On November 16, the House Judiciary Committee held a hearing on H.R. 3261, the Stop Online Piracy Act (SOPA), the controversial legislation introduced by Rep. Smith to give the executive branch and IP owners more tools to fight online piracy.
Witnesses who testified represented the U.S. Copyright Office, Pfizer, the Motion Picture Association of America, Mastercard, Google, and the AFL-CIO. All of the witnesses except for Katherine Oyama (Google) supported the legislation, and most of the Members of the Committee seemed to support it as well.
In his opening statement, Rep. Smith said that the DMCA has flaws – it doesn’t work for websites that are foreign owned and operated, it doesn’t protect consumers from misbranded drugs, and it doesn’t assist IP owners, doesn’t address online intermediaries – so further legislation is needed to fight the problem of rogue websites. He commended Mastercard for creating a workable system to cut their payment services to websites that distribute infringing content, and attacked Google for “active promotion of rogue websites” selling illegal pharmaceuticals.
Ranking Minority Member Conyers said he supports the legislation, and he doesn’t believe the criticism that the bill will “kill the internet.” He thinks some of the rhetoric against the bill is over the top (he showed an “Internet Killers” poster). However, he does take seriously the American Civil Liberties Union warnings that the bill would authorize site takedowns that inadvertently involve noninfringing content, thus violating the Constitutional rights of those not engaged in infringement. He concedes that others disagree that this could be a problem, and cited a paper by Floyd Abrams, (which he asked to have put in the record).
Rep. Goodlatte, Chairman of the Subcommittee on Intellectual Property, Competition, and the Internet, stressed the need to keep US innovators incentivized to promote economic growth. The internet ecosystem contains an exploding number of rogue sites that not only distribute infringing materials, but often sell deceiving counterfeit products of poor quality that fool consumers, and this debases the value of the brands. SOPA should help internet service providers and content owners work together. He acknowledged some criticisms are legitimate, and said he wants to work with the tech community to address their concerns. The legislation should absolutely protect legitimate innovators and startups.
Rep. Watt noted that there is a lot of money at stake, and much of the opposition to the bill is about some companies’ bottom lines. While he is not generally an advocate of increasing government seizures, it is important that the Attorney General should have the same powers to go after foreign criminals as local ones. To date, internet companies lack the economic incentives to adequately address piracy. Watts takes strong exception to claims that it would “open the floodgates to government censorship,” but the bill could be improved to protect the rights of legitimate businesses.
U.S. Register of Copyrights Maria Pallante was the first to testify, and she expressed strong support for the bill. She said that Congress has updated the Copyright Act many times to keep up with changes in technology, and it is time to change the law again. She said that if Congress doesn’t act, “the U.S. copyright system will ultimately fail.”
Pallente said that the “follow the money” approach advocated by others won’t always work, because some websites are giving away content for free. She acknowledged that the blocking of websites is no small thing, but she said it is a question of philosophy for Members of Congress – the attorney General is chasing 21st century infringers, and needs modern tools to do it. She also noted that there are procedural safeguards in place.
John Clark from Pfizer talked about how SOPA would expedite the system for cracking down on rogue websites that sell counterfeit medicines. He discussed the health threat posed by counterfeit medicines that may contain no active pharmaceutical ingredients, improper dosages, or toxins. Pfizer currently works with the FDA and other USG entities in their investigations of counterfeiters, and they have blocked the sale of over 138 million units of dosages of fake medicines since 2004.
Today, however, criminals are technologically savvy, and this makes things harder. Many professional looking websites promote illegitimate medicines deceptively marketed as the legitimate branded product. Online customers sometimes can’t tell the difference. SOPA provides an expedited system to take down rogue websites selling dangerous counterfeits. It also makes penalties tougher, which is also essential.
Michael O’Leary from the Motion Picture Association of America discussed the jobs created by the entertainment industry. These jobs include people in unions, and people working for big and small businesses. These jobs depend on strong IP protection. O’Leary said that many of the arguments offered by opponents of SOPA – that it stifles innovation, breaks the internet, and violates free speech – were offered when we debated DMCA, but commerce has thrived under the DMCA and now some of the same actors are warning that SOPA will undermine DMCA. Fears that increasing protection of IP will hinder innovation among startups is misplaced. Increasing IP protection always leads to more innovation.
Linda Kirkpatrick from Mastercard described her company’s efforts to fight online piracy, working with IP Enoforcement Coordinator and other companies to develop a set of best practices for industry. Mastercard supports SOPA, and they want to be sure they are immune from liability for complying with the law.
Katherine Oyama from Google opened by saying that her testimony expresses the views of Google, the Computer and Communications Industry Association, and Tech America.
Google takes piracy and counterfeiting seriously. It spent $60 million fighting piracy last year, and it shut down 150 million adwords accounts. However, they are concerned that SOPA would undermine the legal, commercial and cultural architecture that has driven the online economy. Every major internet company, – Yahoo!, eBay, etc – has expressed serious concerns over the legislation.
SOPA is overbroad, and it undermines DMCA. It sweeps in innocent websites that have violated no law. There is a study of the views of venture capitalists that argues the safe harbors of DMCA are essential.
For example, imagine a small company that runs a website which lets merchants sell clothing. 99% of the merchants using the website to sell their clothing are legitimate, but one uses it to sell counterfeit copies of trademarked clothing. Under SOPA, the whole site could fall under the definition of being “dedicated to theft.” The private company that runs the site would have it taken down, without judicial process, and/or IP owners could attack their ads and payment processors. This could put the company out of business, also harming the merchants that rely on the site to sell their goods. Faced with these risks, the website might not start in the first place.
SOPA would force ISPs to become web censors, a strategy that ultimately will not work. Tech savvy criminals will find ways to sell online. A better approach would be to target the problem at the source – “follow the money” – and focus on payment processors and advertisers that give rogue websites their funding.
Paul Almeida from the ALF-CIO was the last witness. His organization represents workers in numerous industries, and they are ardent defenders of first amendment. The AFL-CIO supports SOPA because strengthening intellectual property helps American jobs, incomes, benefits, and because counterfeits endanger workers and consumers. They find no inconsistency between free speech and the protection of IP, because the first amendment doesn’t protect “stealing goods off trucks.”
After the initial statements had been introduced, Chairman Smith asked Maria Pallente (U.S. Copyright Office) to clarify her comment that the U.S. copyright system would fail if Congress doesn’t take action to address online piracy, and whether or not she believes authorities have the necessary legal tools to address it. Pallente said that the copyright system is based on system of exclusive rights, and if those rights can’t be enforced, then they will become meaningless. Currently, authorities do not have the tools they need, because criminals set up overseas to sell goods online to Americans, placing their activities are outside normal jurisdiction. However, Congress has always updated copyright law as needed, and SOPA will give authorities the tools they need to fight overseas piracy.
Chairman Smith asked Katherine Oyama (Google) if she thought Google should stop providing links to infringing sites. She answered that Google spends many resources fighting piracy, and they routinely remove links bad content when IP owners alert them of it. Smith said that Google has a choice to make, and if it makes the right choice, it will negatively affect their bottom line, but it will be good for American companies and jobs.
Rep. Berman said he has not seen Google’s proposal to address online piracy that Oyama mentioned in her opening statement, and he would be interested in seeing it. He is frustrated by opponents who claim to support SOPA’s goals but take issue with the structure of the bill, and he would like to see the tech community come forward with a workable plan for fighting piracy. He thinks some of the rhetoric used by opponents is over the top. Rep. Berman asked Oyama why Google will not take down entire sites that are clearly dedicated to piracy, citing the Pirate Bay as an example. Oyama answered that the company takes down links to infringing content when notified, but Berman would like to see whole sites taken down if they are clearly rogue.
Oyama also told Berman that Google is working through the NetCoalition, which has sent proposals to the committee, and that they are happy to work with his office on efforts to fight rogue sites. She cautioned that when dealing with speech, it is important to “use a scalpel.”
Rep. Coble asked John Clark (Pfizer) about the involvement of organized crime in the distribution of counterfeit medicines. Clark answered that organized crime’s involvement is growing, though it is not “to the point of cartels” yet.
Rep. Watt told Oyama (Google) he gets the impression that Google does not object strenuously to Section 102, which requires a court order for action, but it more concerned with Section 103, where a private sector system is involved. (Oyama agreed Google’s concerns with Section 103 are the greatest.) If the concerns have to do with a lack of notice to a site owner before action is taken, is there a way we could address this? What about situations where it is difficult to identify the site owner? Would Google oppose blocking a website that is almost entirely full of infringing content, but also contained some legitimate content? Oyama said she thinks one needs to look at an entire site to determine whether it is really dedicated to infringement.
Rep. Goodlatte said that he took part in drafting the DMCA, and he agrees that it still plays a role, but that today the law needs to be updated. The internet has grown, and criminals have become more sophisticated. He thinks SOPA is needed to give authorities new tools to fight piracy, but that it should not harm legitimate businesses. He asked Oyama for the tech community’s top concerns and recommendations.
Oyama said there are concerns about the broad definition of a site that is dedicated to infringement. There are phrases in SOPA like “internet site or a portion thereof,” and words like “facilitate” that are a problem. Under SOPA, a site can be considered dedicated to theft if it has “taken deliberate actions to avoid” knowing whether content is infringing, and no one in the tech community is sure what this means. Firms don’t know how they could build their site to deal with this.
A better way to move forward would be to have a bill that chokes sites off at their revenue source – advertising and payment processing. This way, you can address piracy without the collateral damage of harming speech.
Rep. Goodlatte asked about concerns that SOPA would affect the functioning of the internet. Oyama noted concerns cited by cybersecurity experts (including Stuart Baker) about DNS blocking. The methods proposed are not compatible with DNSSEC, a security effort underway for 10 years to make DNS more secure. Also, there will be efforts to circumvent DNS blocking. Users will be more likely to reroute to offshore networks, which could lead to more spyware, malware, etc.
Rep. Lofgren asked that a large amount of documents from stakeholders opposed to SOPA be put in the record, including letters from Consumers Union, Tech Net, the American Library Association, Human Rights Watch, other human rights groups, the ACLU, a paper from Brookings, the letter from DNS engineers, the Stuart Baker Article, a joint letter from AOL, Facebook, Twitter, Mozilla and others, and a Harvard Business Review paper on the “Great Firewall.” Lofgren disapproves of the fact that many have written off serious objections to the bill. She noted that many stakeholders other than technology concerns have serious concerns to SOPA, and attacking the critics’ motives rather than engaging on substance is a mistake. She also noted that the panel is unbalanced, with five supporters and one opponent, and that it doesn’t include a witness with the technical expertise to explain the DNS problem.
Rep. Logren asked O’Leary (MPAA) if he thinks software should be illegal if it could be used to circumvent TPMs. He said that software should not be illegal, but asked if the hypothetical software had a legitimate use.
Rep. Issa also asked to put more documents in the record, including comments by the Consumer Electronic Association and remarks by Joe Biden. He said he will introduce a rival bill giving the International Trade Commission jurisdiction to order the blocking of foreign sites. He said that his bill would offer a superior due process. He asked Clark if Pfizer has used the ITC to block infringing products, and Clark said they had – and that the ITC operates efficiently and effectively.
Rep. Jackson-Lee asked about the issue of security risks related to DNS blocking, and said she hopes the committee has time to study it. She noted that the bill has no referral to the Homeland Security Committee, which would have made sense given the security concerns. She asked Pallente how circumvention of DNS blocking would affect security. She also asked about the effect of the entire bill on small businesses. Pallente said she did not know the technical details of the DNS issue, but that SOPA would not have a negative effect on small businesses.
Rep. Jackson-Lee asked Oyama to elaborate on her concerns that the legislation is overly broad and inherently incompatible with how the internet works.
Oyama said that the definition of a site dedicated to theft was far too broad, and that this concern has been raised by small businesses. There is much concern that SOPA’s definition would include websites complying with DMCA by taking down content when notified. One particular concern is that the “notice and terminate” provision doesn’t go through a court. Payment and advertising can be shut down within 5 days, without an adequate due process. DNS blocking would be ineffective because it is easy for traffic to get around the blocks.
Rep. Ross noted that Google has blocked child pornography from its search results, and asked why it could not do the same with infringing content. Oyama answered that computers can screen content for pornography (for instance, by identifying fleshtones), but it cannot automatically tell if content violates copyright – this requires collaboration with rightholders.
Rep. Waters noted that many upcoming artists use sites like YouTube and Vimeo to showcase their work, but that these sites also contain content that infringes copyright. She asked Pallente if SOPA should contain something to protect legitimate uses of sites for user generated content. Pallente said that the bill, as written will only go after commercial sites, so this is a nonissue.
Rep. Waters alsosaid she is concerned about the voluntary authority and legal immunity for ISPs that block websites as long as they have a ‘reasonable belief’ that they are hosting infringing content.
Rep. King asked O’Leary (MPAA) if the industry had a list of countries that are the worst violators of IP, and a list of countries that are setting a good example. O’leary said that the content industry identifies lists of bad-actor countries through various government processes including the Special 301 and the Notorious Markets list. On the other hand, there are at least 16 countries in the world that engage in website blocking, and the internet still functions in those countries. For instance, some European countries block Pirate Bay.
Rep. King asked O’Leary and Pallente for a dollar amount of loss faced by the content industries due to piracy in particular countries, esp. China. The panelists said that hard numbers are difficult to estimate.
Rep. Cohen asked the O’Leary and Oyama if the MPAA and Google have worked together to try to iron out their differences. O’Leary said the MPAA works with Google on a regular basis to alert if of infringing content, but there have been no discussions over SOPA. If Google wants to come forward with constructive ideas, MPAA wants to work with them. Oyama agreed that the two work together often, though not on this legislation. She said that the most effective way to counter piracy is to increase the amount of legitimate services on the internet.
Rep. Cohen asked Oyama how China and Russia would respond to American companies if we blocked their sites and searches. Oyama said that it would be wise to expect some sort of retaliation. She also noted that the content wouldn’t really be “taken down.” It would still exist online and people could find it. You can’t really take down a page by removing the link from U.S. search engine results.
Rep. Quayle asked Oyama if she thinks piracy makes it more difficult for creators and small businesses to create new content and services, which are then distributed via new models. Oyama said that there are numerous models being experimented with – some license, some stream, some sell downloads, etc. – but most people want control over their content. Quayle suggested that if we do not crack down on illegal free distribution of content, then these business models are undermined. Content owners could be forced into advertising-based distribution.
Rep. Quigley asked if SOPA included immunity for search engines and ISPs that block websites to comply with the bill. He’d heard that there is an immunity provision in the Senate bill, but not the House version. Oyama confirmed this, and said it is critical. Businesses today rely on the DMCA Safe Harbors, and there are no monitoring obligations. If SOPA requires intermediaries to do new things to fight piracy, they should receive immunity for actions undertaken to comply with the new law. Businesses do not want to be stripped of safe harbors, and they do not want to be put in a position where they need to monitor users. O’Leary objected to the assertion that SOPA undermines the DMCA, and said that the bill is actually good for legitimate companies going after illegitimate ones. Oyama said that one sentence clarifying this in the legislation would be “very helpful.” Pallente said that compliance with the DMCA does not mean that an intermediary company shouldn’t go after rogue sites run by criminals.
Rep. Quigley asked Almeida (AFL-CIO) if he thought SOPA would stifle innovation and job growth, and Almeida said no.
Rep. Poe asked Oyama what google could do to keep infringing sites from coming up in their search results, and what they would support in the bill. Oyama said they do take down infringing content, and they have made a public commitment to increase the speed in which they act on takedown requests. She says they would support legislation other than SOPA that gives the Department of Justice authority to go after the payment processors and advertisers for the illegal sites, but they cannot support SOPA in its current form. O’Leary said that he agreed with the “follow the money” strategy, but that Congress should follow everyone’s money – including that of search engines.
Rep. Gohmert said no one wants thieves abusing the internet, but it can’t be the search engine’s job to know everything that is online. Even pawn shops are not liable for stolen goods. The “follow the money” strategy has a problem when the money goes overseas – because the US government is not getting help from foreign governments.
Regarding cutting off service to a site, Gohmert said he does not see a problem in a situation where someone goes to court and proves that someone else is committing the crime of theft, and then the website is taken down. Oyama said Google agrees that it is important to have due process in this. Oyama suggested there are three things to do to fight piracy:
- Work under the existing DMCA framework to get rid of infringing content. Google is getting faster at this.
- Build on that to get legislation that imposes new obligations on payment processors and advertisers.
- Make sure the dangerous parts of SOPA are removed from the bill.
Rep. Johnson noted that there has been confusion over the meaning of “willful” infringement in SOPA. Is this the same as “intentional?” Pallente agreed that this could be clarified in the bill. Johnson also had concerns over censorship. He asked how the bill will be viewed by countries like China and Iran, and how the bill would affect U.S. diplomacy. Oyama agreed that if the U.S. passes a law requiring the blocking of full websites, then we are headed down the road toward greater censorship. Rep. Johnson asked a general question about the affect of SOPA on small businesses, and Oyama said it startups and small businesses would need to dedicate resources to complying with the law.
Rep Lungren asked about SOPA’s affect on DNS Secure – which engineers have warned could be greatly harmed by SOPA. O’Leary said that the concerns are overstated. He noted that other countries take down websites, and they are able to do it without harming the overall structure of the internet. Pallente pointed out that the Department of Homeland Security is already engaged in DNS blocking through Operation In Our Sites. The Congressman asked MPAA, Mastercard, and Google to have their experts submit comments in writing to the committee regarding how DNSSEC could be affected by SOPA.