The fight for the galaxy continues. The theater of war has shifted to Europe, but the story is the same. Emboldened by their recent victory in the United States scorching the Stop Online Piracy Act, opponents of Internet regulation scored another major victory.  The European Parliament International Trade Committee voted twenty-one to five with two members abstaining against referring ACTA to the EU Court of Justice for an opinion on whether the agreement violated fundamental EU rights.

Critics of the bill claimed the referral would rubber stamp the agreement and serve as nothing more than a parliamentary tactic to delay the final vote on the bill and reduce the effect of the U.S. SOPA/PIPA debates on the European public.  There might be merit in that claim because the process to evaluate the law was expected to take as long as eighteen months, enough time to fade the SOPA/PIPA controversy in the minds of European voters. Theoretically, after such a delay the debate could be recast in a different light and thus improve the chances of success.

As thousands of protesters across Europe and a European Member of Parliament would have it, ACTA will be referred directly to the European Parliament to be voted on in the next few months.  This may be the inglorious end to an international trade harmonization process that began in 2006.  The prospect of IP enforcement on the Internet in some form appeared inevitable in technologically advanced countries when in January 2012 twenty-two countries signed ACTA (with the notable exception of EU heavyweight Germany).  Most of the negotiations were done in secret.

The debate is about the creation of legal liability on the Internet to enforce intellectual property rights (IPR).  On one side is the entertainment industry — not a uniform collection of interests by any stretch of the imagination — while the other side consists largely of Internet Service Providers (ISPs).  ACTA is the latest effort of exasperated IPR holders, including the entertainment industry (which includes the artists we celebrate, to be fair), to retain some value in the artistic creations that the world enjoys and guiltily distributes across the Internet.  The problem of the Internet is that the open structure prevents effective enforcement of IPR because there are so many anonymous users throughout the world uploading and downloading material so quickly that controlling the transfer is technically impossible and enforcing IPR is so expensive that it is economically detrimental.  This problem is also known as “whack-a-mole.”

Unfortunately, with salvo after salvo of legally questionable distribution methods — such as Napster, Aimster, Grokster, Megaupload, The Pirate Bay — the entertainment industry responded by pushing international lawmakers to create some sort of legal framework to address what many rights holders see as theft.  ACTA is one of several versions of a similar legal framework (SOPA, PIPA, and TPP) that have attempted to transfer the enforcement mechanisms that IPR holders enjoy in the physical world to cyberspace. This latest defeat could signal an end to those efforts and force the entertainment industry to innovate new business models of distribution for the Internet (a la Spotify or iTunes).

The enforcement measures attempted to apply legal liability to one of the few chokepoints of the Internet (that could pay) – the ISPs.  Holding the ISPs liable would force them to police the behavior of their users and allow the IPR holders to sue ISPs if their rights were infringed.  Businesses naturally tend to attempt to reduce risk, in this case legal liability, by any means necessary, but cynics point to another benefit to ISPs in keeping the Internet free of regulations such as ACTA.  Many of the business models of the most common ISPs rely on monitoring the behavior of their users and selling advertisements individually targeted to each user as well as selling user information to other businesses. Thus, the more content available to users the more accurate the monitoring of user behavior will be and could subsequently increase the value of the information provided to businesses and advertisers.

Legislatively, the issue is that the ISPs have effectively applied their leverage to inform citizens of the negative effects of enforcement and have successfully defeated attempts to implement the enforcement measures. IPR holders must find a new business model that adjusts their rights to the reality that modern society is dependent on the Internet and the services that ISPs provide.  Undoubtedly, society’s dependence on the Internet will only increase and IPR holders will only face more difficultly in informing voters of their concerns.  After stalled attempts to implement these measures, the entertainment industry should consider negotiating with the ISPs to buy property rights to cultivate business models that distribute protected material fairly.

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