The Sony hack is not SOPA redux

As we all know by now, last month Sony Pictures’ servers were hacked, resulting in the release of stolen internal proprietary documents and intellectual property. The stolen material ranged the full gamut from draft scripts to five completed movies to gossipy emails about Adam Sander, Angelina Jolie and President Obama to privileged legal correspondence. After an investigation, the FBI stated that it believes North Korea was behind the attack, thus opening a new front in state-sponsored attacks on the homeland.

Fortunately, nobody died in this particular act of cyber warfare. But the unprecedented scale and nature of the attack has shocked America. To date, most large-scale cyberattacks have been conducted by criminal gangs intent on financial gain through identity theft or credit card fraud. By contrast, the Sony attack appears to have been perpetrated by a rogue state and was specifically designed both to destroy Sony utterly while at the same time threaten cherished American freedoms.

{mosads}Given the serious implications raised by the Sony attack on national security, freedom of speech and the rule of law online, you might surmise that policy discourse about the incident would focus on these issues.

Unfortunately, you would be disappointed.

Adhering to the old political adage that you never let a serious crisis go to waste, we now see the anti-copyright crowd cynically attempting to use this attack as an excuse to weaken efforts to combat online piracy.

For instance, many have feigned outrage that the leaked documents revealed the Motion Picture Association of America (MPAA) and its member companies encouraged state attorneys general to include copyright theft in their investigations into search engines facilitating illegal conduct online, such as drug distribution and human trafficking. For example, Google claimed that the MPAA’s efforts were nothing more than a backdoor attempt to resurrect the Stop Online Piracy Act (SOPA) and an effort to promote “[W]eb censorship.” Adding to this chorus were several tech trade groups and some self-described “Internet freedom” organizations who also claimed that the stolen MPAA correspondence indicated that the movie industry was somehow surreptitiously trying to revive SOPA through alternative legal channels.

Not so fast. Seeking to pursue all lawful means to protect valuable intellectual property is not the moral equivalent of Web censorship (which is precisely what North Korea does every day to its citizens).

First, as the Commerce Department recently recognized, intellectual property (IP) is a key component of the American economy and must be protected. Indeed, according to the Commerce Department’s report, the direct and indirect employment in IP-intensive industries is substantial: Using the most available data at the time, the report found that direct employment in the subset of most IP-intensive industries amounted to 27.1 million jobs in 2010, while indirect activities associated with these industries provided an additional 12.9 million jobs, for a total of 40 million jobs, or 27.7 percent of all jobs in the economy.

Second, as the Phoenix Center’s peer-reviewed research has demonstrated, online theft of intellectual property is not costless to society. Nor is it costless to rights holders. Indeed, researchers at Carnegie Mellon University have concluded that 16 of 19 peer-reviewed papers conclude piracy harms sales. Regarding pre-release piracy (when a movie appears online before its theatrical release), the same researchers concluded it can dramatically reduce box office revenue relative to post-release piracy, in contrast to some dubious research which concluded otherwise.

Finally, what’s wrong with using every available legal avenue to protect intellectual property rights? Absolutely nothing. The leaked emails reveal that the MPAA hired some creative and talented lawyers to protect their property using existing legal tools under current law. Conflating the MPAA’s alleged legal strategies with a four-year-old legislative strategy is intentionally and cynically misleading.

Fortunately, there are some focusing on the real issues. For example, Sen. Bob Menendez (D-N.J.), the outgoing chairman of the Senate Foreign Relations Committee, observed that “Terrorism is when you destroy a building. And what happened here is that North Korea landed a virtual bomb on Sony’s parking lot, and ultimately had real consequences to it as a company and to many individuals who work there.” Heck, even shock-jock Howard Stern observed (hyperbolically) that the Sony hack was “no different than a 9/11-type attack” (an observation for which he was unfairly pillared in a full headline as an “idiot” by the Daily News).

The big story about the Sony hack is not that movie studios are pursuing legal avenues to protect their product; the big story is that American assets were attacked by a rogue regime. (To the Obama administration’s credit, it has ordered new economic sanctions against North Korea in retaliation to the attack.)

So when you read the next diatribe complaining about how leaked emails show that the movie industry is using all lawful means at its disposal to protect its valuable intellectual property, perhaps a bit of perspective is in order.

Spiwak is the president of the Phoenix Center for Advanced Legal & Economic Public Policy Studies, a nonprofit 501(c)(3) research organization that studies broad public-policy issues related to governance, social and economic conditions, with a particular emphasis on the law and economics of the digital age.