FC: Rep. Howard Berman declares war on P2P networks, plans new laws

From: Declan McCullagh (declanat_private)
Date: Fri Jun 28 2002 - 16:24:53 PDT

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    Anyone got a copy of Rep. Berman's draft bill? Confidentiality guaranteed,
    if you want it.
    Shorter press release:
    News coverage:
    Berman's contributors -- top industry is tv/movies/music:
            Speech by the Honorable Howard L. Berman to the Computer and
                        Communications Industry Association
                     Regarding Solutions to Peer to Peer Piracy
                                   June 25, 2002
       Thank you for inviting me to address you today.  I know it is a
       difficult time for many in the technology sector to focus on issues
       other than survival.  Further, with so many issues critical to
       national security on the congressional agenda, it is difficult for
       policymakers to focus on the future of technology.  However, it is
       important that the technology sector and government look beyond their
       immediate crises and make a concerted effort to remain engaged.
       Disengagement between the technology sector and government could stall
       your sectors, and the nations, recuperation and recovery.  Engagement,
       on the other hand, could actually accelerate the recovery.
       The future and fate of the technology sector is also inextricably tied
       to that of the entertainment industry.  Unlike those who present a
       vision of Hollywood vs. High-Tech, I believe the entertainment and
       technology industries have a symbiotic relationship.
       The technologies many of your companies produce, and the services they
       offer, present creators, artists, and media companies with untold new
       opportunities.  Interactive television, massively multiplayer computer
       games, computer animation, ebooks, digital photography, Internet music
       distribution, and P2P networks promise to greatly benefit creators and
       media companies alike.
       Likewise, entertainment and media products create demand for many of
       the technologies your companies produce.  Demand for the next
       generation of PCs - with faster chips, more processing power, and
       bigger hard drives - will come from consumers who want to play
       lifelike computer games, watch premium movies, and store music
       libraries.  Demand for broadband connections - and the routers, fiber,
       and wireless technologies that enable broadband - will be spurred by
       consumer demand for online movies, music, games, photographs, books,
       and software.  Thus, the next growth cycle for many technology
       companies depends, to a certain extent, on the availability of media
       products and services desired by consumers.
       While the symbiotic relationship between technology and media
       companies is self-evident, it must be nourished.  There are many
       obstacles to technology and media reaching their full symbiotic
       potential. Primary among these obstacles, I believe, is piracy of
       copyrighted works.
       There is no doubt that piracy causes substantial harm to copyright
       owners.  The evidence is everywhere and the numbers are staggering.
       In 2001, the U.S. recording industry lost $4.2 billion to hard-goods
       piracy worldwide, the U.S. movie industry lost $3 billion to
       videocassette piracy, and the U.S. entertainment software industry
       lost $1.9 billion due to piracy in just fourteen countries.  In 2000,
       hard-goods piracy cost the U.S. business software industry alone $11.8
       These numbers only reflect hard-goods piracy.  Internet piracy losses
       are almost impossible to calculate, but by all indications these
       losses are even more staggering.  A recent report by Viant estimates
       that 400,000 to 600,000 pirate versions of movies are downloaded every
       day over the Internet.  In April 2002, 1.1 billion files - the vast
       majority containing copyrighted works - were downloaded through the
       KaZaA peer-to-peer file trading network.  Piracy is also widespread
       through FTP sites, IRC channels, and auction sites, but cannot
       effectively be quantified.
       Internet piracy threatens to undermine the symbiosis between the
       technology and media industries.  The widespread availability of
       pirate works online makes it difficult for copyright owners to develop
       viable Internet business models.  No matter what bells and whistles
       they add, copyright owners cannot compete with unauthorized Internet
       services that make their works available for free.
       There is no justification for Internet piracy.  There is no difference
       between pocketing a CD in a Tower Records and downloading copyrighted
       songs from Morpheus.  Theft is theft.
       Internet piracy is not promotional.  This argument is laughable
       sophistry.  There may be some who just want to try before they buy, -
       I dont question that - but the vast majority of illegal downloaders
       just want free stuff, and dont intend to purchase legitimate copies.
       Do I have proof?  Yes, I have both common sense, a rudimentary grasp
       of economics....and a college-age daughter.
       Internet piracy hurts consumers by undermining the incentive to create
       great new digital works and to offer consumers new opportunities to
       access and use those works.  Perhaps a little closer to home for me,
       Internet piracy threatens the jobs of the session musicians, actors,
       carpenters, seamstresses, writers, photographers, retailers and other
       folks in my district.
       Among Internet piracy problems, the most vexing is that presented by
       peer-to-peer, or P2P, networks.
       P2P networks represent as much of an opportunity as a threat to
       copyright creators.  P2P represents an efficient method of information
       transfer, has the potential to greatly reduce the costs associated
       with server-based distribution systems, and can support a variety of
       legitimate business models.
       Unfortunately, the primary current application of P2P networks is
       unbridled copyright piracy.
       The owners and creators of these copyrighted works have not authorized
       their distribution through these P2P networks, and P2P distribution of
       this scale does not fit into any conception of fair use.  Thus, there
       is no question that the vast majority of P2P downloads constitute
       copyright infringements for which the works' creators and owners
       receive no compensation.
       Simply put, P2P piracy must be cleaned up.  The question is how.
       The answer is most likely a holistic approach relying on a variety of
       solutions, none of which constitutes a silver bullet.  At least one of
       these solutions may require congressional action to make it effective.
       Many believe that an important part of the solution to piracy involves
       digital rights management, or DRM, technologies, which protect
       copyrighted works from unauthorized reproduction, performance, and
       I support the use of strong DRM technologies.  Such technologies not
       only help deter piracy, but are pro-consumer and pro-technology.
       Through DRM technologies, copyright creators can allow each consumer
       to make optimal use of the copyrighted work at a price that reflects
       the value of that use to the consumer.  No longer is a consumer forced
       to pay $150 for a permanent copy of software, or $13 for a music CD,
       if he wants just a one-time use, or a one-time listen.
       DRM technologies are pro-technology for the very reason that they
       represent a new technology industry unto itself.
       The development of strong, effective, consumer-friendly DRM
       technologies is not a foregone conclusion.  Significant debate swirls
       around the appropriateness of such technologies, the appropriate role
       of government in their creation, and the state of industry development
       I am not a fan of government mandates on technology, including
       government interference in the developing marketplace for DRM
       technologies.  The marketplace and copyright holders are most
       competent to pick the winners and losers among competing DRM
       technologies.  The marketplace and industry technologists are best
       suited to quickly adapt when DRM technologies are cracked.
       There are clearly times, however, when government can play an
       appropriate role in technology development.  When industry fails to
       create adequate technologies to serve a government need, the
       government must sometimes commission creation of such technologies.
       Similarly, when technologies obstruct a policy objective, the
       government must sometimes outlaw or limit such technologies.
       My impression is that there is a growing frustration in Congress with
       the apparent lack of progress in creating adequate and interoperable
       DRM standards.  This frustration does not bode well for those who
       oppose government mandates on DRM standards.
       No matter who is at fault for the failure to arrive at a consensus on
       DRM solutions, continued delay will result in increasing pressure to
       legislate.  Regardless of who is actually doing the foot-dragging, the
       failure of the marketplace to create adequate solutions will convince
       more and more Members of Congress that government intervention is
       While the development and deployment of DRM technologies should be
       encouraged, DRM technologies do not represent a complete solution to
       P2P piracy.  DRM solutions will not address the copyrighted works
       already in the clear on P2P networks.  DRM solutions will never be
       foolproof, and as each new generation of DRM solutions is cracked, the
       newly-unprotected copyrighted works will leak onto P2P networks.
       Shutting down all P2P systems is not a viable or desirable option.
       P2P systems have many positive uses and could actually benefit those
       copyright creators who choose to utilize them.  Shutting down all P2P
       networks would stifle innovation.  P2P networks must be cleaned up,
       not cleared out.
       The day for cleaning up P2P networks through court action may now be
       past.  While the 9th Circuit could shut Napster down because it
       utilized a central directory and centralized servers, the new P2P
       networks have engineered around that court decision by incorporating
       varying levels of decentralization.  It may be that truly
       decentralized P2P systems cannot be shut down, either by a court or
       technologically, unless the client P2P software is removed from each
       and every file trader's computer.
       Copyright infringement lawsuits against infringing P2P users have a
       role to play, but are not viable or socially desirable options for
       addressing all P2P piracy.  The costs of an all-out litigation
       approach would be staggering for all parties.  Litigation alone cannot
       be relied on to clean up P2P piracy.
       One approach for dealing with P2P piracy that has not been adequately
       explored is whether it could be addressed, at least partially, through
       technological self-help measures.
       Copyright owners could employ a variety of technological tools to
       prevent the distribution of copyrighted works over a P2P network.
       Interdiction, decoy, redirection, file-blocking, and spoofing
       technologies can help prevent unauthorized P2P distribution.
       Technological self-help measures are not particularly revolutionary.
       Satellite and cable companies periodically employ electronic
       countermeasures to thwart the theft of their signals and programming.
       Software companies have experimented for decades with a variety of
       technologies that disable software being used in violation of a
       When deployed to thwart P2P piracy, however, such technological
       self-help may run afoul of common law doctrines and state and federal
       statutes, including the federal Computer Fraud and Abuse Act.  In
       other words, while P2P technology is free to innovate new, more
       efficient methods of P2P distribution that further exacerbate the
       piracy problem, copyright owners are not equally free to craft
       technological responses.
       Congress should free copyright creators and owners to develop and
       deploy technological tools for addressing P2P piracy.  We could do
       this by creating a safe harbor from liability for copyright owners
       that use technological means to prevent the unauthorized distribution
       of their copyrighted works via P2P networks.
       Obviously, such legislation must be narrowly crafted, with strict
       bounds on acceptable behavior by the copyright owner.
       Such legislation should not allow a copyright owner to damage the
       property of a P2P file trader or any intermediaries, including ISPs.
       For instance, a copyright owner shouldnt be allowed to introduce a
       virus that disables the computer from which infringing works are being
       made available to a decentralized, P2P network.
       Such legislation should also provide for strong penalties against
       abuse of the authority provided by the safe harbor.  For instance,
       such legislation should ensure that a P2P file-trader who has been
       subjected to technological self-help measures has effective remedies
       if he believes a copyright owner has acted improperly.
       I believe such legislation would have a neutral, if not positive,
       effect on privacy rights.  A P2P user has no expectation of privacy in
       computer files that she makes publicly accessible through a P2P
       file-sharing network.  A P2P user must affirmatively decide to make a
       copyrighted work available to the world before any P2P interdiction
       would be countenanced by the proposed legislation.  Thus, to the
       extent a copyright owner is scouring these publicly accessible files
       to find copyright infringement, there is no privacy violation.
       No legislation can eradicate the problem of peer-to-peer piracy.
       However, enabling a content owner to take action to prevent an
       infringing file from being shared via P2P is an important first step
       toward a solution. Through this legislation, Congress can help the
       marketplace more effectively manage the problems associated with P2P
       file trading without interfering with the technology itself.
       In order to stimulate dialogue on this issue, I intend to introduce
       legislation creating such a safe harbor for technological self-help
       measures.  I will, of course, be happy to work to address any
       reasonable concerns expressed about such legislation.  I am hopeful
       that the Subcommittee on Courts, the Internet, and Intellectual
       Property will mark up this legislation in the remainder of the 107th
       Thank you for giving me the opportunity to share my thoughts with you
       this morning.  I look forward to taking whatever questions you have.
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