p2pnet.net News:- The INDUCE Act – S.2560 – continues to draw fire from all sectors of industry, including individuals and institutions one might have supposed would have been in favour of it.

The BSA (Business Software Alliance) whose members include Microsoft, HP, IBM and Intel, said it needs to be, “clarified to ensure that it is properly balanced to curtail harmful practices while avoiding adverse unintended consequences for legitimate technology companies”.

It would, “put a foot on the throat of anyone coming to market with a new device, software product, or home networking system that handles copyrighted content,” said Gary Shapiro, chairman of the Home Recording Rights Coalition (HRRC).

Forty one organizations ranging from the Association of American Universities through the Institute of Electrical and Electronics Engineers (IEEE-USA) and Intel to Google and Yahoo recently signed a joint letter to the Senate Committee on the Judiciary expressing concerns centering on new proposals for the Act.

Now Josh Wattles (right), former acting general counsel of Paramount Pictures, a key architect of the MPAA’s (Motion Picture Association of America) anti-piracy programs in the transition to videocassette distribution, and the former senior executive in charge of Viacom’s music subsidiaries, The Famous Music Publishing Companies, has again written to senators Orrin Hatch and Patric Leahy expressing serious concerns over S.2560 .

Read on >>>>>>>>>>>>>>>>>>>

September 21, 2004

The Honorable Orrin G. Hatch, Chairman, Senate Committee on the Judiciary
The Honorable Patrick J. Leahy, Ranking member, Senate Committee on the Judiciary
224 Dirksen Senate Office Building,
Washington, DC 20510

BY FAX
RE: S.2560

Dear Senators:

I previously submitted comments to your Judiciary Committee staff and to the Copyright Office in connection with your consideration of S.2560, The Inducing Infringement of Copyrights Act of 2004, and write again in that regard.

The new draft of S.2560 sent to you on September 10, 2004 by the Copyright Office is an indirect assault on the Sony-Betamax doctrines as effective as a direct hit.

S.2560 is a sweeping, ground-breaking proposal with very significant consequences should it prove to be mistaken – a judgment which will come, unfortunately, only in hindsight. I urge the Committee to hold additional hearings in order to receive the input, advice and counsel of affected parties and more critically to provide time for sober consideration before advancing such a dramatic change on the fabric of the American intellectual property scheme.

There are additional voices to be heard and existing ones needing time to digest the potential impact of this bill.

Content aggregators, such as the RIAA and MPAA companies and the companies that make technology useful to the distribution of content such as Microsoft, Intel, consumer electronics manufacturers, ISP’s, etc… are fully engaged, right now in the marketplace, shaping together new rules for their businesses accommodating the transformational impact of digital replication, distribution and manipulation. S.2560 is a part of that dialogue.

This bill began as a call for legislative intervention to stop “bad actors” involved in so-called P2P software applications used to assist in millions of allegedly unlawful, and certainly uncompensated, transfers of copyrighted works. Quite obviously, S.2560 has moved on from its original intent into an attempt on the part of content companies to force greater control over a broader group of technologies, mostly as yet undeveloped, that impact public distribution of copyrighted works in digital form.

The purpose of the copyright law in the United States (and admittedly not elsewhere) is to enable two core constituencies – authors and consumers – and not to enable advantages in battles among commercial enterprises.

Commerce protected by copyright laws occurs entirely as a derivative of author’s rights or the consumers’ rights of access to copyrighted works. The Congressional powers for copyright were established in the Constitution to benefit authors and specifically not publishers even though some publishers were Founding Fathers present at the Constitutional Convention.

But, neither authors nor consumers are well represented in this debate over S.2560.

Of course, the well funded and highly capable corporate players claim representation and even protection of these “natural” parties in interests.

The claims are largely opportunistic. Content companies support artists because artists keep their supply chain in working order and technologists support consumers simply to advance the attractiveness of their consumer products. (As shareholders no doubt in some of those companies, we wouldn’t want it to be any other way.)

Nonetheless, authors and consumers need strong, pure voices in this debate if the copyright law, their law, is to be changed. Your Committee needs to reach out and hear those voices and here are just two examples why.

Who will stand up and say to Congress that this technology acts to enable artists to distribute works outside of conventional channels and that their interest in new modalities for distribution and new ways to reach their audience need to be balanced against the acute protectionism demanded by content owners? Certainly ASCAP will not stand for this because half of its membership, the music publishers, can only promote copyright maximalism. At a critical time when artists need a collective voice before Congress, they are not organized, appear only through surrogates and their silence may be dreadfully mis-interpreted. Thus far, the point that the technology endangered by S. 2560 enables self-publishing and ntermediary-free world-wide direct distribution is made only by technologists and only by default.

Who will stand up and say to Congress that consumers want nothing other than maximum access to the greatest quantity of content at the lowest possible price which would serve to expand the availability of knowledge and the appreciation of the human condition? The typical American family budget is directly and increasingly impacted by the cost and availability of communications technologies and entertainment products. You know consumers aren’t in the room because if they were the noise would be deafening. No consumer could possibly support the INDUCE Act as a solution to P2P distribution. Consumers, once well informed, could opt for no other solution than collective licensing.

Remarkably, the proponents of S.2560 don’t even need to argue against collective licensing. They can (and do) ignore it because, it would seem, collective licensing isn’t even before the Committee as an option. The Register of Copyrights made no mention of it whatsoever in her testimony before your Committee even though it has been a tried and true solution in the past.

Of course, collective licensing does nothing good for content aggregators looking for the highest price and is of little help to technology companies now privileged with a free ride. For authors and consumers, however, it is the preferred and obvious outcome.

Congress solved the problem of unlawful cable and satellite retransmission of copyrighted works with collective licensing. Congress solved over 40 years of free uses of music by jukeboxes with collective licensing. Congress solved with compelled, openly available licensing, a pernicious monopoly over piano rolls held by a single dominant company with the collusion of music publishers. That solution, the mechanical license, was adjusted over time, again by Congress, to include modern sound recordings and digital downloads. Webcasting of digital soundrecordings is covered under collective licenses required by law and enacted by Congress.

For cable transmissions, for jukeboxes, for piano rolls, for webcasting, for digital downloads Congress did not cede control over these technologies to content owners as S.2560 would propose to do. Yet in each of these examples the content owners have been able to shape healthy, vibrant markets in which their rights are respected and their works are compensated. Tellingly, in each instance, consumers were also treated with respect and benefited from uninterrupted enjoyment of their access to copyrighted works without being prosecuted by copyright holders. And, in each case authors ultimately obtained a substantial increase in royalties.

S.2560 does the opposite of building on Congress’ successful interventions of the past – many of which came from this Committee. Each successive draft of S.2560 builds upon a broad scale one-sided grant of control to content owners over the design and implementation of digital distribution technologies for the future.

But no artist, no authors and certainly no consumer would ever want such a result. There are no “trickle-down” benefits to authors in permitting large scale aggregators of copyrights to dictate the manner of technology to be used for essential communication and distribution of our culture. It is an axiom that more communication, more channels of distribution give breath and life to more expression. Less – - well, it’s just less and results in a suffering for the world of ideas, an impoverished exchange of culture for all and ultimately will threaten to produce a weaker democracy.

Allowing content owners to dictate and shape technology is a step back into the pre-history of modern copyright when all content was controlled and owned by the Crown and all printing presses were approved by the Crown’s agents or destroyed. Imagine if early U.S. copyright law had given the owners of agricultural texts the power to tell Benjamin Franklin whether or not he could improve upon on the moveable type at his presses in Philadelphia.

The Copyright Office went on record against the Sony-Betamax doctrines before your Committee just a few weeks ago (and in advance of your assignment to that Office to produce a consensus approach) offering a constrained statement of the doctrines more narrow than any interpretation ever applied in the federal courts. Its position is as unfortunate as it is near-sighted with regard to its general responsibility to authors and consumers.

I can assure you as a copyright lawyer that the new draft sent to you by the Copyright Office in effect and if applied eviscerate the Sony-Betamax doctrines as they are now understood and used in practice. The draft is even sufficiently well crafted to permit the bill to include a direct re-affirmation of the Sony-Betamax doctrines while nonetheless rendering them completely irrelevant for the future. It is not a trick or a nuanced trap. It is an open object of the exercise.

Precipitous action against these doctrines can upset a business-driven symbiosis now successfully balancing powerful forces. Accommodations are reached daily in the marketplace between content owners and distribution technologies while each risk billions of dollars a year in development, manufacturing, marketing and sales expenses. It is a symbiosis well built on the compromises found by the Supreme Court 30 years ago in crafting the Sony-Betamax doctrines. This symbiosis earns everyone handsome returns, benefits our society and expands the world-wide cultural influence of the United States.

There is no exaggeration in saying that the principles of the Sony-Betamax doctrines share responsibility for the most productive and explosive period of technological development in the history of the world that produced the most efficient, open and democratic channels of communication and delivery ever made.

Are these channels in need of some control and perhaps some regulation now that the technology has matured and some of its benefits and harms are self-evident?

Of course.

But when, and if, that control is imposed, it should be done directly and openly after deliberate social debate. Not, as with INDUCE, out of mere expediency. Not, as with INDUCE, by granting near veto power over new technologies to a select group of commercially-driven companies controlling copyrights in prosaic works.

Not by overturning 30 years of proven law as applied just to stop some “bad actors” temporarily and anomalously outside the reach of current law. As a legal matter it is relatively simple to draft a bill directed at stopping only P2P applications managed and distributed for profit without providing the slightest compensation to authors. S.2560 could do this but it doesn’t stop at it.

Your staff worked hard on this bill. You obviously look to have results. With great respect, I urge you to apply just a little more process and re-direct your effort to hearing the voices of consumers and authors as well as to the consideration of the alternatives presented to your Committee in past weeks.

Sincerely Yours,
Joshua S. Wattles

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See:-

clarified – INDUCE sparks corporate fears, p2pnet, July 29, 2004

on the throat – Apple sued under INDUCE Act, p2pnet, June 25, 2004

Forty one – INDUCE storm gathers, p2pnet, September 19, 2004

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