In January, a number of websites, including Firefox (shown above), banded together to coordinate a blackout of services in protest of SOPA and PIPA.

In January, a number of websites, most notably Reddit, Firefox, Google and the English version of Wikipedia banded together to coordinate a blackout of services across the World Wide Web in protest of the Stop Online Piracy Act (SOPA) and the PROTECT IP Act (PIPA). Notable examples of the protest include Google’s blackout of its homepage logo and Wikipedia’s darkened banner reading “Imagine a world without free knowledge” and a complete shutdown of services for a 24-hour period.

Although SOPA and PIPA have not been voted on yet (and there is no vote in sight), these laws mark a step back in the Obama administration’s push to promote entrepreneurship and innovation. SOPA and PIPA have the potential to put a damper on online innovators, entrepreneurs, and the feedback loop between customers and providers that the web enables.

What are SOPA and PIPA?

Introduced by Rep. Lamar Smith (R-TX), the Stop Online Piracy Act (SOPA) and its Senate companion bill, the PROTECT Intellectual Property Act (PIPA), are bills that aim to enable U.S. law enforcement officials to combat the online pirating of intellectual property and goods and online commerce involving pirated materials. SOPA’s full title as House Resolution 3261 reads that its intent is “To promote prosperity, creativity, entrepreneurship, and innovation by combating the theft of U.S. property, and for other purposes.”

What’s next?

Due to the overwhelming response to the online protests in January, the SOPA vote has been tabled. Senate Majority Leader Harry Reid (D-NV) announced that the PIPA vote originally scheduled for January 24 has also been postponed indefinitely.
The Center for Democracy and Technology explained their concerns regarding SOPA’s key provisions in a 2-page white paper in November, which include:

• Authorizing the U.S. Attorney General to issue injunctions against “foreign injunction sites” or portions of those sites, that are deemed to be facilitating copyright or trademark infringement

The U.S. Attorney General would have the authority to file suit against websites that are judged to be infringing on copyright or trademark infringement, regardless of the origin of the website. Internet Service Providers (ISPs) would then be required to ensure that traffic be redirected from sites deemed to be participating in copyright or trademark infringement. Search engines like Google and Bing would also be required to prevent these sites from showing up in search results. An entrepreneur’s Web site could have traffic redirected without proof of intent of copyright infringement, decreasing branding and advertising power.

• Creating a cease-and-desist like system requiring advertising networks and payment facilities to stop conducting business with websites alleged to be “dedicated to theft of U.S. property.”

Private parties like ad networks and payment services would have five days to cease business with any site that is alleged by any rightsholder to have engaged in theft of online material. Again, for entrepreneurs who make a living by advertising online, this raises the likelihood that small, Web-based businesses may fail if deemed to have participated in “theft of U.S. property” without proof of intent.

SOPA would also expand existing criminal laws to include unauthorized reproduction of copyrighted content, for which the maximum penalty would be five years in prison. This heavy punishment, in addition to the broad and ill-defined standards that SOPA sets without including a provision for establishing proof of intent, would fuel a sense of fear around innovation and entrepreneurship, which would be detrimental for innovators in the US.

In my view, the Obama administration has taken enormous steps to support entrepreneurs and innovation in the United States through a variety of channels, such as the Open Government Initiative and Startup America movement. In this vein, the government’s efforts would be better spent in the support of promising small businesses and entrepreneurs by cultivating an environment for innovation and entrepreneurship, as opposed to trolling for patent and copyright violations.

A first step in the right direction would be for Congress to involve entrepreneurs, innovators and content creators in drafting legislation that protects new technologies while cultivating American entrepreneurship and most importantly, makes sense for all involved stakeholders. Congress was widely criticized for not inviting scientists, engineers and content creators themselves to submit input on SOPA/PIPA and for making light of the lack of scientific expertise among Congressmembers during the bill’s debate. The broad language of SOPA should be narrowed through a component which addresses the intent to pirate while respecting the DMCA safe harbor to ensure user-generated content remains free and open.

The debate over SOPA/PIPA reintroduces innovation and entrepreneurship into the public agenda, and may further invite a reexamination of other policies and processes in place to protect intellectual property and catalyze new knowledge. This includes the patent and copyright processes, as well as processes in place to handle the data generated by the Internet and flow of knowledge. It is vital that the American economy embrace small businesses and entrepreneurs. We may sometimes forget that some of the largest Internet and computing businesses today began as startups (see: Google, Microsoft and Apple) and it is critical that we find innovative ways to spur economic growth with entrepreneurship as one of the vehicles. Government mechanisms include the already mentioned Startup America and Open Government Initiatives; another piece of legislation that is currently in the pipeline is the JOBS Act, which aims to remove some financial regulations surrounding funding mechanisms that may hinder small business growth.

Finally, it is also critical to remember that the protection of new technologies is only one part of entrepreneurship; as Mathew Ingram writes for GigaOM, “It’s not about piracy, it’s about failure to adapt.” The media industry needs to recognize that the Internet itself has become a platform for free expression and commerce due to its characteristics of openness without gatekeepers. To support a bill that would remove the inherent characteristics of the Internet would be detrimental to economic activities and possibly backfire against the industry. Adaptability to technology and consumer needs requires creativity and engagement with consumers, not the dictating of what the media industry thinks its consumers need. I attended this year’s South by Southwest (SXSW) conference in Austin, and BravoTV’s Andy Cohen and New York Times executive editor Jill Abramson all noted the importance of ensuring their customers were engaged with their offerings, whether it was via fan interaction with a television show (Top Chef) or via the public editor column at the New York Times. Social media has definitely made it easier to communicate and facilitate interaction with your customer. Enabling your customer to engage with their favorite TV show, health care provider, or their local government starts a feedback loop whereby the citizen gets to participate and feels like someone is listening to their concerns. And by enabling interaction, the consumer ensures that the government, or the newspaper or their health care provider is held accountable for their services. In this regard, the media and Internet industries should work together in order to create innovative business models for the creation and consumption of media.