New federal web laws will confiscate wealth from adult, other industries

By J. DeVoy

Pat Leahy seems to actually know a bit about intellectual property law, if you listen to him speak long enough.  Based on the failed introduction of COICA in the fall, he’s clearly aware of the ravages piracy has caused on the broader recording and entertainment industries, as well as the harm of fraudulent goods being sold over the internet.  Leahy is now renewing his call for tough new internet laws to rein in “rogue websites” that sell counterfeit goods and are at the heart of the piracy epidemic that has sent adult entertainment revenues tumbling.

On the surface, government intervention is a good thing – an entity with tremendous resources and power is stepping in to preserve the market for IP holders’ goods.  If you think the government is doing this for the benefit of the adult market – or that these efforts will in any way aid adult – think again.  As always, the beneficiaries of these policies are the groups that weren’t hurting too badly in the first place.  For example, the RIAA and MPAA spend tons of money pursuing infringers just to preserve the markets for their respective works, as they have the resources to do so, and simply meting out high-profile punishments without regard for what recovery they can actually obtain is sufficient to serve their ends.  For example, the movie industry posted massive profits for 2010.  Then there are brands like Gucci and Louis Vuitton that love government intervention so that the market for their overpriced products is kept free from cut-rate counterfeiters.

The adult entertainment industry lacks this kind of centralized, well-funded activism apparatus.  While the sums at stake for the industry as a whole may rival those sought – and spent – by the RIAA and MPAA, a patchwork approach to litigation, including undisclosed settlements, keeps outsiders from seeing the full scope of piracy’s damages.  In just one case, Evil Angel and Jules Jordan won a $17.5 million award against various defendants for DVD piracy – an activity that seems almost quaint in the current climate of BitTorrent litigation.  While that’s a huge award, too, it still pales in comparison to the amount of money the RIAA will spend to fight pirates in a single year.  Especially after Citizens United, money talks, and its the mainstream recording industries that are spending more of it to influence legislative activity.

So, evidently, this legislative push is not made with the intent of making life easier for adult content producers.  In practice, it will not behoove them either.  Here’s why:

Destruction of evidence

When the government shuts down a site, it doesn’t preserve and disable it – it throws its logos up and tells the world that it has been taken over by the Feds.  For those in the process of building a case, or considering one, the information needed for that prosecution is gone, certainly as far as you’re concerned, if not from the potential defendant’s servers.  Some of these sites will reemerge on alternate domains, but then the facts underlying a producer’s case may have changed.  A view count on a pirated video, which has probative worth with respect to damages, may reset from hundreds of thousands of views to zero.

Confiscation of assets

Shutting down sites like channelsurfing.net isn’t enough.   The government is now pursuing those sites’ operators, such as Bryan McCarthy, for criminal copyright infringement.  “Hang ‘em high!” May be the rallying cry of some producers, but the funds used for criminal legal defense and assets forfeited to the government in a plea deal or upon conviction are all things that copyright holders won’t get in civil damages.  Servers, real property, and anything else used in running a site that the government confiscates under its ill-defined conception of rogue websites all go to the government – and there are a lot of ways the government ensures it receives this property.

In essence, these actions become a hidden tax on adult content producers who are robbed of a means to pursue litigation and the damages to which they may be entitled for copyright infringement.  While keeping one’s business afloat on copyright infringement lawsuits is a poor model, recouping lost sales by going after pirates makes a hell of a lot of sense, and can be pretty damn moral, too.  But if Congress gets its way, any potential gains studios may realize become government property.

This doesn’t even begin to address the free speech concerns of what would constitute a too-infringing website, and where that line would be drawn.  The threats to collaboration and innovation should be obvious.  And while many believe something should be done to aid in the fight against piracy, this probably isn’t the answer, as government intervention is money out of studios’ and producers’ pockets.

Market regulation is something the government should have some hand in, due to its reach and resources.  If all antitrust and market enforcement action were private, no group or groups would have the resources to find and police every instance of market abuse and cure them in an even-handed way free of self-interest.  It’s a good thing that the FTC and DOJ exist to fight antitrust violations (to the extent they can in the wake of Iqbal and Twombly), but for ICE to get involved by unilaterally shuttering websites goes far beyond the market-policing role and delves into something much more sinister.

3 Responses to New federal web laws will confiscate wealth from adult, other industries

  1. M says:

    Of course Senator Leahy knows about IP law. He’s been one of the moving forces behind patent reform legislation for years, and he’s buddies with at least one Federal Circuit judge.

    • J DeVoy says:

      Fair point; I always thought he was just some blowhard from VT – a state more closely associated with ice cream, teddy bears and aging hippies than intellectual property.

  2. [...] previously written about the futility of federal proposals to further regulate the internet for copyright [...]

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