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Hatch Vows P2P Action This Year

WASHINGTON -- U.S. Sen. Orrin Hatch (R-Utah) said Thursday he plans to do "something" this year about rampant music theft on peer-to-peer (P2P) networks. As for his controversial new copyright inducement bill, he's willing to negotiate.

Last month, Hatch introduced his Inducing Infringement of Copyrights Act of 2004 (S. 2560), legislation permitting persons or corporations to be held liable for infringing acts "that they intend to induce." The bill would allow P2P networks and others to be sued for encouraging children and teenagers to commit copyright infringement via their P2P networks.

"The architects of this file-sharing piracy make millions of dollars while attempting to avoid any personal risk of the severe civil and criminal penalties for copyright infringement," Hatch said at a Senate Judiciary Committee hearing on the bill.

He added, "I think all here today would agree that these pernicious schemes to encourage others -- and unfortunately these are mostly kids -- to break federal law allows these pirates to collect huge revenues while subjecting users to the risk of prison or crippling damage awards."

Hatch is a longtime critic of the P2P networks. Last year, he suggested he might favor technology that can remotely destroy the computers of those who illegally download music from the Internet. The proposal was never acted upon.

In introducing the legislation, Hatch again startled the tech industry by originally maneuvering the bill to the Senate floor without a hearing. After a number of industry groups criticized the legislative tactic, Hatch scheduled Thursday's hearing.

Witnesses at the hearing readily agreed stealing copyrighted works was wrong, but strongly opposed Hatch's approach.

"Although I believe this bill to be a novel and sincere approach to dealing with an issue that merits much discussion," said Gary Shapiro of the consumer Electronics Association, "I also believe it would make a radical and unfortunate change to legal principles on which my industry and many others have relied in order to bring new technology to American consumers."

Shapiro was referencing the landmark 1984 U.S. Supreme Court Betamax decision, which found that the manufacturer of a technology, in this case a VCR, could not be held liable for infringing uses of a product as long as the product also has non-infringing use.

"The Supreme Court in Betamax gave technology companies the confidence and incentives to invest in new technology because it set an objective legal standard: a safe harbor for manufacturers and distributors of hardware and software products," Shapiro said. "Unfortunately, the subjective legal standard proposed in S. 2560 would fill this harbor with unchartable mines."

Robert Holleyman, president and CEO of the Business Software Alliance, told the Senate panel his organization believes Hatch's proposal would result in unintended consequences.

"Persons with bad motives have repeatedly used developments in the marketplace and technology to their own ends," he said. "Today is no different. In the past such bad actors have used the postal system, telephones, automobiles and other avenues of commerce for their own illicit ends."

Holleyman noted, "Just as past solutions focused on these bad actors, and did not outlaw overnight delivery, cars, or telephones, today's solutions must leave intact the important contributions computing technologies make to our daily lives, and allow these technologies to make even greater contributions in the future."

IEEE-USA Intellectual Property Committee Vice-Chair Andrew C. Greenberg testified that copyright owners should not be permitted to restrict the development of technology having non-copyright-infringing uses, unless the developer actively and independently induces a copyright infringement. The IEEE is the world's largest professional technology society.

"The Sony test worked well and has withstood the test of time for nearly 20 years," Greenberg said. "Far from destroying the market for content, successors to the Betamax were plentiful and cheap, and spawned entire new markets for distribution of content, creating a significant, and in some cases principal, new source of revenue for content owners savvy enough to capitalize."

Hatch contended his bill would not inhibit technological innovation.

"Just as the Sony Court never intended to allow the substantial-non-infringing-use rule to be misused as a license to enter the copyright piracy business, I do not intend to allow S. 2560 to be misused against legitimate distributors of copying devices," he said.

Hatch said he welcomed a "constructive dialogue" with the technology industry about his bill, but warned, "We must find a solution in this session of Congress that protects both copyrights and the technology. We're going to do this, we're going to get this done."