SENATE STARTS ELECTION-YEAR FIGHT OVER ONLINE COPYRIGHT: New bipartisan legislation from Sens. Thom Tillis (R-N.C.) and Patrick Leahy (D-Vt.), the chair of the Senate Judiciary subcommittee on intellectual property, would be the first major overhaul of online copyright law in nearly a quarter century. The SMART Copyright Act (S. 3880 ), introduced on Friday, promises to pit tech platforms and independent content creators against the music and movie industries. But since it's being rolled out just months before November's election, its potential to pass this legislative cycle is doubtful at best — and Leahy's retirement in January means Tillis will need to find a new cosponsor if the effort slips into next cycle. — DMCA overhaul: The bill would make major changes to the Digital Millennium Copyright Act ( H.R. 2281(105)), a 1998 law that updated copyright rules for the early internet age. Among other things, the DMCA provides tech platforms with "safe harbor" protections that shield them from lawsuits as long as they work to remove or block access to infringing materials — pirated movies or songs posted on YouTube, for example. Those protections are similar to those found in Section 230 of the Communications Decency Act — and the DMCA's "safe harbor" protections have garnered the same kinds of criticism Section 230 has received in recent years. — Tech's (other) legal shield under threat: Among other things, the legislation would create new legal liability for tech platforms if they interfere with or fail to accommodate new government-mandated measures designed to crack down on online piracy, to be created after the bill's passage. — A long campaign: The SMART Copyright Act is the culmination of a yearslong effort by Tillis to overhaul the DMCA — something the major tech platforms have successfully blocked in the past . And the tech industry, aided by independent video or music creators who at times run afoul of zealous copyright enforcement, is already gearing up to oppose this latest attempt. "This bill is very dangerous," said Joshua Lamel, the head of the Re:Create Coalition, which includes among its members tech lobbying groups like the Computer Communications and Industry Association and the Consumer Technology Association. In a Friday statement , Lamel said new government-mandated technical standards for copyright violations "will result in content filtering — stifling creativity, innovation and the flow of information." But the music and movie lobbies are excited about the new bill. Mitch Glazier, the head of the Recording Industry Association of America, said the SMART Copyright Act " will incentivize the development and adoption of effective tools to address online piracy while giving platforms clarity." Patrick Kilcur, the Motion Picture Association's head of U.S. government affairs, thanked Tillis and Leahy for their work to prevent "digital theft." — A path forward? The SMART Copyright Act is likely to face a difficult route to passage, in a Senate already bursting with last-minute legislative priorities to complete ahead of the midterm campaign season. There's also so far been no companion bill introduced in the House. But Tillis spokesperson Adam Webb said the senator "intends to work with Senator Leahy, [Senate Judiciary] Chair [Dick] Durbin (D-Ill.), and Senate leadership to ensure the SMART Copyright Act is enacted into law this Congress." Webb said Tillis is encouraged that lawmakers from both parties "realize that big tech companies and platforms must do more to combat property theft." DOJ, FTC ZERO IN ON VERTICAL DEALS— The Biden administration's antitrust agencies are conducting in-depth probes of vertical mergers — mergers between companies that manufacture products and those that distribute them — two former heads of the DOJ's antitrust division told Leah. Rick Rule, the assistant attorney general for antitrust under President Ronald Reagan, said such deals are getting attention when they "wouldn't have gotten attention five years ago." That dynamic, he said, may make it harder for tech companies looking to merge or acquire new firms to "anticipate what issues the government is going to take an interest in." — Rule would know: He and Deborah Garza, herself a three-time DOJ alum and acting AG for antitrust under President George W. Bush, authored the DOJ's 1984 guidelines on vertical mergers. Those guidelines, which outline when the DOJ and FTC should challenge such deals, were weakened in favor of industry in a 2020 update issued by the Trump administration. The Biden administration withdrew that update in September, and the DOJ and FTC are now redrafting the guidelines. Rule and Garza — who are now forming a new boutique law firm, Rule Garza Howley, to advise companies on antitrust issues — spent years working closely with Jonathan Kanter, now the DOJ's top antitrust official. Rule said Kanter "has a much more expansive view of antitrust" compared to past regulators. — FTC limited on vertical mergers: For the time being, lawyers and companies still expect vertical mergers to survive scrutiny at the FTC. The reason for that is simple, said Rule — the agency's 2-2 partisan split means it's harder for FTC Chair Lina Khan to find the three votes needed for a challenge. One very recent example of this phenomenon: Amazon's acquisition of MGM Studios, a vertical merger that closed last week after an in-depth review by the FTC . Two people familiar with Khan's decision to not challenge the merger told Leah she decided not to do so because she expected the agency's two Republicans would oppose it. — Tough fights ahead: Khan is likely to eventually receive an additional Democratic vote in the form of Alvaro Bedoya, whose nomination as FTC commissioner is awaiting a Senate floor vote. But this isn't the first time vertical deals and labor issues have become major themes in Washington's antitrust efforts, Garza said — and it doesn't mean regulators will inevitably have the upper hand, even once the FTC is up to full strength. Garza said the Biden DOJ and FTC — like regulators before them — may still struggle to convince skeptical judges. "Courts are always going to be a backstop," she said, pointing to the DOJ's failed 2018 challenge of a merger between AT&T and Time Warner.
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