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What US anti-piracy measures might mean for Kiwis

James Kevany (top) is an associate and Richard Watts a partner at Simpson Grierson.

James KevanyRichard Watts

Protests against proposed changes to US intellectual property laws have been grumbling away in the background for months, attracting little attention.

But the issue suddenly found itself in the international spotlight after recent blackout protests by Wikipedia and other popular websites. As a result of the campaign, US legislators were forced to revisit their initial proposals.

However, the underlying purpose of the legislation remains, and any measures along current lines are likely to affect all internet users, even those in New Zealand.

What's the problem?
The decentralised and global nature of the internet is a key to its success, but at the same time creates many of its problems. A borderless global network is clearly at odds with the traditional legal structure built on individual territorial laws. Those operating questionable online services exploit the resulting jurisdictional issues, operating in countries with favourable laws while targeting consumers in others. IP owners have long complained that existing laws and international agreements provide ineffective deterrents and unenforceable remedies, and have asked legislators in many countries for enhanced tools to enforce their rights.

The focus of the controversial new measures is on websites based outside the US that are primarily designed for facilitating online piracy or trafficking in counterfeit goods (particularly medicines). Intended targets include foreign auction/retail platforms that sell counterfeit goods to US consumers, and websites that host, or provide catalogues of links to, infringing media (eg films) and software files. The new laws focus on the sites/businesses themselves, rather than on US consumers who visit or use them.

How do they plan to tackle it?
The measures proposed by acronym-obsessed US legislators are SOPA (the "Stop Online Piracy Act") and PROTECT-IP or PIPA (the "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act"). Although there are some distinctions between them, the two are essentially very similar versions of the same bill in each of the two chambers of the US legislature. Another Bill known as the OPEN Act (the "Online Protection and Enforcement of Digital Trade Act") has been recently introduced as a more moderate alternative to the earlier SOPA and PIPA proposals.

Broadly speaking, SOPA and PIPA aim to undermine "rogue" foreign sites by: (1) blocking US consumers' access to the sites, and (2) preventing US-based entities from assisting the sites. To accomplish these objectives, the proposals potentially require many third parties to provide assistance, including:

- internet service providers (eg the equivalent of Telecom, Orcon or Vodafone); search engines (eg Google or Bing); internet advertising services (eg Google's AdSense); and

- payment network providers (eg Visa or PayPal).

The idea is that US-targeted "rogue" sites cannot survive if sources of advertising revenue are cut off and US internet users cannot find the sites in search engine results, visit their known domain name, or use US credit cards to purchase their goods or services.

How does this differ from New Zealand's recent copyright law changes?

The proposed legislation differs from the three-strikes law enacted in New Zealand in 2011. The legislation: (1) may apply only to P2P downloads (which requires special software and technical know-how), and (2) targets the individual users who download and share files. In contrast, the US proposals target businesses and websites that provide access to infringing works, and not individual users. These proposals would also apply to all methods of distributing infringing material, including streaming and hosting services, websites (eg those providing indexed links to infringing content on hosting sites), and online stores that deal in counterfeit physical goods (eg Louis Vuitton handbags or L'Oreal perfumes) and medicines.

But while their targets are different, the new measures are similar to the three-strikes law in that both primarily focus on providing effective remedies for rights-holders against infringers, rather than on changing the standard of what is and is not 'legal'. For the most part, there are no changes in what constitutes an infringing work and unlawful conduct. However, it is the practical mechanisms to shut down the "rogue" foreign sites that is both the key to the legislation and the primary source of public protest.

Who cares?

Objections to the US proposals have extended far beyond the usual "making copies doesn't harm anyone" crowd, and include major multinationals and other interest groups who, despite supporting the goal of reducing the flow of infringing content and counterfeit goods on the internet, are concerned about the potential global impact of the particular mechanisms proposed.

From a practical perspective, internet security experts have asserted the US proposals could damage both the security and architecture of the internet, identifying certain methods suggested for preventing access to "rogue" sites, such as tinkering with the way in which the Domain Name System functions, and permitting ISPs to employ invasive "deep packet inspection" of content (ie peeking at users' data). Commentators have also argued that high compliance costs could inhibit new entrants, particularly those who seek to provide ISP, search, advertising and payment services.

Very little gets the internet community fired up as much as the notion of online censorship, and critics have been quick to draw analogies between the US proposals and the so-called "Great Firewall of China". While the comparisons are unfair, the action reinforces the fact that openness and a lack of censorship are seen by most people as two fundamental tenets of the internet. Critics argue that these basic principles are inconsistent with any law that would shut off access to domain names, require search engines to delete relevant sites from search results, prohibit any type of financial transactions, and block advertising.

Why should it matter to us?

Wikipedia intended its blackout to demonstrate that proposals to legally regulate the internet on a national level can impact users worldwide.

Although the internet is global and decentralised, the reality is that the US wields considerable influence over the internet's regulatory and standard-setting bodies, and over companies that provide key infrastructure and services to non-US websites.

Opponents claim that the US legislative proposals will change the way the internet operates worldwide. In fact, the legislation is expressly intended to use US laws to make it difficult, if not impossible, for some non-US websites to operate.

From a policy perspective, the question is whether this international problem is best addressed with unilateral legislation, or through the various international agreements and related discussions. For example, the multi-national Anti-Counterfeiting Trade Agreement (ACTA), which aims to create an international legal framework to deal with precisely these sorts of jurisdictional issues, may offer a better forum for discussion and resolution. ACTA is thought to have its own issues due to perceived secrecy and manipulation during the negotiations, but nevertheless represents a more collaborative approach.

While internet browsing in New Zealand is unlikely to be directly affected, if the process for identifying "rogue" sites is not sound and unbiased, local businesses could be hamstrung by a complaint over content on their sites.

New Zealand is not known to be a haven for the types of sites being targeted, but other local sites could still be subject to an enforced complaint. The resulting withdrawal of services from the major advertising and payment providers in the US could cripple certain sites, as could the loss of access by, or exposure to, the lucrative US market. The precise mechanism and its effect on overseas sites remains to be seen (or debated in Congress, at least), but it appears likely that the proposed measures could still present a potential issue for local sites that fall foul of the law.

Now what?
With no role in the US legislative process, New Zealand can only sit back and wait for the so-called battle between Hollywood and Silicon Valley to unfold. The situation is likely somewhat familiar to local businesses, who witnessed public pressure halt and then mould our own digital copyright changes.