Stop Online Piracy Act: fair play or a stacked deck?

Insights December 22, 2011

Currently under debate in the U.S. House of Representatives, the Stop Online Piracy Act (“SOPA”) would provide the Attorney General and copyright holders with tools to combat copyright infringement and trafficking of counterfeit goods. Whether the bill goes too far, though, is under heavy scrutiny. Opponents to SOPA, including Internet giants such as Google and Facebook, worry that the bill will result in Internet censorship akin to China’s Internet firewall. Others, including the RIAA and MPAA, believe it is necessary to protect U.S. intellectual property.

SOPA’s procedure and relief vary depending on whether the U.S. Attorney General or a copyright holder takes action against websites or operators deemed in violation of the bill. Essentially, SOPA enables copyright holders to cut off sources of funding and traffic for offending sites by preventing completion of payment transactions, and barring advertisements on, as well as advertisements directing traffic to, the allegedly infringing site.

Following is a brief overview of the process when initiated by a copyright holder.

SOPA creates a private right of action for copyright holders
Copyright holders need only have a “good faith belief” that an Internet site, domestic or foreign, is at least partly dedicated to the theft of U.S. property.

A site is deemed as such if it is directed to the U.S., is used by U.S. users, and: the site offers “goods or services in a manner that engages in, enables, or facilitates” copyright infringement, sale of goods bearing counterfeit marks, or circumvention of copyright protection systems; or the operator of the site has taken deliberate steps to “avoid confirming a high probability” that the site is used to “carry out” copyright infringement or circumvention of copyright protection systems; or the operator runs the site with the goal of promoting copyright infringement or circumvention of copyright protection systems.

The copyright holder must send a written notification to payment network providers (e.g. PayPal) and Internet advertising services, who must then take certain actions upon receipt of the notification.

Payment network providers must “expeditiously” take “technically feasible and reasonable measures” designed to prevent its service from “completing payment transactions involving” customers located in the U.S.

Internet advertising services must “expeditiously” take “technically feasible and reasonable measures” which disable placement of ads on the site, ads pointing to the site, and must stop providing or receiving compensation for advertising services in connection with the site.

Additionally, both types of entities must provide notice of the action to the offending site.

The gamut of “feasible” actions is noticeably restricted by the inclusion of “reasonable”. Therefore, simply because a party could implement a costly process to deal with allegedly infringing sites, this does not necessarily mean that such action is reasonable.

Counter notifications
SOPA does provide site owners with the ability to file counter notifications. An effective counter notification bars payment network providers and Internet advertising services from outright disabling their services upon receiving a SOPA notice. Instead, a copyright holder would first have to get approval from a court.

Importantly, if the allegedly infringing site is a foreign Internet site, then the owner must consent to U.S. jurisdiction in its counter notification. Assuming the foreign site is not actually violating SOPA, it would still have to consent to U.S. jurisdiction, thereby exposing itself to potentially crippling costs. In these situations, it may be more cost efficient to simply shut down and start over.

Copyright holder relief
In cases where the defendant issues an effective counter notification, SOPA grants the copyright holder access to temporary restraining orders, preliminary injunctions, and injunctions to cease and desist any further activity as a site dedicated to theft of U.S. property.

Incentive to comply
Entities which comply with SOPA’s mandates, or which voluntarily block access to, or end financial affiliation with, the allegedly infringing site, receive immunity from suit and damages which may arise out of compliance. This may ultimately mean that parties who receive a SOPA notice will immediately take action against the site, regardless of whether the site actually infringes. Acting otherwise risks immunity and subjects the party to liability.

Provision to prevent abuse of SOPA
Although the private action is easily triggered, the bill provides that anyone who knowingly, materially misrepresents whether a site is dedicated to the theft of U.S. property, is liable for damages and costs and attorney’s fees. Those seeking to successfully argue misrepresentation must meet a high burden, especially compared to the ease with which copyright holders may initiate the process. Due to this burden and the cost of litigation, infringing parties are more likely to simply shut down the site and setup another one, while non-infringing parties face the possibility of shutting down altogether.

SOPA’s reach and implications
Copyright holders need protection for their work as well as the tools to ensure their work is not misappropriated. The ease with which copyrighted work can be reproduced and distributed is a valid concern. While SOPA seeks to equip copyright holders with new tools to combat piracy, it is undoubtedly far reaching.

SOPA would allow U.S. copyright holders to sue even foreign Internet sites which may violate SOPA. Thus, if a copyright holder has a good faith belief that a site based in a foreign country is misappropriating a copyrighted work, then the copyright holder can fatally disrupt that site’s operation. Though this may be considered fair play where the site actually infringed on a copyright and reached into the U.S. for illegitimate purposes—what of the sites that do not so infringe? Is it fair play when a site, operating legitimately, is one day alerted that its advertising and payment systems have been disabled due to a foreign copyright holder’s good faith belief that only a portion of the site is infringing?

Although SOPA contains provisions for arguing these cases, not many Internet sites would have the funding to litigate in the U.S. This seems especially unfair where the copyright holder is mistaken and the site is actually non-infringing.

The House is expected to continue debating and amending SOPA early next year.