P2P Bill Induces Tech Group to Action

Technology businesses and trade groups are pushing for a bigger say about a fast-tracked bill in Congress they say would unfairly penalize them in the process of curbing copyright infringement.

The bill is aimed at thwarting copyright infringement, as well as the distribution of pornography, through the use of peer-to-peer (P2P) networks. The group is asking Sen. Orrin G. Hatch (R-Utah) to hold hearings on the Inducing Infringement of Copyrights Act of 2004 (S. 2560), which he introduced last month.

“While we agree with the need to penalize those who intentionally cause copyright infringement, we are concerned that S. 2560 would have the unintended consequence of punishing individuals and companies that create and distribute consumer, business, and professional products that might be used by others for unlawful purposes,” states a letter sent to Hatch
Tuesday. It was signed by Intel , Sun , eBay , Yahoo! and 39 other businesses and groups.

The bill would allow P2P networks and others to be sued for encouraging children and teenagers to commit copyright infringement via their P2P networks.

Through parliamentary maneuvering, Hatch, the chairman of the Senate Judiciary Committee, bypassed the usual hearing process and moved the legislation directly to the Senate floor for a vote. Hatch’s tactics in avoiding a public hearing have attracted as much criticism as the legislation itself.

The letter claims the legislation would undermine the 1984 U.S. Supreme Court decision in the landmark Betamax case, 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 letter urges lawmakers to “hold hearings to assure that any unintended consequence can be fully explored and avoided. Congress should not rush to revise fundamentally a well-established Supreme Court doctrine without a
process in which the implications for the individuals and the industries
that have relied on it for the last two decades are fully and publicly aired
and discussed.”

The group claimed that if Hatch’s bill becomes law, it would provide
“copyright owners with a new legal avenue to attack every new technology
about which a copyright owner is concerned. Even a product review that
discusses how a product works could be implicated by the bill.”

Using the Betamax case as legal precedent, a federal court in 2002 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
music industry is appealing the decision.

“We understand your concerns for protecting children and addressing activity
that infringes copyright. We share these concerns. As currently conceived,
however, S. 2560 would undermine the 20-year-old Supreme Court decision,”
the Tuesday letter states. “In Betamax, the Supreme Court held that
the manufacturer of a product could not be held secondarily liable for
infringing uses of the product by others so long as the product was capable
of substantial non-infringing uses.”

The letter said the Betamax decision has given “venture capitalists,
engineers, and manufacturers the confidence and certainty that they could
invest their resources in developing a wide range of consumer products
without facing copyright liability.”

Hatch’s office was not immediately available for comment on the letter or
the legislation. When he introduced the bill on June 22nd, Hatch said the
bill “remedies a threat to the security of
copyrights as well as to our citizens and children. Some corporations
distributing so-called ‘peer-to-peer file-sharing software’ have hit upon a
truly malicious business model.” Hatch also said his bill does not undermine the Betamax decision.

“The [bill] permits civil enforcement only against parties whose acts would already
trigger criminal liability under existing law. Intentional inducement of
criminal or illegal acts of infringement is already a felony. The bill
merely confirms that civil liability can be imposed in cases where potential
criminal conduct already exists.”

In his statement on the Senate floor, Hatch quoted the 2002 federal court
decision, which 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.”

He 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.”

Art Brodksy, a spokesperson for the advocacy group Public Knowledge, which
also signed the letter, told internetnews.com, “We can’t
imagine a bill of this magnitude not having a hearing. It is far too broad
and there is potential for great harm. We would ask that they stop a minute
and consider what they are doing.”

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