Large copyright holders are warning that a new proposal called the OPEN Act is ineffective because it would do nothing to thwart what they view as the Internet's most notorious Web site: ThePirateBay.org.

The owners of the popular BitTorrent search site make money by running advertisements along links to not-exactly-legal versions of movies including "Transformers 3" and "The Twilight Saga: Breaking Dawn."

Because the advertisements are placed by two Israel-based ad networks, they would likely not be affected -- meaning The Pirate Bay's revenues wouldn't be affected -- by an order under the OPEN Act preventing U.S. advertising networks from doing business with suspected piratical Web sites. Also unaffected: overseas Web sites without advertisements and ones that don't accept payments.

The more controversial Stop Online Piracy Act, or SOPA, goes further by requiring Internet service providers to block access to allegedly piratical Web sites in some circumstances. That includes banning Internet Protocol addresses, deleting records from domain name system servers, and deep packet inspection to target specific URLs. (See CNET's FAQ.)

"Simply going after the money isn't going to work all sites since not all of them have advertising or some kind of monetary component," a spokesman for the Recording Industry Association of America told CNET. "Pirate Bay is an example of one that would probably stay up even if the advertising disappeared."

Last week, as CNET reported at the time, Rep. Darrell Issa (R-Calif.) and Sen. Ron Wyden (D-Ore.) publicly distributed an alternative bill called the OPEN Act. In an unusual move, they've posted a draft on KeepTheWebOpen.com for the public to edit and could announce the final version as early as today.

The OPEN Act would attempt to interrupt the flow of funds to offshore piratical Web sites by targeting only Internet ad networks and "financial transaction providers" such as credit card companies -- stopping short of SOPA's approach of allowing the Justice Department to seek a court order blocking Americans from accessing "rogue" Web sites.

The Pirate Bay represents everything that Hollywood and the major record labels love to hate about Internet file-swapping: despite concerted efforts to shut it down, including a criminal prosecution in its home country of Sweden, Americans can still freely visit it. Its owners have returned the favor by taunting large copyright holders. (Even its T-shirts are sold by a Swedish company, outside the reach of U.S. law.)

One reason why the Motion Picture Association of America and its influential allies are so steadfastly pro-SOPA -- MPAA chairman Christopher Dodd recently implied that the U.S. could take lessons from China in banning Web sites -- is that they view any law that does not block access to The Pirate Bay as unacceptable.

Around the world, large copyright holders have tried to convince other governments to do precisely that. The list includes last month's request by MPAA members and other content holders to the U.K.'s largest Internet provider; ongoing legal efforts in Belgium and Finland; and an unsuccessful lawsuit in Norway.

The MPAA says the OPEN Act "fails to provide an effective way to target foreign rogue Web sites and goes easy on online piracy and counterfeiting."

The Pirate Bay runs ads provided by Z5X.net, owned by the Ra'anana, Israel-based DSNR Media Group, which describes itself as a "recognized provider of result-based online and mobile advertising solutions." Other ads appear from CNI67.com. That appears to be owned by Sharon Jefet of InCauda, an Israel-based company that boasts of offering an "automatic targeting solution of Internet advertisements."

In 2009, Swedish police estimated that The Pirate Bay had collected about 1.2 million Swedish Krona in advertising revenue, about $171,000.

In August, the MPAA dubbed The Pirate Bay a "notorious rogue site" that boasts "0 torrents has been removed, and 0 torrents will ever be removed." (The Pirate Bay calls itself "the world's most resilient BitTorrent" search site and has gleefully posted a series of letters, with its own snarky responses, from copyright lawyers demanding that it cease-and-desist.)

Issa told CNET in an interview that he believes his OPEN Act, which would create a quasi-pirate court at the U.S. International Trade Commission, would be effective against The Pirate Bay.

Once an injunction is in place, there can be additional legal actions including targeting "whatever company places ads on that pirate Web site" even if it's through an overseas ad network, Issa says.

The ITC would have the ability to embargo intellectual property violations, he said, and could still attempt to cut off the flow of funds.

"They have a number of very creative solutions," Issa says.