New Induce Act Prompts Old Complaints

A fourth rewrite of the Induce Act is proving as controversial as its
much-maligned predecessors. The Inducing Infringement of Copyrights Act of
2004 (S. 2560) would permit individuals or corporations to be held liable
for infringing acts that “they intend to induce.”

Written by Senate Judiciary Committee Chairman Orrin Hatch (R-UT) and
Patrick Leahy (D-VT), the committee’s ranking Democrat, the bill, the
authors say, is aimed at the rampant music piracy on peer-to-peer (P2P)
networks. Critics, however, contend the legislation goes far beyond
targeting the file swapping networks to include consumer electronics
manufacturers and Internet service providers that induce copyright theft.

Groups opposed to the legislation fear that the bill would allow content
owners to sue companies such as Apple with its popular iPod for making
equipment that encourages users to engage in copyright infringement.

Hatch and Leahy’s latest rewrite includes exceptions for manufacturers “so
long as such use is private and noncommercial, such use is not for financial
gain and any copies of phonorecords resulting from such use are not made
publicly available.”

“Although this new draft may appear on the surface to be more friendly to
technology and innovation than were past drafts, in fact it is not,” Gigi B.
Sohn, president of the advocacy group Public Knowledge, said in a statement.

As currently drafted, the bill states, “Whoever intentionally induces
[copyright violation], by manufacturing, offering to the public, providing,
or otherwise trafficking in any product or service, any violation . . . shall be
liable as an infringer.” The legislation says the inducement must be
“intentional” and defines that as “conscious and deliberate affirmative acts
which a reasonable person would expect to result in widespread violations.”

Yahoo , Google , SBC and Verizon and a number of other

organizations including
the Consumer Electronics Association, TechNet and the U.S. Internet Industry
Association have also aligned themselves against the latest working draft of
the bill, which is scheduled to be heard Thursday at a Judiciary
Committee meeting.

The allied groups said in a Monday letter that even though Hatch and Leahy
have “recognized and attempted to address many of our concerns, [the new
draft] underscores the fact that adding any new cause of action to the
Copyright Act is a daunting undertaking that requires carefully nuanced
drafting to prevent adverse impacts on the many sectors of the economy that
copyright law reaches.”

Public Knowledge further contends if the Induce Act is implemented as an
amendment to the Copyright Act, “this bill would constitute the greatest
threat, to date, to the innovation processes that the copyright and patent
laws were intended to promote.”

Of greatest concern to Public Knowledge is that Induce Act would
undermine the landmark 1984 U.S. Supreme Court Betamax decision, which found
that the manufacturer of a technology, in that case a VCR, could not be held
liable for infringing uses of a product as long as the product also has
non-infringing use.

In August, the 9th Circuit Court of Appeals in San Francisco used the
technology neutral principles established in the Betamax case in deciding
that P2P networks such as Kazaa, Grokster and StreamCast Networks (owners of
Morpheus) were not liable for the copyright infringements of their users.

“[The Induce Act] would seem to subject all who invest, manufacture, or
‘traffic’ in legitimate home, personal recording and Internet products to a
new and unquantifiable risk of litigation,” the Monday industry letter to
Hatch and Leahy states. “There seems a substantial likelihood that staple
hardware and software products that are considered legal today would be
found illegal tomorrow. ”

At a July hearing on the bill, Hatch said, “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.”

The Senate Judiciary Committee did not respond to a Tuesday inquiry about
the legislation.

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