Three Guarantees In Life: Taxes, Death, And Politicians Trying To Destroy The Internet
Two years ago we wrote about Rep. Jerry Nadler's SHOP SAFE Act, which we noted would basically cement into place Amazon's position as a dominant online marketplace, because no one else would be able to afford the associated liability. The bill is based on the massively exaggerated claims that online marketplaces are full of counterfeit" goods. The default position under SHOP SAFE is that the marketplace is liable for anything that goes wrong with any sale on a platform, meaning that it becomes vastly more expensive to run a marketplace where people and companies can sell stuff, cutting off important access to buyers for most smaller sellers.
The entire premise behind SHOP SAFE is that the courts got the years long dispute between Tiffany and eBay wrong. If you don't recall, nearly two decades ago, Tiffany sued eBay over some counterfeit Tiffany products that showed up on eBay. Since Section 230 exempts any intellectual property" disputes, eBay couldn't get the case dismissed on 230 grounds, leading to years and years of back and forth legal fighting, before courts created a quasi-safe harbor for marketplaces selling goods posted by users: that as long as they had policies in place and made efforts to takedown counterfeit goods as they found out about them, they wouldn't be liable for those that slipped through.
SHOP SAFE would remove that stance and say if you run a marketplace, you're basically automatically liable if any counterfeit goods are sold.
Law professor Eric Goldman highlighted that SHOP SAFE would basically be an end to online marketplaces (though I think Amazon might be the sole survivor of such a bill, though even it would be changed dramatically, such that it would be much more difficult for smaller sellers to use). Nadler spent much of last year trying to shove SHOP SAFE into various must pass" bills, and got pretty close to doing so.
In the end, something of a (very weak) compromise" was reached, in that SHOP SAFE didn't move forward. Rather a competing bill, the INFORM Act, moved forward instead. As we noted, INFORM was also really problematic, just not quite as problematic as SHOP SAFE. However, we heard from various tech companies that they viewed INFORM as an acceptable compromise" to keep SHOP SAFE and its even larger problems from becoming law.
But, that was based on the silly belief that even once INFORM became law, internet-hating politicians would somehow shelve SHOP SAFE. That was a silly bet.
So, yeah, last week, SHOP SAFE came back, this time introduced on the Senate Side by Senators Chris Coons and Thom TIllis (who have teamed up on numerous terrible-for-the-internet bills over the years). What's most incredible is that INFORM just passed and we don't even yet know the impact of that lesser" version of SHOP SAFE. So maybe we shouldn't be rushing to put in place the more extreme version?
As Eric Goldman is noting again, it's clear that politicians want to destroy online marketplaces, and here's their chance.
For the reasons I described in my blog, theSHOPSAFEAct is a marketplace-killer. This bill is not a nuancedattempt to exciseharmfulproducts from the marketplace. It is a neutron bomb designed to wipe marketplaces off theInternet. Why Congress would spend time on doing that, when online marketplaces are essential to many communities, is absolutely beyond me. I don't see how the bill can be justified as in the best interests of the proponents' constituents.
I'm also confused about the timing. The INFORM Consumers Act was designed to redress the same concerns as theSHOPSAFEAct, and it just became effective a few months ago. What have we learned since then? Did the INFORM Consumers Act make a difference or not? If so, why do we need theSHOPSAFEAct? If not, why didn't it work and what lessons can we learn from its failure? The bill sponsors need to explainhow they researched the effects of the INFORM Consumers Act and how those insights got folded into their new draft. If they haven't even done that work, they are clearly not interested in actually solving problems.
Incredibly, this version of SHOP SAFE is even worse than the one from last term. The old one at least had sanctions that could be placed on trademark holders for filing bogus takedowns to marketplaces. This version did away with that, perhaps because Chris Coons, whose family owns the notoriously litigious Gore-tex maker W. L. Gore & Associates, doesn't want to deal with any blowback when it sends takedowns.
As Goldman notes:
I note that the bill draft apparently dropped the sanctions for trademark owners who send bogus takedown notices. The provision was misdesigned in the prior draft, but rather than fix it to actually curb rightsownerabuses, they just stripped it out to make it even more rightsowners-favorable.
And this is a real concern, trademark owners have a long history of filing bogus claims about infringement to stop legitimate competition. And all SHOP SAFE does is empower them, while making it more difficult for any small business or individual to reach consumers.