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Summary:

What if the answer to all the political theatre surrounding SOPA was an amendment forcing copyright holders to put their money where there mouths are? Some of SOPA’s terribly harsh penalties for infringement can stay, but making false allegations would cost accusers dearly.

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The biggest web-related legal controversy over the past few months — if not the entire year — has been the Stop Online Piracy Act, or SOPA. The bill’s shortcomings have been covered to death (including by GigaOM here and here), and watered-down versions have emerged to address its more-controversial points, but the bill itself is far from dead.

But what if the answer to all this political theatre was an amendment forcing copyright holders to put their money where there mouths are? Maybe some of SOPA’s terribly harsh penalties for infringement can stay, but making false allegations would cost accusers dearly. Law professor and blogger Eric Goldman thinks that might be a good start, and that the future of the Internet economy might depend on it.

It all starts with the DMCA

Anyone wondering why SOPA engenders such outrage need only look at the effects of its predecessor, the Digital Millenium Copyright Act. As I’ve noted before, the DMCA — including the oft-mentioned safe-harbor provision (aka 512(c)) — is really a boon for copyright holders and a burden for service providers. We were reminded of this recently when the Ninth Circuit Court of Appeals upheld the now-defunct Veoh’s DMCA defense in its lawsuit against recording label UMG Recording.

Goldman, writing about the case on his Technology and Marketing Law Blog earlier this week, gave a damning assessment of the situation:

Make no mistake, web hosts and their investors got a major 512(c) victory in this ruling. …

But also make no mistake: this case reminds us why we need to strike a fair balance between rightsowners and technology providers, or else our system will break down. This case’s real result is that Veoh is legal, but Veoh is dead—killed by rightsowner lawfare that bled it dry. Meanwhile, rightsowners wrongly assessed the legality of Veoh, but the worst consequence they suffered was overpaying their lawyers. … Veoh’s employees? On the street. Veoh’s investors? SOL. Veoh’s community? Kicked to the curb.

However, as originally written, SOPA makes the DMCA look like child’s play. For foreign websites it doesn’t even provide the option of fighting expensive, protracted legal battles before killing their services.

So, make accusers pay

Reining in copyright infringement is a laudable goal, but SOPA simply goes too far, especially when viewed in light of DMCA cases such as UMG. Goldman offers a compromise: keep some of the draconian penalties for infringement, but make copyright holders pay damages when their accusations prove false. Otherwise, there’s little reason for big-media plaintiffs not to overstretch claims if they can afford the attorney’s fees.

His proposed solution:

Make them put up a $1 billion bond for the privilege of sending cutoff notices; and pay liberally out of that bond if the rightsowners get the law or facts wrong. Write checks to the investors and employees whose economic expectations are disrupted when rightsowners get it wrong. Write checks to the payment service providers and ad networks who turn down money from legally legit businesses based solely on rightsowner accusations. Heck, write checks to the users of those legit services who are treated as inconsequential pawns in this chess match. Sure, a $1B bond obligation with liberal payouts would turn cutoff notices into a sport of kings that only the richest rightsowners could afford, but perhaps that’s the way it should be. A rightsowner’s decision to send a cutoff notice should be a Big Deal, the equivalent of going to Defcon 5, and not like sending holiday cards to distant relatives you last saw at Ethan’s bar mitzvah.

Sure, it needs some fine-tuning, but I think Goldman’s solution has legs. I’ve written on numerous occasions about the disconnect between the law and the web, but copyright is one area where the law is still relevant because content is still content. The challenge is figuring out how to police copyright law on a medium as fast-moving, flexible and democratized as the web without sacrificing due process for individuals or small companies that can’t afford legal battles with Hollywood.

If drastic measures such as proactive takedown notices and DNS cutoffs without legal proceedings really are the best solution, it seems only fair that companies have a reason to think twice before seeking them.

Image courtesy of Flickr user Ross Elliott.

  1. From the view of a web host, we see false/incorrect DMCAs on a daily basis, items that the accuser doesn’t have rights to, isn’t actually located where they say it is, or is clearly fair use. While we’re more lenient than most, it still means a lot of perfectly legitimate content is being forced down for at least the 10 day waiting period for a counter claim. In many cases, that 10 days is enough to make the content irrelevant or no longer profitable.

    I agree completely, if a claim can cause significant financial damage to another party, there MUST be some method of preventing such false claims. Maybe they need to put funds in an account to cover losses, or that false claims face large fines, something… I’m not sure what the best method is, but as you point out, that is one of the primary issues with the DMCA and then also one of the issues with SOPA.

    I don’t understand what is wrong with the way the legal system usually functions. Why not submit a notice of infringement, give a set period of time for the other party to respond, it can be a short period of time. If no response is received or certain provisions are not met, then the content can be taken down. Otherwise, they actually need to go to court/trial over it, following proper due process. If they can convince a judge in advance to file an injunction or similar they can do that as well. I don’t understand how people accused of copyright infringement, where there are so many gray areas in fair use, get LESS rights than someone accused of a physical crime, like automobile theft.

  2. I don’t support sopa, but… this is not just for intellectual theft of movies, what about someone just getting something patented, about to make it big, and see’s his product/idea/whatever being ripped off, but cant afford to put up the so called bond. remember, it aint just the big biz folks that this bill will have to address, it might be setup to benfit them the most, but it is also to help the new guy on the block. however I still hate sopa, your solutions just seems to have overlooked a very essential issue.

    1. This sort of hints at the larger issue with the common practice of conflating patent, trademark, and copyright law as ‘intellectual property law’ as if they’re all similar things that make sense to be grouped together and discussed such.

      1. My understanding of SOPA is that it’s all about copyright, unless I’m seriously misreading it. If it applied to patents, it would be devastating because everyone is facing a patent claim of some sort, some for the very design of their services.

        But that’s a great point overall. In my law school, copyright was a class of its own, albeit under the banner of IP II. It’s just so much different than trademark law and patent law, which are entirely different from each other and all serve different purposes.

  3. While this conceptually interesting, I believe a modified version of this should happen under DMCA and forget SOPA altogether. Under DMCA if the rightsholder is either not one or has falsely accused someone of what is in fact ‘fair use’, then there should be automatic monetary recourse by defendant. SOPA is just too extreme in too many ways to focus on fixing it.

    1. I agree, and the Veoh example shows why it’s such a problem. It’s really problematic for private parties to force action via takedown notices, or just to avoid that step altogether and sue a smaller party out of existence. I would rather the process be drastically altered in DMCA and the SOPA bill, but if that can’t/won’t happen, I do like the idea of making it a risk for both sides.

  4. Not good enough.

    To be clear, we can NOT allow anyone to put the keys to the internet in their pocket. Even heavily restricted versions of this great absurdity will be whittled down, mangled and de-clawed over time by that moneyed industry until they get what they want.

    This mess has gone on for far too long. It needs to stop, and then we need to undo the damage they’ve already done.

  5. The proposed parity gain with the $1 billion bond is everything but. It all but ensures that only the richest ‘rights holders’ will be able to afford any action leaving smaller players, like self-published artists and indie publishing companies in the lurch, and it does absolutely nothing to address the imbalance of resources between the largest ‘rights-holders’ and the comparatively small operations they would be accusing. What difference does wrapping up a billion really make to the largest rights holders when their victory is assured against opponents who don’t have the financial legs to stay in the race. While Veoh might be the poster child for a defendant that would have been recompensed by such a provision what happens to all those outfits that were smaller than they were but just as legal that could not afford to even shutter their business, shut off all expenses but the legal ones, and fight it out? Where would justice be for those that simply cannot afford a trial? The reality is that even the DMCA safe-harbor provisions, the token portion of a law otherwise completely loaded in favor of rights-holders, still skew wildly toward rights-holders and against everyone else including the public. What we need is not a redress of SOPA, what we need is a repeal of the DMCA. We’ve already gone to far, why are we even seriously discussing the possibility of swinging even further in that direction with a few caveats as if that’s some kind of equitable compromise? It’s lunacy that SOPA has even brought us to the point were the DMCA is pointed to as being in any way reasonable.

    1. The billion-dollar bond might not fly, but the idea of damages for being wrong might. In that case, all it would take is a lawyer seeing a winnable case and fighting it out for a contingency fee. That’s how class actions work.

      But the ultimate goal is that big media stops inundating small parties with lawsuits and looks for alternative means to address their perceived woes. Maybe that means rethinking content distribution or getting flexible on licensing.

  6. I can’t believe that anyone is even seriously considering this bill – or discussing its mechanics or options.

    Rights holders have had years to come together as an industry and deliver a solution that works for them. Instead, it is cheaper for them to draft legislation where everyone but lawyers can get hurt. Republicans want less government but want this. Democrats want representative laws but support something that’s clearly not representative.

    People seem to ignore or not understand that a new infrastructure is going to be put in place to manage this – the problem is not about lawsuits, or bonds, or finger-pointing. The problem is the creation of mechanisms that limit free speech.

  7. Why are we accommodating this bastard legislation from hell? Throw it in the trash. We need to stage a revolt and fire those cannons.

  8. For the past decades you voted on politicians mostly basing on things you have seen/heard/read in traditional media. They always had some control over these media. Now it has changed and social media became more powerful, they (governments/ politicians) don’t have such power or control over these media. This can lead to unexpected change of power, or other events not wanted by the people ruling our countries. That is why they want to gain that control through SOPA. http://baretech.wordpress.com/2011/12/05/2011-the-year-in-which-the-internet-has-started-to-end/

    But there more to it, these idiots still want to show the world that the world works by their rules, their regulations, it’s nonsense! Todays laws and regulations are to slow in implementing, technology has became to fast. All this copyright & patent issues are just slowing us down. I’m not saying to completely remove them, but we must focus on creating and developing, not patenting and copyrighting.

  9. Prior to the uproar about GoDaddy, i had a few domains with them. After i read what could happen with the SOPA act i transferred my domains. Low price domains is having a special if you transfer, you just need to use the Promo code: SOPA . It’s cheap and customer support was there to help me with the transfer, cheaper prices than the rest as well! Happy to help!

    here’s the website in case you need it!
    lowpricedomains.com/domains/domain-transfer.php

  10. Basically, the American government is trying to control everything, above and beyond its capabilities. No entity will ever be able to control the internet, they can only do their best to suppress it. The internet is a platform for change, and governments are afraid of radical change; real change that will exposes the hypocrisy underlying many policies. It is a fast, free and open platform, and everyone can have an equal say on it.

    I have posted about copyright on my blog, but here to summarize: copyright only ever suppresses innovation and creativity, it gives big companies the power to bully other creative minds. It restricts the poor from the resources available to the rich.

    This is why the government is trying to enforce copyright and censorship.

    If one does not think critically, one will believe whatever politicians and the media tells you. So we must have better education you say? Of course! Go learn something! Wait, most of the stuff which aid my learning have been taken off the internet. Maybe I will just go outside, join a gang and deal drugs.

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