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Business News (more headlines) 06-24-2004

New Senate Bill Threatens Betamax Protection, Public Hearing Is Essential, Says HRRC

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The Home Recording Rights Coalition today expressed deep concern over a new Senate bill, the "Inducing Infringement of Copyrights Act of 2004," that would impose copyright liability for any person for any activity "intentionally inducing" copyright infringement. HRRC called for a full hearing on the legislation.

HRRC said that the proposed bill, though not overtly aimed at devices and software, could be interpreted as giving copyright owners a veto over the introduction of almost any new technology for home and personal use, and thus effectively eviscerate the fundamental public policies and essential safeguards for technology developers that formed the basis of the Supreme Court's landmark 1984 Betamax ruling.

"We understand that this bill is aimed by its sponsors at multi-purpose on-line services, and how they might be abused. But it also covers all multi-purpose devices, software, and home networking products," said HRRC Chairman Gary Shapiro. "Every time entrepreneurs launch a new hardware, software, or home network product, this bill would seem to subject them to a jury trial about what they had in mind. This would chill the introduction of new technology and new products across a wide range of media. It merits full and careful consideration of all of its potential consequences."

In 1976, motion picture studios filed for a court injunction against the marketing of the first consumer VCR, or "video tape recorder." When the case reached the Supreme Court, the Court observed: "The request for an injunction ... indicates that [the studios] seek, in effect, to declare VTR's contraband." The Court refused to ban VCRs according to their use or terms of sale, observing:

"It seems extraordinary to suggest that the Copyright Act confers upon all copyright owners collectively, much less the two [studios] in this case, the exclusive right to distribute VTR's simply because they may be used to infringe copyrights. That, however, is the logical implication of their claim."

The Court held that there was no basis for finding "contributory" infringement if an article of commerce, "is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses."

The "Inducing Infringement of Copyright Act" would add a new copyright cause of action for "intentionally inducing" copyright infringement. HRRC said today that, by adding a new and separate copyright cause of action, the bill could change the outcome of cases such as the Betamax case itself.

"'Inducement' is already a part of the legal test for contributory infringement. The main effect of adding a separate, broad provision based on 'acts from which a reasonable person would find intent to induce infringement' is to allow a different outcome on the same facts, even of the Betamax case itself," noted Shapiro. "Hence, this bill would put a foot on the throat of anyone coming to market with a new device, software product, or home networking system that handles copyrighted content."

HRRC said it appreciated the efforts of the drafters in adding a provision that nothing in this bill should be taken to enlarge or diminish the "doctrines" of contributory or vicarious infringement. However, by creating a new and separate doctrine of "induced" infringement, the bill effectively renders these doctrines, and their interpretation to date by the Supreme Court, irrelevant, and so could have a broad, dramatic and negative effect on the development and introduction of new products, and anyone creating and marketing them.

"Just as the "Hollings Bill" in the last Congress had some laudable objectives but swept much too broadly, this initiative also threatens innovative consumer devices, software, and home networks. They can> be enjoined before even getting to market," Shapiro said. "This is why a public hearing, to explore all of the consequences for technological innovation, as well as for products that consumers now rely on, seems essential."

He added HRRC would be vigilant in urging Members of Congress to protect the legacy of the Betamax case - the Magna Carta for today's competitive market in CE and IT devices.


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