H.R. 3261: The Wrong Approach

By Alex Liao

The recent legislative deliberations over the Stop Online Piracy Act (SOPA) and Protect Intellectual Property Act (PIPA) have ignited widespread protests and outrage over the role of government in policing Internet content. At one end of the spectrum, entertainment, music, and motion picture corporations are lining up to denounce the flagrant piracy that runs rampant, draining them of valuable revenue during a time where few can afford to lose profit. On the other end, Internet companies and consumers alike have pointed out the freedom of expression inherent in open access to the web. In particular, they take issue with planks of legislation that would remove any semblance of due process from Internet companies if they were found to have inadvertently distributed pirated content. The result would be an inevitable censorship of websites from the likes of Facebook to Reddit and Wikipedia.

However, the discussion over enforcement of procedures such as DNS-blocking appears to be headed in the wrong direction. Indeed, the Social Science Research Council released a report in 2011 where it signaled that “pricing problems,” rather than intellectual property enforcement, was the root cause of the piracy dilemma. “The structure of the licit media economy is almost never discussed. Instead, policy conversations focus on enforcement,” they note. In turn, this artificially constrained paradigm prevents forward progress on the issue, imposing “intellectual, policy, and ultimately social costs.” They cite the “little evidence…that enforcement efforts to date have had any impact whatsoever on the overall supply of pirated goods” and provide evidence that piracy has in fact increased, mostly due to pricing factors and amorphous cultural exigencies.

It is important to point out the significance of this paradigm. If true, then the United States – and a crucial section of its international trade policy – is pragmatically bankrupt. Instead of wasting resources on criminal penalties and punishments, shareholders in the intellectual property rights discussion should focus on the critical market dilemmas posed by low-cost pricing in developing nations and newfound competition in these economies. As the authors of the report summarize, money lost to piracy is not chalked up as a loss for a given nation’s economy; rather, the “consumer surplus” effect implies that the extra money saved will be spent on goods and services that buttress industry investments.

The choice is clear: dealing with imperfect economic realities and business management, or tying and clogging up the court systems with enforcement cases that rarely lead to a decrease in piracy anyways. In the U.S. Supreme Court case MGM Studios, Inc. v. Grokster, Ltd., the high court established new legal principles which actually increased the level of illegal peer-to-peer filesharing. The similarities to SOPA suggest that litigation and criminal punishments fail to deal with the realities of the situation. In response to the Grokster decision, developers simply created open-source software, highlighting the perpetual divide between legislation and the Internet community. SOPA’s broad provisions mirror the same kind of obstinacy in trying to tackle a problem which cannot be solved through the dualism of legal and legislative action. Of course, piracy is an enormous problem; nonetheless, caution must be taken especially when recent precedent has demonstrated the ruse of the proposed legislation. Kicking the can down the road with overly broad legislation will simply open more unresolvable debates about censorship and provide a disincentive for innovators to work without fear of punitive action.
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On a broader level, the United States has always stood for democratic values – in stark contrast to China, which currently employs DNS blocking in its so-called Great Firewall. A salient fear is that enacting SOPA and PIPA legislation will dilute America’s voice in the international sphere. As a leading voice in intellectual property law, it must maintain a stream of continuity in its values. Utilizing the same tactics it criticizes, while standing in opposition to products of American entrepreneurship like Google, Twitter, and Facebook will devalue our position both at home and abroad. In an age of delicate sociopolitical values, the Obama Administration must stand in sharper support of its stated endorsement of Internet freedom. Reactionary statements to public outrage are insufficient. The White House should lead with policy and combat the ineffectual legislative standard being raised in Congress.
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1 Karaganis, Joe. “Media Piracy in Emerging Economies,” Social Science Research Council, 2011.
2 Giblin, Rebecca. “How litigation only spurred on P2P file sharing,” IT News, 11 November 2011.