Inside the Protect IP Act

Early last month, United States Congress introduced a Bill entitled “Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011”, also known as the “Protect IP Act”.  The stated goal of the legislation is quite simple: to protect the economic interests of American intellectual property owners from theft and piracy online. 

Shortly after the Bill was tabled, Senator Ron Wyden (D-Oregon) exercised his power to put a temporary hold on the Bill.  In his estimation, the Act, as worded would have the undesired effects of limiting free speech and negatively impacting e-commerce. In a press release on the issue Wyden said: 

"At the expense of legitimate commerce, [the bill's] prescription takes an overreaching approach to policing the Internet when a more balanced and targeted approach would be more effective. The collateral damage of this approach is speech, innovation and the very integrity of the Internet."

The senator’s appraisal of the Bill is quite accurate.  As written, the Protect IP Act gives power to the Attorney General as well as private IP rights holders to not only sue owners and operators of American based websites, but to execute what is known as an In Rem action- essentially an action against property without involving the owner- against web sites where the owner is not American or cannot be located.  

Many critics of the Bill including The Electronic Frontier Foundation (EFF) warn that allowing individual IP owners to execute actions In Rem will limit the ability of site owners to defend themselves before a judgement is rendered. EFF points out that this is ostensibly an offence to due process. 

The Bill vests plaintiffs with the powers of restraining orders, preliminary-injunctions and injunctions to enforce their rights against non-domestic domain owners so long as their service is being used by Americans and that the service “harms holders of United States intellectual property rights.”

One of the tools the Protect IP Act would provide rights holders is the ability to prevent what the Bill calls Domain Name System (DNS) servers (such as Internet service providers) from allowing access to infringing web sites.  In other words, access to websites being attacked in a law suit under this law would be restricted at the ISP level. This will obviously put an additional strain on ISP’s; one the government won’t reimburse them for.  

 

EFF also warns that the definition of DNS in the law is too broad and could easily be interpreted to cover things like personal and corporate e-mail clients, routers and even operating systems.  It should be noted that such interpretations, if ever made, would be left to the courts.  That being said, powerful IP rights holders tend to hire pretty good lawyers.

Two other major groups are affected by the legislation: online financial transaction providers (most notably PayPal) and online advertising services.

E-commerce providers would be forced to cease all payments and transfers of funds being made to or by American customers located in the US upon being presented with an order to do so. Online ad companies would be forced to immediately stop doing business with any site listed in the order. The Bill says this must be done “expeditiously”, once again, at the cost of the service provider.

 I share Senator Wyden’s feelings on the Bill in that even though the cause may be noble, the legislation may produce broad and overarching undesirable effects.

First, the targets of this Act are stated as being entities “dedicated to infringing activities”. Though the U.S  Supreme Court has rendered decisions on the subject (See: Sony Corp. of America v. Universal City Studios, Inc.; A&M Records, Inc. v. Napster, Inc.; MGM Studios, Inc. v. Grokster, Ltd.), the introduction of this law would likely cause a flare up in the debate on what is and what isn’t “dedicated to infringing activities”.

Second, the fact that any IP owner can go and get a judgement In Rem against a website so long as they complete “due diligence” in attempting to identify the domain owner is a little farfetched.  If nothing else, it certain disrupts due process and what most legal systems refer to as Audi Alterem Partem, a principal of fundamental justice essentially meaning the right to plead ones case and make arguments against the other party’s assertions. What if the web site owner is out of the country or otherwise indisposed when the plaintiff is supposedly trying his best to locate them? 

Third, it’s my belief that this Bill may ultimately come to cover not only the use infringing material at the front end or service level of the site (eg. Streaming of pirated TV shows or movies) but the coding level as well. 

For example, a company that owns patents or copyrights on a web player or its supporting software that believes their player is being used by a site would be able to avail themselves to the remedies afforded by the Act.  It wouldn’t technically matter if the content being played on the players is infringing if the alleged use of the player on the website infringes someone’s software patent or copyright.

Finally, and perhaps most importantly to the average American, I fear that the additional economic burden sustained by ISP’s and e-commerce providers may ultimately be transferred onto the backs of consumers.  It would be unreasonable to assume that these corporations, in an act of benevolence, would bear these additional costs that do nothing but subtract from their bottom line.

It remains to be seen if Congress will scrap the Bill, re-tool it or carry on with the Bill in its current form.  Though the US (and Canada for that matter) may require new and up to date legislation that addresses the reality of online pirating, one can only hope that the final product will attempt the achievement of its goals with more finesse than the currently tabled version of the Protect IP Act.