Intellectual Property

The Digital Millenium Copyright Act‘s notice-and-takedown safe harbor is rapidly becoming obsolete. The safe harbor, aka Section 512 of Title 17 of the U.S. Code, is the subject of a hearing tomorrow in the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet.
The safe harbor limits the liability of online service providers for copyright infringement if they remove infringing content upon receiving notice from the copyright owner. Safeguards are built into the law to protect against the possibility of erroneous or fraudulent notifications.
The problem is the safe harbor was designed for the Internet as it existed 15 years ago, before broadband. Most people did not access video over the Internet when Congress enacted the DMCA in 1998. As the Federal Communications Commission concluded at the time,

Due to bandwidth and other limitations, this method of video distribution does not yet produce programming that is comparable in length, quality, or convenience to broadcast video. Before Internet distribution of video becomes competitive in the video distribution marketplace, significant improvement must be made in this form of delivery.

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A sampling of 596 web sites that deal primarily in pirated content made an estimated $227 million in annual advertising revenues, according to the Digital Citizens Alliance (See: “Good Money Gone Bad: Digital Thieves and the Hijacking of the Online Ad Business – A Report on the Profitability of Ad-Supported Content Theft“). “The 30 largest sites studied that are supported only by ads average $4.4 million annually, with the largest BitTorrent portal sites topping $6 million. Even small sites can make more than $100,000 a year from advertising.”
“It is important to note that the advertising profits garnered by content thieves do not equate with the losses incurred by the owners of the content,” notes the report. “These losses are unquestionably greater by many orders of magnitude…”
Fortunately, the advertising industry is not willing to tolerate intellectual property infringement. “The future health of digital media is at stake,” according to Bob Liodice, head of the Association of National Advertisers, “and we owe it to ourselves, our industry and its brands to attack the issue head-on.”

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Retransmission consent came under attack again this month, and two long-awaited bills on the subject have finally been introduced–the Next Generation Television Marketplace Act (H.R. 3720) by Rep. Steve Scalise, and the Video CHOICE (Consumers Have Options in Choosing Entertainment) Act (H.R. 3719) by Rep. Anna G. Eshoo. The American Cable Association’s Matthew M. Polka has reiterated his view that the process whereby cable and satellite TV providers negotiate with broadcasters for the right to retransmit broadcast signals is a “far cry from the free market,” and Alan Daley and Steve Pociask with the American Consumer Institute claim that retransmission consent jeopardizes the Broadcast Television Spectrum Incentive Auction. As Jeff Eisenach pointed out at the Hudson Institute, “Congress created retransmission Read More ›

Showdowns are likely in the Senate and House of Representatives later this month on legislation combating online piracy. The House Judiciary Committee is expected to vote on the Stop Online Privacy Act, H.R. 3261 (SOPA), and the full Senate on the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act, S. 968 (Protect IP Act). These measures have generated some overheated rhetoric.
A recent column in Roll Call by Stephen DeMaura and David Segal, entitled “All Candidates Should Be Concerned About SOPA,” for example, suggests that SOPA could be exploited by political opponents to restrict free speech.

Here’s a plausible campaign scenario under SOPA. Imagine you are running for Congress in a competitive House district. You give a strong interview to a local morning news show and your campaign posts the clip on your website. When your opponent’s campaign sees the video, it decides to play hardball and sends a notice to your Internet service provider alerting them to what it deems “infringing content.” It doesn’t matter if the content is actually pirated. The ISP has five days to pull down your website and the offending clip or be sued. If you don’t take the video down, even if you believe that the content is protected under fair use, your website goes dark.

Another recent column in Politico by Tim Mak entitled “Bloggers: SOPA’s the end of us” makes a similar claim and implies a tidal wave of opposition is forming (we shall see).

The conservative and liberal blogospheres are unifying behind opposition to Congress’s Stop Online Piracy Act, with right-leaning bloggers arguing their very existence could be wiped out if the anti-piracy bill passes.

There is no way these bills would permit an opposing campaign or campaign committee to pull down websites harboring “infringing content,” nor would they authorize censorship of lawful speech.

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Is the proposed Stop Online Piracy Act, H.R. 3261 (SOPA) a “massive piece of job-killing Internet regulation,” as our friends at the Electronic Frontier Foundation claim? According to the sponsor of the proposal, House Judiciary Chairman Lamar Smith (R-TX), there is an urgent need to protect American innovators from foreign theft via the Internet. Rogue websites that steal and sell American innovations have operated with impunity. The online thieves who run these foreign websites are out of the reach of U.S. law enforcement agencies and profit from selling pirated goods without any legal consequences. According to estimates, IP theft costs the U.S. economy more than $100 billion annually and results in the loss of thousands of American jobs. The Stop Read More ›

Guy Kewney notes in The Register: The story behind the story is always more interesting, somehow, than the story itself; and the story behind last week’s Mobile World congress wasn’t just the obvious stuff about backhaul capacity. Instead, people were mumbling furtively about piracy – intellectual piracy, that is. You know, like intellectual property, but acquired by devious means. I asked Scott McGregor, CEO of Broadcom, what he thought of 2008 in the intellectual piracy arena. He said: “Patent enforcement has gone too far. It’s time to see an adjustment in roll-forward royalties, where people have a business model predicated on charging royalties several times on the same component.” The problem is not the patent system but the litigious exploitation Read More ›

Should Internet service providers block copyrighted material from their networks if “fingerprinting” technology allows them to easily identify it? Bits, the New York Times’ technology blog, has an excellent copyright discussion featuring Columbia Law Professor Tim Wu and the general counsel of NBC Universal, Rick Cotton. One of the questions is whether ISPs should block copyrighted works? Wu makes a good point, “Technologies designed to examine what kind of content is passing the network are technologies of censorship. Tolerating the routine inspection of all content, in the search for “forbidden” content, is a fast road to a private police state.” But I think Wu is glossing over an important point here, i.e., there is a vast difference between a “private Read More ›

I want to comment on Adam Thierer’s recent paper, “Unplugging Plug-and-Play Regulation,” which makes several excellent points. Adam briefly summarized his thesis (i.e., there is no need for government “assist” in private standard-setting) here a couple days ago and generated a couple comments. The cable industry and consumer electronics manufacturers are touting competing standards initiatives. The pros and cons of each approach, from a technology perspective, are somewhat bewildering to a non-engineer like myself. But there appears to be one clear difference that matters a lot. Adam points out that under the initiative sponsored by the consumer electronics industry, the FCC would be empowered to play a more active role in establishing interoperability standards for cable platforms in the future. Read More ›

Rep. Howard L. Berman A centerpiece of the Leahy-Hatch/Berman-Smith Patent Reform Act of 2007 (S. 1145 and H.R. 1908) is the establishment of an injudicious post-grant opposition procedure (also known as a “second window”). According to Chairman Howard L. Berman (D-CA) of the House Subcommittee on Courts, the Internet, and Intellectual Property, a new layer of review is needed because: In an effort to address the questionable quality of patents issued by the USPTO, the bill establishes a check on the quality of a patent immediately after it is granted or in circumstances where a party can establish significant economic harm resulting from assertion of the patent. [emphasis added.] There are several key problems with the proposed new procedure for Read More ›

According to Senate Judiciary Chairman Patrick Leahy (D-VT), constructive patent reform would “reduce the unnecessary burdens of litigation” in the patent system and “enhance the quality of patents” granted by the Patent and Trademark Office. Better patent quality ought to be the focus of discussion, because only bad patents lead to unnecessary litigation. Most people would agree courts ought to vigorously enforce good patents. The Leahy-Hatch/Berman-Smith Patent Reform Act of 2007 (S. 1145 and H.R. 1908) fails to reflect this basic point. The bills misguidedly treat the goals of improving patent quality and reducing litigation as mutually exclusive goals to some extent. The result will be to reduce protection for all patents, not just the bad ones. Take, for example, Read More ›