Induce Act seeks to overturn “Betamax” decision; Puts scare in technology industry

Proposed new legislation that would outlaw peer-to-peer networks and electronics devices that could be used for copyright piracy is causing a scare in the high technology manufacturing community.

Called the Induce Act, the proposed new legislation is backed by some of the biggest names on Capitol Hill. Sponsors are Judiciary Chairman Orrin Hatch, (R-Utah) and Sen. Patrick Leahy, (D-Vt.). Co-sponsors include Senate Majority Leader Bill Frist, (R-Tenn.); Minority Leader Tom Daschle, (D-SD); Lindsey Graham, (R-SC); and Barbara Boxer, (D-Calif.).

Joining the legislators in supporting the bill is Marybeth Peters, the U.S. Register of Copyrights. She said the 1984 Supreme Court decision, known as the Betamax case, “should be replaced by a more flexible rule that is more meaningful in the technological age.” That 5-4 ruling said that VCRs were legal to sell because they were “capable of substantial non-infringing uses” — a legal shield that one federal court has extended to cover the Grokster and Morpheus file-swapping networks.

Critics of the The Induce Act said it could imperil products like Apple Computer’s iPod and other devices used by consumers for personal entertainment.

In an opinion article for The Wall Street Journal published last month, Les Vadasz, who retired last year as an Intel executive vice president, denounced the Induce Act as having a wealth of undesirable side effects. “The chilling effect that a law like this would have on innovation cannot be underestimated,” Vadasz said.

More than 40 trade associations and advocacy groups voiced similar sentiments. The Induce Act “would chill innovation and drive investment in technology” overseas, said the letter signed by CNET Networks, eBay, Google, Intel, MCI, Sun Microsystems, TiVo, Verizon and Yahoo.

“We would vigorously disagree that Congress ought to reconsider the Betamax decision,” said Markham Erickson, director of federal policy for NetCoalition. “We’re troubled by the Copyright Office’s suggestion that it’s no longer applicable in the digital era. In fact, we would suggest that the Betamax decision is one of the reasons why we had the explosion of the Internet, instant messaging and Web browsing products. The Betamax decision helped to foster this era of great products.”

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