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How Hollywood could use trade law to create an internet blacklist


In 2012, online activists decisively defeated the Stop Online Piracy Act, legislation that would have created a government-backed internet blacklist. The idea became so toxic that content companies haven't made any serious effort to resurrect it in Congress

Yet a document leaked in the Sony hack reveals that the Motion Picture Association of America, one of SOPA's most powerful backers, hasn't given up on the site-blocking concept. The memo was drafted in August by the law firm of Jenner and Block on behalf of the MPAA. It outlines a legal strategy to use a little-known agency called the International Trade Commission to force internet service providers to block access to sites found guilty of distributing pirated content — an idea strikingly similar to the one internet activists defeated three years ago.

Do trade laws apply to the internet?

The ITC is an agency that enforces the nation's trade laws, and one of its functions is to issue orders barring the importation of pirated and counterfeit goods. Traditionally, this meant physical goods like bootleg DVDs or knock-off pharmaceuticals. But in an April ruling, the ITC ruled that same law could be used to bar the importation of certain digital files.

The case focused on a patent, held by Align Technology, that covered the concept of creating a series of plastic retainers that gradually shifted a patient's teeth into a new position. A company called ClearCorrect was designing retainers in Pakistan and then transmitting digital models of these retainers to the United States for fabrication. Since Align's patents covered the part of the process that occurred in Pakistan, ClearCorrect argued that US patent law didn't apply.

But the ITC has the power to block the importation of goods (the law calls them "articles") that infringe patents. Align argued that the digital files ClearConnect transmitted over the internet from Pakistan to the United States qualified as an import goods. And this argument won the endorsement of the MPAA, which argued in a pair of February briefs that expanding the ITC's authority to cover over electronic transmissions would help the fight against piracy.

In its April ruling, the ITC sided with Align, ruling that digital models for retainers were "articles" under trade law, and that the ITC could therefore bar ClearCorrect from "importing" them over the internet.

The MPAA's new anti-piracy plan

MPAA Chairman and CEO Chris Dodd. (Selin Alemdar/WireImage)

Of course, Hollywood doesn't care how trade law applies to orthodontics. The MPAA is interested in combatting movie piracy. And a legal brief leaked by the Sony hackers lays out a roadmap showing how Hollywood might leverage that April ITC ruling to create a SOPA-style internet blacklist.

If a digital model of a retainer is an "article" under trade law, then it seems logical that a pirated movie file could be an "article" too. And when the file is transmitted into the United States over the internet, that could amount to "importing" the file.

The ITC stops the importation of counterfeit and pirated goods by issuing exclusion orders barring shippers, retailers, and other intermediaries from importing or distributing them. In its memo to the MPAA, the law firm of Jenner & Block examines whether the ITC could order broadband providers like Comcast or Verizon to block the "import" of pirated movie files from overseas websites. The memo argues that the ITC might be persuaded to issue this kind of order.

This argument would be something of a long shot. The ITC has the power to regulate two types of activities: importation and sale after importation. But it might be hard to convince the courts that US ISP are involved in either activity.

A file will often pass through several networks as it travels from a foreign country to the United States. So the customer's ISP won't necessarily be the "importer" — the company that carried the file across the border. That could make it difficult to convince the ITC and the courts that broadband ISPs are importers under trade law.

And ISPs don't exactly sell digital files, though they do sell the bandwidth customers need to download the files.

On the other hand, the ITC has taken a fairly broad view of its power to issue exclusion orders. And the law firm was optimistic it could bring the courts around. "We may be able to develop a case that the network access ISPs, by virtue of the integral role that they play in the process of accessing and delivering infringing content from the foreign site to the end user, should be treated as an importer," the memo says.

Similarly while ISPs aren't selling digital files, the memo suggests that "we can argue that the term 'sale' should be read expansively to include the distribution of articles on the Internet as part of a network access ISP’s commercial service."

A backdoor internet blacklist

The memo references two previous memos on the same topic dating back to 2012. That suggests that the MPAA has been considering this legal strategy for several years. Still, the industry hasn't made any of these arguments in court, and it's not clear if they will do so. I sent two emails to the MPAA seeking comment but didn't get a response.

But if the MPAA does pursue this legal strategy, it could have huge implications for the future of the internet. "This is basically a strategy to effectuate one of the most heavily criticized part of SOPA through a trade court," says Charles Duan, a legal expert at Public Knowledge.

Duan argues that fighting online piracy is "far afield" from the job the ITC was created to do. He argues that if the government is going to get more aggressive about regulating online content, the rules should be established by Congress through the legislative process.

Also, treating digital transmissions as imports could create a lot of unnecessary headaches for internet users. "If I'm communicating with someone in a foreign country, I don't normally think about whether my data is going through customs," Duan says. The internet is a single, global network that doesn't draw distinctions between domestic and foreign servers. In Duan's view, it would be a huge power grab for the ITC to assert jurisdiction over information that flows across international borders.