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U.S. Congress Shelves Hollywood-Backed Piracy Bills Following Web Protest

U.S. Senate and House leaders shelved Hollywood-backed anti-piracy legislation days after a global online protest by Google Inc. (GOOG) and Wikipedia eroded congressional support.

Senate Majority Leader Harry Reid today canceled a Jan. 24 procedural vote on the Senate measure, the Protect IP Act, while House Judiciary Committee Chairman Lamar Smith said his panel would postpone consideration of the House bill, the Stop Online Piracy Act.

“There is no reason that the legitimate issues raised by many about this bill cannot be resolved,” Reid, a Nevada Democrat, said in a statement dropping the vote. Reid said he’s “optimistic that we can reach a compromise in the coming weeks.”

The movie and music industries and the U.S. Chamber of Commerce, the nation’s largest business-lobbying group, support the Senate and House measures as a way to fight sales of pirated content by non-U.S. websites. Internet companies say the bills would promote online censorship, disrupt the Web’s architecture and harm their ability to innovate.

The anti-piracy bills call for the Justice Department to seek court orders forcing Internet-service providers, search engines, payment processors and online ad networks to block or stop doing business with non-U.S. sites linked to piracy. The measures would let private copyright holders seek court orders forcing payment and ad companies to cut off such websites.

Photographer: Mario Tama/Getty Images

Protester Nadine Wolf demonstrates against the proposed Stop Online Piracy Act and Protect IP Act outside the offices of U.S. Senators Charles Schumer and Kirsten Gillibrand on January 18. Close

Protester Nadine Wolf demonstrates against the proposed Stop Online Piracy Act and... Read More

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Photographer: Mario Tama/Getty Images

Protester Nadine Wolf demonstrates against the proposed Stop Online Piracy Act and Protect IP Act outside the offices of U.S. Senators Charles Schumer and Kirsten Gillibrand on January 18.

Google Protest

An offer by the bills’ lead sponsors to drop a provision requiring Internet-service providers to block websites failed to stop Google, Wikipedia and other websites from leading a protest this week that unraveled the legislation’s prospects. At least eight Senate co-sponsors, including seven Republicans, withdrew their support or expressed reservations.

Visitors to Google, the world’s most popular search engine, were greeted Jan. 18 by a black box covering the company’s familiar icon, and a message that read “Tell Congress: Please don’t censor the Web!” The message linked to a page outlining Google’s opposition and an option to sign an online petition.

Google said yesterday it collected more than 7 million U.S. signatures urging Congress to reject the legislation. Wikipedia, the online encyclopedia that shut the English language version of its website for 24 hours to protest the bills, said more than 162 million people saw its blackout page.

Reid’s move followed a call yesterday by Senate Minority Leader Mitch McConnell for delaying the chamber’s vote.

The “decision to set aside the bill will give Congress the opportunity to study and resolve the serious issues with this legislation and prevent a counterproductive rush ,” McConnell, a Kentucky Republican, said in an e-mailed statement today.

Leahy Criticism

Senator Patrick Leahy, the Judiciary Committee chairman who introduced the Protect IP Act, criticized the delay in acting on the measure.

Sellers of stolen U.S. content and counterfeit goods “are smugly watching how the United States Senate decided it was not even worth debating how to stop the overseas criminals from draining our economy,” Leahy, a Vermont Democrat, said in an e- mailed statement today.

“The day will come when the Senators who forced this move will look back and realize they made a knee-jerk reaction to a monumental problem,” he said.

Christopher Dodd, chairman of the Washington-based Motion Picture Association of America, said today that shelving the legislation would make it harder to police piracy.

“As a consequence of failing to act, there will continue to be a safe haven for foreign thieves; American jobs will continue to be lost; and consumers will continue to be exposed to fraudulent and dangerous products peddled by foreign criminals,” Dodd said in a e-mailed statement.

Summit Proposed

Dodd, a Connecticut Democrat who served three decades in the Senate, said in an interview with the New York Times yesterday he would welcome a summit meeting between Internet companies and content companies possibly at the White House.

“The perfect place to do it is a block away from here,” Dodd said, pointing from his office toward the presidential mansion, the Times reported.

Creative America, a nonprofit founded by Hollywood studios and unions including the Screen Actors Guild, started a national television and print ad campaign Jan. 18 in support of the House and Senate measures. The campaign will continue indefinitely, and will soon expand to include radio ads in 20 to 25 local markets, said Craig Hoffman, a spokesman.

Megaupload.com Action

“Foreign criminals operating illegal websites are making billions of dollars off the blood, sweat and tears of more than two million middle-class American workers who are not compensated when these thieves distribute stolen and counterfeit goods,” Mike Nugent, executive director of Creative America, said in an e-mailed statement yesterday.

Debate on piracy legislation coincided with a move by U.S. prosecutors to shut down the Megaupload.com file-sharing website and charge people associated with it of running a criminal enterprise that cost copyright owners more than $500 million.

Leahy cited the Megaupload.com action as an example of why legislation is needed to combat piracy by non-U.S. websites.

“Unfortunately there are no tools in the arsenal to protect that same American intellectual property from theft by websites hosted and operated overseas,” he said.

Smith said he has heard from critics of the House measure, the Stop Online Piracy Act, and takes their concerns seriously.

“It is clear that we need to revisit the approach on how best to address the problem of foreign thieves that steal and sell American inventions and products,” Smith, who introduced the measure, said in an e-mailed statement today. Smith had previously said he expected the House Judiciary Committee to resume consideration of the Stop Online Piracy Act in February.

The House bill is H.R. 3261 and the Senate bill is S. 968.

To contact the reporters on this story: Eric Engleman in Washington at eengleman1@bloomberg.net; Laura Litvan in Washington at llitvan@bloomberg.net

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

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