Tech companies are also concerned about the power the Senate bill would grant to copyright holders to seek injunctions against sites they believe are dedicated to infringing activities -- a description that Viacom's attorneys could well have applied to YouTube before it started automatically checking uploads against a database of copyrighted works. But the private right of action in the House bill makes the Senate provision seem tame by comparison.

Labeling their approach a "market-based system" to protect consumers and property owners, the authors of HR 3261 would require advertisers, credit card companies and other payment processors to stop providing ads or payment services to any site that a copyright or trademark holder claimed was "dedicated to the theft of U.S. property." No court would need to be involved unless the operator of the site filed a counter-notice asserting that it didn't fit the bill's definition of a dedicated infringer.

That definition is so broad, it could snare all sorts of cloud-based services, said Markham Erickson, executive director of the NetCoalition tech advocacy group. The problem starts with the bill's focus on Web "sites," which as a technical matter can be a single page within a domain. An eBay listing could be considered a "site," as could a Facebook timeline, a Flickr page or a Dropbox folder.

Making matters worse, the bill broadens the notion of what it means to be "dedicated to the theft of U.S. property." In addition to sites that are primarily designed or marketed for infringing uses, the bill's definition includes sites whose operators "avoid confirming a high probability" that they will be used to infringe or who had at any previous time promoted infringements.

According to Erickson, the only way for ad networks and payment processors to respond to a notification about a supposedly offending site would be to block service to the entire domain. Hence, "you can shut down YouTube, you can shut down internet commerce sites, you can shut down hosting sites" for infringements on just a fraction of their pages, Erickson said.
More here: Technology: A bipartisan attempt to regulate the Internet? - latimes.com