Senate leaders late Tuesday introduced a bill to make it easier to sue "peer-to-peer" services like Kazaa and eDonkey 2000, which allow users to copy music and movies for free over the Internet.
The Inducing Infringement of Copyrights Act of 2004 would allow companies to be held liable if they "intentionally induce" copyright infringement.
Movie and recording industry groups praised the bill, while a trade group representing several peer-to-peer networks said it would hurt innovation.
Separately, one peer-to-peer executive said movie and music companies were pressuring other companies not to do business with them and asked the government to investigate.
Under a recent U.S. court ruling, peer-to-peer networks cannot be held liable if consumers use them to distribute copyrighted works.
While that case is being appealed, the recording industry has sued 3,429 individual peer-to-peer users, many of them underage.
In remarks on the Senate floor, Utah Republican Sen. Orrin Hatch said peer-to-peer companies were exposing children to legal risks.
“It is illegal and immoral to induce or encourage children to commit crimes,” said Hatch, who as chairman of the Judiciary Committee oversees copyright matters.
The odds of any new bill becoming law are slim, as Congress has only 35 working days scheduled before the fall elections.
But the bill has powerful backers, including Senate Majority Leader Bill Frist, Sen. Tom Daschle, the Democratic Senate leader, and Vermont Sen. Patrick Leahy, the top Democrat on the Judiciary Committee.
At a Senate Commerce Committee hearing, StreamCast Chief Executive Michael Weiss urged lawmakers not to impose new restrictions on an industry that he said is working to educate users about copyright law and online risks.
Weiss, whose company produces the Morpheus network, said record companies were uninterested in exploring ways to collect royalties from peer-to-peer traffic, and were pressuring companies like RealNetworks Inc. to steer clear, as well.
“This sounds like a smoke-screen designed to divert attention,” said Jonathan Lamy, a spokesman with the Recording Industry Association of America.
Digital media services company RealNetworks could not be immediately reached for comment.
The recording industry managed to use copyright law to shut down the first file-sharing service, Napster, which has recently been resurrected as an industry-approved pay service.
But the industry has had less luck against second-generation services like Kazaa and Morpheus, which claim their decentralized architecture prevents them from controlling user behavior.
A U.S. district court last year said these networks could not be held liable because, like photocopiers and videocassette recorders, they do not commit copyright infringement but merely make it possible.
The nonprofit policy group Public Knowledge said the bill is too broad, as it could discourage investment in new technology and expose people to lawsuits who do not mean to encourage copyright infringement.