NetCoalition, a lobbying group representing Internet and tech firms,… (Chip Somodevilla, Getty…)
Reporting from Washington — The derailing of long-sought legislation to combat digital piracy is a troubling sign for the entertainment industry, whose insider lobbyists were routed by technology companies armed with the brute-force power of the Internet.
Tech still lags behind Hollywood in campaign contributions, but its leaders showed this week that they could mobilize opposition against bills that threatened the Web's wide-open borders.
Lawmakers' ears were still ringing Thursday from the thousands of calls and emails that flooded Capitol Hill on Wednesday, the day Wikipedia led about 10,000 websites in a blackout to protest the legislation. The Internet companies said the bills could lead to censorship and cause legitimate websites to shut down, and at least six co-sponsors of the bill pulled their support.
The upshot is that the entertainment industry, which has pushed aggressively for more than a year for broad new powers that would allow the federal government and U.S. companies to target those websites more quickly, will probably have to settle for a more limited set of tools in narrower legislation that will take time to draft.
Tech industry partisans were elated, characterizing this week's developments as a populist victory over old-school, inside-the-Beltway Hollywood lobbyists.
"This was not just about this bill; this was about the way a lot of things happen in this town," said Mike Masnick, president of the TechDirt blog.
Both Hollywood and Internet companies want to halt foreign piracy, but they disagree over how to do it.
Hollywood wants strong federal powers, including the ability to block offshore websites that pirate movies, music and books. Internet companies, which fear that overzealous enforcement could censor legitimate websites, want the government to choke off money from the U.S. that supports the pirates.
The widespread uprising online over controversial anti-piracy legislation has fundamentally altered the debate and shifted the timeline for action from weeks to months — or longer.
"There are solutions, but we need to step back and reset," said Markham Erickson, whose NetCoalition includes Google Inc., Amazon.com Inc., EBay Inc. and Yahoo Inc. "Instead of having to negotiate with a gun to our head, so to speak, let's sit down and have a data-driven process."
The delay is bad news for Hollywood, which has been desperate to shut down foreign sites that have been sucking millions of dollars from the industry by offering pirated movies, music, books and other content.
"Hiding offshore will continue to be a safe haven for people that steal our stuff, and the longer that period extends, the greater the damage that can be inflicted," said Michael O'Leary, a senior executive vice president at the Motion Picture Assn. of America.
In a sign of the magnitude of the problem, U.S. prosecutors working with international authorities unsealed an indictment Thursday against seven foreigners and two corporations, accusing them of massive worldwide online piracy through Hong Kong-based MegaUpload.com and related sites. The sites were shut down.
The indictment, one of the largest criminal copyright cases, alleged that the scheme generated more than $175 million in illicit gains and caused more than half a billion dollars in harm to copyright owners.
Opponents of the legislation vowed to keep up the pressure.
The bipartisan effort to pass the proposed Stop Online Piracy Act and the Protect Intellectual Property Act is "not dead at all," warned Michael Petricone, vice president of government affairs for the Consumer Electronics Assn. He noted that the Senate was still scheduled to hold a procedural vote Tuesday on PIPA.
But that vote was in jeopardy after several senators backed off their support. On Thursday, Senate Minority Leader Mitch McConnell (R-Ky.) called for a delay because of "serious legal, policy and operational concerns" with the bill.
Opponents of the bills said they wanted a slower, more open legislative process with congressional hearings on the complex technical issues involved in addressing rogue foreign websites.
"Why can't we step back and get it right?" Petricone said. "This isn't the Patriot Act; the country's not going to blow up if we don't enact this next week."
But legislative time is short in an election year. And the Internet protests might have made the bills politically radioactive to some in Congress.
The sponsors of the bills promised to make changes and are expected to remove the controversial provision that enabled access to foreign-based piracy sites to be blocked.
The White House called for the removal of the provision on Saturday and urged lawmakers to reach consensus on how to address online piracy without damaging the Internet.
Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), lead backer of the PIPA bill, is working on a set of amendments he planned to unveil before Tuesday's vote to address opponents' concerns.