Will ‘PROTECT IP’ Act Stop Piracy or Doom Online Innovation?

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Is the “PROTECT IP” Act—Anti-piracy legislation supported by the Motion Picture Association of America, American Federation of Musicians, Directors Guild of America and Screen Actors Guild, amongst many other bodies within the entertainment industry—good for media but bad for the internet?

A month after the act was passed by the U.S. Senate Judiciary Committee, more than 50 well-known venture capitalists have written a letter claiming that the act will “stifle investment in Internet services, throttle innovation, and hurt American competitiveness.”

(MORE: AT&T, Comcast and Verizon May Start Punishing File Sharers)

The official summary of the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act—PROTECT IP, get it?—explains that it…

“authorizes the Justice Department to file a civil action against the registrant or owner of a domain name that accesses a foreign infringing Internet site, or the foreign-registered domain name itself, and to seek a preliminary order from the court that the site is dedicated to infringing activities… If the court issues an order against the registrant, owner, or domain name, resulting from the DOJ-initiated suit, the Attorney General is authorized to serve that order on specified U.S. based third-parties, including Internet service providers, payment processors, online advertising network providers, and search engines. These third parties would then be required to take appropriate action to either prevent access to the Internet site (in the case of an Internet service provider or search engine), or cease doing business with the Internet site (in the case of a payment processor or advertising network).”

More worryingly, the act also “authorizes a rights holder who is the victim of the infringement to bring an action against the owner, registrant, or Internet site dedicated to infringement, whether domestic or foreign, and to seek a court order against the domain name registrant, owner, or the domain name.”

The letter, from VCs including early investors in Facebook, Twitter and Skype, amongst other well-known companies, says that while the stated goal of the act is appreciated, it is open to abuse due to lack of oversight and due process and “would undermine the delicate balance of the [Digital Millennium Copyright Act] and threaten legitimate innovation” in three particular ways:

1. By requiring “information location tools” — potentially encompassing any “director[ies], index[es], reference[s], pointer[s], or hypertext link[s]” — to remove access to entire domains, the bill puts burdens on countless Internet services.

2. By requiring access to sites to be blocked by Domain Name System providers, it endangers the security and integrity of the Internet.

3. The bill’s private right of action will no doubt be used by many rights-holders in ways that create significant burdens on legitimate online commerce services. The scope of orders and cost of litigation could be significant, even for companies acting in good faith.  Rights-holders have stated their interest in this private right of action because they worry that the Department of Justice will not have enough resources to initiate actions against all of the infringing sites.  Yet, why should costs be shifted to innocent Internet entrepreneurs, most of whom have budgets smaller than the Department of Justice’s?

The letter isn’t the first outcry against the bill; a day after it was passed by the Senate Judiciary Committee, Oregon State Senator Ron Wyden placed a hold on the act, releasing a statement saying that, while he agreed with its goal, he was “not willing to muzzle speech and stifle innovation and economic growth to achieve this objective.”

Additionally, an online petition protesting the act has apparently already been signed by more than 350,000 people.

Where things go from here remains unclear; Wyden’s hold essentially prevents it moving forward, but similar legislation could be introduced to the House nonetheless. Here’s hoping that, if and when it is, it manages to cut down on piracy without cutting down the rest of the internet in the process.

MORE: Senate Committee Votes to Make Illegal Video Streaming a Felony

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