August 24, 2004 9:15 AM PDT

Industry offers alternative to P2P bill

By Declan McCullagh
Staff Writer, CNET News

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That measure, called the Induce Act, has been widely panned by the technology industry. Now some groups, including SBC Communications, Verizon Communications and the Consumer Electronics Association (CEA), are fighting back with their own proposal that will be sent to Capitol Hill on Tuesday afternoon.

Their proposal, dubbed the "Don't Induce Act," is designed to provide the Senate with an alternative that's less threatening to the industry. It is far narrower, saying that only someone who distributes a commercial computer program "specifically designed" for widescale piracy on digital networks could be held liable for copyright violations. Hardware like the iPod and other music players would not be targeted.

In an interview, Michael Petricone, a CEA vice president, said Senate Judiciary Chairman Orrin Hatch told the technology industry to "give us something that reflects your concerns."

"We came back and tried to do what Hatch asked us to do," Petricone said. Hatch, a Utah Republican, is the primary Senate proponent of the original Induce Act, which also enjoys support from top Democrats.

The Induce Act was debated at a Judiciary Committee hearing in July, but the panel has not yet voted on it.

Others involved in the drafting of the Don't Induce Act include the American Library Association, the Computer and Communications Industry Association (CCIA), DigitalConsumer.org, the Home Recording Rights Coalition and Public Knowledge, Petricone said.

CCIA President Ed Black said his organization, whose membership includes Covad Communications Group, Nortel Networks and Verizon, does not actually endorse the new proposal, even though the group helped draft it. Black called the Don't Induce Act a "good framework to approach these issues" that could serve as a starting point for negotiation.

The recording and movie industries, which strongly back the Induce Act, were lukewarm in their reception to the new, completely rewritten version of the bill.

Fritz Attaway, vice president for the Motion Picture Association of America, said the Don't Induce Act was so narrowly drafted, it would be impossible to use it to shutter even operators of peer-to-peer networks. "There is no way that anyone could ever meet the burden of proof that this establishes," Attaway said. "It's spin. (They're) not being honest here."

Mitch Glazier, a vice president at the Recording Industry Association of America, also offered some criticism.

"I don't think this, as written, is a reasonable proposal," he said. "I don't think that, as written, anyone could be found liable...But I'm glad that people are trying to draw the line between the good guys and the bad guys."

A court ruling last week gave the entertainment industry additional incentive to push hard this year for legislation designed to pull the plug on file-swapping networks.

The 9th Circuit Court of Appeals in Los Angeles ruled that Grokster and StreamCast Networks were not liable for any copyright infringement committed by people using their products, as long as they had no direct ability to stop the acts. "The Supreme Court has admonished us to leave such matters to Congress," the judges wrote.

The Don't Induce Act also could encounter criticism from some Silicon Valley companies that would prefer the status quo. Many of those companies in the past have said they prefer laws that are technology-neutral rather than ones that single out distributors of certain types of computer programs and make them liable for criminal and civil copyright violations.

"The rush to push something through very quickly (could result in a law) with unintended consequences and collateral damage that harms innovation," said Laura Ipsen, Cisco Systems' vice president for worldwide government affairs. "There's no clear pathway to legislation anytime soon."

The Don't Induce Act describes three requirements that would have to be met before a software distributor could be found liable: The "predominant" use of the program would have to be the mass, indiscriminate infringing redistribution of copyrighted works; the "commercial viability of the computer program" would have to be dependent on revenue derived from piracy; and the software distributor would have to have "undertaken conscious, recurring, persistent and deliberate acts" to encourage copyright infringement.

The proposal would also indemnify venture capital firms, payment services, financial services, Internet service providers, librarians and e-mail utilities. If the measure becomes law, anyone filing a "baseless lawsuit" under the Don't Induce Act could be heavily sanctioned with damages that are triple what would normally be levied.

Because the measure would only apply only to "commercial" activities, the proposal would not target free or open-source P2P clients.

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