Rumor has it that Sen. Orrin Hatch (R-UT) will be introducing a bill tomorrow that would add a new Section 501(g) to the Copyright Act granting copyright owners a cause of action against those who "induce" copyright infringement (cf. patent law). This bill, dubbed the INDUCE Act, would apparently also reach those who "counsel" infringers.
Even a moment's reflection should make the danger to innovators clear -- you now have to worry not just about contributory and vicarious liability, but an entirely new form of liability for building tools that might be misused. It will be interesting to see whether the bill expressly precludes any Betamax-type defense. This may also pose First Amendment problems, to the extent a journalist or website publisher might be liable for simply posting information about where infringement tools might be found or how to use them.
It's the Hollings Bill by other means -- an over-reaching new form of indirect liability that will force technology companies of all kinds to "ask permission" before innovating for fear of ruinous litigation if they don't.
And so another front in the copyright wars opens, with the aggressors waving the bloody flag of file sharing, but really aiming at a much bigger target. Stay tuned.