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P2P Chief Blasts Hatch Proposal

The peer-to-peer industry's most visible trade group blasted as "reprehensible" a new legislative proposal to allow P2P networks be sued for encouraging children and teenagers to commit copyright infringement.

Late Tuesday, Sen. Orrin Hatch (R-Utah) introduced the Inducing Infringement of Copyrights Act of 2004. According to Hatch, the bill permits persons or corporations to be held liable for infringing acts "that they intend to induce."

A longtime critic of the music file-sharing networks such as KaZaa and Morpheus, Hatch said in a statement, "Tragically, some corporations now seem to think that they can legally profit by inducing children to steal. Some think they can legally lure children into breaking the law with false promises of 'free music.'"

On Wednesday, Adam Eisgrau, executive director of P2P United, a file-sharing trade group representing Morpheus, Grokster, BearShare, eDonkey and Blubster, said Hatch's proposal creates a new crime that "trumps" 150 years of law and legal precedent, including a 2002 federal court decision ruling P2P software to be non-infringing.

In that case, which the music industry is appealing, the court found direct infringement of copyrighted works by some end users of P2P software but ruled the software also had significant non-infringing use. In clearing Morpheus and Grokster of copyright infringement, the court said the file-sharing companies couldn't control how people use their product.

"[The Hatch legislation] is ill-defined, ill-devised and is the product of an unbelievably flawed legislative process," Eisgrau said. "To do that in the dark of night with no hearings and no public discussion is reprehensible."

In his statement on the Senate floor Tuesday night, Hatch quoted the 2002 federal court decision that noted some P2P distributors "may have intentionally structured their businesses to avoid secondary liability for copyright infringement, while benefiting financially from the illicit draw of their wares."

Hatch added, "In other words, many P2P distributors may think that they can lawfully profit by inducing children to break the law and commit crimes. They are dead wrong. America punishes as criminals those who induce others to commit any criminal act, including copyright infringement."

Eisgrau said Hatch's bill could be interpreted that any developer of technology could be held liable for "merely inventing that technology" even when it has legal uses.

Eisgrau's comments to reporters came at the end of an abbreviated Senate Commerce hearing on P2P networks. Pending Senate floor votes limited the hearing to less than an hour. Although time was short, the session was long on fiery rhetoric and incendiary charges, particularly when Streamcast CEO Michael Weiss accused the music industry of "blacklisting" his company, which distributes the popular Morpheus P2P software.

As proof, Weiss produced a transcript of a voicemail message from Real Networks to Streamcast, which included the statement that "the labels have blacklisted you guys. So that is the problem we've got. Basically, what they're saying is you've got to denounce P2P, and/or resolve the lawsuit is what you have to do."

Weiss said he wants to the Senate Commerce Committee to direct the Federal Trade Commission or the Department of Justice to investigate the "apparently collusive, anti-competitive conduct in restraint of trade by the music industry."

John Rose, executive vice president of the EMI Group and EMI Music, denied any collusion between the music companies, but admitted EMI "will not license our work to P2P networks. We don't want to do business with them."

Rose was careful to distinguish between the P2P technology and the file-swapping networks that employ it.

"It's imperative that we distinguish behavior and technology when we look at organizations like Morpheus and Grokster," Rose said. "It's not necessarily the technology that's the problem, it's how the technology has been used and the business model that has been willfully and ruthlessly built around it."

Sen. Gordon Smith (R-Ore.) warned the warring parties, "I'd rather the industry deal with this problem, but if necessary, we'll do legislation."