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SOPA explained: What it is and why it matters

By Julianne Pepitone @CNNMoneyTech January 20, 2012: 12:44 PM ET

SOPA's backers say the sweeping anti-piracy bill is needed to squash sites like The Pirate Bay (left), but the tech industry says the bill is rife with unintended consequences.

NEW YORK (CNNMoney) -- The tech industry is abuzz about SOPA and PIPA, a pair of anti-piracy bills.Here's why they're controversial, and how they would change the digital landscape if they became law.
What is SOPA? SOPA is an acronym for the Stop Online Piracy Act. It's a proposed bill that aims to crack down on copyright infringement by restricting access to sites that host or facilitate the trading of pirated content.
SOPA's main targets are "rogue" overseas sites like torrent hub The PirateBay, which are a trove for illegal downloads. Go to the The Pirate Bay, type in any current hit movie or TV show like "Glee," and you'll see links to download full seasons and recent episodes for free.
Content creators have battled against piracy for years -- remember Napster? -- but it's hard for U.S. companies to take action against foreign sites. The Pirate Bay's servers are physically locatedin Sweden. So SOPA's goal is to cut off pirate sites' oxygen by requiring U.S. search engines, advertising networks and other providers to withhold their services.
That means sites like Google wouldn't show flagged sites in their search results, and payment processors like eBay's (EBAY, Fortune 500) PayPal couldn't transmit funds to them.
Both sides say they agree that protecting content is aworthy goal. But opponents say that the way SOPA is written effectively promotes censorship and is rife with the potential for unintended consequences.
Silicon Valley woke up and took notice of the implications when SOPA was introduced in the House of Representatives in October. But its very similar counterpart, PIPA (the Protect IP Act), flew under the radar and was approved by a Senate committeein May. PIPA had been scheduled for a vote on January 24.
But after a massive pushback from tech companies and their supporters, both SOPA and PIPA were officially "postponed" on January 20.
Isn't copyright infringement already illegal? Yes. The 1998 Digital Millennium Copyright Act lays out enforcement measures.
Let's say a YouTube user uploads a copyrighted song. Under the current law, thatsong's copyright holders could send a "takedown notice" to YouTube. YouTube is protected against liability as long as it removes the content within a reasonable timeframe.
When it gets a DMCA warning, YouTube has to notify the user who uploaded the content. That user has the right to file a counter-motion demonstrating that the content doesn't infringe on any copyrights. If the two sides keepdisagreeing, the issue can go to court.
The problem with DMCA, critics say, is that it's useless against overseas sites.
SOPA tackles that by moving up the chain. If you can't force overseas sites to take down copyrighted work, you can at least stop U.S. companies from providing their services to those sites. You can also make it harder for U.S. Internet users to find and access the sites.
ButSOPA goes further than DMCA and potentially puts site operators -- even those based in the U.S. -- on the hook for content that their users upload. The proposed bill's text says that a site could be deemed a SOPA scofflaw if it "facilitates" copyright infringement.
That very broad language has tech companies spooked.
Sites like YouTube, which publishes millions of user-uploaded videos each week,are worried that they would be forced to more closely police that content to avoid running afoul of the new rules.
"YouTube would just go dark immediately," Google public policy director Bob Boorstin said at a conference last month. "It couldn't function."
Tech companies also object to SOPA's "shoot first, ask questions later" approach.
The bill requires every payment or advertising network...
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