[This post was co-authored by FMC Policy Counsel Chris Naoum]

Last week’s potential federal government shutdown grabbed a lot of headlines, but it wasn’t the only action in DC. On Wednesday, April 6, Congress took aim at “pirates, bad actors, and parasites” in the second House Judiciary Committee hearing on what they are calling “rogue websites.”

FMC believes that protecting the livelihood of working musicians is incredibly important. This applies to digital works that are accessed online. We also realize that the business models around the promotion and monetization of digital music are still evolving, and that new these sites and services continue to impact how artists earn a living.

It’s also good to consider whether “policing the internet” can lead to unintended consequences, namely the restriction of access to legitimate sites providing lawful content to users. Finding the right balance between protecting the intellectual property rights of creators and keeping the web open to innovation is not a simple thing. We appreciate Congress’ attention to the issue, but have some natural skepticism about the effectiveness and scope of enforcement efforts. FMC believes that any solution should bring together many stakeholders — including musicians — and balance the need for enforcement with innovations around creative commerce.

The “Promoting Investment and Protecting Commerce Online: Legitimate Sites v Parasites” hearing included the Honorable John Morton, Director of US Immigration and Customs Enforcement, Floyd Abrams, super attorney and First Amendment scholar, Kent Walker, Senior Vice President and General Counsel for Google, and Christine Jones, Vice President and General Counsel for the GoDaddy Group.

Before we get into the play-by-play, here’s some background on legislative efforts to combat websites that engage in intellectual property infringement. (Remember, copyright is a part of intellectual property.)

At the end of 2010, Senator Patrick Leahy (D-VT) proposed a piece of legislation called the Combating Online Infringement and Counterfeits Act (COICA). The proposed legislation would have given the US Attorney General the ability to target sites (both US and international)  “dedicated to infringing activities” and shut them down via a court order or injunction if those sites were found to be “primarily designed to infringe with no other commercial purpose.”

COICA proposes action against foreign sites by blocking them through US domain name system (DNS) services, prohibiting credit card transactions and eliminating online advertising for infringing sites.

The bill did not pass in the last Congress because a number of other Senators felt that the definitions section for infringing sites was not specific enough and that the legislation did not provide proper due process for sites that had legitimate commercial uses. There were other reasons as well, mostly dealing with the enforcement of Domain Name System (DNS) servers, which we described in this previous post.

While this legislation was being considered, US Immigration and Customs Enforcement (ICE) initiated a number of actions against domestic and foreign sites that they believed were dedicated infringing activities. Offending sites ranged from hip-hop blogs to sports webcasters. Although many of the enforcement actions probably were legitimate, some raised questions about the sweeping nature of the takedowns.

This is where musicians come in. Today’s recording industry has a curious relationship with release dates. As in, sometimes “leaking” is bad; sometimes it’s encouraged. In the hip-hop world in particular, an early release can be a label tactic to build buzz around an artist or album. In the case of sites like Rap Godfather and OnSmash — two domains seized by ICE — it is not clear whether some or all of the content was infringing or intentionally leaked by eager promotional departments. Remember, major labels are big (even in this day and age), and the legal peeps might not always know what’s up with the PR peeps, and vice-versa.

Music blogs are an important consideration here because that’s where many people discover new music. If enforcement actions unintentionally limit access to these sites with no warning or due process, it can have a negative impact on an important segment of today’s music business. Again, we’re not talking about the massive infringing sites where you get a zillion MP3s for a nickel (deposited in a Russian bank). Those sites are bad news, and the operators should be dealt with accordingly. But you can see why it’s important to get our definitions right.

Aside from blogs, the Chamber of Commerce commissioned a study that placed “data locker” services (think Megaupload, YouSendIt, etc.), which can be used for infringement, but also have legitimate uses, among top digital piracy sites. Many musicians — some on our staff — use them for sending large music files to which they own all of the rights. In the era of Pro Tools and long-distance collaboration, these platforms provide an easy way to move entire recording sessions to be mixed and mastered by people in other locations. Yet these sites are also part of a new breed of services that can be used for unlawful streaming or downloading. How should the law treat them?

We went to the hearing to learn more about how Congress percieves these complex issues.

The Chairman of the Judiciary IP Subcommittee Bob Goodlatte (R-VA) said he is concerned about the adequacy of existing laws to effect changes to address the problem of foreign sites which cannot be directly seized or shut down by US enforcers. The reason for this hearing was to bring together representatives from the tech enforcement and legal communities to discuss solutions and potential legislation.

Many members on the committee seemed to be in agreement that simply blocking domain names at the DNS level can lead to sites switching to foreign DNS servers, which in turn could undermine our domestic internet security. This is why Congress is looking to legislation that would require collaboration from credit card companies and web advertisers to restrict financial gains from the bad actors. (We also think this is a good place to start.)

Rep John Conyers (D-MI) added that members are also considering the possibilities of a “private right of action,” where citizens can go after internet service providers, search engines and payment processors if they disregard specific action required under the law. Conyers also said that that there are still more options to explore.

Kent Walker from Google didn’t like the “private right of action” concept, warning that it would allow private companies to “shakedown” Google. Walker also presented ways his company is working to combat illegal content online. The list included Google’s content ID systems (like those used at YouTube), the efficiency and number of takedown requests that they act on, ad tracking and automated tools to block ads on pirate sites and the exclusion of piracy-related terms from their auto-complete search feature. Walker asked that any proposed legislation be narrowly tailored to address the worst infringers, and that Congress work within the bounds of current copyright law.

Google soon became the focus of much of the inquiry. Questions about search result filtering and advertising restrictions came fast and furious. Walker explained Google’s general operating policies and the time his company spends dealing with unlawful content. Walker stressed the need for the tech and the content industries to work together: tech companies need to find the best and fastest ways to remove or block infringing content, and the content industries need to let them know what is and isn’t authorized. But in a world of complex assignments across multiple geographies, this can be very difficult. (If only there were a international database with standardized metadata and easy-to-find rights information….)

Morton form ICE agreed that the content industries need to present accurate information about the worst online infringers in order to avoid overstepping. He added that the true goal of any legislation should be to get the tech and content sides to work together to protect rightsholders in an efficient and precise manner.

Christine Jones from GoDaddy played the heavy, saying that we need to shut down all “choke points” in the system and discencentivize bad actors while removing users’ ability to search for illegal content and counterfeit goods online. “Unless there is consequence for bad behavior there will always be a safeharbor for criminals,” she said.

To our ears, free speech expert Floyd Abrams said it best: first, legislation must be narrowly tailored to impact the websites and domains that are the worst actors; second, Congress should not establish new laws but rather expand upon time-tested copyright law that already exists and build on enforcement measures that are already part of that law; third, any legislation should include reference to the laws of civil procedure to allow for fair due process protections.

We’ll be keeping our eyes on how these and other online enforcement efforts develop.