What is SOPA/PIPA? An Analysis of SOPA and its Influence on the Internet, Business and Consumer Engagement

Table of Contents

Introduction………………………………………………………………………….3

International Approach…………………………………………...…………….8 MegaUpload Case Study…………………………………………...……………

Pros: SOPA…………………………………………...……………………………… Cons: SOPA…………………………………………...……………………………… Ethical Considerations……………………………………………...……………

Conclusion…………………………………………...……………………………….

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Introduction The mid 1990s were the genesis of the Internet as know and use it today. It’s immersion into every day culture and commerce, revolutionized the way we communicate and acquire information. Today, the Internet is a worldwide platform in which discussion forums, blogs and social networks dictate much of the culture of today’s society. The communication infrastructure of the Internet is one of the fastest growing in history. It’s big boom came in the late 1990s when it is estimated that traffic grew by “100 percent per year, while the mean annual growth in the number of Internet users was thought to be between 20% and 50%.”1 Experts agree that this extraordinary growth is mainly attributed to the lack of a watchdog in a virtually free space that lives in an intangible world, as is the case with the set of communication protocols that we call the Internet. The deficiency of a central administration allows the network to grow free and organically. In addition, the non­propriety open nature on which the internet operates, encourages interdependency between vendors, or websites, and in essence, prevents any one company from controlling too much of the Internet.2 This lack of oversight and rapid Internet growth became the perfect storm for encouraging intellectual property to run wild in a space with no supervision or accountability. Intellectual property (IP) refers to a number of distinct creations of the mind for which exclusive rights are acknowledged under law. In intellectual property, owners are granted exclusive rights to intangible assets such as music, movies, books, artistic creations, etc.3 However, the Internet has added pressure to traditional intellectual property such as copyright and patent and has essentially destroyed the first model on which the concept was born. With the introduction of the Internet, intellectual property exists in the intangible world of cyberspace where it is up for grabs for anyone who has the mere access to an Internet connection. On October 26, 2011, House Judiciary Committee Chair and Texas Republican, Lamar Smith, along with 12 co­sponsors, introduced the Stop Online Piracy Act (SOPA) and its counterpart in the senate Protect IP Act (PIPA), mostly in part to protect the fundamentals of intellectual property and essentially wipe out foreign sites that exist

1 Coffman, K. G; Odlyzko, A. M. (1998‐10‐02) (PDF). The size and growth rate of the 2 "Internet Game Timeline: 1963 ‐ 2004", (2011‐06‐02) Dave Spohn, About.com, 2

Internet. AT&T Labs. Retrieved 2012‐03‐06

Retrieved 2012‐03‐06 3 Intellectual Property Licensing: Forms and Analysis, by Richard Raysman, Edward A. Pisacreta and Kenneth A. Adler. Law Journal Press, 1998‐2008. Retrieved 2012‐02‐ 06 2

online and illegally reproduce and distribute copyright material.4 The right to protect intellectual property is undisputed and integral to any business model, specifically for those who argue in favor of SOPA. For example, a recording artist uses the Internet to network and market his/her work. In turn, an overseas piracy website begins to distribute a free download of the artist’s album in its entirety. The artist’s ability to profit from the production of the album is immediately compromised by the website who is reproducing and distributing copyright material at their own will. The bottom line of the business is severely bruised as will be discussed further in this paper when we introduce an extensive section with focus on the pros and cons of the bill. Another example, whose effects trickle down the ladder, is with the piracy of movies. If for example, a website in Portugal is distributing copies of the latest Academy‐Award winning movie “The Artist”, the studio can have Google shut down that site and have all of the site’s ads removed, causing a financial wound to providers like Google who receive ad revenue from some of these company. Of most controversy however, is the fact that the sites ISP (internet service provider) could prevent Internet users from ever getting to the site again. What is considered by many to be the most treacherous component of SOPA is that “intellectual property owners take these actions [of removing ISP’s to certain websites] without the need of a court appearance or judicial sign‐off. All it requires is a single letter claiming a ‘good faith belief’ that the target site has infringed on its content.”5 Given this example, one can see why SOPA’s biggest supporters are organizations like the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA) and of its more adamant opponents are search engine websites like Google and Yahoo!. In its traditional model, intellectual property is built from the notion that a sole author crafts the creation. However, a non‐traditional platform, such as the Internet, compromises this model. On the contrary, the Internet has been a revolutionary medium that brakes away from traditional formats of communication. “One place where this habit of thought conflicts with reality is the World Wide Web. The Web has often been called a community. It provides a fine opportunity for individual creators to publish their works, but it also includes many opportunities for interactive communication and so constitutes a good environment for sequential improvement.”6 For example, the Online Guitar Archive (OLGA) was started in 1992 and was an archive of approximately 28,000 user‐submitted tablatures (music notation explaining how to play a song), guitar lessons and similar educational tools 4 What is SOPA? (2011‐01‐17) Brian Barrett, Gizmodo.com, Retrieved 2012‐03‐07

http://gizmodo.com/5877000/what‐is‐sopa 5 What is SOPA? (2011‐01‐17) Brian Barrett, Gizmodo.com, Retrieved 2012‐03‐07 http://gizmodo.com/5877000/what‐is‐sopa 6 Intellectual Property on the Internet: What's Wrong with Conventional Wisdom? 6by James Bessen and Eric Maskin ,2004 3

for guitar enthusiasts. These tablatures were worked out by individual guitarists who interpreted the music (guitar players have different fingerings for the same song) and as such added unique value to the music and the way it played instrumentally. The significance of this altered intellectual property is that the tablatures are a complement to the original recordings, not necessarily a substitute. In this particular case, the distribution of guitar tablatures over the Internet constitutes a violation of traditional intellectual property rights. In 1996, just a few years after OLGA was started, EMI, a powerful record company, threatened to take legal action against OLGA if it didn’t shut down its services completely. At the time, OLGA was receiving about 200,000 weekly downloads. As a result, guitarists began to boycott EMI.7 Within the traditional concept of intellectual property, one can understand why EMI was upset about distribution of tablatures that would in essence let anyone play songs that belonged to their private catalogue. However, when taken into account in the world of the Internet, where on a daily basis users add unique value to the composition of songs, EMI seems to be restricting creative freedom. A more accepting, and brand savvy, course of action would have been for EMI to sponsor and host OLGA. It could have taken to the innovate nature of the Internet and hosted links between guitar tabs of EMI recording artists and information about their records, other artists, sound clips, latest news and information, etc. It seems like these same user‐friendly incentives are already an integral part of the online business model that companies invest in. Why not set it up as part of an infrastructure that already exists and has active users who provide high traffic to the site? “Imitation can increase the overall incentives to create in a dynamic environment. Most creative activity, in fact, tends to be partly imitation. Strong intellectual property rights can decrease the incentives to create by reducing licensing and other sharing of information.”8 In addition, although SOPA aims to target only foreign sites from entering U.S. domains, some of its clauses require compliance and even liability on third party U.S. sites such as YouTube, Facebook or even Craigslist that enable the spread of information, ideas and speech. Opposition for the bill in its current form has been broad and has experienced rapid growth. On January 18, 2012, a number of websites, including leading players such as Google, Mozilla and the English Wikipedia joined forces for a blackout that was conducted to raise awareness of SOPA. It is also estimated that approximately 115,000 other, smaller websites rallied in protest

7 Intellectual Property on the Internet: What's Wrong with Conventional Wisdom? 7by James Bessen and Eric Maskin ,2004 8by James Bessen and Eric Maskin ,2004 8 Intellectual Property on the Internet: What's Wrong with Conventional Wisdom?

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through a service blackout as well. In addition, physical demonstrations took place in major cities such as New York City, San Francisco and Seattle. 9 Shortly thereafter, the Obama administration issued a statement saying that it “will not support” any bill “that reduces freedom of expression, increases cyber security risk, or undermines the dynamic, innovative global Internet."10 In fact, it can be noted that the current administration, in more ways than one, advocates the freedom of information and content that exists on the Internet. In 2009, the U.S. government ended an 11‐year contract with the non‐profit organization, Internet Corporations for Assigned Names and Numbers (ICANN) which essentially helps maintain the stability of the Internet by providing oversight and encouraging the broad representation of the global community that exists on the Internet. The decision for the U.S. government to part ways with ICANN came mostly from strong opposition that noted that as the Internet became an essential tool to world economies and governments, no one country (in this case the U.S.) should have control over such keystone aspects of the Internet.11 Although the move was only three years ago, many argued that this separation reflected the true globalization of the Internet and encouraged other countries to take an active role in the monitoring of what happens in the realm of cyberspace. With this move the U.S. shared that it understood the vigilante role was not a burden that was to fall solely on them, or anyone for that matter. Simultaneously, it stated that it respected the integrity of a global platform in which ideas are shared through the freedom of communication, which many would argue is the exact thing that SOPA is trying to revoke. It is important to note that there has been significant restructuring since the Internet’s inception to try and right the wrongs of copyright infringement that were so rampant at the start of the World Wide Web. Specifically, is the case of Napster, a pioneering peer‐to‐peer file sharing Internet service that allowed audio files to be shared; it’s existence and consequential legal battle set precedence for much of the online intellectual property protection cases. Napster was the founding version of what can be compared to a modern‐day iTunes. However, it was a library free of charge that revolutionized music sharing online. At its height, many would argue, Napster had more promotional power than the record industry. As an example, the popular rock band Radiohead, whose music prior to being on Napster had never experienced a number one hit in the U.S., reached widespread popularity with the help of Napster. Radiohead’s Kid A, an experimental album with no singles, was released in the U.S. after it had been downloaded millions of times on Napster for 9 SOPA, Wikipedia.com, Retrieved 2012‐03‐11, 10 What is SOPA? (2011‐01‐17) Brian Barrett, Gizmodo.com, Retrieved 2012‐03‐07

http://en.wikipedia.org/wiki/Stop_Online_Piracy_Act

Retrieved 2012‐03‐08 5

11 U.S. Eases Grip Over Web Body (2009‐10‐02) Christopher Rhoads, WSJ.com,

free. Then in October 2000, on it’s official album release date, Kid A reigned as the number one selling album on the Billboard 200 sales chart in its debut week. Napster was accredited as being a driving phenomenon with the unprecedented power to drive album sales.12 But then things went very sour for Napster. Napster faced several legal challenges by world­renown artists such as heavy metal band Metallica and A & M Records, who along with other recording companies, joined forces through the Recording Industry Association of to sue Napster for contributory and vicarious copyright infringement under the US Digital Millennium Copyright Act (DMCA).13 “The DMCA is a United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization (WIPO). It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures (commonly known as digital rights management or DRM) that control access to copyrighted works.”14 To better put the DMCA into layman’s terms, it’s a law that essentially provides oversight for infringing material. For example, if a consumer goes online to watch a movie that has not yet been released for home viewing but is circulating the Internet, a consumer will see a “video removed” message brought through by the DMCA that has essentially tracked the down the illegal activity and put an end to it. In A&M Records, Inc. v. Napster, Inc., the music industry made three major legal claims against Napster under the DMCA and these were: “1.That its users were directly infringing the plaintiffs' copyrights. 2.That Napster was liable for contributory infringement of the plaintiffs' copyrights. 3.That Napster was liable for vicarious infringement of the plaintiffs' copyrights.”15 After a treacherous court ordeal, Napster lost the case in the District Court. However, the company’s three founders (two of which were in their early 20s) appealed to the U.S. Court of Appeals for the Ninth Circuit. Although, the Ninth Circuit Court found that Napster could potentially continue to operate without “significant non‐infringing uses,” it upheld the District Court's decision. “On remand, the District Court ordered Napster to monitor the activities of its network and to

12 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). Copyright and

Peer‐To‐Peer Music File Sharing: The Napster Case and the Argument Against Legislative Reform Retrieved 2012‐03‐07 13 17 U.S.C. A&M Records. Inc. v. Napster. Inc. 114 F. Supp. 2d 896 (N. D. Cal. 2000). 14 Digital Millennium Copyright Act, Wikipedia.com, Retrieved 2012‐03‐07 http://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Act 15 17 U.S.C. A&M Records. Inc. v. Napster. Inc. 114 F. Supp. 2d 896 (N. D. Cal. 2000). 6

block access to infringing material when notified of that material's location.”16 Napster was unable to monitor the activities as the court had ordered and officially shut down its services in July 2001. Napster was never able to bounce back from the hard‐hitting court proceedings and formatting adjustments. In 2002, Napster declared bankruptcy and sold its assets not having been online since the court order passed in 2001. Today, the company no longer exists. It remnants exist in fragments that have been compartmentalized by large companies and then resold to other music Internet start‐ups. The large electronic US retailer Best Buy bought Napster for US $121 million in 2008, and most recently on December 1, 2011, it was noted that Best Buy merged with Rhapsody, an online music store subscription service available only in the US.17 Napster essentially came at the very peak of the dot.com bubble, and A&M Records, Inc. v. Napster, Inc. set the tone for Internet file sharing on a myriad of intellectual property platforms. It was wrong and it would not be allowed. Precedence set by cases like A&M Records, Inc. v. Napster, Inc. is imperative. It is estimated that U.S. companies lose more than $250 billon a year as a result of worldwide copyright, trademark, and trade secret infringement. 18 The goal is to try to substantially minimize that profit loss while still maintaining a platform that encourages the sharing of ideas. It is also important to disclose that rules tend to be tighter overseas, as will be discussed in depth in this paper. The U.S. seems to have the most lenient regulations when it comes to cyberspace in comparison to many countries abroad. The regulations, rules and general law of the land in other countries, will be discussed and analyzed in detail later in the paper. We will take an in‐depth look at SOPA and analyze the realm of the Internet in modern day society. We will present both sides of the argument through a comprehensive analysis of the pros and cons of SOPA, provide case studies with anti‐ piracy at the core of discussion, give an ethical evaluation concerning SOPA and conclude by discussing current programs which already aim to establish the provisions of SOPA. The nucleus of the paper will aim to establish that the Internet is an interconnected network not only in the physical sense, but also in a much larger intangible way, through which creativity and ideas are harvested and created to become part of something bigger; a medium that at its very core has revolutionized society and its way of communication. 16 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). Copyright and

Peer‐To‐Peer Music File Sharing: The Napster Case and the Argument Against Legislative Reform Retrieved 2012‐03‐07 17 "Today is Napster's last day of existence". CNN. November 30, 2011. 18 Progress Report of the Department of Justice’s Task Force on Intellectual Property 13 (2006) www.cybertime.govIPTFProgressReport (0‐19‐06) pdf. 7

 This paper will analyze the innovative nature in which the Internet was born and how its ever‐evolving content continues to strengthen for the better of society through a sequential process where content improves as it continues to be shared and experienced. The World Wide Web is known as a community in which sharing is encouraged and celebrated. It is important to note that an act as undefined and vague as SOPA might in turn harm the very fabric, that today, successfully weaves the Internet. “Strong intellectual property rights can decrease the incentives to create by reducing licensing and other sharing of information. Overall, moderately weak intellectual property protection is optimal. The best sort of intellectual property rights are strong enough to prevent direct copying and knock‐off products, but weak enough to encourage the greatest amount of cross‐licensing and sharing of information between competitors.”19 A combination in which entities such as the Motion Picture Association of America or the Recording Industry Association of America protect their material from direct copying, without an intrusion of content or restrictions on the ability to share information as SOPA proposes, would be an ideal situation that would simultaneously protect intellectual property and the freedom to search the internet as we do any other information in the U.S.

19 Intellectual Property on the Internet: What's Wrong with Conventional Wisdom? 19by James Bessen and Eric Maskin ,2004

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