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October 21, 2004

Whatever Happened to the Induce Act?

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The Cato Institute held a panel discussion yesterday featuring key negotiators in the discussions on the currently stalled Induce Act -- two from each "side." These are a few of the people who were infamously locked into a room together after Senator Hatch told them to come up with a workable compromise before the Congressional session ended.

For (dis)Content: David Green, MPAA, and Mitch Glazier, RIAA.

For technology/innovation/Betamax: Markham Erickson, NetCoalition, and Gigi Sohn, Public Knowledge.

Below are few very rough notes on the opening gambits from each; I couldn't stick around for the whole thing. You can listen to audience Q&A, etc., here. Fascinating stuff:

David Green begins by digging deep into an old bag of tricks -- attempting to induce, if you will, "shock and awe" over how anyone can get the lastest Hollywood product in mere "seconds" via P2P. He then segues into a discussion about how, no matter what, "everyone" agrees that bad actors must be taken out (if not by Induce, then something else, and soon), complains bitterly about the Grokster decision, and ends by arguing that Induce isn't a new and radical change to copyright law. No mention of Betamax, even while addressing this last point.

Mitch digs into the same bag, pulls out the chestnut about P2P as conduit to porn. Because you must think of the children. Discusses the various drafts; sounds as though he didn't care which one made it past the goal line. Says it's pretty clear to everyone that there is a bad business model here. These actors are bad and need to be isolated. We don't want to hurt the Yahoos and Googles of the world. But these people do need to be stopped.

Gigi starts with Betamax. Larger principles at stake. If this was just about P2P, she wouldn't be here. She calls Mitch on the porn gambit; says it's cynical and unfortunate that he mentioned porn. [People start to clap; she says, "No clapping."] Everyone here has a PC or another innovation, and it's because the Supreme Court found that the VCR is not an illegal copying tool. Technologies capable of substantial non-infringing uses are okay. This is critical. Led to all kinds of innovation. Critical to this economy. The problem with the Induce act, is that it was so broad that almost anyone would be liable. Cites EFF's "brilliant" mock complaint against Apple. Says under the "reasonable person" standard, of course iPod would fall under that. Says we heard all of this, "We won't go after Apple, we won't go after the iPod." But history shows otherwise. Induce would have punished more than bad actors, and further, more than tech companies. Even CNet was getting nervous. Never mind the promises, "No, no we won't sue you." Again, history shows otherwise.

Says she also hears, "We need to get rid of Grokster." But do we? Argues lawsuits are working. DoJ is helping. HR 4077 may even lower the standard for copyright infringement. Legit services gaining popularity, and album sales are up. Finally, spyware is scaring people away from P2P. People talk about impossibility of "competing with free" -- but you can actually do that.

Stresses again that people shouldn't be fooled that this is about P2P -- it's about who controls the future of technology. The content industry wants this. Or govt. controlling it for them. Broadcast flag -- represents kernel of that debate. Who will control: content or tech?

Gigi closes by reading the end of Grokster opinion out loud -- a lesson for content industry, for everyone. "We live in times when quicksilver changes..." Warns: Be careful what you ask for. Because you may kill the golden goose.

Markham starts by stating that "the entire Internet is a giant copying machine." So everything is a peer-to-peer platform. Legislation must distinguish between architecture and everything else. Betamax is the foundation upon which today's tech industry stands. There's got to be something above and beyond architecture. Betamax is responsible for the great products and services we have. Induce Act undermines Betamax. Proponents said they weren't touching Betamax. But our concern was that you were making cause of action irrelevant. The result is explosive litigation over every new tech that comes down the pike. We had reason to fear. So far, the content industry has sued everything that comes down that pike.

Markham says he disagrees that some in tech companies support Induce. Says they all have substantial concerns. His group worked on creating an alt. draft. Thought: secondary liability is case law, not statute. So put in Sony Betamax-like language. BSA had a thoughtful draft. IEEE did, too. Senator Hatch took all the drafts and told Copyright Office to meld/make it work -- it produced two drafts. Behavior-based and business model approach. Smart approach. But problem is that we needed time to work these things out. Hatch wanted to move this out of committee during the session. Told us to go into a room and work it out.

We tried to do that. Problem -- these discussions quickly devolved into a draft with a technology-specific approach. We had a huge problem with this approach. Who is "good," who is "bad"? This is a losing strategy. Future of the Internet is decentralization. Trying to construct this box will have a tremendous chilling efffect. Look at Internet industry and consumer electronics. The future is portability. Guess what? A lot of that content will be distributed over the Internet. They said, "If you're a good actor, you'll win in court." That doesn't help. Not when you need people to invest.

We need to look at the actions, not the tech itself.

Moderator Adam Thierer says Cato has been largely uninvolved. His own position a tough one -- he's an intellectual schizophrenic over copyright. He struggles. A hard sell on copyright policy. His qs for David and Mitch: What about the Sony precedent? That's a good decision. Made lots of money. Clearly we wouldn't have wanted it to come out another way. Why shoot the middleman at all? Analogy to gun debates. Why not just enforce directly against the infringer?

Qs for the other side -- isn't there any role at all for secondary/contributory liability in copyright law? Aren't some people really inducing? What conduct should be clearly illegal? He says the rule is: don't ban or mandate business models to solve copyright problems. But asks, are there exceptions to the rule?

Later: Coverage from Wired: Toe-to-Toe over Peer-to-Peer.

Comments (2) + TrackBacks (0) | Category: Laws and Regulations


1. Alexander Wehr on October 21, 2004 5:31 PM writes...

"Mitch .... Says it's pretty clear to everyone that there is a bad business model here."

I think this is rather funny and ironic. Talk about shooting yourself in the foot.

Tell me.. did anyone snap back at him about how his represented companies' business models are wrong because they ignore the will of the buying public and change laws in order to force people into the stores at the point of the bayonette?

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2. Mickey on October 21, 2004 6:58 PM writes...

Both Mitch and the first commentator used gun analogies in their arguments, so here is another one: Would a gun manufacturer be liable for INDUCING a criminal act (theft of property) if the guns they make and distribute are used to rob a bank?

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