ISPs should take a graduated response to the piracy problem

Chris Castle, Arts+LabsAnother year has gone by and the elephant is still in the room. An industry-wide agreement between ISPs and the creative community dealing with piracy could be a quick, market-based step toward solving the online piracy problem. That would be a welcome change to the current landscape of expensive infringement lawsuits that move at a glacial pace while creators suffer. 

Everyone knows what the problem is--there is broad agreement on that from Main Street to Pennsylvania Avenue. An executive at Canadian ISP Quebecor summed it up a few years ago: "As...good corporate citizen[s], [ISPs] cannot remain insensitive to the piracy problems affecting the survival of content producers and rights holders." Another round of massive layoffs in the music industry last month confirms the threat to jobs--the AFL-CIO executive council recently said that "the online theft of copyrighted works and the sale of illegal CDs and DVDs threaten the vitality of U.S. entertainment and thus its working people."  And Vice President Biden said plainly, "Piracy is theft. Plain and simple."  Cooperation among ISPs and the creative community seems inevitable but as of yet there is no definitive agreement on how to work together.  

While it is not hard to identify the problem, it's harder to determine what that agreement entails or whether a legislative solution is required. One possible legislative solution which has been tested in France and the UK is "graduated response," a policy choice that diminishes illegal activity while developing commercial markets. 

France and the UK each established different versions of graduated response. These legislated remedies are not without controversy, but the HADOPI procedures in France and the Digital Economy Act (DEA) in the UK have shown that legislative consensus is possible, but hard won.  That's an important victory.

In France, the HADOPI law established a state agency to oversee graduated response. It remains the responsibility of right holders to find evidence of infringements, but ISPs are compelled to take actions. The process is anonymized (the rights holder only has a user's IP address) and is overseen by Ofcom, the UK communications regulator. HADOPI got running in October of last year, while the Digital Economy Act, though passed in law, is still awaiting sign-off from the UK's Coalition Government.  

In both HADOPI and the DEA, the account holder (i.e. the direct infringer) is contacted and asked to stop any illegal activity. If they do, that's the end of it. If they don't, increasingly pointed remedies are applied. Both the French and British solutions seek equal respect for the rights of consumers, creators and ISPs. They provide proper privacy and due process protections for the users, while also standing up for national laws that protect creators.

There has not been much serious discussion of a legislated graduated response approach in the U.S. So far the success stories in the content distribution space all revolve around companies and customers who voluntarily respect creator rights.  Apple, Netflix, and Spotify (planning a US launch) decided to be "good corporate citizens" while simultaneously providing a great consumer experience that attracted large audiences. Each benefited immensely from that choice-and has paid a lot of money to creators.

But imagine how successful they could have been without having to compete with unfair operators whose services offer access to infringing material. As Spotify's Daniel Ek said, "In the physical world, an enormous supermarket giving entertainment away illegally and for free would be a serious deterrent to setting up and running a shop where you charge for the same products."

Leveling the playing field to assure fair competition that maximizes users' choices will be difficult without legal boundaries. Absent a voluntary agreement among the creative community and ISPs, it may be necessary for the U.S. to craft a European-style government solution that would pass muster. But the legislative option would probably take place slowly while the pirates continue to feast.  Experience in the UK and France illustrates that legislative mandates are contentious and time-consuming. Given the imminent threat from piracy, time is not on our side.  A voluntary market-based agreement could avoid legislative delays.

A few key points to include in that definitive agreement:

1.  ISPs have a role in protecting their users' privacy, but also have a role in keeping their networks safe from those who exploit privacy protections for bad ends.

2.  There should not be two classes of creators--wealthy corporations, who can afford to protect their rights, and individual creators who can't afford federal copyright infringement cases and must stoically accept their abuse. All creators are deserving of protection.

3.  Protecting the human rights of artists should not be confounded with "criminalizing our kids" or other such hyperbole. The potential of the Internet to expand rather than to limit opportunities for fueling original creative production for the benefit of society will be undermined if the bulk of internet communications continues to involve illegal exchanges of protected content--i.e., if ISPs remain passive while large numbers of users can "get away with it."

4.  The government will not be able to permit massive theft forever and will eventually have to act.

Now is the time for voluntary agreement on graduated response. 

Chris Castle is Managing Partner of Christian L. Castle, Attorneys in Los Angeles and San Francisco. He works with artists, independent record companies and technology companies and is a consultant to Arts+Labs.