[Note: this is the third in a series of posts on SOPA.]
Introduction
In the first of these SOPA posts I provided circumstantial evidence that the entertainment industry's increased lobbying and generous contributions to key Judiciary Committee members had at least facilitated strong bipartisan support for the bill and an easy pathway out of committee. Nevertheless, the bill has become extremely controversial in recent weeks, eliciting strong pushback from leading tech and internet companies, their trade groups, venture capitalists, and internet and civil rights advocacy groups - as well as strong criticism from many legal scholars. In the second post I argued, using the most primitive possible textual analysis, that SOPA was never meant to be exclusively about what its defenders claimed it was, "rogue foreign sites". So what is going on?
Clearly these two facets are related. The condensed version is that even those provisions that appear most directly focused on "rogue foreign sites" grant extremely broad powers that could be used against many sites for outside the scope of what the admittedly vague "rogue foreign sites" conveys to the layman trying to make sense of its plain meaning. Furthermore, the implementation of these provisions seems very poorly thought out, and if actually put in place would likely lead to at least some of the following disastrous outcomes: weakening of our national cybersecurity, a failure to actually impair materially the very sites the provisions are meant to target, loss of America's position as trusted caretaker of the internet's core infrastructure and preserver of its liberal ethos, the providing of a template for greater internet control to serve as cover for more sinister regulatory efforts by less democratic regimes, and a cause for genuine offense to our economic partners and even our military allies. And these are just the potential consequences of Section 102! Other sections introduce a wide variety of new regulations, penalties, and initiatives, almost all of which have come under heavy criticism from a large, growing, and bipartisan alliance of stakeholders and disinterested parties. This may sound hyperbolic but, sadly, it is not. Also sadly, it is well beyond the scope of this post to present all this material; fortunately, there's a lot of great stuff out there already. Techdirt has the best and most comprehensive daily coverage; search the Volokh Conspiracy for a very good series of posts on the legal issues at stake and links to other legal scholars' discussion of the topic.
In this post I will restrict my focus to Section 103 of SOPA, which provides a mechanism by which copyright holders in the U.S. can bring a claim against a site on the grounds that it is "dedicated to theft of U.S. property" - if the courts agree, no U.S. financial services company may process payments from U.S. customers to the site, which in most cases will threaten to make the site insolvent in very short order. The key question is what "dedicated to theft of U.S. property" means - the bill's supporters claim that it refers narrowly to sites we would all agree are very, very bad, while its detractors claim that it is extremely broad. The latter opinion is also my own, and I will present my version of the argument here. I will also argue that this broad definition is not an accident, but is an essential feature of the bill; the "dedicated to theft" provisions are an unambiguous attempt to seek rents by gaining leverage over internet tech firms.
Reading Sections 103 of SOPA
The obvious starting point, then, is the definition of “internet site dedicated to theft of U.S. property.”
(i) [the internet site] is primarily designed or operated for the purpose of, has only limited purpose or use other than, or is marketed by its operator or another acting in concert with that operator for use in, offering goods or services in a manner that engages in, enables, or facilitates [copyright infringement, circumvention of copyright protection systems, or trademark infringement]; or
(ii) the operator of the U.S.-directed site–
(I) is taking, or has taken, deliberate actions to avoid confirming a high probability of the use of the . . . site to carry out acts that constitute [copyright infringement or the circumvention of copyright protection systems]; or
(II) operates the . . . site with the object of promoting, or has promoted, its use to carry out acts that constitute a violation of section 501 [copyright infringement] or 1201 [circumvention of copyright protection systems] of title 17, United States Code as shown by clear expression or other affirmative steps taken to foster infringement.
The claim that this definition is narrowly constructed does not survive first contact with the text. All three routes (it's all "or"s between the three, so the subheadings add no logical force) to branding a site as "dedicated to theft" have come under heavy criticism. Here e.g. is David Post in the Volokh Conspiracy, writing about the second:
If the prosecutors have been snooping around on my website to find infringing material and I take “deliberate steps” that prevent them from “confirming” that I have such material on the site — perhaps I have this pet peeve about government agents crawling around what I might regard as private space and I have tried to keep them out — then I have violated the statute even if I don’t actually have infringing material on the site. That is, it’s an independent violation of law to keep the prosecutors from “confirming” that you’re violating the law — all the prosecutor has to show, to make you vanish from the Net, is that you’ve somehow tried to keep the prosecutor off of your website!
It's an excellent point, but for simplicity I like the first of the three, because if you prune away the right alternatives at each stage, you get this definition for "dedicated to theft":
“[the internet site] is primarily operated for the purpose of offering services in a manner that enables copyright infringement.”
I'd argue that Facebook, YouTube, and Vimeo might well be found to fit this definition. In fact, virtually every major site in the U.S. that allows users to upload their own content is an "internet site operated for the purpose of offering services," and since those services allow you to upload copyrighted material, the offering of services is done "in a manner that enables copyright infringement". Obviously this isn't a proof that YouTube would be found "dedicated to theft" in a U.S. court; but it strongly suggests the possibility that such a ruling would be made.
Again, the consequences of being ruled "dedicated to theft" are severe: U.S. financial network providers - credit card companies etc. - are forbidden by court order from completing payments from U.S. customers to sites "dedicated to theft". Additionally, SOPA allows for an injunctive order to the same effect, so that the site in question would have to mount a legal defense without incoming operational cash flows. Indeed, the interruption of payments is far worse than "merely" depriving the site of operational cash flows: if customers cannot pay for services, how can the site provide them? For free, and suffer an invariable glut of demand? Or not at all, and interrupt paid services? Even if the company ultimately survived a period of classification as "dedicated to theft", it would emerge far, far weaker in the competitive landscape.
Finally, the procedure leading to denial of payments is astonishingly fast. Any company that belives in good faith that its intellectual property is being harmed by a site, and that the site is "dedicated to theft" may issue a claim directly to payment network providers; the site named in the claim has only five days to file a counterclaim, or payments are cut off, even without a court order. The counterclaim serves only to move the question to the courts, which may issue an injunctive order as noted previously. Then the question is heard in court, and a ruling made, with the same consequences for the site should it lose the case. The central observation of this section: even if the court is expected to rule in favor of the site, the consequences to it are so severe if it loses that it will be forced to negotiate from a position of weakness. This aspect of the law is I think the one most underappreciated in even critical analyses. Again, to put it bluntly: for many sites, being found "dedicated to theft" would be tantamount to a court order to go bankrupt; for almost all the rest, it would be a destruction of a huge portion of the firm's value. Thus, the simple existence of this law would give IP holders a lever with which to negotiate concessions from internet companies on a wide range of issues, not necessarily related to IP protection.
From the DMCA to SOPA
Looking at the text of SOPA on its own shows you that the "dedicated to theft" provisions are a potential weapon against companies like YouTube. But I'm asserting something more - that the provisions were deliberately written in the hopes of creating such a weapon, something the entertainment industry has increasingly wanted to do since the passage of the Digital Millenium Copyright Act.
The DMCA was passed in 1998; a lot of it was favorable to the entertainment industry, but one portion of it was not: the Online Copyright Infringement Liability Limitation Act. OCILLA established the so-called safe harbor provisions of the DMCA, which (as the fully spelt out name suggests) limits the liability of online sites for copyright infringement provided that the site meets certain requirements. The central issue here is one of liability for copyright infringement.
Suppose I have on my computer a legal copy of Steamboat Willie – but I want to illegally give it away for free using the internet. I upload Steamboat Willie to YouTube, which stores a copy of the short on its server, then transmits it to Steamboat Willie-loving internet users everywhere. Soon, Google starts returning a link to my YouTube page when people enter the search term “Steamboat Willie”. Blogs and websites start linking to my uploaded copy, too. Demand for my clip goes up to the point that some servers start caching, or saving a temporary copy of, the video so that they can deliver it to users more quickly and save bandwidth.
So only one person (me) bought the right to watch Steamboat Willie, but thousands are doing the watching. Clearly there is copyright infringement – the question is, who is liable? Certainly I am. But what about YouTube, which stored a copy of the video and transmitted it other users, Google and other websites, which linked to the video, or internet service providers, which cached it? The answer, after OCILLA, is that each of these entities has “safe harbor” from liability claims, provided it complies with certain provisions:
- it does “not receive a financial benefit directly attributable to the infringing activity”.
- it does not have knowledge of the infringing activities. There is no duty to monitor for infringing activities, but the OSP can be made aware of them by a) notice from a copyright holder, or b) “red flags”. A red flag is a set of circumstances that lead the OSP to become aware of infringment activities; to count as a red flag, the OSP has to be shown to actually be aware of the set of circumstances (a subjective test), and it has to be shown that a reasonable person would draw the conclusion that infringement activities were taking place (an objective test).
- it complies with the so-called notify-and-withdraw provision. Using the example above, Disney notifies YouTube that it is storing and transmitting a copyrighted work, viz. Steamboat Willie. YouTube takes the video down and informs me. I get seven days to assert my right to post Steamboat Willie online. If I claim such a right, Disney has 14 days to sue me, and if it doesn’t, the video goes back up.
This law suffers from many defects from the perspective of copyright holders. I’ll focus here on two:
1. The onus of identifying infringement falls on copyright holders, not OSPs.
2. There is no recourse against infringements on foreign websites.
3. The organizing principle is to start off by giving OSPs immunity from copyright infringment claims, then define the circumstances under which that immunity is forfeit.
Even when the bill was passed, these defects led people to consider the DMCA a loss for content providers. How much more so now! Global internet traffic in 2010 was between 1,000 and 2,500 times as much as in 1998, making the identification of infringement more burdensome, and copyright infringement faster and cheaper. And that growth has been even faster outside the U.S., making limitations on international protection an increasingly large problem. And consider the years in which the following firms were founded: Google, 1998; Napster, 1999; FaceBook, 2003; YouTube, 2005. The internet has changed beyond all comprehension, and from the perspective of the entertainment companies, it is just a huge device for stealing their IP under the protection of the safe harbor provisions.
One case in particular, already discussed on the blog, is a monument to the industry's frustration: Viacom v. YouTube. The first sentence of Viacom’s complaint is “Over the past decade, the emergence of broadband networks, Internet protocol and inexpensive wireless networks has revolutionized the way Americans inform and entertain themselves … But these same innovations have also been misused to fuel an explosion of copyright infringement by exploiting the inexpensive duplication and distribution made possible by digital technology.” A few paragraphs later, Viacom goes on to complain that YouTube puts the burden of identifying copyrighted material squarely on copyright holders. As we know from Andy’s post, the court ruled in YouTube’s favor, and the central point was that YouTube has no knowledge of infringing activities as defined in the DMCA, and so enjoys safe harbor from copyright infringement claims. Some sympathy here for Viacom: Google/YouTube clearly knew there were infringing activities - the only sense in its executives didn't "know" was in the sense defined in the DMCA, which also relieved them of the duty to monitor.
Looking at the history - of the legislation, industry developments, and caselaw - makes it much more reasonable to infer that a major aim of the "dedicated to theft" provisions is to do an end around the safe harbor provisions of the DMCA. One more look at the text of the statute shows how this is done:
1. SOPA's supporters have steadfastly maintained that "dedicated to theft" is not a backdoor change to the safe harbor provisions. It even says so in the second paragarph of the bill: nothing about SOPA changes anything about the safe harbor provisions. This is technically true; the safe harbor provisions do not stop providing safe harbor from claims of copyright infringement if SOPA passes. But they don't provide safe harbor from the claim that a site is "dedicated to theft". That is a new category that does not require the site to be liable for copyright infringement. That's why I think the phrase "end around" is better than "back door" to describe what's going on: this bill isn't trying to change the safe harbor provisions, it's trying to avoid them altogether.
2. Each of the three clauses in the definition of "dedicated to theft" differs in subtle but significant ways from similar language used in precedent cases and legislation. See, for instance, this article for discussion of this topic. It's as if the authors threw a lot of stuff down in the hopes that some of it might stick.
3. Again, the consequences are so severe that if the bill were law, few sites would want to risk litigation. Even if SOPA ultimately failed to achieve this goal in the courts, for at least a while it would achieve partial victory in the negotiating room.
Conclusion
This is admittedly a long post. But to me this issue is really astonishing, maybe because I've never looked so closely at the legislative process before; Bismarck's joke about making sausages comes to mind. I'm under no illusions that the players here are any more wicked than anyone else doing similar stuff, but still what they're doing is just amazing. Thinly veiled collaboration between the industry lobby and the drafting of the law. Relentlessly disingenuous language in the bill itself and the speeches of people promoting it. Almost unmistakeable evidence of attempts to sneak language into the bill that would change profoundly copyright law on the internet without bringing it up for debate. And if this all sounds too much like a conspiracy theory, consider this: Bob Goodlatte (R-VA), one of the four lead sponsors, missed his talking points and said openly that SOPA would change the safe harbor provisions:
"We're open to working with them on language to narrow [the bill's provisions], but I think it is unrealistic to think we're going to continue to rely on the DMCA notice-and-takedown provision," Goodlatte said.
"Anybody who is involved in providing services on the Internet would be expected to do some things. But we are very open to tweaking the language to ensure we don't impose extraordinary burdens on legitimate companies as long as they aren't the primary purveyors" of pirated content, he said.
And that's the punchline. A point blank admission that all the principal agents are just lying, baldly, about their intentions and the purpose of this bill. Pretty astonishing stuff, at least to me.
I think you highlighted the key take away from this legislation. There is asymmetry to which websites will suffer under this bill. Media sites such as YouTube can play ball and allow copyrighted material to pop in and out of existence on the site, while smaller sites will be unable to reach an understanding with content companies and may go offline.
Posted by: Steven Graefe | November 28, 2011 at 05:16 PM