January 2012

[Commentary] By most measures, the Web site Mega­upload was a 21st-century success story, with 50 million daily visitors and $175 million in profits. According to the Obama administration, it was also an “international organized crime enterprise.”

In an indictment last week, the Justice Department accused the company and several of its principals of conspiracy, racketeering and vast violations of copyright law. The loss to copyright owners of movies, television programs, entertainment software and other content: some $500 million. The government calls this the largest criminal copyright case in the nation’s history. Megaupload maintained servers in the United States and relied on U.S.-registered domain names, allowing U.S. prosecutors to tap domestic laws to shutter the business. But what if the Web site had been run using only foreign-based servers and foreign-registered domain names? U.S. law enforcers would have had a difficult if not impossible time stopping the alleged wrongdoing. That reality, of course, is what gave rise to the Protect IP Act (PIPA) and its House counterpart, the Stop Online Piracy Act (SOPA), which proposed to give the Justice Department and copyright owners the legal reach and muscle to thwart overseas theft of American intellectual property. SOPA was fatally flawed, with vague provisions that could have made legitimate Web sites vulnerable to sanctions. PIPA was more measured, allowing action against a site only if a federal judge concluded it was “dedicated to” profiting from the unauthorized peddling of others’ work.

Last week, smarts won — at least one round.

Wikipedia went dark and Google blacked out its logo, as the brainiacs of Silicon Valley tilted at the A-list media giants of Hollywood and New York. At issue were two antipiracy bills that few Americans had even heard of. Suddenly, though, people were buzzing about SOPA and PIPA — short for the Stop Online Piracy Act and the Protect Intellectual Property Act. The clash prompted a remarkable outpouring within the Internet world. One reason for that, says Sandra Aistars, the executive director of the nonprofit Copyright Alliance and a former associate general counsel for Time Warner, is that the Web’s anti-SOPA message is “sexier” than the facts offered up by Hollywood. “Downloading stuff on the Internet for free is cool,” said a person close to Viacom, who spoke on the condition of anonymity so as not to jeopardize his relationship with the company. “Our message isn’t cool.”

[Commentary] Senate Majority Leader Harry Reid (D-NV) last week said he was putting off a vote on online piracy legislation "in light of recent events." Those events were Silicon Valley proving that it can harness the power of the Web to protect itself against Washington—the clearest evidence yet of how technology moves so fast that regulations have no chance of keeping up.

Computer science trumped political science over the arcane topic of copyright. Hollywood and the music industry had lobbied for laws aimed at foreign websites that violate copyright; the laws included banning search engines from linking to the websites and even deleting them from the Web altogether. These intrusive remedies, which would have been at the discretion of the Justice Department, included vague rules that could have affected U.S. websites. The proposals went far beyond simply bringing foreign sites into line with the copyright protections in effect domestically.

Businesses are bracing for a radical overhaul of European Union privacy rules to be unveiled this week, which some fret could result in costly burdens and large fines for errant companies.

The European Commission will on Jan 25 propose far-reaching changes to rules dictating how companies handle any personal information, the first time EU regulations first crafted in 1995 are updated. The proposals will impose a single set of privacy standards in the EU’s 27 countries for the first time, overriding often divergent national rules. Though watched particularly keenly by technology companies such as Google and Facebook, who store large amounts of personal data, the new EU privacy rules will impact the entire corporate landscape.