Today, the Financial Times reported a significant development in the fight against online copyright piracy. The U.K. is reportedly ready to announce an agreement between copyright owners and ISPs under which UK ISPs will agree to work to achieve "a 'significant reduction'" in illegal file-sharing. As a first step, the proposal would have ISPs send warning letters to 1,000 prolific illegal downloader per week during the three-month trial period. If that fails to significantly reduce illegal file-sharing, other alternatives would be considered, including a variation of the graduated-response/three-strikes proposal that would eventually disconnect Internet access services of persons who ignore repeated warnings or--of course--another European media levy, this time on internet-access services.

Personally, I hope that the U.K. opts for the graduated-response option. I realize that the usual "public-interest" groups say that disconnecting infringing users after repeated warnings is unfair, but, seriously, as compared to what? Forcing copyright owners to incur thousands of dollars filing John Doe lawsuits that must then be recovered from the families of teenagers and students unless copyright enforcement is to become a money-loosing proposition? Putting college students in jail? Those are the options available to deter illegal file-sharing under existing U.S. law. Are these options honestly less punitive or more enlightened than a graduated-response program? And by the way, libraries also provide access to knowledge, but if you don't follow their rules, they will throw you out and revoke your borrowing privileges. Is that unfair?

Granted, these "public interest" groups may really think that suing teenagers and imprisoning college students are good ways to enforce copyrights on the Internet. For example, in MGM Studios, Inc. v. Grokster, Ltd., the Internet Archive, Project Gutenberg, and many associations of university and law-school librarians argued that for-profit corporations that encourage or dupe teenagers or students into downloading infringing files should not be held liable for the intended consequences of the business models that gave those corporations "no product costs to acquire music" and "the ability to get all the music." Why? Because these guardians of the public interest argued that the teenagers and college students that these corporations induced could just be sued into ruin by copyright owners or imprisoned by the United States Department of Justice. So remember, university students, if your file sharing causes you to receive a prelitigation letter or subpoena from a copyright owner--or a visit from the FBI--do be sure to say "thanks" to the Internet Archive, Project Gutenberg, and your campus librarians: They all told the Supreme Court that bankrupting or imprisoning you should be the preferred means of enforcing copyrights on the Internet....

But for those inclined to think seriously about how copyrights should be enforced on the Internet, this new U.K. proposal ought to be viewed as a wake-up call, though it need not be a roadmap for what we should do here. It should, however, remind us that we have a serious problem, and that we need to think seriously about how that problem ought to be resolved.

History suggests that if we do think seriously about all of the interests involved--consumers, copyright owners, artists, and ISPs--then we probably can identify means short of compulsory licensing or levies that can reconcile those interests and significantly reduce piracy. Consider, for example, the balance that the Digital Millennium Copyright Act (the "DMCA") struck as to sites hosting user-generated content ("UGC").

UGC sites have enormous potential to encourage creative expression, but it would be difficult to imagine how they could operate were they governed by the strict-liability that copyright law has traditionally imposed upon distributors of expressive works. But simply exempting UGC site operators from liability for infringing third-party uses of their sites would only encourage piracy and shift copyright enforcement onto individual Internet users.

As result, the DMCA created a so-called "safe harbor" that exempts UGC site-operators from liability for monetary damages if they take several measures to redress or deter infringing third-party uses of their sites. The most important is the so-called "notice-and-takedown" requirement. It prescribes an iterative process of dispute identification and resolution. First, a copyright owner must notify a site operator of allegedly infringing content. The site operator must then take down the content and notify the subscriber who posted it. The subscriber must then decide whether to send a counter-notice to the site operator. If the subscriber sends a counter-notice, then the operator must restore access to the disputed content unless or until the copyright owner files a lawsuit and secures a court order requiring it to be taken down.

This takedown process can benefit all three parties--copyright owner, site operator, and even the allegedly infringing user. The copyright owner gains a means to halt infringing conduct that is faster and cheaper than a lawsuit. The site operator gains unprecedented protections against most infringement liability. The allegedly infringing user receives a warning about any potential conflict, and gets to chose whether to avoid or confront it. This takedown process has resolved countless potential disputes and prevented many lawsuits.

But make no mistake: The DMCA notice-and-takedown regime is not ideal--not for copyright owners, UGC-site operators, or UGC-site users. Copyright owners find themselves playing takedown-notice whack-a-mole in which the same infringing content is repeatedly taken down and re-posted. UGC site operators incur enforcement and response costs, and operators receiving too many notices may fail to qualify for the safe harbor. For users, the notice-and-takedown process may alert them to potential conflicts and let them decide whether to avoid them, but it may not always show them how to correct problems so the content can be safely re-posted.

Fortunately, Congress expected that even the imperfect incentives to cooperate imposed by the takedown process would encourage interested parties to devise innovative solutions superior to any contemplated back in 1998. See 17 U.S.C. § 512(i)(1)(B). Congress appears to have been right. Many copyright owners and UGC-site operators have entered into licensing agreements. Both YouTube and the parties to the Copyright Principles for UGC Sites are preparing to deploy advanced filtering technologies. The parties to the Principles are also devising more interactive dispute-resolution procedures. Consequently, not even important, backward-looking disputes like the Viacom-Google litigation should obscure the progress being made by copyright owners, UGC-site operators, and UGC-site users.

To be sure, the DMCA did not anticipate the rise of file-sharing piracy that cannot be reasonably redressed at the application level. Nor could the balance that the DMCA struck as to UGC sites just be "cut and pasted" into the context of access providers. Nevertheless, the case of UGC sites show that when the law has encouraged cooperative approaches--even imperfect ones--cooperation has occurred, improvements have been made, and enforcement lawsuits against consumers have been almost entirely avoided.

Finally, some will argue that the U.K. proposal is unfair to internet-access providers. That argument has weaknesses and strengths. To be sure, many claim that piracy has helped access-providers by driving demand for broadband access. For example, in Free Culture, Professor Lawrence Lessig argues, "The appeal of file-sharing music was the crack cocaine of the Internet's growth. It drove demand for access to the Internet more powerfully than any other single application. It was the Internet's killer app.... It no doubt was the application that drove demand for bandwidth."

But while piracy may have been indirectly benefited some access providers, it has also imposed significant costs and inefficiencies. For example, from the perspective of efficient network management, most ISPs should cache popular downloads. But doing so is extremely risky. The DMCA's caching safe-harbor, (§512(b)), like its other provisions, envisioned a web-based Internet: Consequently, it does not seem to "harbor" the caching systems needed by file-sharing networks. Nevertheless, vague reports alleging the use of caching have surfaced ever since the 2004 study, Is P2P Dying or Just Hiding?

But in any case, a simple fact remains: Broadband Internet-access providers were not the ones who worked hard to ensure that file-sharing piracy would become a problem that could not be redressed at the application level. If those who did try to make that problem difficult to remediate now expect others to clean up their mess, then that is unjust.

Nothing makes this point more effectively than the written testimony provided recently to a congressional committee by Mr. Mark Gorton, "the founder and Chairman of LimeWire, LLC, the makers of the LimeWire file sharing program":

The regulatory framework that surrounds the Internet has not kept pace with technical advancements, and currently, no effective enforcement mechanisms exist to address illegal behavior on P2P networks.

Internet Service Providers, ISP's, are a unique point of control for every computer on the Internet. Universities frequently function as their own ISP's, and a handful of universities have implemented notice based warning systems that result in the disconnection of users engaged in illegal behavior who ignore multiple warnings. These universities have sharply reduced child pornography and copyright infringement on their campus networks.

Similar policies could be mandated for all ISP's in the United States. However, these policies are unpopular with the telecom and cable companies who would prefer not have an enforcement relationship with their paying customers. The telecom industry has objected vigorously to previous attempts to involve ISP's in the enforcement process and it continues to oppose policies that would allow for the establishment of moderate, yet effective enforcement mechanisms to combat illegal behavior on the Internet.

The only institution in the United States with the power to mandate the creation of an effective enforcement mechanism to police the Internet is the United States Congress.

I believe that careful thought would reveal viable solutions to the challenges of file-sharing piracy more creative and less prescriptive than those proposed by LimeWire. And if distributors of piracy-and-pornography-prone file-sharing programs now admit that they have knowingly created problems that can only be resolved by imposing significant costs on many third parties, including copyright owners, internet users, and internet-access providers, I would respectfully suggest that federal law-enforcement agencies should take such admissions into account. And send a message....