Cites & Insights: Crawford at Large
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Selection from Cites & Insights 4, Number 12: October 2004


Copyright Perspective

IICA: Inducing to Infringe

The big legislative issue at the moment is the INDUCE act, which became IICA, which may become something else entirely. Introduced by Senator Orrin Hatch (R-UT), a published songwriter, the act is yet another overreaching effort that could prevent many new technological developments. It’s also one of those cases where what the proponents say doesn’t match the language of the act—and as we know from DMCA, “legislative intent” rarely does much to narrow the reach of a bad law.

I’m going to keep these comments as brief as possible, which isn’t easy—for example, I’d like to toss in more than a thousand words just on Orrin Hatch’s incredible statement introducing IICA.

The Proposal

The first version, INDUCE, rang alarm bells with its name alone: Inducement Devolves into Unlawful Child Exploitation Act. There must be a whole squadron of congressional staffers whose job it is to come up with bizarre acronyms for bad legislation. This one, instead of throwing in the usual “porn” scare tactic, uses “child exploitation”—and we must protect the children. INDUCE would amend copyright law to say that anyone who “induces” copyright infringement is also an infringer—and “induce” was defined to mean “intentionally aids, abets, counsels, or procures.” As Susan Crawford says (in a June 16 post), this language means you wouldn’t even be able to hire a lawyer if you were doing something “risky”—the lawyer would be open to infringement charges. Others pointed out that reviewing software that could be used to infringe could lead to charges under this act. As EFF noted, “A journalist or website publisher might be liable for simply posting information about where infringement tools might be found or how to use them.” Worse yet, Hatch wanted to fast-track the legislation without hearings.

By June 22, the name had changed and so had the language. S.2560 is now IICA, the Inducing Infringement of Copyrights Act of 2004. “Child exploitation” isn’t in the name—and “counsel” isn’t in the language. That language is short enough to quote in its entirety (other than overhead sections):

Section 501 of title 17, United States Code, is amended by adding at the end the following:

“(g) (1) In this subsection, the term ‘intentionally induces’ means intentionally aids, abets, induces, or procures, and intent may be shown by acts from which a reasonable person would find intent to induce infringement based upon all relevant information about such acts then reasonably available to the actor, including whether the activity relies on infringement for its commercial viability.

“(2) Whoever intentionally induces any violation identified in subsection (a) shall be liable as an infringer.

“(3) Nothing in this subsection shall enlarge or diminish the doctrines of vicarious and contributory liability for copyright infringement or require any court to unjustly withhold or impose any secondary liability for copyright infringement.”

Section 501 is the Copyright Act and “violation” is infringement of copyright. Given the placement, this language would open those who “induce” to both civil suits by any copyright holder or intermediary, or criminal suits based on sufficiently large infringements.

Hatch’s Statement of June 22

Hatch wants to keep the focus on children. The second sentence in his statement: “This Act will confirm that creative artists can sue corporations that profit by encouraging children, teenagers and others to commit illegal or criminal acts of copyright infringement.” He goes on to repeat “children” seven times in the brief second paragraph, noting how “illegal and immoral” it is to induce or encourage children to commit crimes and comparing the villains of Oliver Twist and (!) Chitty-Chitty Bang-Bang with “some corporations” who profit by “inducing children to steal” with “false promises of ‘free music.’”

Hatch claims to be after P2P distributors. He claims that half of P2P users are children, that P2P networks routinely violate criminal laws and distribute pornography, that if courts understood “balance” they would find Grokster and the like guilty despite all precedent to the contrary, and that decentralized P2P systems are “inefficient” compared to centralized indexes, used only and deliberately to induce infringement while avoiding liability. (Hatch is apparently a world-class software expert as well as a songwriter. Who knew?)

Hatch notes that Criminal Code rules for secondary liability don’t let you off the hook because of non-criminal uses: So much for the Sony doctrine. “Those who induce others to commit crimes cannot avoid prison by showing that some of them resisted.” Hatch claims that the new bill would “simply import and adapt the Patent Act’s concept of ‘active inducement,’” but observers who understand the Patent Act say this isn’t what it does.

Hatch speaks of nothing but children, pornography, piracy, and P2P networks—but you may note that nothing in the act’s language narrows it to P2P. I will sadly note at this point that Barbara Boxer, who should know better, is a cosponsor. As usual, extreme copyright is a bipartisan effort.

Reactions to Hatch’s Statement and IICA Itself

Public Knowledge issued a press release on June 23 noting that the “reasonable person” standard is lower than the intent standard usually applied to contributory or vicarious infringement and that the bill is overbroad. In the words of Gigi B. Sohn, “Since the line between infringement and lawful use in copyright law depends on the specific situation and facts, someone might ‘aid or abet’ conduct he thought was lawful but that later proves to be infringement.” Mike Godwin claimed the bill would discourage or outlaw future technologies with substantial non-infringing uses: “No one will invest in, or invent new innovative technologies if the mere fact that they can be used unlawfully is enough to make both the investors and the inventors liable.” Later, Public Knowledge posted a brief analysis of IICA, noting that “this response to Grokster sweeps far more broadly than its sponsors recognize or admit” and that the use of “intentional” in the bill’s title is misleading: “The bill expressly allows courts to find ‘intent’ based on what a ‘reasonable person’ would be expected to know, rather than on what the defendant actually knew or should have known.” The analysis concludes:

This bill, if enacted into law, puts technology creators and users on notice that they may face liability even if they neither intended to cause copyright infringement nor had reason to know about actual infringement. It’s also broadly written enough to put those who invest in such technologies on notice that they might face liability too (not to mention losing their investments if the techologies they invest in are declared illegal).

A Wired News story by Joanna Glasner (June 24) notes Hatch’s role in a series of bills “favorable to the music and motion picture industries” and quotes EFF’s Fred von Lohmann: “If this bill were law, I could easily imagine suing Apple the very next day for inducing infringement for selling iPods.” It quotes Gigi Sohn as believing IICA would gut the Sony doctrine—and Will Rodger of the Computer and Communications Industry Association on the vagueness of the standard for inducement: “As we read it, reporters who wrote about peer-to-peer file-trading networks could be charged with inducing infringement. Their definition of inducement seems to cover almost anything.”

Susan Crawford (in a June 25 post, while Hatch was still trying to fast-track IICA) looked at three arguments against IICA and plausible counterarguments, mostly suggesting that “we slow things down, have some hearings, and try to get to the bottom of what’s going on.” To the charge that IICA will cripple the development of new technology she notes RIAA’s argument that it was meant to be narrowly tailored to address companies that build technology focused on illegal file sharing—but, of course, that “narrow tailoring” isn’t in the text of the bill in any way, shape or form. Noting the argument that the bill broadens secondary liability in unpredictable ways, she offers the counterargument that it’s an incremental change. To the “guts Sony” argument she offers the claim that (g)(3) “saves” Sony—but also notes that DMCA states that fair use isn’t affected, although anti-circumvention rules make fair use impossible.

Eliot Van Buskirk offered a July 7 essay at CNET Reviews, “Allow me to induce myself.” He offers a parallel to speeding tickets, noting that although there’s almost nowhere in the U.S. that you can legally drive faster than 75, carmakers don’t install electronic speed enforcers. If you get caught speeding, it’s between you and the highway patrol: “The police can’t automatically collect money from Volvo every time your station wagon hits 71mph.” What if—before you were caught speeding—“the highway patrol preemptively brought lawsuits against every entity responsible for your driving too fast. Volvo, your tire manufacturer, the movie Speed, the ad firm who made the car look fast, and even NASCAR could be sued for ‘inducing’ you to speed.” Ludicrous? Not necessarily, based on IICA’s standard. EFF did draft a mock complaint suing not only Apple for the iPod but Toshiba for manufacturing the iPod’s hard drive and CNET for Van Buskirk’s iPod review, “in which I explain how to use the iPod to transfer music between two computers.” Inducers, one and all! As he notes, Universal sued Sony to kill off VCRs—and, showing its reluctance for lawsuits, the RIAA sued Diamond to shut down the Rio and other MP3 players. He ends with a silly syllogism that concludes Orrin Hatch should be the first person sued if the bill passes.

Lawrence Lessig also discussed some background to IICA (which he still called the Induce Act in a July 7 post); you might find that post and the lengthy comment by Andrew Greenberg worth reading, but I won’t summarize them here, except to say that it was becoming obvious to a number of people that IICA would enable copyright holders to keep suing companies for each work potentially copied using their technology, and that the low standard would almost certainly require a jury trial in each and every case.

On July 15, EFFector issued an action alert noting that IICA was now off the fast track and that a hearing was scheduled for July 22. The alert noted that the RIAA had turned up its rhetoric, with president Mitch Bainwol calling IICA “a moral behavioral test that targets the bad guys” and asserting that critics were missing the point.

Finally, the day before that hearing, Les Vadasz, a retired Intel VP who testified against CBDTPA at an earlier hearing, wrote a Wall Street Journal op-ed about IICA. Noting that “rationality prevailed” in the case of the Hollings bill, which never moved forward, he calls IICA a “bill with similar goals” and quotes President Reagan, “Here we go again.”

Sen. Hatch and others argue that the bill will protect kids from porn and punish those who “intentionally induce” piracy. In reality it will do neither. But it will do serious harm to innovation.

Senate Hearings, July 23, 2004

In a preview to the hearing, Declan McCullagh reported that Marybeth Peters (U.S. Register of Copyrights” would announce her support for IICA and would say that the Sony doctrine “should be replaced by a more flexible rule that is more meaningful in the technological age.” He also noted that 40 trade associations and advocacy groups sent a July 6 letter to senators noting the chilling effect on innovation. Regarding Peters’ comment, Fred von Lohmann noted, “The Copyright Office tends to view copyright law through the narrow lens of what does it mean for copyright owners.”

The written statements from that hearing are available; as is typical for one of the hearings, they’re fascinating—but I’ll leave them for you to read. (The versions I found are a little hard to read, as footnotes are interspersed with body text—and in some cases, formatting errors make reading really tough.)

Very briefly, Hatch talks about the “large, for-profit global piracy rings,” says that P2P users are “mostly kids,” claims the bill was crafted with the help of “leading technology companies,” and seems to say the bill is narrowly tailored to P2P issues. Hatch avers that “I do not intend to allow S. 2560 to be misused against legitimate distributors of copying devices,” and we all know from DMCA what legislative intent is worth. Sen. Patrick Leahy offers a shorter statement, threatening or promising “we will make sure our commitment results in law.” Leahy asserts new technologies mean “our artists lose the rights to their own works.” He says S.2560 precisely penalizes “those who intentionally cause copyright infringement,” a remarkable reading of the bill’s language.

Mitch Bainwol of RIAA proceeds from the RIAA’s usual position: Customers are all thieves. It “defies logic and common sense” that filesharing may increase CD sales: “If one can get something for free, without consequence, buying it becomes less attractive.” Naturally, Bainwol ignores current CD sales figures (which aren’t dropping) and makes a big deal of the fact that the top ten hits sold fewer units in 2003 than in 2000—not considering the possibility that the ten hottest CDs of 2003 were crappier than the ten hottest of 2000. He moans that music industry jobs are down by about one-third (I’ve noted previously that at least one RIAA member proudly noted its sharply reduced job force along with stable sales and increased profits), and “families have suffered.” And, of course, P2P networks are “havens for pornographers.” Here’s an interesting claim: “No objective review of these services can possibly conclude that they have any pretense of legitimacy”—apparently there are no legal uses of P2P! He claims IICA sets “an extremely high standard” and later seems to say that iTunes and competitors aren’t in business: “These new offerings cannot survive in competition with illicit businesses.” Has someone told Apple—and Real, and WalMart, and MusicMatch and now Microsoft—that their downloading services can’t survive?

Andrew Greenberg of IEEE-USA offers a nuanced discussion of copyright and balance. IEEE is concerned about the language of IICA, says there is no silver bullet, and notes the dangers of giving copyright owners control over industries and technology with which they have no particular expertise. Greenberg says the Sony test has worked well. He notes that the Patent Law’s “inducement” clause looks to the conduct of a defendant, requires active inducement, and is far narrower than the IICA clause. He notes that IICA would apply to all copyrighted works and all technologies capable of manipulating, controlling and displaying content. IEEE doesn’t want changes in copyright to inhibit research and novel technologies before their worth can be demonstrated—and wants tests to be “simple, clear, predictable and objective”—adjectives that don’t apply to IICA’s language. He offers a proposed substitute, which may also be worth quoting in full—after the “by adding at the end of Section 501 of title 17”:

(g)(l) Inducement of Infringement. Whoever actively and knowingly induces infringement of a copyrighted work by another with the specific and actual intent to cause the infringing acts shall be liable as an infringer.

(2) Contribution to an Infringement. Whoever knowingly and materially contributes to the infringement of a copyrighted work by another shall be liable as an infringer.

(3) Vicarious Infringement. Whoever has the right and ability to supervise an activity resulting in a direct infringement and has a direct financial interest in such activity and infringement shall be liable as an infringer.

(4) Limitations on Secondary Liability.

(A) manufacture, distribution, marketing, operation, sale, servicing, or other use of embodiments of an otherwise lawful technology by lawful means, with or without the knowledge that an unaffiliated third party will infringe, cannot constitute inducement of infringement under Subsection g(l) in the absence of any additional active steps taken to encourage direct infringement.

(B) manufacture, distribution, marketing, operation, sale, servicing or other use of embodiments of an otherwise lawful technology capable of a substantial noninfringing use cannot constitute contribution to an infringement under Subsection (g)(2) or vicarious infringement under Subsection (g)(3).

(5) Damages for violations of section (g)(l) of this section shall be limited to an injunction against inducement, and actual damages for infringement of a work for which the defendant had specific and actual knowledge the work would be infringed.

Robert Holleyman of the Business Software Alliance was supposed to be a supporter of IICA—but that’s not how his testimony reads. He says the marketplace is the best way to address harm done by illicit P2P networks: “Consumers will embrace appealing legal alternatives that offer a rich and varied array of content.” He’s in favor of DRM, but that’s a different fight. “We know it is not your intent…to put at risk” legitimate computer functions or the makers of products with those functions, but that’s what’s likely from IICA. In the end, Holleyman calls for five areas of change: A clear affirmation of the Sony doctrine; an inducement standard requiring “conscious, recurring, persistent and deliberate acts demonstrated to have caused another person to commit infringement”; explicit statement that knowledge of actual or potential infringement does not demonstrate intent to induce such infringement; no liability for advertising or product support; and mechanisms to deter frivolous or harassing lawsuits.

In the past…bad actors have used the postal system, telephones, automobiles, and other avenues of commerce for their own illicit ends. Now, they are also using computers, software and the Internet. Just as past solutions focused on these bad actors, and did not outlaw overnight delivery, cars, or telephones, today’s solutions must leave intact the important contributions computing technologies make to our daily lives, and allow these technologies to make even greater contributions in the future.

Kevin McGuinness of NetCoalition emphasizes that IICA is too broad; would have severe repercussions on Internet companies, products and services; jeopardize the introduction of new technologies; and would trigger a flood of litigation. He also offers five principles for a “balanced and effective” solution: Using the Sony doctrine as a premise; targeting unlawful uses and behavior, not the technology; providing a “bright line between lawful and unlawful conduct”; incorporating current case law into new concepts; and ensuring that advertising and product reviews could not be considered inducements. McGuinness notes that entertainment industry briefs in the Grokster case called for cost-benefit analysis: If there are substantial infringing uses, a provider must show it would be disproportionately costly to eliminate those uses—regardless of noninfringing uses. That would, he says, “cripple the Internet industry,” and that seems reasonable. There’s more—including a note that the Grokster court found no evidence of direct inducement: advertisements encouraging users to trade copyright works, emails instructing users how to break copyright laws. Thus, while IICA goes far beyond what might be needed to make P2P networks liable, it also appears to fail to make them liable.

Marybeth Peters, Register of Copyrights, calls P2P “the most important issue facing our copyright system today” and says there should be no question that such services should be liable. She calls the Grokster decision an “unnecessarily cramped view of existing secondary liability doctrines” and says, “There is no dispute that the use of these services [Grokster and Streamcast] constitutes copyright infringement.” That’s right: Peters dismisses any non-infringing use of P2P networks. She appears to like IICA as written. She notes KaZaa’s suggestion that users “share large and interesting files” and reads this as encouraging users “to make available popular copyrighted work.” She seems to label Fred von Lohmann as an “attorney for [P2P] services.” And, sure enough, she disses Sony:

If the Sony precedent continues to be an impediment to obtaining effective relief against those who profit by providing the means to engage in mass infringement, it should be replaced by a more flexible rule that is more meaningful in the technological age, but that still vindicates the Court’s goal to balance effective “and not merely symbolic” protection of copyright with the rights of others to engage in substantially unrelated areas of commerce.

Note that wording carefully: Not “noninfringing uses” but “substantially unrelated areas of commerce.” Peters appears willing to sacrifice quite a bit to favor copyright holders; but then, that (apparently) is her job.

Finally, Gary Shapiro of the Consumer Electronics Association (and the Home Recording Rights Coalition) takes the view you’d expect from CEA and HRRC. The test for inducement in IICA is “hopelessly subjective” and would be “potentially ruinous to innovation and investment.” The new cause for action “verges perilously on punishing speech.” It’s hard to read it as anything other than “a frontal attack on the holding of the Supreme Court in the Betamax case”—and statements to the contrary offer no reassurance, particularly given the record. MPAA drove Replay into bankruptcy through copyright litigation over features such as large storage capacity and the ability to organize recordings into coherent collections. MPAA claimed the right to “determine the degree of air time a particular program receives” and asserted that home digital recording would usurp that right. Neither MPAA nor RIAA has ever agreed that Sony Betamax was decided properly. “Citing the MPAA and the RIAA as the guides and protectors of the Betamax doctrine would be akin to appointing Fagin as Oliver Twist’s personal protector. In fact it would be worse: Fagin sought to exploit Oliver, not to kill him.” There’s a lot more here and it’s pretty damning.

Reactions and Don’t Induce

A new INDUCE Act blog (techlawadvisor.com/induce/) includes a July 22 posting that, based on the comments, says the hearing “did not turn out as badly as it could have; in fact it went very well for those opposed to the introduction of the INDUCE Act.” Nearly every witness came out against IICA, and the conclusion was that “everyone needs to go back to the drawing board and redraft the law.”

Seth Finkelstein headed his comments “Copyright is broken and nobody knows how to fix it”—noting that it’s not an especially original insight. Not to get too reflexive, but he notes my latest copyright special and this comment: “I believe in balanced copyright. If that sometimes results in coverage that seems to say ‘a curse on both your houses,’ that’s because sometimes neither extreme makes much sense.” I must have struck a nerve:

I kept thinking about this. Because, copyright abstractly makes no sense. By this, I don’t mean something silly, not property-is-theft. Rather, I mean something deep, that the technological change has completely disrupted the extremely complex set of functional compromises that made copyright work in practice (for example, formerly being almost entirely a restriction on businesses, but now turning into a control on users and technology development).

He follows that with a note that too much of the discussion on IICA “basically boils down to posturing,” and that maybe we should all start by taking a loyalty oath that we believe in copyright. But what does that mean today?

For me, the most chilling moment of the hearing was when Hatch outright said, “Something has to be done here.” The problem is that there may be no equitable solution which both preserves openness and current industry profits. Repeating that these both should be served, doesn’t make it so. We have improvement in the ability to exchange information again colliding with a social regime which says information must be controlled….

Nobody has the answer. Sorry, I sure don’t.

An August 26 Wired News story notes some reactions to the hearings and some things that might happen. It also notes the Don’t Induce Act, one coalition’s alternative wording for IICA. The coalition has its own acronym specialists: The name stands for “Discouraging Online Networked Trafficking Inducement Act of 2004.” It’s a much longer proposal, too long to offer here. Basic elements:

Ø    It focuses on computer programs “specifically designed for individuals to engage in the indiscriminate, mass infringing distribution to the public…”—it’s a narrow remedy.

Ø    Intent requires that the predominant use of the program is mass, indiscriminate infringing; that the commercial viability of the software depends on such infringing; and that the creator of the software has undertaken “conscious, recurring, persistent, and deliberate acts” to encourage mass, indiscriminate infringing redistribution.

Ø    You can’t show infringement merely based on knowledge of the use of a program; you can’t target anyone who’s not a distributor of such a program—such as investors and those providing ads or customer support; navigation, recording, and other similar functions of consumer electronics and technology products and services aren’t infringing; and email doesn’t constitute mass, indiscriminate distribution.

Ø    Remedies are limited to injunctions against intentional commercial activity and actual damages for infringement of which the defendant had specific and actual knowledge.

Ø    Successful defendants in civil suits may recover attorney’s fees and triple monetary sanctions, to discourage baselss lawsuits.

Ø    The Sony (Betamax) precedent is explicitly included.

The Copyright Office Draft

Susan Crawford and Ernest Miller both pointed to (and commented on) a “discussion draft” to replace IICA, issued by the Copyright Office on September 2. It’s a considerably longer bill. “Induces” is defined as “to commit one or more affirmative, overt act that are reasonably expected to cause or persuade another person or persons to commit any infringement…” “Overt acts” may include distributing technology that automatically causes the user to infringe without making a specific decision; actively interfering with copyright holders’ efforts to detect infringing efforts; offering an incentive to infringe; failing to take “reasonably available corrective measures” to prevent ongoing infringement from overt acts; distributing a technology as part of an enterprise that substantially relies on infringing acts of others for its revenues or viability.

“Overt act” specifically doesn’t include distributing a “dissemination technology” capable of substantial noninfringing uses “so long as that technology is not designed to be used for infringing purposes,” distributing technologies that incorporate “reasonably effective measures” to halt infringement; advertising or marketing that doesn’t specifically encourage infringement; providing information on the use of a technology when that information doesn’t encourage infringement; reviews and commentary; providing products or services to a technology distributor. “Dissemination technology” is defined very broadly.

A section says courts “should attempt…to minimize the potential burden” of litigation by allowing summary judgment and awarding fees and costs as appropriate.

Is this better? Is it good enough?

Susan Crawford doesn’t think so: “If anything, it signals a hardening of position… any technology that makes infringement possible…can be reached under the draft, and the Sony/Betamax rule is dead.” I didn’t read it that way, but unlike Ms. Crawford, IANAL. She wonders why the Copyright Office “(clearly not neutral on the subject)” is writing draft legislation.

Ernest Miller thought the bill was better—but not a lot. “Instead of ludicrously overbroad, this proposal is only excessively overbroad.” But as he analyzes the draft, it doesn’t sound much better. As he notes, gun manufacturers probably “reasonably expect” that their products might be used to commit crimes (as might crowbar manufacturers), but they’re not held liable on that basis. His final comment: “Overall, this bill will still be a terrible burden on creativity and innovation. It is improvement in the sense that innovation will be permitted a lingering death instead of immediate execution.”

What’s next? Who knows? With any luck, no action this term—but that’s not assured.

Cites & Insights: Crawford at Large, Volume 4, Number 12, Whole Issue 54, ISSN 1534-0937, is written and produced at least monthly by Walt Crawford, a senior analyst at RLG. Opinions herein do not reflect those of RLG. Comments should be sent to wcc@notes.rlg.org. Cites & Insights: Crawford at Large is copyright © 2004 by Walt Crawford: Some rights reserved.

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