[Hague-jur-commercial-law] Wall Street Journal op-ed: A Bill That Chills

[Thiru Balasubramaniam]

Commentary

A Bill That Chills

By *LES VADASZ*
July 21, 2004; Page A10

Two years ago, I had the "pleasure" of testifying before the Senate 
Commerce Committee on the so-called Hollings bill, which aimed to 
protect entertainment content against piracy by getting the government 
involved in the design of the innards of personal computers. Far from 
protecting against piracy, the bill would have suffocated innovation in 
the high-tech industry. Rationality prevailed, and the bill never moved 
forward.

Yet last month, a bill with similar goals was introduced by Orrin Hatch. 
The Inducing Infringement of Copyrights Act of 2004 -- the "Induce bill" 
for short -- would make liable anyone who "intentionally aids, abets, 
induces or procures" a copyright violation. As President Reagan once 
remarked, "Here we go again." Sen. Hatch and others argue that the bill 
will protect kids from porn and punish those who "intentionally induce" 
piracy. In reality it will do neither. But it will do serious harm to 
innovation.

The problem with the "Induce bill" is not its intent, but its overly 
broad language: Any person or device that "aids, abets or induces" the 
sharing of copyrighted material would be subject to civil and criminal 
proceedings. This would include the manufacturers and end-users of such 
popular file-sharing devices as Apple's iPod. A mock lawsuit is 
currently circulating on the Internet, showing how iPods could be deemed 
illegal under the bill, and how Apple could face fines of $150,000 for 
each one produced; Toshiba could even face fines for making the hard 
drives inside them. But it doesn't stop there. There might even be fines 
for newspapers like The Wall Street Journal for publishing reviews of 
iPods. This is, of course, ridiculous, but certainly possible under the 
wording of Induce.

The chilling effect that a law like this would have on innovation cannot 
be underestimated. I spent most of my 42-year career in high-tech 
focusing on the business challenges of new technology, either as an 
engineer or manager developing new products, or as the president of 
Intel Capital, funding many new ventures in the IT industry. I learned 
that innovation needs the right environment for it to be nurtured, 
funded, protected and rewarded.

Even in the most optimal situation, only a small minority of projects 
become commercial successes. Although we know this, we fund them because 
of the huge opportunity they represent if they succeed. We feel 
comfortable judging the risk, since the past performance and creativity 
of the group means that some of the outcome is under our control. But 
the final result is always uncertain and a law with dodgy legal 
implications will tip the balance against funding.


      * * *

Consider this: What if the "Induce bill" had passed back when one of my 
projects was the development of the first microprocessor? Intel was a 
tiny company then, but with high hopes, operating in a 
yet-to-be-developed market. Would we have pursued this idea if someone 
said that we'd get sued for "inducing" someone to steal? After all, 
computers that pirates use have microprocessors, too. This may sound 
far-fetched, but it isn't; you need to live within one of these tiny, 
innovative, high-tech companies to really understand what uncertainty 
means. I'm glad that a development as important as the microprocessor 
never had to face this dilemma.

If this bill is enacted, many new opportunities will migrate outside the 
U.S.; others will never happen. It's unconscionable that at a time when 
our economy needs /more/ innovation, we'd consider enacting a law that 
would surely lead to less. Innovation means jobs, productivity, a 
betterment of our lives. When you tamper with that, you damage the 
engine that gave us our living standards. The Hollings bill was 
attempting to tamper with innovation -- it had to be stopped. The 
"Induce bill" is similarly attempting to tamper with innovation -- it 
must be stopped, too.

To be sure, new technology will pose societal challenges. The Internet 
and the PC were very important developments, and we have yet to fully 
digest all their ramifications in our everyday lives. Some of the 
unintended consequences of new technology are clearly not desirable. No 
responsible person in the high-tech industry condones the practice of 
piracy or the exposure of our children to porn via the Internet. 
However, bills like Induce are misleading us, by making us believe that 
they "solve" the problem, when in effect they only cause bigger problems.

What we need more are innovations like Apple's iTunes Music Store that 
make the Internet a more friendly business environment for entertainment 
content. What we need is more risk-taking by the entertainment industry 
to utilize new technologies, to both deliver and protect their content. 
The more we attempt to provide government protection to the old ways of 
doing business, the less motivation we provide to the entertainment 
industry to adapt and benefit from new technology. We need better ways 
for parents to supervise children's use of the Internet: New filtering 
technology is invented every day. We need more willingness by parents to 
oversee what kids are doing with the computer -- and new technology can 
help with this task. Let's not abdicate this responsibility to the 
government.

Most importantly, what we need are legislators who can curb their urge 
to legislate in areas where their actions are likely to do more harm 
than good.

/*Mr. Vadasz was a director and executive vice president of Intel until 
his retirement last year.*/

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