Bloomberg News

Google Friends Facebook to Fight Hollywood-Backed Piracy Measure

November 15, 2011

Nov. 15 (Bloomberg) -- Google Inc. and Facebook Inc. are among Web companies warning that legislation aimed at combating online piracy may threaten the U.S. technology industry.

The House Judiciary Committee is scheduled to hold a hearing tomorrow on the Stop Online Piracy Act, which would give the U.S. attorney general and copyright holders new powers to cut off financial support to “rogue websites” accused of trafficking in goods spanning knockoff watches to fake pharmaceuticals to pirated movies.

The House bill and a similar Senate measure have pitted the nation’s top Internet companies against the U.S. film and music industries, which want the government to halt counterfeiting and intellectual-property theft. Web companies say the proposed legislation would require them to police the Internet, jeopardizing the growth of online services.

“Unfortunately, the bills as drafted would expose law- abiding U.S. Internet and technology companies to new uncertain liabilities, private rights of action, and technology mandates that would require monitoring of websites,” Google, Facebook, Yahoo Inc., and EBay Inc. wrote in a letter today to leaders of the House and Senate Judiciary committees.

“We are concerned that these measures pose a serious risk to our industry’s continued track record of innovation and job- creation, as well as to our nation’s cybersecurity,” the companies wrote in the letter, which was also signed by AOL Inc., Twitter Inc., LinkedIn Corp., Mozilla Corp. and Zynga Inc.

The House measure, introduced by Judiciary Committee Chairman Lamar Smith, a Texas Republican, would let prosecutors seek court orders requiring U.S. Internet-service providers, search engines, payment processors and ad networks to block or cease business with websites linked to online piracy.

Valenti Successor

The Motion Picture Association of America, the Recording Industry Association of America and the U.S. Chamber of Commerce are among the supporters of the legislation.

A study released Nov. 2 by the International Intellectual Property Alliance found that the publishing, software, film, music and television industries added more than $930 billion to the U.S. economy in 2010.

“That intellectual property is being stolen every day -- nearly one-quarter of all Internet traffic is copyright-theft -- and that is costing us hundreds of thousands of jobs each year,” Christopher Dodd, chairman of the MPAA, said in an e- mail. The MPAA, an alliance member, helped publicize the study.

Dodd, a Connecticut Democrat who served three decades in the Senate, is looking for a win in his new role as head of the MPAA, which grew powerful in Washington under the 38-year leadership of Jack Valenti, a onetime aide to Lyndon Johnson. The group’s members include Walt Disney Co., Viacom Inc.’s Paramount Pictures, Sony Corp., News Corp., Comcast Corp.’s NBC Universal and Time Warner Inc.’s Warner Bros.

‘Rogue Websites’

Under the House bill, payment processors and online ad networks must suspend services to a website if notified of an infringement by a private copyright holder, unless the website provides a “counter notification” explaining its actions, according to a bill summary on the Library of Congress website.

After that process, a rights holder may seek an injunction in court against the website that may be applied to payment processors and ad networks requiring them to stop doing business with the site, the summary states.

“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,” Smith, the House Judiciary chairman, said in an Oct. 26 statement. The measure is H.R. 3261.

Vague Language

The legislation “helps stop the flow of revenue to rogue websites and ensures that the profits from American innovations go to American innovators,” Smith said. The measure has at least 20 co-sponsors from both parties.

The House bill has broad and vague language and may extend to legitimate websites that are accused of facilitating infringement, such as those letting users comment, post blogs or share video, said David Sohn, a senior policy counsel at the Washington-based Center for Democracy and Technology, in an interview.

The center is financed in part by the technology industry and got almost 12 percent of its 2010 funding from Web companies including Google, Facebook and Yahoo.

In a preview of objections that may be voiced at tomorrow’s hearing, two California members of the House Judiciary Committee, Democrat Zoe Lofgren and Republican Darrell Issa, criticized the Stop Online Piracy Act as a threat to online innovation and commerce in a Nov. 8 letter to other U.S. lawmakers.

‘Overreaching Approach’

“Before we impose this sprawling new regulatory regime on the Internet, we must carefully consider the risks that it could pose for this vital engine of our economy,” they wrote.

Senator Ron Wyden, an Oregon Democrat, has vowed to block the Senate bill, the Protect IP Act, from reaching a vote in the full Senate, saying in a May 26 statement that it “takes an overreaching approach to policing the Internet.” The Senate measure is S.968.

Wyden is working on alternative intellectual-property legislation, Jennifer Hoelzer, a spokeswoman for the senator, said in an e-mail.

--Editors: Steve Walsh, Michael Shepard

-0- Nov/15/2011 15:25 GMT

To contact the reporter on this story: Eric Engleman in Washington at eengleman1@bloomberg.net

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net


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