Fordham Law

Online Infringement Legislation Fuels Furious Debate at New York Conference

Hugh Hansen in Bloomberg BNA, April 27, 2012

Media Source

NEW YORK—If those that support and those that oppose a robust legal framework for dealing with online piracy and counterfeiting are making progress towards a compromise, then evidence of such compromise was not evident during a two-day intellectual property law conference at Fordham Law School April 12-13.

Instead, the two sides dug in deeper, demonstrating why in the United States the House’s Stop Online Piracy Act (H.R. 3261) and the Senate’s Protect IP Act (S.
968) faltered, and suggesting that the Anti-Counterfeiting Trade Agreement may be destined for the same fate.

‘‘We all know deep down inside that ACTA is dead,’’ Bernt Hugenholtz from the University of Amsterdam cheerfully declared during an April 12 panel discussion. Noting that the international agreement is hugely unpopular with an energized and vocal demographic in Europe, Hugenholtz predicted that ACTA would be stalled either by the European Court of Justice, or by any of the 27 EU member states refusing to ratify the agreement.

‘It is good that we are having one last panel on it, but this is not going to happen, because no politician in hisright mind is going to associate himself with this thing that has become totally poisoned,’’ Hugenholtz said. ‘‘Even hard liners are distancing themselves now,’’ he added.

One day later, at a separate panel focusing on the need for enforcement to back up international intellectual property rights, the president of the Hungarian Copyright Council, Miha´ly Ficsor, compared the fervent opponents of ACTA to Nazis. As to the ACTA opponents, Ficsor criticized ‘‘the fear-mongering style, the absence of seriousness, and the lack of honesty of the slogans of the organizers of the hysterical mob.’’ He said, ‘‘If a big misled crowd repeats the same lie [and] enthusiastically supports the same stupidity,’’ then the result can manifest in social
and political dangers.

Though unable to match Ficsor’s Nazi rhetoric, James Love, executive director of Knowledge Ecology International, urged the international stakeholders who drafted ACTA in secrecy, and whose ongoing Trans-Pacific Partnership Agreement negotiations also lack transparency, to ‘‘stop acting like criminals yourself.’’

Love asked these actors to ‘‘begin to act in the kind of open and democratic process that you are claiming to support.’’

Industry Agreements Foster Hope for Compromise.

During the April 12 discussion, which took place at the 20th annual Intellectual Property Law and Policy Conference hosted by the Fordham Intellectual Property Law Institute, NBC Universal Media LLC’s executive vice president and general counsel, Rick Cotton, tried to highlight the positives that came out of the SOPA debate.

Cotton suggested that it was counterproductive to focus on the controversy that the debate stirred up. Rather, Cotton said that it was possible to view the debate as having ushered in two substantive areas of agreement.

"We all know deep down inside that ACTA is dead."

‘‘The first agreement is that there is a major problem, the second agreement is that we need to find a solution,’’ Cotton said.

Cotton said that the ‘‘dustup in Congress’’ actually overshadowed two other positive developments that took place last year that demonstrated that all actors are beginning to come together to work on the problem. Cotton said that one of those positives came in July when it was announced that six major internet service providers had agreed to voluntarily send a particular subscriber up to six ‘‘early alerts’’ notifying that user electronically that there is suspect activity on his or her account, namely possible unauthorized downloading of copyrighted motion pictures, television programs, or music (82 PTCJ 332, 7/15/11).

In another agreement, payment processors agreed to put in place safeguards that would prevent them from doing business with what Cotton described as ‘‘truly
bad actors.’’

‘‘These agreements are indications that one can make significant progress outside of the legislative arena, but they also show that actors are convinced that change needs to take place,’’ Cotton said.

The goal is not to get infringement and piracy down to zero, Cotton said, because such a goal would be untenable. ‘‘But right now it is out of control, and the question is how to get it down to tolerable levels, like the levels we see in retail theft,’’ Cotton said.

In order to do that, Cotton said that all actors in the internet ecosystem need to get together and figure out how to ‘‘sustain the vibrancy of the internet and support the positives, but seriously discourage people from utilizing the internet to access stolen content.’’

Deterrence Through Education or Enforcement?

Panelists generally disagreed over the best ways to address the online infringement problem, with some calling for stiffer penalties, and others advocating an education based approach.

Anders Jessen, the head of the Unit for Public Procurement and Intellectual Property, Directorate General for Trade, European Commission, Brussels, was
one of the advocates for strict enforcement.

‘‘Sometimes in the public debate it is forgotten that the economy is driven by creativity, thus we have very robust rules for IP,’’ Jessen said during the April 13 panel. ‘‘But if you don’t have enforcement, then the rules amount to little.’’

Andrew P. Bridges, an attorney with Fenwick & West, San Francisco, pointed out that rights holders seldom hesitate to avail themselves of the powerful enforcement
remedies that are already at their disposal.

‘‘We have to take into account what level of protection IP already has,’’ Bridges said. ‘‘Does it deserve a bin Laden type commando raid like we saw in the Megaupload case? Does it require trillions of dollars in damages?’’

Indeed, with large statutory penalties on the books, and with no dearth of judicial avenues available to rights holders, some wondered why so much emphasis was being placed on enforcement.

‘‘I don’t believe for one second that enforcement will be the thing that solves the problem,’’ Hugenholtz said.

‘‘I haven’t seen enforcement making even a dent on the internet in the last 20 years. We are spending too much time and money on enforcement and it is not working.’’ The problem, Hugenholtz said, is that an entire generation has ‘‘no moral qualms’’ about online infringement.

‘‘We need to recognize that millions, and maybe even billions of people expect that they can do these things,’’ Hugenholtz said. ‘‘If we take that as a given, then we should go for different kinds of solutions, such as being much more generous on the licensing front in order to allow the kind of things that everyone thinks that they
are entitled to do.’’

On this point, Professor Hugh C. Hansen, director of Fordham’s IP Institute, lamented what he called ‘‘an apparent disconnect between right and wrong’’ when it comes to digital infringement. ‘‘People seem to think that as long as it is intangible, and I can download an album in my own home, then it is OK,’’ Hansen said.
‘‘But people acknowledge that it is wrong if I go out and shoplift that same album from a store.’’

Nokia Corp.’s Global Director of Legal and Intellectual Property Anti-Counterfeiting and Brand Enforcement, Lucy Nichols, agreed. ‘‘The moral compass is very different between industry and consumers, and that needs to be addressed,’’ she said.

Shira Perlmutter, the Patent and Trademark Office’s acting administrator for policy and external affairs, agreed that this disconnect cannot be bridged through
legislation alone.

‘‘We must address this as a societal problem that we all share,’’ Perlmutter said. Extensive education needs to be part of the solution, she said, but that cannot happen so long as the public perceives the issue as only concerning Hollywood and Silicon Valley.

‘‘It is possible to move beyond this, and there are various steps that we could take to make a difference, but what is key is not so much the specifics, but the societal
message that [reining in online infringement] is something that should be done,’’ Perlmutter said.

Autopsy for SOPA, PIPA.

If SOPA and PIPA are truly dead, then a number of panelists were interested in examining just how the legislation fell apart. The answer came very easily to the Authors Guild’s executive director, Paul Aiken.

The insistence of rights holders to include provisions in the bills that would allow the government to force domain name system interdiction doomed the legislation, Aiken said. He said that it should have been clear following the 2010 failure of the Combating Online Infringement and Counterfeits Act (S. 3804) to get out of Congress that DNS blocking would be contentious (80 PTCJ 719, 10/1/10).

More damaging than the political ramifications of the DNS blocking were the moral ramifications, Aiken said, noting that the provision allowed opponents to claim that the legislation would infringe free speech rights.

‘‘We had the rhetorical high ground and we lost it because of the DNS filtering,’’ Aiken said. ‘‘It was clear from COICA that this was a third rail that we could use to galvanize our opposition against us. Its inclusion in SOPA was an unforced error by an over confident industry that failed to grasp what messages sell very quickly and fit within a tweet.’’

Indeed, many internet companies, and in particular the social media platforms, were able to leverage the personal relationships that they have with their users in order to spur action (83 PTCJ 175, 12/9/11). The result was an unprecedented backlash, culminating in thousands of websites going dark during a Jan. 18 ‘‘internet
blackout day’’ (83 PTCJ 360, 1/20/12). The issue became so divisive that tech companies that supported SOPA were ‘‘outed,’’ and found themselves facing boycotts. For instance, the domain registrar Inc., a company that was praised by lawmakers for supporting the rogue website legislation, saw numerous customers, including Wikipedia, transfer their sites away from GoDaddy.

Hansen worried that the success of the boycotts and the protests may be sending a dangerous message.

‘‘With the boycott, isn’t this like a mob tarring and feathering?’’ Hansen asked. ‘‘Have we created an environment where you can achieve your results by starting
an internet mob?’’

‘‘Part of the problem with PIPA and SOPA is that internet companies that wanted to negotiate are much more hemmed in from doing that,’’ Tod Cohen, vice president and deputy general counsel for eBay Inc. said April 12. ‘‘So in GoDaddy’s case, the backlash was so intense that by the time [of the boycott], there was no middle ground anymore from which responsible companies could negotiate from. It has put the internet companies that want to work with [rights holders] in a
much more difficult solution.’’

Did Megaupload Raid Undermine Needs for Legislation?

That difficulty was in fact compounded when the U.S. authorities, in collaboration with local New Zealand agents, conducted a raid of Megaupload Ltd.’s offices Jan. 19 (83 PTCJ 402, 1/27/12). The raid, which coincidedwith the unsealing of a 72-page indictment that included charges of criminal copyright infringement, resulted in four defendants being taken into custody and the seizure of the website and a number of related sites.

The timing of the raid, just one day after both SOPA and PIPA were shelved, begged the question: Why is new legislation needed if rights holders already have
these powerful tools at their disposal?

‘‘If there is ultimately success in the Megaupload case, then what is the point of SOPA?’’ eBay’s Cohen asked.

Nichols concurred. This raid demonstrates that ‘‘SOPA and PIPA aren’t in fact necessary,’’ Nichols said. ‘‘Rights holders need to be very, very careful in pushing for more legislation. We often don’t need more because the reality is that we have good legislation in most of the developed countries. The more we push for it, the more backlash we are going to get,’’ Nichols said.

‘Perfect Storm’ Sank ACTA.

That backlash spread across Europe in February and March as ACTA opponents took to the streets in many countries to protest the agreement (83 PTCJ 749, 3/23/12).

‘‘We had the rhetorical high ground and we lost it because of the DNS filtering.’’

‘‘We were hit by the perfect storm that came out of SOPA,’’ Jessen said, discussing the difficulties that European member states are having getting ACTA approved.

‘‘Internet activists were very much aware of the issue, and they were energized after seeing the dramatic success that they had in Congress where they were able to stall SOPA over an eight-day period.’’

Stanford McCoy, the assistant U.S. trade representative for Intellectual Property and Innovation, said that it was a mistake for opponents of these two approaches to
lump them together. SOPA and PIPA were domestic legislative measures aimed at giving U.S. authorities the tools to disable U.S. access to rogue websites based abroad, McCoy said. Alternatively,

ACTA is an international agreement that in no way expands domestic enforcement authority. Thus, McCoy said that the two approaches used different means to achieve a similar end.

‘‘We need to start doing a better job convincing people that if you don’t like SOPA and PIPA then you better support multilateral agreements like ACTA,’’ McCoy said.

Next Steps: Strive for ‘Reasonable Dialogue.’

Although there was stark disagreement as to the extent of the problem and as to the nature of a fix, as the conference drew to a close on April 13, it appeared that for the most part panelists agreed with Cotton’s basic premise that there is a problem and there needs to be a solution.

‘‘Something clearly needs to be done,’’ Carey R. Ramos from Quinn Emanuel Urquhart & Sullivan said. ‘‘It is time for everyone involved to discuss a way to move forward. Right now that is difficult because the rhetoric has gotten in the way, and it may take a while for passions to settle down,’’ Ramos said.

The relevant panel discussions from Fordham’s conference made it clear that passions have not yet settled down. Ramos, however, remained optimistic. ‘‘With a reasonable dialogue, I think we can find a way forward.’’