Google Friends Facebook Against Hollywood-Backed Piracy Bill

Google Inc. (GOOG) and Facebook Inc. are among Web companies warning that legislation aimed at combating online piracy may threaten the U.S. technology industry.

The House Judiciary Committee is scheduled to hold a hearing tomorrow on the Stop Online Piracy Act, a measure that would give the U.S. attorney general and copyright holders new powers to cut off financial support to “rogue websites” accused of trafficking in goods spanning knockoff watches to fake pharmaceuticals to pirated movies.

The House bill and a similar Senate measure have pitted the nation’s top Internet companies against the U.S. film and music industries, which want the government to halt counterfeiting and intellectual-property theft. Web companies say the proposed legislation would require them to police the Internet, jeopardizing the growth of online services.

“Unfortunately, the bills as drafted would expose law- abiding U.S. Internet and technology companies to new uncertain liabilities, private rights of action, and technology mandates that would require monitoring of websites,” Google, Facebook, Yahoo Inc. and EBay Inc. (EBAY) wrote in a letter today to leaders of the House and Senate Judiciary committees.

The House Judiciary Committee is scheduled to hear from witnesses on the Stop Online Piracy Act. The measure would give the U.S. attorney general and copyright holders new powers to cut off financial support to foreign “rogue websites” accused of trafficking in stolen U.S. goods and services. Photo: Caroline Ventezou/AFP/Getty Images Close

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The House Judiciary Committee is scheduled to hear from witnesses on the Stop Online Piracy Act. The measure would give the U.S. attorney general and copyright holders new powers to cut off financial support to foreign “rogue websites” accused of trafficking in stolen U.S. goods and services. Photo: Caroline Ventezou/AFP/Getty Images

“We are concerned that these measures pose a serious risk to our industry’s continued track record of innovation and job- creation, as well as to our nation’s cybersecurity,” the companies wrote in the letter. It was also signed by AOL Inc. (AOL), Twitter Inc., LinkedIn Corp., Mozilla Corp. and Zynga Inc.

House Measure

The House measure, introduced by Judiciary Committee Chairman Lamar Smith, a Texas Republican, would let prosecutors seek court orders requiring U.S. Internet-service providers, search engines, payment processors and ad networks to block or cease business with websites linked to online piracy.

The Motion Picture Association of America, the Recording Industry Association of America and the U.S. Chamber of Commerce are among the supporters of the legislation.

A study released Nov. 2 by the International Intellectual Property Alliance found that the publishing, software, film, music and television industries added more than $930 billion to the U.S. economy in 2010.

“That intellectual property is being stolen every day -- nearly one-quarter of all Internet traffic is copyright-theft -- and that is costing us hundreds of thousands of jobs each year,” Christopher Dodd, chairman of the MPAA, said in an e- mail. The MPAA, an alliance member, helped publicize the study.

Valenti Successor

Dodd, a Connecticut Democrat who served three decades in the Senate, is looking for a win in his new role as head of the MPAA, which grew powerful in Washington under the 38-year leadership of Jack Valenti, a onetime aide to Lyndon Johnson. The group’s members include Walt Disney Co. (DIS), Viacom Inc. (VIA/B)’s Paramount Pictures, Sony Corp. (6758), News Corp. (NWSA), Comcast Corp. (CMCSA)’s NBC Universal and Time Warner Inc. (TWX)’s Warner Bros.

Under the House bill, payment processors and online ad networks must suspend services to a website if notified of an infringement by a private copyright holder, unless the website provides a “counter notification” explaining its actions, according to a bill summary on the Library of Congress website.

After that process, a rights holder may seek an injunction in court against the website that may be applied to payment processors and ad networks requiring them to stop doing business with the site, the summary states.

“The online thieves who run these foreign websites are out of the reach of U.S. law enforcement agencies and profit from selling pirated goods without any legal consequences,” Smith, the House Judiciary chairman, said in an Oct. 26 statement. The measure is H.R. 3261.

Vague Language

The legislation “helps stop the flow of revenue to rogue websites and ensures that the profits from American innovations go to American innovators,” Smith said. The measure has at least 20 co-sponsors from both parties.

The House bill has broad and vague language and may extend to legitimate websites that are accused of facilitating infringement, such as those letting users comment, post blogs or share video, said David Sohn, a senior policy counsel at the Washington-based Center for Democracy and Technology, in an interview.

The center is financed in part by the technology industry and got almost 12 percent of its 2010 funding from Web companies including Google, Facebook and Yahoo.

In a preview of the objections that may be voiced at tomorrow’s hearing, Representative Anna Eshoo, a California Democrat, and nine other House members criticized the Stop Online Piracy Act as a threat to online innovation in a letter today to senior members of the House Judiciary Committee.

‘Overreaching Approach’

The House bill “would cause serious and long-term damage to the technology industry, one of the few bright spots in our economy,” the lawmakers wrote. “We hope you will work with the technology community to find narrow and targeted remedies against online infringers.” The letter was signed by nine Democrats, including six from California, and Republican Ron Paul of Texas.

Maria Pallante, director of the U.S. Copyright Office, and representatives of Google, Mastercard Inc. (MA), Pfizer Inc. (PFE), the MPA, and the AFL-CIO are scheduled to testify at tomorrow’s House hearing.

Senator Ron Wyden, an Oregon Democrat, has vowed to block the Senate bill, the Protect IP Act, from reaching a vote in the full Senate, saying in a May 26 statement that it “takes an overreaching approach to policing the Internet.” The Senate measure is S.968.

Wyden is working on alternative intellectual-property legislation, Jennifer Hoelzer, a spokeswoman for the senator, said in an e-mail.

To contact the reporter on this story: Eric Engleman in Washington at eengleman1@bloomberg.net

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net

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