Monday, November 7, 2011

SOPA: Enabling & Facilitating The Death Of Internet Innovation

WARNING! After not posting in forever & a day, I'm breaking my dry spell with a mega-post. Double-warning - no cut-tag on this one. I may only get a hundred or so people a week but you are should be aware of what Congress is up to.

Many people have dissected the proposed SOPA bill before the US House of Representatives Judiciary Committee. I am not here to rehash all of those arguments as others have made compelling cases regarding the problems with this bill. Today, I am going to explain what I find to be the worst portion of the bill, and why that portion is a fundamental danger to the internet and our future as an innovative society. There is a phrasing in this law which potentially endangers the entire Internet: every site, every domain, every single aspect up to and including the US government’s own websites. Several articles I read mentioned that this phrasing is a concern but to me, it is the most broad and most dangerous portion of the proposed bill.

People may find it ridiculous that I'm getting worked up about three little words but court rulings have been decided based upon slight turns of phrase buried in the text of a law. The fact that everyone supporting this bill believes their own web presence exempt from this clause reflects a nauseating hubris resulting from a combination of entitlement, technological or economic ignorance and knowing corruption of our legal system.

Let’s get to the clause in question. I’m going to include the preliminary stuff to give you some context but the key phrase will be bolded.

“(a) DEFINITIONS.-In this section:
(1) DEDICATED TO THEFT OF U.S. PROPERTY.-An “Internet site is dedicated to theft of U.S. property” if –
(A) it is an Internet site, or a portion thereof, that is a U.S.-directed site and is used by users within the United States; and
(B) either-
(i) the U.S.-directed site is primarily designed or operated for the purpose of, has only limited purpose or use other than, or is marketed by its operator or another acting in concert with that operator for use in, offering goods or services in a manner that engages in, enables, or facilitates-“(1)
The text goes on to list various violations of trade-mark and copyright laws. Now, if you do not know anything about either IP or information technologies this may seem sensible. But this phrasing is the exact opposite of sensible because it ignores two key facts.

One, all intellectual property is information. IP is a legally recognized monopoly on segments of information consisting of either designs (encoded as CAD, drawings, etc) cultural artifacts (encoded as songs, pictures, videos), processes (encoded as services optimized for most-useful function) or objects (encoded as physical goods). So any law regulating IP is ultimately about regulating who gets to control what information and who gets to replicate or make profitable use of that information. This post is not arguing against doing this.

Secondly, all information technologies, the best known and largest being the Internet, are by design and intent about the sharing, copying and distribution of information. The initial purpose of networking was to communicate with and share computer resources among mainly scientific users at the connected institutions. This information-sharing default is not a historical factoid with no relevance today. For a number of the sponsors of this bill advertise their IT products or advocate other IT products which also help people share information. For example:

A number of this bill's sponsors share their IP via Hulu. From Hulu’s website:
Hulu's mission is to help people find and enjoy the world's premium video content when, where and how they want it. As we pursue this mission, we aspire to create a service that users, advertisers and content owners unabashedly love.(2)
The entire purpose of Hulu is to make information protected under IP laws available to the public. It exists to share information of a cultural nature.

Circling this square of two contradictory facts, and ultimately two fundamentally different economic models, will be a very important political and economic adaptation in the twenty-first century. Especially since information is neither industry-specific nor commercially-specific. We tend to be aware of information-proliferation effects on the entertainment industry but that is because its profits are the most dependent on perceived information-scarcity. However, every single business on the entire planet is affected by information technologies. Also important, every single cultural and political sphere is equally affected because all social networks are ultimately, information networks. This is exactly why information technology is quite so transformative and why it is also quite so destabilizing. Again, getting this balance between tolerating the old until we can transition to the new (or determining if we do not want to transition particularly valued portions of the old) is pretty much the Great Big Deal of our times.

So, we have this ongoing question of how to balance between two seemingly contradictory industry structures. Into this debate, our lawmakers have given us SOPA with its "enables or facilitates" criteria for illegality. This annihilates a balanced approach to our two contradictory structures. Again, every single information-sharing technology ever meets the criteria of “enables or facilitates”. EVERY ONE. Every webpage, every domain, every database, every peer-to-peer network, all of it regardless of the amount of actual infringing being performed on or using these tools. Every single one of those companies listed as sponsors is also a violator of this standard because every single one enables or facilitates information exchange via information technologies cited in this law. And if you enable or facilitate exchange of information, then it becomes possible to exchange (legally or not) IP which is nothing more than a protected category of information. This bill does not provide IP owners the ability to destroy those who violate IP law; SOPA gives whomsoever can afford legal counsel the opportunity to destroy websites based upon the physical possibility of IP infringement absent any other proof of wrongdoing. This would cover every single site on the entire Internet.

I know what supporters of this bill will say, “But that’s ridiculous! We only mean sites which break the law!” But, and this is important, that is NOT what the law actually states. “Enables, or facilitates” does not require that IP laws are broken only that the violation of the laws cited is enabled or facilitated. Again, all web sites, by inherent definition and function, including those of the bill’s sponsors, meet this standard.

Wait a minute! I’m ignoring something. Elsewhere in Sec.104 of SOPA we find that in order to get these take-down injunctions the submitter must include:
“...under penalty of perjury, that the signatory is authorized to act on behalf of the holder of the intellectual property right harmed by activities described in subsection (a)(1)” (3)
Well, that solves everything, right? Because copyright holders never submitted frivolous or wrong-headed take-down notices. Being major corporations, they would not be terribly burdened by the occasional court costs imposed for being a little too aggressive. Especially compared to IT start-ups or mom-and-pop business who can't blow money on litigation with no revenue coming in without ending up in bankruptcy court. Also, RIGHTHAVEN. A company proved NOT to own the copyrights in question managed to shake-down dozens of people for who knows how much money before getting caught. How much worse would it have been if RightHaven could have brought whole sites down first? How many small business owners could be extorted before they were caught?

Nothing in the this clause actually delimits the “enables or facilitates” to portions of sites or users of sites actually violating the IP laws cited. Someone, who is a legitimate IP representative, could file these injunctions against a site not for violating their IP law but for “enabling or facilitating” a violation of their IP law. This is the key. You do not have to actually commit IP infringement to get these injunctions placed upon you. And anyone who makes an argument about judges not allowing frivolous injunctions – how are they to determine the facts when they only have the plaintiff’s accusations to go on? An injunction is issued prior to the defendant being told about it not after you have had the opportunity to contest the claim and failed.

Now, supporters of this bill all claim that this level of regulation is necessary to stop “real companies [from] being bled to death by these foreign IP-thieves” (note the hand-waving over the fact this bill also regulates domestic sites). This would be significantly more believable if these same bill sponsors hadn't just issued the “Copyright Industries In The US Economy” Report which basically says theses same poor, put upon industries are somehow, despite being threatened by every website ever, making absolutely bagfuls of money. All that profit does not exactly justify broad extrajudicial powers to protect these guys. If they are doing fine, why do they need this law? Especially since content-sharing industries based on IP-law exceptions are actually a pretty significant boom to our economy as well.

The problem is that none of these pro-SOPA folks are honestly dealing with the elephant in the room: A great many business-models are based around the scarcity of information in time and space. No industry more so than entertainment. So, you have a global information network which eliminates the scarcity all of these businesses are based on and, surprise! They want to control it. Of course they do. Control = Forced Scarcity. With this control, their business model survives and so do they.

More importantly, this level of control means that anyone who wants to do business on the internet has to go through them, the self-selected gate-keepers, first. Innovators have to make “gentleman’s agreements” with this protection racket in order not to be threatened by these take-downs. These same innovators will be forced to make these deals from a negotiating position of extreme and government-enforced weakness. Anyone who attempts to threaten an information-scarce-based organization, political or commercial, without breaking the IP laws cited does not get to compete fairly against these scarcity-based models because whomsoever is most threatened by a legal information-proliferating competitor can file a take-down injunction against them under the “enables, or facilitates” criteria. Anyone who denies this possibility simply has not been paying attention to how IP law actually operates in our courts.

If a patent or copyright troll can hack existing law to extort people for money, what do you think they will do with an opening like this one? One which does not require the breaking of IP laws, but only the possibility that such violations could occur.

This is of course, a ridiculously broad criteria. And the second you start applying it elsewhere, that becomes very clear. For example, it is physically possible for me to run over people with my car. Doing so is rightfully illegal and morally wrong. However, I am not required, every time I purchase or use a car, to swear under penalty of perjury that I will not do this. Pedestrians cannot sue me based on the physical possibility of me injuring them with my vehicle, only if I do in fact injure them. The current text of SOPA, via “enables or facilitates”, is not so restrained. This broadness is exactly what all information-scarcity based organizations want. The broader the criteria of control, the better they will be able to control the marketplace rather than compete within the marketplace.

What is most face-palm-inducing about this is how little any of these organizations, companies or even the government itself realize that this law threatens them. Any portion of the web meets these criteria, including the parts SOPA's sponsors currently own or control. Each and every one of them are equally bound by “enables, or facilitates.” The difference is organizations like the MPAA operate under the principle that “he who has the best lawyers, wins.” They pay big money to have the best lawyers (and the best members of Congress). So, in creating this law as it is written, Rep. Smith, far from promoting “prosperity, creativity, entrepreneurship, and innovation”, is more accurately promoting “rent-seeking, extortion, litigious behavior and stagnant economic growth due to technology innovation slowdown”.

In some respects, I almost hope this law passes as is. Because I would pay for tickets to a trial some of these companies when it comes the IP battles that they start and fight with each other all the freaking time. Do they really think that their constant on-going IP suits against each other won’t extend to this law? Do they really trust each other not to use every legal tool available to win these lawsuits?

Which is another horrible future allowed by this law: One of IP trade-wars where companies, who routinely sue each other for patent or copyright infringement, now have a new tool in their legal arsenal to go after each other. While this would be amusing to watch, the legal costs of fighting these battles would likely be passed along to consumers or taxpayers. Additionally, site-shutdowns would endanger anyone whose livelihoods depend on websites, ads on websites and/or online payment providers. All that is right there in the text of “enables or facilitates”. All that is being pointedly ignored by these trade organizations because all of them believe that “enables or facilitates” ultimately, does not apply to them.

This hand-waving over “enables or facilitates” and insistence that, no matter the actual text of the law, it won’t be abused is why I am completely furious to share a state with Rep. Smith. Because you are giving today’s industries veto-power over tomorrow’s industries. You will not continue on the internet unless you get permission to exist first from some vested interest and your continued survival will entirely depend on cultivating that toleration. Again, I don’t give a damn about what anyone of the writers or sponsors of the bill intend. Laws and litigation are not often about intention; they are about what the text of the law actually says and allows. And, for SOPA the text of states “enables or facilitates” IP infringement NOT “actually commits or advocates the commission of the IP crimes listed below”.

Doubly ridiculous is how this bills’ supporters in Congress are being disingenuous about the scope of this law in regards to politics, elections and free speech. Because this same standard applies to government and political websites. The Department of Homeland Security recently got caught using a PSA video for which they likely did not have the appropriate copyright licensing. Members of Congress routinely use copyrighted materials in crafting campaign or position advocacy videos. Again, copyright law is very complex. It is easy to make a innocent misstep, especially if you’re a campaign staffer who does not specialize in IP issues. Do members of Congress really want to run the risk of accidentally having a copyright violation and, in the middle of an election campaign, having their websites and web-based campaign finance machine shut-down?

Again, each and every one of them is either ignorant of this possibility or thinks themselves above it. Now, D/R Establishment politicians would probably have a vested interest in not using this law against each other and they possess the lobbyist connections or experience to prevent this. But what about political outsiders like Tea-Party primary challengers or the Green Party or third party candidates in general? Establishment politicians see these kind of challenges as threats to their power base. This law empowers Establishment-supporting IP-holders with a rather specific tool to take down amateurs in the political arena, again because the criteria are so broad that it is not a question of who is violating IP law, but rather of, who doesn’t have the resources to stop us from litigating them out of existence? Who does “enables or facilitates” empower and who does it burden?

Now, again, I’ll probably get a lot of song-and-dance about IP infringers and darknets. If this law actually targeted those sites and people who actually break IP laws, then I would have no problem with it. Frankly, including commercial aspects of a web-site in take-down is a smart improvement for combating actual rogue sites and actual rogue users of popular sites. If the law targeted these people and only these people, then I would not be writing this post. But, “enables or facilitates” is such a gaping-wide criteria that the entire IT industry is under the gun. Again, this is not hyperbole because:

IP = Information (valuable because scarce or difficult to apply in valuable manner)

IT=Information-proliferating (reduces economic and political value of scarce information by making it common and easily shared/implemented but information also gains value due to network effects, commercial or social)

SOPA encodes into law is not a “targeted killing” of IP-infringers or IP-infringing websites but rather an ongoing threat of nuclear bombardment regardless of actual, provable wrong-doing in the hands of people who routinely sue grandmothers and get caught abusing the existing DMCA take-downs process (for example).

The important thing for the average citizen to understand is that none of these sponsors, political or commercial, has any incentive to interpret “enables or facilitates” narrowly. Information-proliferating technologies undermine entire industries on a structural level. These sponsors are big, unwieldy organizations and the people who benefit from their financing, all of which are at risk in the changing marketplace of default information-proliferation. This law means they don’t have to bother with adapting to these changes anymore. “Enables or facilitates” encodes into law “some (industries/politicians) are more equal than others” by empowering vested interests. “Enables or facilitates” takes the decision of who succeeds in this brave, new world out of the hands of the market and the consumer. It then places the IT marketplace, and all that transformative possibility, in the hands of lawyers and anyone with the deep pockets to pay them.

Now, you may think this overhanging threat is a good thing because it will keep people in line. People won't pirate when they could lose whole sites. But again, “enables or facilitates” does not threaten only those who violate IP law; it threatens everyone who is physically capable of violating IP law which in an Internet connected world is EVERYONE. This is because every single webpage, server, social network, peer-to-peer file sharer, campaign website, advocacy group, industry website, EVERY SINGLE ONE is designed to "enable or facilitate" the exchange of information. And again, all intellectual property is ultimately information. If you enable or facilitates the sharing of information then by design you are enabling or facilitating the sharing of intellectual property.

That’s the true extent of “enables or facilitates.” That’s the terrifying breadth of this law and ultimately, I fear, that is exactly what the industry supporters want. Because nothing terrifies any corporation more than being outmaneuvered by the marketplace. A lot of these bills sponsors feel out of control in an interconnected world. This is not an irrational fear nor should we dismiss it entirely. These companies have thus far succeeded in providing what people are willing to pay for. But the marketplace is an tempestuous, ever-changing mistress. Businesses come and go all the time. This is a reality that every business must deal with. These sponsors have been caught flat-footed by technology developments before and do not want it to happen again.

However, in a free market system, creative destruction is a fact of life. Of course, arguments could be made that we do not truly have a market-system anymore. Obviously, when the government intervenes in the banking, automotive and aviation industries in order to pick who survives and who doesn’t, then clearly, the market is being manipulated. As it is currently written, SOPA becomes just one more example of these sort of interventions. “Enables or facilitates” is exactly the tool by which the marketplace for ideas or money could be short-circuited. “Enables or facilitates” ultimately means that whether in politics or business, you either are deemed non-threatening to vested interests and are left alone OR you are labeled a threat and because of “enables or facilitates” vested interests can use their legal and institutional clout to make you disappear instead of having to compete with you.

If Congress wants to protect intellectual property, that’s great. This transition from information-scarcity to information-proliferation does not have to be dangerously disruptive. Striking a good balance between intellectual property and information technologies is a smart way to improve both old and new alike. So, how about Congress write a law that actually does strike that balance? That actually treats intellectual property holders and innovative technology companies like they are equal partners in creating a profitable, diverse marketplace of ideas and money? Because, as it is written, SOPA is not balanced or really even about protecting intellectual property. The actual text of SOPA is about giving legacy industries veto power of how the Internet should be used and how it should develop far, far beyond protecting their intellectual property.

(1) Found in Section 104 of the bill. This phrasing is repeated in a similar form in Sec.103(a)(2) for foreign-based web sites as well (keyword “facilitates”). Meaning the U.S. Congress is applying the standard everywhere.

(2) How does this “enable or facilitate” IP infringement? Streaming videos on the internet can be retrieved from sites like Hulu in a number of ways. Hypothetically, let us say that an IP holder licensed their material to be shared via Hulu and later discovered users had stolen it provably from Hulu. If they believed that Hulu did not do everything the IP holder considered technically necessary to protect their IP, they could conceivably sue Hulu under “enables or facilitates” clause. Because Hulu is about, well, sharing videos Hulu would bear a high burden of proof regarding how they could be expected to both share videos and prevent the sharing of videos. That's how insanely crazy broad the "enables or facilitates" standard is.

(3) SOPA, Section 104(b)(4)(A)(vii)

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