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Intellectual Property: More on S.3804

By 10 December 2010 4 Comments

In my recent article about S.3804, I referred to Technology Liberation Front as an example for my statement that “The hidden factor is that many of those ginning up the outrage [about S.3804] are hostile to intellectual property as an institution.”

CEI’s Ryan Radia calls “foul,” noting that the only TLF post explicitly on the bill is his Five Ways Congress can Fix COICA Copyright Bill, and, far from representing hostility to IP – “These ‘rogue websites’ are a real problem, as the website Fight Online Theft explains, so it’s a good thing that Congress is working to address them,” he wrote — he is concerned with how to protect it effectively, without sacrificing other values.

His point is a fair one. TLF is a group blog, and, while some of its contributors are indeed hostile to IP, usually from a Libertarian perspective, Ryan is not among them. His piece is a serious look at how the bill might be improved. He recommends six steps:

1)      Providing a meaningful opportunity for Internet site operators to challenge before a federal court an Attorney General’s assertion that their site is “dedicated to infringing activities” prior to the suspension of their domain name;

2)      Requiring that the Attorney General, upon commencing an in rem action against a domain name, make a reasonable and good faith effort to promptly notify the site’s actual operator of the action;

3)      Clarifying the definition of an Internet site “dedicated to infringing activities” to ensure that websites with nontrivial lawful uses that facilitate infringing acts by third parties will not face domain name suspension if their operators:

  • Comply with legitimate takedown requests from rightsholders;
  • Do not receive a financial benefit directly attributable to infringing activities;
  • Do not design their site primarily for the purpose of facilitating infringing activities; and
  • Do not induce infringing activities.

4)      Instructing the Department of Justice and federal prosecutors not to request that domain name registrars, registries, or service providers suspend domain names that have not been deemed to be “dedicated to infringing activities,” or otherwise unlawful, by a federal court; and

5)      Requiring the Department of Justice to compensate domain name registrars, registries, and service providers for any reasonable costs they incur in the course of disabling access to infringing domain names.

6)      Eliminating the “Voluntary Actions” clause, which grants blanket immunity from civil liability to any domain name registry, registrar, financial provider, or ad service that “voluntarily” disables a website that it reasonably believes to be dedicated to infringing activities.

I agree with Nos. 2, 3, 4, but I think they are already required by S.3804.

No. 1 raises the standard problem inherent in injunctive relief – that delay causes irreparable harm. So it seems to me that the courts can deal with this issue, with the gradations between a TRO, temporary injunction, and permanent injunction.  One wrinkle – in normal civil litigation the party seeking an injunction can be required to post bond against any harm caused if the injunction is erroneous, a rule that creates an incentive for care. I am not sure how to import such a requirement into government injunctions, but some such mechanism is worth thinking about. One could suggest that content holders be required to post bond, but that creates serious time and collective action problems.

No. 5 would create many problems. I doubt that any system wherein the government pays such costs has ever worked, because it makes the enterprise into a profit center for the claimant (if overhead is included), and expands the definition of reasonableness into the infinite. Protecting property is a necessary expense of the Internet, as is preventing spam and viruses, and it is better to let this one get worked out by negotiation among the interested parties.

[See The Not So Wild, Wild West: Property Rights on the Frontier:

Mention of the American West usually evokes images of rough and tumble cowboys, ranchers, and outlaws. In contrast, "The Not So Wild, Wild West" casts America’s frontier history in a new framework that emphasizes the creation of institutions, both formal and informal, that facilitated cooperation rather than conflict. Rather than describing the frontier as a place where heroes met villains, this book argues that everyday people helped carve out legal institutions that tamed the West.

The authors emphasize that ownership of resources evolves as those resources become more valuable or as establishing property rights becomes less costly. Rules evolving at the local level will be more effective because local people have a greater stake in the outcome. This theory is brought to life in the colorful history of Indians, fur trappers, buffalo hunters, cattle drovers, homesteaders, and miners. The book concludes with a chapter that takes lessons from the American frontier and applies them to our modern "frontiers"—the environment, developing countries, and space exploration.

Maybe the next edition will include the Internet.]

I disagree with Ryan on #6 – in fact, I think this provision is the heart of the law. Realistically, DOJ is busy, and enforcement of IP rights must and should rest primarily with private parties. As long as the enforcers do not have an incentive to over-react – and note that ISPs are not included in this immunity provision, because their close connection with content providers might muddy their disinterest – it is best to let the private actors work out the necessary steps.

Two additional issue are sure to cause trouble, though.

One is that there is no mechanism for error correction. In many areas with which I am familiar – eminent domain; forfeiture – prosecutors or large litigants can use the horrors and expense of the legal process to grind down defendants. Defendants here need some cheap and quick appeal, especially where the voluntary action provision is invoked.

Second, the pirates and counterfeiters are highly sophisticated and well-funded, so they will immediately begin to game the system, skating closer to the line that divides the honest site that engages in occasional infringement, or that has an honest difference over fair use or the extent of rights, from the business-of-piracy/counterfeiting site.  A few decades ago, when the Supreme Court struck down laws against sexual material that had some redeeming social value, porn publishers immediately began hiring professors to write learned introductions on the sociological implications of whatever bit of raunch they were producing that day.  It was good for a laugh, but not successful as a rule of law.

TLF blogger Larry Downes also has a useful entry on Domain Name Seizures and the Limits of Civil Forfeiture, which looks at the topic of forfeiture generally. As I noted in an earlier Digital Society post, “Forfeiture law generally is a snake pit, characterized by insufficient notice, abuse (local law enforcement uses it as a source of supplementary funding), arbitrary action, lack of adequate mechanisms for error correction, and gross disproportion between offense and punishment.” If S.3804 enlists the tech community on the side of reform of this area of the law, that alone will be a good day’s work.

4 Comments »

  • Garrett said:

    George,

    I have to say that I might actually be in support of the bill if Ryan’s recommendations were implemented, with especially #6 being included (or even expanded to place liability on “Voluntary Actions” if found to be errant).

    The reason is simple… IP laws and practices have been used by traditional business actors to spurn innovation and competition among new players in the economy. Without a mirroring mechanism to punish malevolent IP actors then this is a completely one sided bill seeking to only establish easier mechanisms to stifle competition and innovation.

    I agree that piracy is a problem… but there have been far too many victims of laws established to “protect” IP. Make the actors in this game liable for abusing the system… then I will support a bill that enables censorship of the internet.

    We could make it really easy even. Require litigants to post bond of their OWN domain name as a requirement for seeking relief. If they truly believe they are in the right they shouldn’t have any problem waging their own domain for their cause, correct?

  • Garrett said:

    I apologize, I meant to direct that to Mr. James Delong, not George…

  • Tim Lee said:

    Wait, so if forefeiture law is “a snake pit, characterized by insufficient notice, abuse (local law enforcement uses it as a source of supplementary funding), arbitrary action, lack of adequate mechanisms for error correction, and gross disproportion between offense and punishment,” shouldn’t we oppose extending this flawed body of law to the DNS system?

  • Digital Society » Blog Archive » Piracy, Counterfeiting, Web Domains & the Evolution of Property Rights said:

    [...] It has long been obvious that suing copyright infringers and/or counterfeit goods purveyors one-by-one is a losing strategy in the era of Internet time and geographic reach, so efforts to protect intellectual property are increasingly focused on disrupting the infringers/counterfeiters Internet presence. As noted before in this space, the Feds are aggressively pursuing this option (see here), and the proposed S. 3804 would create additional tools (here, here and here). [...]

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