A web of confusion

P2P perplexes pols at Senate hearing

WASHINGTON — The Supreme Court’s recent decision on illegal online file-sharing is either crystal clear or perilously vague, according to conflicting testimony before a somewhat bizarre Senate hearing Thursday.

After hearing witnesses discuss the potential impact of the Grokster decision on future technological innovation — the stated purpose of the hearing — members of the Senate Commerce Committee demanded to know what the online industry is doing to protect intellectual property and stop pornography.

In prepared testimony, entertainment industry representatives said the Grokster decision posed no real threat since it established a clear standard for what constitutes encouragement of illegal swapping of copyrighted content.

Decision held that peer-to-peer softwaremakers could be held liable for copyright infringement by software users if the makers “actively induced” the infringement through marketing or promotion.

“Our beef is not with technology,” said Recording Industry Assn. of America topper Mitch Bainwol. “Our beef is with bad actors, and that’s precisely what the Grokster decision is all about. Businesses encouraging infringement will be the only ones affected. Nascent technologies operating within the law will be able to get traction.”

But the P2P industry and venture capitalists worried that the decision’s “vague” standards about secondary and tertiary liability will chill future technologies because innovators and investors alike will fear the strong possibility of expensive lawsuits even for legitimate products.

“If investors in a technology area can be sued for illegal use of a legal technology, that would shut down our interest in that area,” said Mark G. Heeson, prexy of National Venture Capital Assn. “And venture capitalists are very agile about shutting down and moving elsewhere.”

One P2P developer — Gregory G. Kerber, chairman of Wurld Media — disputed that, saying the Grokster decision “has made a clear path for investors to invest in the potential of small companies in digital media.”

After questioning some witnesses about their testimony, committee chairman Ted Stevens (R-Alaska) announced his annoyance with Internet service providers. “I’m concerned that ISPs are saying they can’t control what goes on over their service. It’s like the piano player in a you-know-what house saying he has no idea what’s going on.”

Dave Baker, VP of public policy for Earthlink and one of the witnesses, replied, “You can’t make the provider of the pipeline the policeman of all the traffic going through. It’s just impossible,” he said, citing “trillions of bits” of information flowing through the lines every hour.

Sen. Barbara Boxer (D-Calif.), who admitted to not understanding much about the Grokster decision, wanted to know what the P2P industry was doing to stop illegal downloading and curtail child porn on the Internet.

As Adam Eisgrau, exec director of P2P United, explained, the Grokster decision spoke only to two specific P2P services that appeared to be actively inducing infringement — not the entire P2P industry, which, he said, was largely legitimate — and that P2P services oppose porn and have provided online resources for parents to report it.

Bainwol said P2P developers “can stop all infringement right now.” Eisgrau said that was not true.

After sharing Boxer’s concerns about porn, Stevens closed the hearing, saying, “The whole point of having this hearing was to find out if industry is going to do anything about protecting intellectual property. We can’t accuse people abroad of stealing our intellectual property if we don’t protect it ourselves.”

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