Tech groups fight copyright infringement bill

Bill would discourage development of new products, groups say

WASHINGTON - A U.S. Senate bill that would allow copyright holders to sue creators of products that "induce" copyright violations would discourage technology companies from offering new media players or other recording products, representatives of four technology groups said Thursday.

The Inducing Infringement of Copyrights Act of 2004 broadly allows lawsuits against anyone defined as inducing copyright violations and could be used by the music and movie industries to sue venture capitalists who invest in new technologies or journalists who review digital recording products, said Gary Shapiro, president and chief executive officer of the Consumer Electronics Association.

The legislation, which doesn't exempt makers of technologies with substantial legitimate uses from lawsuits, would discourage the creation of new products like the iPod or TiVO, or home video and recording equipment, Shapiro said.

"I can't find any technology company that supports this legislation as written," Shapiro testified before the Senate Judiciary Committee. "This bill is, by far, the biggest threat to personal creativity, new technology, and innovation in 20 years. I urge you to consider the harm it will engender."

The bill, aimed at peer-to-peer (P-to-P) software vendors, would allow artists and entertainment companies to sue creators of products that "intentionally induce" copyright violations, based on what a "reasonable person" would consider an inducement. Currently, civil penalties for copyright infringement can be up to $30,000 per act of infringement, or up to $150,000 per act of willful infringement. Total damages are determined at trial.

While Shapiro and other technology groups said the bill goes too far, committee chairman Orrin Hatch, a Utah Republican, challenged the groups to come up with alternative legislation to curb the unauthorized trading of copyrighted material online. The bill is not targeted at makers of legal technologies, Hatch said.

Hatch accused Shapiro's group of opposing all proposals that would expand penalties for copyright violations. "I'd like to have a great mind like yours help us solve the problem, instead of criticizing," Hatch said.

Hatch accused most P-to-P vendors of enticing young people to trade files illegally and then leaving them to face legal action themselves, instead of the P-to-P service providers. "To implement their schemes, the architects of file-sharing piracy must encourage users to infringe copyright," Hatch said. "Let me make it clear that our aim is stop the for-profit commercial piracy operations that threaten the futures of artists, legal commerce, and all but their most cautious and expert users."

Despite opposition from tech groups, supporters of the bill said it's necessary to stop the billions of unauthorized downloads every year. About 97 percent of the files traded on P-to-P services are illegal, said Mitch Bainwol, chairman and chief executive officer of the Recording Industry Association of America (RIAA).

The RIAA has had little choice but to sue users of P-to-P software after a California judge threw out a lawsuit against P-to-P vendors Grokster Ltd. and StreamCast Networks Inc. in April 2003, Bainwol said. "They make a total mockery of intellectual property rights," Bainwol said of P-to-P vendors. "They thumb their noses at this Congress, and they laugh all the way to the bank."

P-to-P vendors disputed Bainwol's testimony and repeated their opposition to the bill. Thursday's testimony should "leave no doubt" that the bill is "the fearsome and flawed product of a perfect policy storm," said Adam Eisgrau, executive director of P2P United.

"An ocean of misinformation about peer-to-peer technology and its developers, whipped into mindless fury by a gale of propaganda, has produced without warning a rogue legislative wave that leaders of America's technology economy have said with one voice will -- not might -- utterly swamp the craft of innovation, if passed," Eisgrau wrote in an e-mail message.

Hatch asked Bainwol if the RIAA would use the Inducing Infringement of Copyrights Act to sue makers of legitimate products such as MP3 players. Bainwol promised that the RIAA would not.

But Kevin McGuiness, executive director and general counsel of the NetCoalition, an Internet company trade group, said that promise was not enough. "It's a little disconcerting for those of us in the Internet community to sit idly by and watch this legislation go forward based on presumption of good intentions forever on behalf of lawyers for the entertainment community," McGuiness said.

The Inducing Infringement of Copyrights Act could harm the progress of the Internet while not stopping unauthorized file trading, McGuiness said. "The Internet is basically one big copying machine," he said.

Andrew Greenberg, vice chairman of the Intellectual Property Committee at the Institute of Electrical and Electronics Engineers-USA, also testified against the bill, saying it could discourage tech companies from offering new products.

Even the Business Software Alliance (BSA), with members that have been victims of piracy, asked the committee to consider changes to the bill. Legislation should clarify that multipurpose technology products that can be used for significant legitimate purposes are not subject to lawsuits, and should require that someone being sued is "engaged in conscious, recurring, persistent and deliberate acts" causing others to violate copyright law, said Robert Holleyman, president and chief executive officer of the BSA.

Holleyman urged the committee to come up with legislation that's "properly balanced to avoid unintended consequences."

The bill, despite opposition, has powerful supporters. Among the bill's co-sponsors are Senate Majority Leader Bill Frist, a Tennessee Republican, Senate Minority Leader Tom Daschle, a South Dakota Democrat, and Judiciary Committee ranking Democrat Patrick Leahy from Vermont.

Marybeth Peters, register of copyrights for the U.S. Copyright Office, testified in support of the bill, saying unauthorized file trading online is the largest problem in copyright law today. "Copyright protection need not be merely symbolic in the face of new technology," she said.