In the past several weeks, as the SOPA/PIPA debate heated up in Congress, a clear majority of entrepreneurs and engineers have come out against both of these pieces of legislation, culminating in today’s Black Out of various sites.  The concern involves damage that these laws could do to the freedoms enjoyed by Americans on the Internet.  It is great to see so many people doing their research and speaking out regarding their views on these laws (for or against).

In short, the Stop Online Piracy Act (SOPA) is meant to assist law enforcement agencies in battling copyright infringement and counterfeiting on the Internet.  The bill makes unauthorized streaming of copyrighted content a crime, with possible jail time for repeated violations. However, immunity is provided to Internet services that voluntarily take action against websites dedicated to infringement.

This policy is in stark contrast to the current copyright infringement framework under the Digital Millenium Copyright Act (DMCA).  Under the DMCA, an Internet service is required to remove infringing content in response to receiving a takedown notice from the copyright holder.  As long as the service removes the infringing content (the uploading user has an opportunity to respond), the service has what is known as a safe harbor against copyright infringement.  Thus, under the DMCA, the burden is placed on the copyright holder to identify infringing materials.

So why should startups care?

For startups with limited resources, this shift in burden from the copyright holder to the Internet service provider is a big deal.  Many of the most successful startups have been built on user generated content.  Terabytes upon Terabytes of such user generated content is uploaded to these services.  For young companies, analyzing all this data to identify infringing content is challenging and likely requires resources (time, money, legal, etc) beyond their means.  For companies that rely on content generated by others and that are looking for investment to grow their businesses, SOPA raises another challenge.  Investors will have to strongly consider whether policing of the startup’s content is possible and whether and how much of their investment in such a company will be used for this task, instead of growing the company.

Having said that, there are many supporters of these proposed laws.  Intellectual property theft is a huge problem that costs U.S. businesses 250 billion dollars annually.  Many of the most innovative young companies are content creators, whether that be Internet videos, mobile applications, analytics, or the like.  Protecting their hard work prudently is important to their continued success.  Thus, while the current versions of SOPA/PIPA may not become law, it is more than likely that in the coming months and years,  we will see variations of these bills come up for discussion.  This is why it is important for arguments for both viewpoints to be heard and considered as we continue the debate.