Tech firms fight antipiracy bill

Leading technology companies including Google Inc. and eBay Inc. are stepping up efforts to block a bill in Congress that Hollywood studios say would clamp down on foreign websites selling pirated movies and other goods.

Ahead of a House hearing Wednesday, nine tech companies sent a letter Tuesday to congressional leaders saying the legislation would "expose law-abiding U.S. Internet and technology companies to new uncertain liabilities."

The bill would let the U.S. attorney general seek court orders requiring U.S. Internet sites and search engines to take reasonable measures to block access to other websites carrying pirated material. That could compel them to block domain names and search results featuring those sites.

Under the new measure, amovie studio could also act on its own against alleged offenders by asking credit-card companies to block payments from U.S. customers. If they don't, a copyright owner could seek a court order to block the sites from receiving ads and getting payments from the U.S.

Internet sites such as Google, Facebook Inc. and Twitter Inc. as well as smaller Internet start-ups say they fear the provisions could shut down innocent sites that unknowingly includea handful of links to pirated material.

The fight represents a reopening of hostilities between Silicon Valley and the movie studios, which have complained for years that tech companies haven't done enough to stop the spread of pirated movies and music online. Hollywood studios estimate that about a quarter of global Internet traffic consists of copyright-infringing files, and they say it costs U.S. companies billions of dollars each year.

The studios say the legislation is targeted at foreign, "rogue" websites that sell illegally copied movies and music or counterfeit goods. Hollywood has won support from a number of companies, labor unions and the U.S. Chamber of Commerce. Among the studios advocating the legislation is Twentieth Century Fox Film, which like The Wall Street Journal is owned by News Corp. Other backers include studios owned by Comcast Corp., Walt Disney Co. and Sony Corp.

Silicon Valley's complaints are "a slight variation of the theme we've had from the other side for 20 years, that we want to break the Internet," said Michael O'Leary, senior vice president for global policy at the Motion Picture Association of America. "This won't stifle innovation."

The Senate Judiciary Committee passed a version of the bill in June, and the House Judiciary Committee will hear testimony Wednesday on its version. The legislation has bipartisan support but isn't a sure bet because of the opposition from the technology companies. The Senate bill hasn't gotten to a floor vote because of objections by Democratic Sen. Ron Wyden of Oregon, who put a hold on it.

Silicon Valley companies and venture capitalists agree that foreign "rogue" websites are a problem but say the legislation paints with too broad a brush and will place new mandates on U.S. Internet companies.

"What we are concerned about is that this is more of an attempt to change the laws that apply to tech companies and give the studios new private rights of action to sue," said Markham Erickson, executive director of NetCoalition, a group of mostly tech companies fighting the proposal, including Google, Facebook and Bloomberg LP.

The companies are worried that the legislation would override parts of the 1998 Digital Millennium Copyright Act, which protects websites like YouTube or Facebook from lawsuits if they act in good faith to remove copyrighted material posted by users. Tuesday's letter was signed by nine companies including eBay, Google, Twitter and Yahoo Inc.

Congressional proponents of the bill dismiss those concerns, saying the bill narrowly expands the Justice Department's existing authority to shut down access to foreign pirate websites and won't require Internet companies to police their users' actions.

House Judiciary Committee Chairman Lamar Smith (R., Texas) said Tuesday the legislation "has strong bipartisan support" in the committee and that lawmakers "must protect America's intellectual property from rogue websites."

(Published by WSJ - November 16, 2011)