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Stop Online Piracy Act Sparks Debate Between Intellectual Property Rightsholders and Advocates of Open Internet

Tuesday, November 22, 2011

Ashok Chandra | Bloomberg Law A bill recently introduced in the U.S. House of Representatives, the Stop Online Piracy Act ("SOPA"),1 has gained considerable attention from both proponents and detractors. SOPA, introduced by Representative Lamar Smith, is intended to combat online piracy and intellectual property theft. The bill would expand the criminal penalties for copyright infringement and broaden the government's ability to block access to websites that are accused of facilitating infringement. Supporters of the bill, including prominent groups in the film industry, assert that the bill will save jobs in the entertainment industry by preventing the theft of protected works. However, opponents of the bill assert that the bill does not protect user content, is too broad in giving the government discretion over what constitutes an infringing activity, and would essentially promote censorship.

Contents of the Bill

Section 102

Section 102, entitled "Action by Attorney General to Protect U.S. Customers and Prevent U.S. Support of Foreign Infringing Sites," gives the U.S. Attorney General the power to bring an action against a foreign website which would "be subject to seizure in the United States in an action brought by the Attorney General if such a site were a domestic Internet site."2 A "foreign infringing site" may include a site whose domain registration authorities are located outside the United States and which facilitates the commission of criminal copyright or trademark infringement. When a court order, which may include a temporary restraining order or a permanent injunction, is entered against a site, the Attorney General can serve a copy of the order on the website's Internet Service Provider ("ISP"). ISPs must take "technically feasible and reasonable measures designed to prevent access by its subscribers located within the United States to the foreign infringing site (or portion thereof) that is subject to the order."3 Such measures include preventing "the domain name of the foreign infringing site (or portion thereof) from resolving to that domain name's Internet Protocol address."4 ISPs must act within five days after being served with a copy of the order, or within such time as a court may otherwise prescribe. If a court order is served on a search engine, the search engine must prevent the site containing the infringing material from appearing as a link in search results. Payment networks such as Paypal must take measures, within five days of being served, to suspend monetary transactions between the site and U.S. customers. Additionally, Internet advertising services must stop placing ads on the allegedly infringing website and must cease compensation payments to and from the site. To ensure compliance with Section 102, the Attorney General may bring an action for injunctive relief against any party that fails to comply with the requirements or any intermediary that helps to circumvent the orders.

Section 103

Section 103, entitled "Market-Based System to Protect U.S. Customers and Prevent U.S. Funding of Sites Dedicated to Theft of U.S. Property," creates a cut-off system, akin to the Digital Millennium Copyright Act's ("DMCA") notice and takedown procedure, to cut off a website's financial resources. Payment and advertising networks must stop doing business with a site within five days of receiving an allegation that the site is "[d]edicated to the theft of U.S. property."5 According to the bill, a site can be deemed "dedicated to the theft of U.S. property" if the site offers a service in a manner that enables or facilitates infringement, or if its operator takes a deliberate action "to avoid confirming a high probability" of infringing activity on the site.6 If the financial intermediary fails to cease doing business with the site for whatever reason, the rightsholder of the copyrighted work can initiate a lawsuit against the accused site. If a court determines that the site is indeed "dedicated to theft," the court can enjoin the site from operating and order its advertising and payment networks to stop doing business with the site.

Immunity Provisions

Section 104, entitled "Immunity for Taking Voluntary Action Against Sites Dedicated to Theft of U.S. Property," provides that there will be no cause of action and no liability for damages against "a service provider, payment network provider, Internet advertising service, advertiser, Internet search engine, domain name registry or domain name registrar" that blocks access to or ends financial affiliation with an accused website.7 Additionally, Section 105 offers immunity to parties that take voluntary action against sites that endanger the public health. — Amendments to Existing Law The bill further amends pre-existing law by increasing the penalties for streaming video and for selling counterfeit drugs or counterfeit goods. Under the bill, unauthorized streaming of copyrighted content would be a felony.

Debate over Scope of SOPA

Supporters of SOPA, including television and movie studios, assert that the bill is necessary to protect American intellectual property and jobs in the entertainment business. Maria Pallante, the U.S. Registrar of Copyrights, urged passage of the bill in recent testimony before Congress, asserting that the bill's scope is limited because it restricts actions to the Attorney General and does not permit copyright holders to bring actions against websites. 8 The bill would, at least hypothetically, protect the intellectual property rights of artists by cutting off Internet users' ability to download protected material illegally. Proponents argue that illegal distribution of copyrighted movies, software, and music is financially damaging the U.S. economy and forcing layoffs among U.S. media companies. However, in recent weeks, numerous groups have come out against the bill. Yahoo, Google, Facebook, and the Consumer Electronics Association, as well as advocates of an open Internet, argue that the bill's language is too broad and would force them to shut down the domain names of websites that may tangentially have infringing material.9 Telecommunications companies worry that the bill could potentially force them to expend extra resources to monitor Internet traffic that may be related to infringing activities. According to critics, SOPA would force ISPs to implement new methods to prevent access to infringing sites, as well as to inspect Internet traffic. Critics further argue that SOPA would deter the growth of social media and force sites on which users post content, such as Facebook, to act as content police. They contend that SOPA would essentially require social media platforms to monitor user behavior to ensure that members do not post copyrighted material and to block certain types of content from being posted.

Effect on DMCA Safe Harbor Provisions

A major concern that critics of the bill have pointed to is Section 103's effect on the DMCA's safe harbor provisions. Under the DMCA, a website is not required to track and actively police user behavior. If the site does not have actual knowledge of infringement, or is not aware of facts or circumstances from which infringing activity is apparent, the site can qualify for safe harbor protection if certain other conditions are met.10 Only after receiving written notification from a rightsholder must the website take down the infringing material. However, under the language of SOPA, it is arguably unclear as to when a website "facilitates" or "fails to confirm" infringement. As currently drafted, it would appear that a rightsholder can take action against a website even if the site does not have knowledge that it is hosting infringing content. Websites that thrive on user-generated content, such as YouTube, may no longer be able to operate under the proposed bill because they would have to actively monitor the content being posted rather than waiting for a notification. DisclaimerThis document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

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