Backing Ban on Piracy Site Ads: Online Giants in Collaboration with the White House

Sanna Kulevska, July 22, 2013

Abstract: If you were Google, Microsoft, AOL, or another giant Ad Network and you wanted to place your customers' ads everywhere on the Internet, would the nature of the content on the sites where your ads were running matter - or would you close your eyes and keep things strictly business? This is the big question that the online giants in collaboration with the White House strive try to solve in a newly signed best practices agreement to combat online piracy.

President Obama once said: "If the playing field is level, I promise you, America will always win." The President is here referring to the USA as a nation of entrepreneurs, inventors, and artists, a nation that generates cutting edge research, is the globe's most productive economy, and that has had to fiercely defend its competitive advantages.

Is there anything that threatens America's position at the top of the economic hierarchy?

The Obama Administration claims that piracy does.

With over 4.58 billion websites in the World Wide Web, the economy of the Internet is an extremely complex thing. A lot of it runs off advertising. Much of the advertising is in fact automated. When sites sign up for services like Google's AdWords, these advertisements will automatically be placed on sites which are likely to be relevant according to Google's algorithms determination. Every time a reader click on the advertisement, the Ad Network gets a share of the "pay-per-click" revenue. This automatic service is attractive to Ad Networks who desire to gather money with no questions asked about the content of the site that the advertisements are linked to. It is also attractive to Ad Networks who do not want to spend a lot of time dealing with this issue at all. Online we find advertising linking to content that does not violate copyrights, but we, unfortunately, also find advertising that links to sites participating in intellectual property theft.

In 2011, Google had to pay $500 million to the U.S. Department of Justice in order to settle allegations it allowed Canadian pharmacies to target ads at U.S. consumers. More recently, Google was accused of monetizing illegal online content on YouTube when putting advertisements on videos that sell counterfeit pharmaceuticals. Regardless of whether this happened automatically or was a decision Google made with awareness of the facts, Google has now taken a different approach to the issue of advertising associated with counterfeiting and piracy. Google and other representatives of the online advertising industry, including Microsoft, Condé Nast, AOL and Yahoo, have acknowledged their lack of knowledge and capability to identify and address infringement. To protect intellectual property, the companies have now won the backing of the White House and the U.S. Interactive Advertising Bureau in order to cut off revenue from websites "dedicated to selling counterfeit goods or engaging in copyright piracy". Together they have agreed on a common set of best practices.

According to the best practices agreement that the companies have published "an ad network may take steps including but not limited to, requesting the website no longer sell counterfeit goods or engage in copyright piracy, ceasing to place adverts on that website (or pages within that site) until it is verified that the website (or other pages within the website) is no longer selling counterfeit goods or engaging in copyright piracy, or removing the website from Ad Network".

Further, the voluntarily participating Ad Networks are required to participate in dialogues with rights holders, consumer organizations, and free speech advocates. It is important to underscore that the companies' role is not to police online activity. The best practices state that the document "should not, and cannot, be used in any way as the basis for any legal liability or the loss of any applicable immunity of 'safe harbor' from such liability". Simply put: the Ad Networks do not control the content, nor can they remove websites from the Internet.

According to the best practice guidelines, Microsoft and Google will, along with AOL and Yahoo, start accepting DMCA-style take-down notices from rights holders against advertisement that appear alongside infringing content. While partly mirroring the DMCA takedown notices, this proposed notice-and-takedown possibility is not a law, but merely a completely voluntary agreement. However, it creates an opportunity for copyright holders to alert the big Ad Networks if they find their ads appearing on sites that offers links to counterfeit goods.

What is the challenge Internet society is facing when giving the intellectual property holders a right to file notice-and-takedown requests when they find infringing advertisements? Statistics show that Google receives 18.5 millions takedown notices per month. The result of the possibility to file a notice-and-takedown request described in the best practices agreement will most likely be an increased amount of takedown notices sent to these Ad Networks. It will also establish a relatively easy channel for copyright holders to control their competitors, since the Ad Networks lack the knowledge and capability to identify and address infringement. Accordingly, intellectual property holders are expected to be accurate in demonstrating infringement of their copyrights and trademark rights and to target only infringing conduct. I believe that policies for Ad Networks should reflect best practices that encourage and supplement, not replace, responsible and direct independent actions taken by intellectual property owners to enforce their intellectual property rights. Fred Humphries,Vice President of the U.S. Government Affairs at Microsoft, means that "an appropriate notice-and-takedown system – that requires rights holders to identify specific instances of infringement and online services to respond promptly and appropriately to such notices – can address infringement while still respecting critical values such as fair use, privacy, free speech and the freedom to innovate". However, websites affected by complaints will have a chance to appeal complaints via the filing of a counter-notice.

The Chilling Effects Clearinghouse will be reaching out to notice recipients in order to include these notices in its database, in order to further its missions of providing maximum transparency for the online notice-and-takedown ecology and educating the public as to their online rights.
Some critics have raised their voices and argued that this is a non-existing battle since advertising does not cover more than 5 % of the costs involved with running a site. Another critical argument is that Internet is full of smaller advertising companies, implying that there will still be plenty of other advertisers that most likely will try to fill the gap of easy money making that the Ad Networks included in this voluntary agreement leave open. A third group of critics fear that when the Ad Networks go bankrupt, they will desperately have to come back and offer their ad service unconditionally to all kinds of businesses.

Despite the criticism, the White House's Office of Management and Budget stays optimistic that the best practices agreement will help reducing the "financial incentives" associated with copyright infringement: "Intellectual property is the key driver of our economy. So it matters that we have the right approach to intellectual property enforcement; one that is thoughtful, dedicated and effective, and that makes good and efficient use of our resources." In the Administration’s 2013 Join Strategic Plan for Intellectual Property Enforcement, the White House underscored the importance of a sustainable enforcement of innovation and creativity as well as the hope that a stronger combat against intellectual property theft will lead to increased economic growth, an ensured global competitiveness, and a stronger protection for the safety of the U.S. citizens. A clear example of how the counterfeit ads have affected America can be found in the industry of counterfeit pharmaceuticals, previously discussed in my blog post “A Sick Crime?”. The industry fake drug industry is often operated by terrorist organizations such as Al Qaeda and the Russian mafia, and according to the United States Federal Commission, the it has caused the loss of more than 750,000 jobs in America - a number that, however, has been accused for being false.

Fred Humphries, applauds the Administration’s leadership on intellectual property and innovation, as well as the public-private collaboration that made the best practices agreement a reality: “As both a creator of copyrighted works and a provider of online services, including advertising services, Microsoft understands the problems faced by copyright owners subject to massive infringement and the need to ensure that innovation can flourish online.”

It remains to be seen whether the best practice guideline will be a successful collaboration between the public and private sector. As President Obama stated, the USA is a nation of entrepreneurs and inventors. To defend this competitive advantage and to enable the “always win” promise, it is of great importance to inspire copyright holders to be role models for smaller Ad Networks
- who are otherwise ready to fill the money making advertising spots that are now left open.

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