Copyhype

Creators are often told they have to learn how to “compete with free” because of online piracy. To some extent, this is true, but certainly not a new idea — piracy existed way before the Internet became so prominent in our lives. ¹See, for example, Martin Luther’s Warning to the Printers, Wittenberg (1541): “Avarice now strikes / and plays this knavish trick on our printers whereby others are instantly reprinting [our translation] / and are thus depriving us of our work and expenses to their profit, / which is a downright public robbery / and will surely be punished by God / and which is unworthy of any honest Christian.” Creators have been adapting, and continue to adapt, to the realities of digital technology — through a combination of new business models, technology, and carefully constructed legislation.

But what creators shouldn’t have to do is compete with paid. That is, the law should provide little leeway for those who profit off the infringement of the core exclusive rights protected by copyright law for centuries — rights that the US Constitution empowers Congress to secure to authors in order to promote the progress of the useful arts and sciences for all of society.

Most online firms recognize the value of copyright and creative works — rogue sites, however, believe that all of that value should go directly into their own bank accounts. Recognizing the ease of doing this and the harm it causes to creators, consumers, and the economy in general, Congress has pursued legislation addressing the problem of rogue sites: the PROTECT IP Act was introduced in the Senate last May, and the Stop Online Piracy Act (SOPA) in the House this past week.

Some of the early criticism of the House bill has centered around Section 103 of SOPA, which would provide a system for notifying advertising and payment providers of Internet sites that are dedicated to piracy and using their services.

The EFF predicts “we’re going to see a flurry of notices anyway – as we’ve learned from the DMCA takedown process, content owners are more than happy to send bogus complaints.” Larry Downes, writing on behalf of TechFreedom, claims the bill is “drafted to ensure maximum litigation.” And Gary Shapiro, president of the Consumer Electronics Association, notes “the potential for abuse by the notoriously litigious content industry is clear.”

If you read the bill, however, it is difficult to see these predictions coming true. Section 103 is appropriately called a “Market-based system to protect U.S. customers and prevent U.S. funding of sites dedicated to theft of U.S. property” — the market will naturally mitigate against any flurry of notices. The robust procedures envisioned in the bill, along with the penalties for abusing the notice process, also make it an unlikely candidate for abuse.

The Market-based System

The notification system under SOPA is similar to the one provided by the DMCA where content owners can notify service providers of infringing material uploaded by users. By comparing the two notification processes, we can see that, contrary to early criticisms, the notification process under SOPA is less likely to be abused than the DMCA.

A service provider has an incentive to remove content when it receives a DMCA takedown notice. Expeditiously removing content once it is notified preserves its safe harbor from any liability it might face. There is also little downside to removing content for the service provider. The DMCA shields the service provider from any legal claims from a user whose content was removed. ²17 USC § 512(g). And, in most cases, any subsequent business repercussions of content takedown are slight — at worst, a user of a free service takes his business elsewhere.

While an ad provider or payment processor may, in some cases, be liable for contributing to copyright infringement, ³See Warner Bros. v. Triton Media, Consent Judgment, No. CV 10-6318-GW (CD Cali, Oct 27, 2010), defendant liable for “providing advertising consulting and referrals for, and/or providing other material assistance to” infringing websites. this requires a rare set of circumstances. ⁴See Perfect 10 v. Visa International, 494 F.3d 788 (9th Cir. 2007), payment processor not liable for copyright infringement for processing credit card transactions on infringing sites. Most ad and payment service providers, then, do not have the same additional legal incentives to comply with SOPA takedowns as online service providers have to comply with DMCA takedowns.

They also don’t have business incentives to comply with bad faith notices under SOPA. Each site they are ordered to block is, presumably, a paying customer or revenue source. I doubt many businesses would be happy to rubber-stamp any and every order that cuts into their bottom line without some way of making sure the site at issue is one that genuinely falls within the scope of this law.

Due Process

The bill provides a fair process for resolving disputes between content owners and ad and payment providers when they disagree about whether a particular site is dedicated to the theft of US property.

When an ad or payment provider receives a notice under SOPA, one of three things may happen: (1) the identified site files a counter-notice, (2) no counter-notice is filed and the provider complies with the notice and prevents its service from being used by the infringing site, or (3) no counter-notice is filed but the provider fails to comply with the original notice.

In the first and third scenarios, absolutely nothing happens to either the identified site or provider unless the copyright owner chooses to pursue further. In those cases, a copyright owner is limited to filing an action against the identified site’s operator, or the site itself if the operator is not locatable or resides outside the US. ⁵This dual in personam/in rem style cause of action is reminiscent of the one in the Anticybersquatting Consumer Protection Act, see Caesars World v. Caesars-Palace.com, 112 F.Supp.2d 502 (ED Va 2000) for a discussion of the constitutional propriety of the Act.

When an action is commenced, the court may issue an injunction — governed by the Federal Rules of Civil Procedure, the same rules that govern injunctions in any federal civil lawsuit — against the site owner to cease infringing activity. The copyright owner may then serve court orders against ad and payment providers providing services to the identified site.

When one of these providers gets such an order, it must use “technically feasible and reasonable measures” to prevent its services from being used by the identified site, but once it has put these measures into place, it has no duty to monitor.

If the provider still refuses to comply, the copyright owner may, upon a showing of probable cause that the provider has refused to comply, request further action by the court. Under the statute, the court would issue an order to show cause to the provider. If the provider cannot show cause why it has failed to comply, the court may order it to comply, or, in the case of a knowing and willing refusal to comply, it may “impose an appropriate monetary sanction”.

These are the only legal remedies available to a copyright owner under this section of SOPA. Copyright owners cannot shut down a site, they cannot collect monetary damages (any monetary sanctions go directly to the court). Success under this market-based system is getting an ad or payment provider to prevent its services from being used by a site dedicated to the theft of US property to profit off that theft.

Little room for mistakes

Under the DMCA, a content owner who “knowingly materially misrepresents” that content is infringing is liable for any damages, attorney fees, and costs incurred by the user as a result of the content being taken down. ⁶17 USC § 512(f). One of the few cases that dealt with this part of the DMCA involved the infamous takedown of the dancing baby video on YouTube. In 2008, the Northern District Court of California concluded that a takedown notice requires a “good faith consideration of whether a particular use is fair use”; otherwise, a content owner may be liable for misrepresentation. ⁷Lenz v. Universal Music Corp., 572 F.Supp.2d 1150, 1156 (ND Cali 2008).

Even so, as the court pointed out, the amount of damages a content owner would face for such a misprepresentation would likely be “nominal.” Having a video removed from YouTube for a few days may be annoying, but provable financial damage? Probably not much. ⁸See Ben Sheffner’s discussion of the 512(f) damages provision in Lenz for more on this.

SOPA provides a similar provision against misrepresentation in notices — but while the language mirrors that in the DMCA, there are two practical realities that make it different.

First, a good faith effort to determine that an entire site is “dedicated to theft of US property” under the definition of the bill requires considerable more effort than determining whether a single file is infringing. The notification itself requires substantially more investigation than a DMCA notice. Under the DMCA, a copyright owner need only identify what work is being infringed and the content that is infringing. ⁹17 USC § 512(c)(3). Under SOPA, the copyright owner must show, among other things, “specific facts to support the claim that the Internet site, or portion thereof, is dedicated to theft of U.S. property” and “clearly show that immediate and irreparable injury, loss, or damage will result” to the copyright owner in the absence of timely action; “Information reasonably sufficient to establish that the payment network provider or Internet advertising service is providing payment processing or Internet advertising services for such site”; and identification of evidence that indicates the site is US-directed.

Second, the risk of making a material misrepresentation is much higher. The operator of a site whose sources of income have been threatened is far likelier to push back than a user whose video was taken down. And unlike the nominal damages present in a DMCA takedown, the loss of ad revenues and credit card transactions because of a bad faith takedown could add up.

No law is immune from abuse, and copyright law shouldn’t be an exception. But the penalties for erroneous notices under SOPA have teeth, the procedures and remedies involved don’t encourage over-litigiousness. These provisions strike a proper balance that should prove to be effective against rogue sites and protective of good faith actors.

Taking the Profit out of Piracy

The provisions of Section 103 of the Stop Online Piracy Act will certainly continue to evolve during the legislative process; if SOPA and the PROTECT IP Act are successfully voted on, they will need to be reconciled before becoming law.

But these provisions represent a good start for creators who have long noted the ease (and injustice) of profiting from online piracy and escaping liability. They are aimed in theory at rogue sites, and in practice will be used against only rogue sites. Safeguards are built into the bill to limit abuse.

Web services who are acting legitimately and legally should welcome rogue sites legislation because effective protection of creative labor is vital to a functioning online marketplace, and a functioning online marketplace benefits us all.