, but protects those consumers who might otherwise fall victim to identity theft or fraud online.  Second, PROTECT IP would shut down the financing that lets those illegal sites stay in business, by getting the U.S. companies that provide rogue sites with advertising services and plumbing like payment processing to stop doing business with them. 

Obviously the rogue sites themselves profit from U.S. consumers – either by charging a fee for stolen content or for hosting advertising for other companies – but the only “revenues sources” the bill covers come from transactions with criminal sites.  Put another way, the bill would only kick in if a U.S. company is providing financial services to an illegal site, and a court asks it to stop.  So our question is this: when the writers of this letter say PROTECT IP would “require third parties to … take away revenues sources for online services,” are they saying businesses like Facebook and Twitter depend on these illegal sites for revenues? 

That doesn’t make sense. 

This bill simply won’t apply to the writers of this letter, or to the ventures they’re backing.  It applies only to sites whose sole purpose is criminal activity, and if American companies are making money by facilitating that criminal activity, it asks them to stop. 

In the end, theft is theft, and it hurts all of us.  What if a criminal had stolen and duplicated the code that runs Facebook?  So you can imagine the harm that comes when the work of a small filmmaker, who poured her life savings and that of her family, is stolen just after release and sold around the world, with all the returns lining criminals’ pockets instead of going back to the filmmaker to repay her investors and fund future projects.  We can’t stand by as criminals profit from the hard work of the millions of American men and women of the creative and entertainment industry. 

The fundamental issue here is this: the writers of this letter, like so many others, think we have to choose between technological innovation and creative expression.  That’s a false choice.  Technology and creativity are inextricably intertwined, and work in concert, not opposition.   But it shouldn’t be too much to ask the innovators to play by the rules.  That’s all the PROTECT IP Act does – it’s a smart, narrowly-crafted bill whose purpose is stopping theft, not slowing innovation.

The letter cited a number of exciting, successful businesses representing partnerships between creators and technology companies to make content available legally.  We couldn’t agree more – Netflix, Rhapsody and Pandora are exciting partnerships and have proven that these legitimate models can work.  Everybody can get behind that kind of innovation.


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