Tech Community Lining Up Against Digital Piracy Bill

Venture capitalists write letter to say bill would chill Internet investment

The tech community has begun to marshal its forces against the Protect IP Act, a bill aimed at shutting down rogue websites. Some 50 venture capitalists fired off a letter to members of Congress Thursday in which they charge that the act, which has already been approved by the Senate Judiciary Committee, would "chill investment in the Internet, throttle innovation, and hurt American competitiveness."

"The bill is ripe for abuse, as it allows rights holders to require third parties to block access and take away revenue sources for online services, with limited oversight and due process," wrote Brad Burnham of Union Square Ventures, which has funded Internet companies such as Twitter, Foursquare, Boxee, Kickstarter, Clickable, and Zynga. His letter was signed by 53 other venture capitalists representing 40 firms, including AOL Ventures, Andreessen Horowitz, and EDventure Holdings.

Proponents of tougher legislation, including the movie, TV, music, and publishing industries, have been like a force of nature in Congress when it comes to pushing legislation that will crack down on digital piracy. But now opponents have powerful allies in the venture capitalists to go with a group of engineers who penned a white paper in May about technical problems with executing the bill as strong reasons for Congress to take a second look at it.

"You rarely see venture capitalists sign a letter on a particular piece of legislation," said Markham Erickson, founding partner of Holch & Erickson and president of the Net Coalition, which represents a number of pure play Internet companies. "They are at the leading edge of putting money into new technologies. This is an incredibly big deal."

Opponents have time to make their case, thanks to Sen. Ron Wyden, D-Ore., who put a hold on the bill immediately after it passed the Senate Judiciary Committee. In the meantime, they're hoping that an alternative to be introduced in the House later this summer by Reps. Lamar Smith, R-Texas, and Bob Goodlatte, R-Va., will take a different approach.

"I think we can address all the issues without the collateral damage PIPA will cause," Erickson said. "If you [just] take away advertising and payment processing, there is no reason for these sites to be in existence."

Update: The Motion Picture Association of America is striking back, hard, against the venture capitalists and their letter. 

"We can’t keep being asked to choose between technology and creativity, and we can’t stand by as criminals profit from the hard work of the millions of American men and women of the creative and entertainment industry," Michael O'Leary, the MPAA's executive vice president for government affairs, said in a statement. "This is a smart, narrowly-crafted bill whose purpose is stopping theft, not slowing innovation. All we’re asking is that the innovators play by the rules.”