OTN Special Update - SOPA Put on Hold (2012-02-20)

SPECIAL
OFFICE OF TRADE NEGOTIATIONS

… for trade matters
OTN Update
February 9, 2012

SOP A Put on H ol d
A congressional vote on the anti-piracy bill SOPA, the Stop SOPA was crafted to be wide in scope as it endeavours to
Online Piracy Act (SOPA) was shelved on January 16. This protect US interests at home and abroad. It recognises the
headed off the threats made by a number of major websites importance of Intellectual Property (IP) to the US economy
such as Wikipedia, Reddit, Mozilla, WordPress and Tucows to as it relates to revenue, jobs and in particular the
institute a blackout on January 18 in protest of the proposed entertainment industry.
bill.1 The proponents of SOPA have decided to re-examine
and possibly refine the bill’s language to ensure that it is more The bill also facilitates the possibility of preventing ‘foreign
palatable for the myriad of technology companies and interest infringers’ of US Intellectual Property Rights from accessing
groups that have vehemently opposed its principles. or raising US capital for business ventures whether through
Opponents of the bill fear that it will negatively impact the US capital markets or through US investors.
openness of the Internet which is increasingly central to
innovation. On the other hand supporters of the bill believe it Section 107 of SOPA requires the Intellectual Property
will protect US innovation, revenues and jobs. Enforcement Coordinator (IPEC) working in conjunction
with other agencies to “identify and conduct an analysis of
SOPA has its origins in Hollywood where the major film and
music industry executives conceptualised the provisions of
SOPA and lobbied it to Congress for its enactment.

These proponents are of the view that the US loses millions
through internet piracy of protected content such as music,
videos and movies. Furthermore, there is a public health and
safety concern regarding the trafficking of inherently
dangerous goods and services such as counterfeit
prescription medication and those intended for use in a
military and a national security application.2

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), formerly the Caribbean Regional Negotiating Machinery
(CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy issues and developments
germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation issues within its mandate
and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy
developments of currency and importance to the Caribbean.
http://www.crnm.org

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notorious foreign infringers whose activities cause significant Domain Names (websites) or Domain Names Servers from
harm to holders of intellectual property rights in the United translating Domain Names to unique IP addresses, a core
States”. In carrying out this duty, the Bill further indicates that function and the very foundation of the internet. However,
the IPEC shall provide a Report to Congress that includes, there is a concern that the DNS-blocking mechanism
inter alia, violates the First Amendment of the U.S. Constitution with
respect to freedom of speech5. DNS-blocking prevents
1. “an examination of whether notorious foreign access to an entire domain name, not just a specific URL
infringers have attempted to or succeeded in and could therefore block all content, both infringing and
accessing capital markets in the United States for non-infringing. The DNS-blocking mechanism is proposed
funding or public offerings”, and as a key provision of the bill in the fight against online
piracy, but will be scrapped until the U.S. House Judiciary
2. “A discussion of specific policy recommendations to can further examine the issues surrounding this provision.
deter the activities of notorious foreign infringers and
encourage the foreign businesses to adopt industry The White House has also commented on SOPA and a
norms that promotes the protection of intellectual similar bill called Preventing Real Online Threats to
property globally.” Economic Creativity and Theft of Intellectual Property Act
(PROTECT IP Act or PIPA). These bills have been
The recommendations would further examine “whether receiving wide support within the US legislature and from
notorious infringers that engage in significant infringing activity major copyright and trademark owners, particularly those in
should be prohibited by the laws of the United States from the film, music, pharmaceutical and book publishing
seeking to raise capital in the United States” and would also industries. The White House has made it clear however
examine “whether the United States Government should that the US President could veto any bill “that reduces
initiate a process to identify and designate foreign entities from freedom of expression, increases cybersecurity risk, or
a list of notorious foreign infringers that would be prohibited undermines the dynamic, innovative global Internet”. 6
from raising capital in the United States.”
SOPA Provisions
In the US there already exists a number of copyright and IP
laws including the Digital Millennium Copyright Act of 1998 The key provisions of SOPA can be summarised as follows:
(DMCA).3 The DMCA prohibits persons from gaining
unauthorised access to a copyrighted work by circumventing i. It authorises the US Attorney General to seek
technological protection measures put in place by the copyright court orders against “foreign Infringing” Internet
owner designed to control access to the copyrighted material. websites that conduct business in the United
If it is determined that a technological device was used for States or are accessed by US residents that are
circumvention and violates the DMCA, the device can be committing or facilitating online piracy, to cease all
seized and or forfeited by U.S. Customs and Border Protection activities constituting Intellectual Property (IP)
(CBP).4 offences.

Advocates of SOPA are adamant that the existing IP laws do ii. Internet Service Providers (ISPs) and Domain
not go far enough to protect US IP interest, in particular from Name System (DNS) providers would be required
foreign entities, and do not have the reach to actively to apply the (DNS) blocking methods described
discourage or prosecute these entities. above to its subscribers attempting to access any
“foreign infringing site” that is accused of copyright
The enactment of SOPA was halted only days after it was infringement. The ISPs and DNS providers must
announced that the controversial Domain Name System (DNS) take action within 5 days after being served with a
blocking mechanism was thought to be violating U.S. court order to shut down the infringing site.
Constitutional rights.
iii. Online advertising networks, payment facilitators,
The DNS provision in Section 102 requires US Internet Service search engines and ISPs, complying with a court
Providers (ISPs) to block their subscribers from accessing order from the US Attorney General to enforce the


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provisions in the bill, will have immunity from suit and “fined not more than $2,000,000 or imprisoned not
liability from entities facing prosecution. Furthermore, more than 10 years or both”. A repeat offender
should one of these complying businesses, of their may be “fined not more than $5,000,000 or
own initiative, and without a court order, decide to imprisoned not more than 20 years or both.”
cease doing business with an entity that is allegedly
committing or facilitating IPR violations, it will also ix. To protect public health SOPA makes illegal the
have immunity from suit. The bill also absolves online distribution of counterfeit drugs. It also
service providers of any liability once they have makes illegal the trafficking of false or misleading
complied with a court order to discontinue service to labels on goods or packaging of any nature.
an entity which is circumventing or using by passing
tactics. x. To protect US businesses from Foreign espionage
the provisions in the Bill amends the US Code on
iv. Provisions allow for any Internet service provider to Foreign and Economic Espionage to incur more
accept “good faith” complaints by IP owners once the severe penalties for individuals and companies.
necessary proof is provided as required by the Bill to The “theft of trade secrets” or “economic
take action against an infringing entity before the espionage” now gets an individual 20 years
issuance of a court order. instead of 15 and a fine between $1,000,000 and
$5,000,000 instead of not more than $500,000.
v. The bill provides for a reversal or vacation of a court Companies will now be fined “not more than the
order by the accused entity once proof is presented greater of $10,000,000 or 3 times the value of the
of no wrong doing. A petition must be made in the stolen trade secret, instead of $10,000,000.
US court system to reverse the court order.
xi. It empowers copyright owners whose IP rights
vi. For websites accused of copyright infringement have been breached to sue both US and foreign
through a court order, the Attorney General (AG) can websites that are in direct violation of US IP laws
order payment providers such as: PayPal, Visa and and regulations.
Mastercard; online advertising networks, search
engines such as Google, Microsoft and Yahoo; ISPs, xii. Finally, persons can be subject to criminal
and domain name registrars to stop doing business prosecution for streaming copyrighted works
with those alleged offending websites. For the without permission over the Internet. For a first
service providers to manage the notification process, offence of streaming 10 pieces of music or movies
the bill requires that each service provider within a six-month period, can result in up to five
designates an agent and register him or her with years’ imprisonment. To ensure compliance, the
their local copy right office. This person will act as Attorney General can bring action against any
the liaison and company representative between the entity that knowingly and wilfully provides or offers
US AG office, IP owners, its customers and their to provide a product or services designed or
company. marketed for the circumvention or bypassing of
measures used to prevent access by US
vii. The Bill also facilitates the possibility of ensuring that subscribers to foreign infringing sites.
‘foreign infringers’ of US Intellectual Property Rights
don’t succeed in accessing US capital for business Dangers of SOPA
venture whether through the US capital markets or
US investors. Although SOPA is designed to combat online piracy its
detractors emphasize that inherent in its provisions are
viii. The Bill in Sec. 202 seeks to amend Section 2320 of various forms of online censorship and the openness of the
title 18, United States Code by criminalising the Internet must be safeguarded for innovation to thrive.
trafficking, import, export, distribution and production Freedom of expression and innovation are closely linked
of counterfeit drugs such that the offender may be and it is argued that SOPA threatens to introduce legislation
that would severely affect both.

4

to seek, as a first resort, some sort of diplomatic solution
rather than pursue prosecution. As an example, Google
continues to be forced by the Chinese Government to adhere
to its censorship laws particularly on filtering search results for
certain subject matter despite the company’s principles on
freedom of expression and the free flow of information.

Caribbean businesses which utilise website hosting services
in the US would be subject to SOPA if the Bill is passed into
Getty Image
law and could result in loss of web presence and proprietary
information and data resident on US servers. The only
recourse for Caribbean firms would be to challenge the action
in the US courts which has major financial implications as it
Detractors of SOPA are further convinced that the bill raises
relates to legal fees, loss of use and lack of access to
serious concerns regarding Internet security especially as it
important company information.
relates to Domain Name Systems (DNS) filtering. They believe
that DNS filtering will be ineffective for that purpose and will
Caribbean content providers and users would be severely
interfere with cross-border exchanges of data and services
constrained by SOPA in accessing and distributing US
which is a critical element for innovation and social
content and ideas, which can aid in generating new innovative
development in an information society. Opponents of SOPA
ideas in the Caribbean. Sadly, in the region there is a culture
further state that technology start-ups and online companies
of online piracy and a general lack of respect for IPR. Bootleg
may seek greener pastures and relocate outside the US as
copies of the latest movies and music are displayed publicly
SOPA could create a more onerous environment for them to
for sale in almost every Caribbean capital. Our countries are
operate.
already compelled like other developed counterparts to
enforce International IPR agreements. SOPA would serve to
increase the legislative requirements with which the region
Possible Impact on the Caribbean
has to comply. There will have to be a paradigm shift in the
Caribbean’s attitude towards IPR to avoid the negative
To the extent that there is validity in the arguments presented
repercussions of not respecting the IPR of others.
by SOPA detractors, SOPA could have a similar effect
regarding the stifling of innovation and social development in
Caribbean firms with an existing business model that is
the Caribbean as in the US. It could also negatively impact
heavily dependent on US content would now have to acquire
trade in cross-border data and services as argued in Google’s
it legitimately, which could result in increased operating cost.
May 2008 Congressional testimony on freedom of expression.7
SOPA attempts to protect the creator of the content and
In its testimony, Google stated that “digital barriers to the free
determines how that content can be used to create additional
flow of information are equivalent to traditional trade barriers
content, and therefore impacts how foreign entities can profit.
which are illegal under WTO rules”. When the flow of
information is blocked innovation suffers.
Opportunities
Caribbean firms operating internet sites or portions of internet
sites which provide online business services to residents of the
The passing of SOPA into law could benefit the Caribbean
US that commit offences as defined under SOPA could face
and its firms as it may result in an exodus of US online
the threat of prosecution by the US. Given the Caribbean’s
companies to the Caribbean due to the Caribbean’s similar
heavy dependence on US goods and services, and the
time zone, similar language requirements and satisfactory IT
significance of the US’s geo-political influence on the
infrastructure. This could lead to technology, skills and
Caribbean, the threat of prosecution for Caribbean firms could
knowledge transfer while providing business opportunities for
be comparatively higher than for Chinese businesses guilty of
Caribbean firms and ICT professionals.
the same offences. China’s status and importance in the world
economy could compel the US government or US companies
Caribbean firms, such as Lime and Fujitsu, which have


5

The influence of the US online businesses will likely continue
to influence the debate on SOPA. Hopefully, what will
emerge will safeguard against any perceived or real negative
implications whilst preserving the valid interest of intellectual
property protection.

Analysis done by Derek E. Browne, IT Specialist, Office
of Trade Negotiations (OTN), CARICOM Secretariat.

ENDNOTES:

recently launched their Cloud services operations with server 1
. On January 18, 2011 Wikipedia did however move its English-
farms located in the region, stand to benefit tremendously as language content offline in protest of SOPA for a 24 hour period.
they can offer web, data and other online services to US firms 2
looking to escape the onerous environment of the US. Some . Section 202 of the SOPA bill seeks to address internet trafficking
US firms have already started moving their Cloud services, of dangerous goods and services through the amendment of
Section 2320 of title 18, United States Code.
particularly their data centre services off shore, or seeking
foreign companies that provide like services. Currently, there 3
. The Digital Millennium Copyright Act, 1998:
are two major reasons for this exodus – the US PATRIOT Act, http://www.copyright.gov/legislation/dmca.pdf
and data privacy laws which are less protective of consumer
4
and company data than legislation found in other jurisdictions.8 . US Customs and Border Protection, (2009, October, p 12, para.5,
1-10). What Every Member of the Trade Community Should Know
About: CBP Enforcement of Intellectual Property Rights. Retrieved
The US PATRIOT Act empowers US Home land security
February 12, 2012, from: http://www.cbp.gov
agencies by “dramatically reducing restrictions on law
enforcement agencies' ability to search telephone, e-mail 5
. Mack, Lauren. 2011. ‘DNS Filtering to fight Internet Piracy
communications, medical, financial, and other records” which violates the First Amendment’, JURIST.
is a major concern for companies that provide online services. http://jurist.org/dateline/2012/01/lauren-mack-DNS-filtering.php
These companies would like to avoid facing legal issues Retrieved on January 13, 2011
regarding the sovereignty of data retained in data centres for 6
. U.S. White House response on SOPA. Retrieved February 15,
example when information is created in one jurisdiction and
2012, from: https://wwws.whitehouse.gov/petition-
stored in another. SOPA, if passed, can be the third reason for tool/response/combating-online-piracy-while-protecting-open-
the continued exodus of US companies seeking Cloud and-innovative-internet
services off shore, which can provide new opportunities for
7
Caribbean firms. . Google's May 2008 Congressional testimony on Promoting Free
Expression on the Internet. Retrieved February 15, 2012, from:
SOPA can be an opportunity for the Caribbean to focus on http://googlepublicpolicy.blogspot.com/2008/05/promoting-free-
expression-on-internet.html
developing and using its own original content or even using
content originating from outside of the US. The Caribbean 8
. United States Patriot Act. Retrieved February 15, 2012, from:
Cultural industries can be an immediate beneficiary of such a http://www.fincen.gov/statutes_regs/patriot/index.html
thrust which could provide the impetus for the much needed
investment in the Caribbean Cultural industries.

The Caribbean can become a major player in the world as a
supplier of meaningful knowledge by contributing valued local
content online. The Caribbean’s knowledge of various plants
and their medicinal properties, as well as herbal remedies
immediately comes to mind.


OTN Special Update - SOPA Put on Hold (2012-02-20)

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OTN Special Update - SOPA Put on Hold (2012-02-20)