Threat to Tech Innovation in Senate

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Richard Morrison, 202.331.2273


<?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Washington, D.C., September 30, 2004—This morning the Senate Judiciary Committee’s Executive Business meeting includes discussion and possible markup of on S. 2560, a bill to make third-party tech companies, Internet service providers, and an unknown roster of other businesses and services liable for possible copyright violations in online peer-to-peer (p2p) transfers of music and video files.  The bill, known as the INDUCE Act, is sponsored by Senators Orrin Hatch (R-UT) and Patrick Leahy (D-VT).


This heavy-handed approach to copyright protection is inherently dangerous to technological innovation and economic growth, as George Pieler pointed out in a Competitive Enterprise Institute OnPoint, “Send Me No Files,” released on July 21, 2004 (,04126.cfm). 


“Banning p2p file sharing as it exists today, or expanding liability in novel ways, is no solution for online piracy,” said Wayne Crews, Vice President for Policy at the Competitive Enterprise Institute.  “Piracy problems do not exist in isolation. They are rooted in the Net's (perceived) anonymity. But so are spam, spyware, and problems with transaction authentication and cybersecurity. Such problems have to be solved in tandem and cannot be helped by narrow panic moves like the INDUCE Act. To a large extent, we don't have an intellectual property problem, we have a broader anonymity and authentication problem.” 


Even with major revisions since the original Hatch-Leahy INDUCE Act was introduced,  the concept of hard liability for the vague concept of “inducing” someone to violate copyright risks chilling innovation much more than it promises to protect legitimate intellectual property rights, and both consumers and business leaders should be very concerned about this bill, which, in its latest iteration, hasn’t been given a hearing, and may be slated for quick-and-dirty Senate approval before the end of the session.