from the this-won’t-make-anyone-safe dept
Final fall we had an entire sequence of weblog posts explaining simply how harmful Rep. Jerry Nadler’s SHOP SAFE invoice can be. It’s a kind of payments that in the event you simply hear what it’s about — stopping the sale of counterfeit items on-line — sounds good. However provided that you don’t perceive how mainly something really works in the true world, together with the legal guidelines round legal responsibility and counterfeiting. SHOP SAFE would upend ideas associated to middleman legal responsibility and mainly lock in Amazon as one of many solely corporations that would in all probability deal with the large compliance prices related to SHOP SAFE.
And, so, in fact, Rep. Nancy Pelosi was blissful to incorporate SHOP SAFE within the in any other case helpful omnibus COMPETES Act. The Senate companion to COMPETE, often known as USICA, didn’t embrace SHOP SAFE and the 2 homes of Congress have been attempting to kind out the variations.
Just lately, two letters had been despatched to congressional leaders to elucidate simply how extremely harmful it might be for the web if SHOP SAFE grew to become legislation. The primary letter was from over two dozen tutorial consultants in trademark/counterfeit legislation, explaining the intense deficiencies within the invoice:
Quite than defending shoppers, the SHOP SAFE Act would curtail many current on-line market choices that at present give shoppers larger selections and spur worth competitors that reduces client prices. In a pandemic period with rising inflation, taking away choices for shoppers to buy at house and growing client costs is the other of what constituents need Congress to do. The invoice additionally places many small on-line entrepreneurs, and the roles they supply for People, in danger.
The SHOP SAFE Act would do that by essentially altering trademark legislation. For over a decade, trademark legislation has been clear that on-line marketplaces should honor takedown notices that trademark homeowners submit about particular listings. This well-settled rule balances the pursuits of trademark homeowners, on-line market operators, on-line market distributors, and shoppers. The SHOP SAFE Act would overturn the present rule in two crucial methods. First, it might empower trademark homeowners to ship broad takedown notices that aren’t listing-specific, placing on-line marketplaces in an untenable place of attempting to find out the legitimacy of particular person listings with out the good thing about the trademark proprietor’s distinctive experience. Second, it might create a brand-new statutory reason behind motion towards on-line marketplaces that might maintain them liable even in circumstances the place trademark homeowners didn’t ship any takedown notices in any respect.
As now we have seen repeatedly over the previous twenty years, in each the trademark and copyright contexts, rightsowners routinely ship illegitimate takedown notices and overclaim their rights. However present legislation permits companies and different recipients of such calls for to push again. SHOP SAFE removes the balancing strategy of current legislation. The SHOP SAFE Act will speed up misbehavior—with the assistance of the act’s imprecise definitions for key phrases corresponding to “counterfeit,” “digital commerce platform,” and “items that implicate well being and security.” Trademark homeowners will misuse their new and extraordinary powers to broadly prohibit professional aggressive choices on on-line marketplaces, corresponding to non-infringing imitators and resellers of used items. Moreover, within the face of primarily unmanageable authorized legal responsibility, on-line marketplaces would proactively prohibit many professional market actions. This can particularly affect on-line retailers and the roles they create.
Sarcastically, the modifications by on-line marketplaces in response to the SHOP SAFE Act are more likely to harm trademark homeowners. First, the compliance and threat administration prices imposed by the act will remove current on-line marketplaces from the trade, consolidating e-commerce right into a smaller variety of marketplaces/retailers and enhancing their means to dictate worth and different phrases to trademark homeowners. Second, the lowered exercise in on-line marketplaces will remove distribution alternatives for trademark homeowners, lowering their gross sales quantity.
The SHOP SAFE Act represents a negative-sum coverage, the place it doubtless hurts each stakeholder and advantages none of them. On condition that threat, this isn’t the type of invoice that ought to bypass Congress’ regular evaluate procedures. The SHOP SAFE Act deserves thorough vetting by Congress in order that the pitfalls could be absolutely understood and maybe coverage options that higher stability the wants of all constituencies can emerge. Bundling the SHOP SAFE Act into an omnibus invoice like USICA or America COMPETES prevents these dialogues from happening, to the detriment of all of us.
Then, one other letter was despatched by a various group of civil society organizations, assume tanks, and web corporations as nicely.
SHOP SAFE represents a seismic shift in legislation and coverage round contributory trademark infringement. But, it has not obtained something near adequate consideration and vetting. Amongst different issues, SHOP SAFE would successfully require digital companies to watch their customers’ posts for potential trademark infringement—creating boundaries to entry for smaller companies, making it tougher for American small companies to achieve their clients, and limiting artistic expression by encouraging the over-removal of non-infringing posts. As a result of overbreadth of the invoice, shoppers may very well be negatively impacted as a result of smaller companies and smaller sellers might cautiously err on the facet of eradicating professional listings and even shut down attributable to compliance burdens. This runs counter to the invoice’s acknowledged targets of enhancing American competitiveness by severely limiting the alternatives for American small companies to supply their items and companies to shoppers.
The Senate has not had a chance to correctly think about this invoice and focus on how greatest to stability main coverage modifications to guard shoppers whereas avoiding harming professional American small companies. Moreover, the Home Judiciary Committee failed to totally think about the issues stakeholders raised with the Committee. On the invoice’s markup, quite a few Home Judiciary members voiced bipartisan issues concerning the invoice’s broad attain and destructive impacts on shoppers and small companies. Sadly, whereas Committee management publicly agreed to proceed work to deal with the issues of the various stakeholders affected by this laws, as an alternative, as Rep. Lofgren notes, “we now discover SHOP SAFE has been inserted with out enhancements[.]”
Congress mustn’t shoehorn this type of dramatic coverage turn into the ultimate compromise between USICA and America COMPETES or different “must-pass laws.” Any such proposal ought to be fastidiously thought-about within the Senate with a clear legislative course of that accounts for full stakeholder participation. Because the invoice’s pervasive flaws stay, they aren’t the form of issues that may be resolved in convention and SHOP SAFE ought to be altogether excluded from the ultimate bundle. Permitting SHOP SAFE to proceed, as-is and tacked-on to unrelated laws, would set a harmful precedent for policymaking that’s essentially linked to our financial system, innovation, competitors, and free speech.
Hopefully Congress acknowledges the numerous and severe issues and risks related to SHOP SAFE, and removes it from consideration of any type of bigger omnibus invoice concerning US innovation.
Filed Beneath: competes act, competitors, counterfeits, innovation, middleman legal responsibility, marketplaces, trademark, usica