ArtsWatch: FTC Warns U.S. Companies Of P2P Dangers

Leading federal consumer protection agency formally notifies close to 100 businesses
March 01, 2010 -- 8:17 am PST
By Philip Merrill /

The Recording Academy actively represents the music community on such issues as intellectual property rights, music piracy, archiving and preservation, and censorship concerns. In pursuing its commitment to addressing these and other issues, The Recording Academy undertakes a variety of national initiatives. ArtsWatch is a key part of an agenda aimed at raising public awareness of and support for the rights of artists. To become more involved, visit Advocacy Action @ and sign up for Advocacy Action E-lerts.

The Federal Trade Commission announced on Feb. 22 that approximately 100 notification letters had been sent to businesses — public and private, large and small — stating their data network security had been breached due to peer-to-peer file-sharing. (link) The three sample letters released by the FTC include language such as, "Your failure to prevent such information from being shared to a P2P network may violate laws enforced by the commission.... It is your responsibility to protect such information from unauthorized access, including taking steps to control the use of P2P software on your own networks and those of your service providers." The agency also announced its new educational resource Peer-to-Peer File Sharing: A Guide for Business. While praising the warnings, RIAA Chairman and CEO Mitch Bainwol emphasized the need to address the actions of P2P software developers and asked, "...what will it take to spur meaningful and long-overdue action against those who profit from nefarious use of P2P?" (link)

On Feb. 23 the Federal Communications Commission released a survey exploring the reasons why 93 million U.S. consumers have not adopted a broadband Internet connection. (link) Although the single major issue was cost, 10 percent of non-adopters were "concerned about potential hazards of online life, such as exposure to inappropriate content or security of personal information." These were grouped by the survey within a demographic that could use digital literacy education because broadband adopters are more likely to be digitally literate. In fact, many broadband users are themselves digitally illiterate and fears over personal security are well founded. The full report gives an expanded look at the segment of non-adopters described as "digitally uncomfortable" — representing 20 percent or more than 18 million consumers. (link) Although most members of this group have a computer, 53 percent of them were worried that broadband Internet use would put their personal information at risk. The survey identifies its categories with an emphasis on the desirability and benefits of Internet broadband, but its findings also reveal that reality-based fears of hacking, spyware and malware pose a significant obstacle that needs to be addressed — perhaps by more than just education.

Representing seven major content industry associations including MPAA and RIAA, the International Intellectual Property Alliance submitted its annual recommendations to the U.S. Trade Representative on Feb. 18 for this year's Special 301 review. (link) As per usual, China and Russia are featured because of their high levels of piracy, however Russia won praise for its antipiracy efforts. IIPA singled out Canada for not having made any promised reforms to its copyright law and recommended that it retain the "Priority Watch List" status it first received last year. IIPA also praised the USTR's negotiations on the international Anti-Counterfeiting Trade Agreement. Leading consumer advocates Electronic Frontier Foundation and Public Knowledge also filed comments this year criticizing the Special 301 process as not relying on evidence or a transparent process and as overly dependent on IIPA data and recommendations. (link) The groups recommended that USTR institute a reply period in subsequent years for comment on IIPA's annual filing and recommended that IIPA data be subjected to independent review.

Details of January's Anti-Counterfeiting Trade Agreement negotiations have become public by now-traditional leaks to the media. Many observers are particularly concerned with Internet-related draft language. One leak to Canadian copyright expert Michael Geist seemed to not include a three-strikes approach but raised concerns that the United States was planning to spread the anti-tampering approach in its Digital Millennium Copyright Act to the rest of the world. (link) A somewhat different leak to PC World stimulated worries about what actions Internet service providers would be required to take in order to retain their safe harbor from prosecution. (link) On Feb. 22 European Data Protection Supervisor Peter Hustinx joined his voice to the chorus of complaints about the secrecy of the negotiations: "A right balance between protection of intellectual property rights and the right to privacy and data protection should be ensured." (link)

On Feb. 19 the office of UK Prime Minister Gordon Brown responded to a petition objecting to account termination as a technical measure to be used against P2P file-sharers under the UK's Digital Economy Bill. (link) The response clarified that notifications were expected to work in most cases, followed by reduction of bandwidth or temporary account suspension "as a last resort." Termination of Internet accounts was expected to only come up for "the most extreme — and therefore probably criminal — cases." reported on Feb. 23 that many of Spain's independent labels and distributors warned the government of an impending lawsuit alleging negligence and claiming financial damages for its failure to address the harm caused by "massive free downloading." (link) Although Spain has tougher copyright legislation pending — the Sustainable Economy Law — its progress is slow and the labels plan to file their suit in March.

On Feb. 16 the French National Assembly voted to approve draft legislation that would require Internet service providers to filter the content of Internet traffic and block offending sites, for example those involved with child pornography or music piracy. (link) Critics of the legislation object that ISP filtering will not be effective and could be abused.


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