A Look At The Testimony Given At Today's SOPA Lovefest Congressional Hearings… With A Surprise From MasterCard
from the they-said-what-now? dept
We already know that today’s SOPA hearings for the House Judiciary Committee are totally stacked in favor of the bill. But with the hearings getting underway, we wanted to dive in and look at what’s about to be said. Most of the testimony leaked out yesterday, allowing us to spend some time going through it — it’s all embedded below. However, here’s a taste of what’s going to be said… with some additional commentary (of course).
First up, the most troubling of all: Maria Pallante, the Register of Copyrights (aka, Head of the US Copyright Office). She should be here to defend the public and to make sure that massive regulatory capture by a couple of stagnant industries doesn’t happen. But, that’s not how the Copyright Office rolls. Instead, her testimony is basically the US Chamber of Commerce’s key talking points (perhaps not a surprise, since the main lobbyist at the US Chamber who’s in charge of shepherding this bill into law only recently worked at the US Copyright Office). If you had hoped for some reasoned argument about pushing back on the massive excesses of SOPA and the broad definitions, you’re not going to get it from Pallante.
It is my view that if Congress does not continue to provide serious responses to online piracy, the U.S. copyright system will ultimately fail. The premise of copyright law is that the author of a creative work owns and can license to others certain exclusive rights ? a premise that has served the nation well since 1790. Congress has repeatedly acted to improve enforcement provisions in copyright law over the years, including in the online environment. SOPA is the next step in ensuring that our law keeps pace with infringers….
The response provided by SOPA is serious and comprehensive. It requires all key members of the online ecosystem, including service providers, search engines, payment processors, and advertising networks, to play a role in protecting copyright interests ? an approach I endorse. Combating online infringement requires focus and commitment. It should be obvious that we cannot have intermediaries working at cross-purposes.
In other words, the successful tech industry should be hindered and shackled because my friends in Hollywood are too clueless to adjust their business models. Really?
SOPA is also measured. It appropriately provides much broader tools and flexibility to the Attorney General than it provides to copyright owners. This is a sound policy choice at this time. The Department of Justice has experience fighting online infringers, will use resources carefully, must exercise prosecutorial discretion in bringing actions, and must plead its case to the court and obtain a court-issued order before proceeding. Put another way, while the copyright industries are extremely important (and certainly a point of pride with respect to the U.S. economy), SOPA recognizes that many sectors rely on, invest in, and contribute to the success of the Internet.
Almost none of that is accurate. It is not measured. It is vague, broad and dangerous. The Justice Department’s “experience” going after infringers has been to take down websites with no notice based on false info from copyright holders… and then to threaten those who seek to appeal with criminal charges. This is not “using resources carefully,” it’s government sponsored censorship.
It is for this reason that SOPA puts only limited tools in the hands of copyright owners, and provides the Attorney General with the sole authority to seek orders against search engines and Internet service providers. This is not to say that we should not continue to assess Internet piracy and the impact of SOPA or whether additional measures or adjustments may be needed. Indeed, SOPA assigns ongoing studies to the Copyright Office and the Intellectual Property Enforcement Coordinator for these very purposes. But I do think SOPA provides the right calibration at this time.
First off, the “limited tools” include the ability to completely cut off funding to any website based solely on accusations. Perhaps I learned a different language from Pallante, but that’s hardly “limited.”
Furthermore, how the hell can she say that this is “the right calibration,” when even she admits this issue has not been studied yet? The bill is completely “shoot first, measure later,” with no details on how it’s effectiveness — or harmfulness — will be measured.
As with any legislation, SOPA deserves and can only benefit from a robust discussion. As the Committee works to further improve and refine the bill, I know it will fully consider a variety of perspectives and suggestions, including from my fellow witnesses. This said, I believe that Congress has a responsibility to protect the exclusive rights of copyright owners, and I urge the Committee to move forward with this in mind.
Yes, a robust discussion that leaves out nearly everyone opposed to the bill, and only allows a single party — one easily dismissed — to speak about concerns on the bill. A robust discussion that leaves out public interest groups, despite Copyright’s entire purpose being for the benefit of the public. This is a shameful bit of testimony from the Head of the Copyright Office, and one that guarantees her a tarnished legacy in her role.
From there, she goes on to defend the US blacklist of sites the Attorney General decides are dedicated to infringement by (1) repeating the US Chamber’s debunked talking points, (2) praising ICE’s highly questionable domain seizures, which are currently being litigated (a fact she conveniently ignores) and (3) quoting (of course) Floyd Abrams, leaving out that he was paid by the MPAA to give that opinion. Even worse, she quotes the really questionable part of his claim:
It also bears repeating that injunctions are not at odds with the First Amendment. As noted First Amendment scholar Floyd Abrams has observed, they are “a longstanding, constitutionally sanctioned way to remedy and prevent copyright violations.”
This is true, but highly misleading. Injunctions are allowed against those infringing. But that’s not what SOPA is about. SOPA is about issuing injunctions on innocent third parties. That’s what we’re concerned about. And for Pallante to ignore that point is really unfortunate.
She then goes on to defend the private right of action to kill off websites based on a single accusation. She claims, laughably, that because the private right of action only leads to injunctions, rather than monetary rewards, there’s little incentive to abuse. Wait. Is Ms. Pallante totally ignorant of the past decade plus of the DMCA? The DMCA takedown process also is basically about blocking content and not about monetary relief, and yet it’s widely abused, with some estimates suggesting that over 30% of DMCA takedowns are questionable. The problem with SOPA (totally ignored again) is that unlike the DMCA — which targets the specific content — SOPA will kill off entire sites.
Even more stunning: rather than suggesting that such abuses may come from copyright holders sending bogus takedowns, she worries instead that payment processors and ad networks may ignore such takedowns — and hints that if anything, the bill may need refinement on that front. Whoa. It’s like an alternative universe where everything is mirrored. Again, we know what happens. We have the less draconian DMCA already and see how widely it’s abused. And we see that those who receive takedowns generally abide by them.
Speaking of the DMCA, she pretends — totally against the text of the actual bill — that nothing in SOPA will impact the DMCA. This is hilarious. Why would anyone use the DMCA to take down a specific piece of content when they can now kill off an entire site using SOPA? Amusingly, she points to the fact that payment providers and ad networks face no monetary liability under SOPA… but ignores that just two paragraphs above, she was hinting that perhaps the law should be changed to include such liability to make sure they comply. This is the ultimate in cynical, obnoxious politics. Put in that one clause that makes you able to pretend something is reasonable (no monetary punishment!) and then be ready to remove that the second the bill is in place.
Finally, she talks about how “pleased” she is that SOPA turns streaming into a felony. Apparently Pallante would prefer people no longer stream videos any more. Has she even used the internet? Amusingly, she cites YouTube as an example of a legal source for streaming… ignoring the fact that under SOPA, YouTube likely wouldn’t have even existed. It’s as if she doesn’t even understand the bill she’s supporting and what it will do to the technology world.
And people wonder why so many Americans think copyright law is a joke? Perhaps they should look at the Copyright boss.
Next, we’ve got MPAA VP Michael O’Leary. His testimony is really worthy of having been written in Hollywood, seeing as it kicks off with a tearjerker of a story about the poor, poor stunt coordinator, “who depends on the residual payments he earns to help support his wife and three children between productions.” Of course, the rest of the world doesn’t get to sit back and get a check for work they did in the past, but actually has to keep working to support their families. Of course, how much do random key grips, stunt coordinators and boom mic operators (the favorites for these multi-millionaires to exploit in this kind of way) really make from residuals? It’s a lot less than these kinds of testimonies suggest.
O’Leary continues to pull at heart strings, by trying to rope all sorts of other businesses into the movie and TV industry including (I’m not joking) the dry cleaners that serve the cast and crew on location. Apparently, without movies, dry cleaners go out of business. Think of the poor dry cleaners!Of course, you could easily counter with thousands of small businesses built on the internet and through technology that will be stifled by SOPA. Ignoring this and pretending that only the movie industry sends money flowing through the economy is ridiculous. Anyone with a bit of common sense should see through the ploy. Unfortunately, this is testimony before Congress.
O'Leary continues to spin yarns. Next up, he suggests that the real reason people use computers, mobile phones or gaming systems is to watch a movie or TV show. This is the way Hollywood has always viewed the internet, by the way. They think it's a broadcast medium, whose main purpose is to supply professionally created content to the masses. That's why SOPA makes sense to them. They don't realize that such uses are pretty far down the chain of reasons why people use the internet. The internet is a communications medium first. But you wouldn't know that to hear O'Leary spin. You see, the internet is really just an "important avenue" for delivering movies and TV shows, and it should be locked down for all other uses, I guess.
Then there's this:
First, it is clear from the language of H.R. 3261 that it is meant to apply only to rogue websites, and not to legitimate platforms. The definitions in the bill are very narrow and rooted in longstanding Supreme Court precedent with which U.S. based sites must already comply.I'm sorry, but he must have a different copy of the bill. The one I read says that you can be declared a rogue website if the primary functions of your site "enable" or "facilitate" infringement. That applies to pretty much every site that allows any sort of user-generated content.
Later, O'Leary (as he's done in the past) mocks the concerns of the very architects of DNS about how SOPA will create massive online security problems -- a view supported by tons of independent review. We heard rumors that the MPAA was adamant with the Judiciary Committee that DNS blocking had to remain in the bill, and made it clear that they would run cover by mocking those who highlight this as being technically incompetent. That's on display here. O'Leary basically says, "if SOPA breaks your little DNSSEC project, well, just fix it."
Opponents point to the DNSSEC code and claim that it is not compatible with the site blocking or filtering technology envisioned by H.R. 3261. This argument conveniently ignores not only the history of the creation of DNSSEC but also the very nature of Internet protocols, which is simply this: when new developments or circumstances require changes to these codes, the codes change. Any software engineer will tell you that no development process stops at version 1.0. Today is no different.This level of total ignorance concerning the technology in question should actually be exhibit A for why DNS shouldn't be touched in this bill. This isn't a "fixable" problem. The requirements of SOPA make DNSSEC impossible. That's the point.
Given his level of ignorance of technology, he then doubles down, by insisting that -- contrary to nearly the entire tech industry's claims -- SOPA wouldn't stifle innovation or investment in tech. His "evidence" is the fact that the tech industry has complained about other expansions of copyright in the past.
Except... what he misses is that the complaints in the past were either accurate (plenty of innovation was stifled due to changes in copyright law -- just look how long it took to get from Napster to Spotify, for example) or those complaints helped shape the parts of those laws that mitigated the problems. For example, many of the complaints that people point to concerning the DMCA were what forced the safe harbors to be added to the DMCA. It's pretty obnoxious to point to the complaints that resulted in softening the impact of the DMCA as evidence that we shouldn't complain at all.
And, really, if we're going to be crying "chicken little," O'Leary really shouldn't be the first to throw stones. As we've detailed, it's his industry (and, quite frequently, his employer specifically) who have a much longer and more hyperbolic history of claiming that the sky is falling -- including in his testimony today, where he cites all sorts of ridiculous and debunked stats about how much trouble piracy is causing his industry... an industry that continues to set records at the box office every single year.
Next up, we've got Pfizer's Chief Security Officer, John Clark. He talks about the threats and problems of counterfeit medicines, something that no one denies is a problem. Oh, and his previous job? Working for ICE, of course. Much of his testimony covers case studies of counterfeit drugs rings that were found and prosecuted under existing law. It's not quite clear why we need SOPA since existing law seems to be working. The main complaint is that existing law doesn't punish people enough -- such as a case where someone received "only" 78 months in jail for counterfeit drugs. Nowhere in his testimony does he actually address what's in SOPA. Seriously. All he does is talk about how they need greater punishment for counterfeit drugs. Um, great. So have someone write a bill that actually does that. Not one that has broad powers to shut down legitimate websites around the globe on a whim.
Then we've got Paul Almeida, from the AFL-CIO. The AFL-CIO's involvement is often used to show how this bill "protects workers." Except there's little evidence to actually support that... and don't expect to hear any such evidence from Almeida either. Almeida makes three key points, all of which are misleading or inaccurate. Let's go through them:
First, strengthening protections for U.S. intellectual property helps American workers, jobs, incomes, and benefits. Theft of intellectual property raises unemployment and cuts income.In the immortal words of the internet: . We've yet to see any credible evidence to support this, and tons of evidence suggesting the exact opposite. Even the very framers of US copyright law made it quite clear that such monopolies should be used rarely and with a light touch, because if they're too strong, they harm American workers, jobs, incomes and benefits.
Second, counterfeit goods endanger workers, both as workers and as consumers.Except, again, the actual evidence suggests that the rates of counterfeiting are massively exaggerated, as is the "harm" of counterfeiting. Yes, there are some cases where there is definite harm. But those are pretty rare. Many cases of counterfeiting involve people knowingly buying fake products, as an aspirational buy -- with studies showing that many later buy the real products when they can afford them. In such cases, there is no harm. That said, we don't deny there are cases where harm does occur. But if that's the problem, let's write a law that focuses narrowly on that harm. SOPA is not that law.
Even more ridiculous? His "support" for this claim is the story of 18,500 counterfeit smoke detectors distributed in Atlanta. It's no coincidence that one of the major supporters of this bill used that very same story in our own comments recently. Which allowed commenter Josh to totally dismantle the story, and show that it had absolutely nothing to do with "rogue sites," but rather a government duped into buying counterfeit detectors. In other words, this has nothing to do with SOPA. At all.
Okay, let's take it up a notch on the ridiculous scale. Almeida apparently reads Techdirt. But rather than recognizing that the counterfeit smoke detector story has nothing to do with rogue websites, he accuses us of defamation, for mocking firefighters for being pro-SOPA. Well, we stand by our point. Firefighters aren't experts on copyright law or on innovation, and their complaint about bogus smoke detectors? It's got absolutely nothing to do with SOPA. But, thanks for quoting us in a Congressional hearing.
Third, freedom of speech is not the same as lawlessness on the Internet. There is no inconsistency between protecting an open Internet and safeguarding intellectual property.Totally misleading (to the point of being intellectually dishonest). No one is defending "lawlessness on the Internet." Believe it or not, there's a range between "lawlessness on the Internet" and "putting up tools that lead to massive collateral damage on legitimate sites and speech." No one is saying that stopping infringement hurts free speech. What we're saying is that the overreach of this law will hinder free speech, either blocking it directly or stopping important services that enable free speech.
Moving on... we've got Linda Kirkpatrick from MasterCard. As noted yesterday, Visa is actually officially against these bills, which makes this one at least somewhat interesting, because the story we'd been hearing was that MasterCard was in favor of them. But Kirkpatrick's testimony is actually kind of surprising. While we expected it to be very pro-SOPA... it turns out that she's very concerned about the massive compliance and liability costs of the bill. Kirkpatrick explains how MasterCard works, and goes to great lengths to say it's against the company's policy to use its cards for any transactions that break the law. And it already has an existing anti-piracy policy, which allows law enforcement and rights holders to bring such infringement using its cards to the company's attention. It then explains its investigation and notification policy. This is all very interesting... and basically makes an anti-SOPA point: given that MasterCard already does this, why does it need SOPA? In fact, it's only real comments on SOPA itself are to note that the five day period to respond to the private right of action is way too short for MasterCard to respond appropriately:
Upon receiving a copy of an order or receiving notice from a rights holder, there are many circumstances that may arise which make a five-day window to complete the required actions not workable for a four-party payment network, such as MasterCard. For example, simply identifying the acquirer for an Internet site may take several days depending upon how long it takes for the alleged infringer to submit payments to its acquirer. The process becomes even more complex if the acquirer does not respond or asks for an extension because of local jurisdiction or other issues. Additionally, providing the merchant an opportunity to respond (in the case of a notice from a rights holder) also requires time. Moreover, confirming that a merchant may no longer accept payment from our brand for an infringing product may also take time. MasterCard is committed to begin this process within five days. However, MasterCard urges the Committee not to set an artificial deadline for the performance of a specific action as it may present impossible compliance challenges in some circumstances.And also that the seven day response to injunctions is too short:
Under the bill, service of a copy of a court order by a rights holder on a payment network provider would trigger an obligation of the payment network provider to file with the court a certification of receipt not later than seven days after service. In MasterCard?s view, this obligation would impose material costs on payment network providers without a commensurate benefit. The process would require additional employee resourcing, the retention of qualified local counsel, and the payment of any applicable court fees. Moreover, the bill provides a rights holder the ability to seek the imposition of monetary sanctions on a payment network provider that does not comply with the court certification process, even though rights holders also have a remedy if a payment network provider does not take the required measures in response to a court order. The certification and sanctions approach is at odds with the cooperative approach that MasterCard and others have taken in their efforts to work together against online intellectual property piracy through the best practices and, in the case of MasterCard, our Anti-Piracy Policy.She's also worried about the liability that can be placed on payment providers. This is especially interesting, because so many SOPA defenders -- including Pallante -- continually hammer on the fact that there's no additional liability for payment processors. However, MasterCard says that's not clear at all:
...it is important that the bill be clarified regarding the liability protection for payment network providers that receive notice from a rights holder of an allegedly infringing Internet site. While the bill contemplates that a rights holder may pursue a court order against such a site if a payment network provider does not complete certain required actions within the five-day window of time, the bill does not provide that the pursuit of such a court order is a rights holder?s sole remedy in that context. It is vitally important to MasterCard that it not face a claim from a rights holder for failing to take action on a rights holder?s notice when the rights holder has an ability to seek a court order against the allegedly infringing site and has the ability to enforce the bill against a payment network provider that has received a copy of the court order and not fulfilled its obligations under the bill related to the court order.It actually goes on in this way for a while. Basically, this is the surprise of the hearing. MasterCard was expected to be pro-SOPA, but instead highlights the massive liability and compliance costs that are likely to come from the bill.
So that's the basics of what will be heard at today's hearings. I'm sure we'll be back later on with more details of the questions and discussions. Unfortunately, with the deck so stacked, it's unlikely we'll learn that much new...