The blogosphere is abuzz over an apparently leaked document showing the United States trying to push its controversial DMCA-style notice-and-takedown process on the world. But since Threat Level already lives in the land of the DMCA, or Digital Millennium Copyright Act, we're more bothered by the fact that the U.S. proposal goes far beyond that 1998 law, and would require Congress to alter the DMCA in a manner even more hostile to consumers.

At issue is the internet section of the Anti-Counterfeiting Trade Agreement being developed under a cloak of secrecy by dozens of countries. The leaked document is a three-page European Commission memo written by an unnamed EU official, which purports to summarizes a private briefing given in September by U.S. trade officials.

The language in the Sept. 30 memo shows the United States wants ISPs around the world to punish suspected, repeat downloaders with a system of "graduated response" – code for a three-strikes policy that results in the customer eventually being disconnected from the internet with the ISP alone deciding what constitutes infringement and fair use.

While the proposal specifically says that three strikes wouldn't be mandated, it might as well be. That's because companies that refused to implement the policy would be ejected from the immunity or "safe harbor" that otherwise protects them from copyright infringement lawsuits over the actions of their customers.

Currently, the DMCA grants safe harbor status to internet companies that promptly remove allegedly infringing content at the request of the copyright holder. Only if they fail to do so can they be held liable in court, and face up to $150,000 in damages per infringement.

Under the U.S. proposal described in the memo, removing infringing content would no longer be enough to qualify for safe harbor. Companies would have to actively work to combat the flow of unauthorized copyrighted material through their pipes, and specifically implement the "graduated response" program.

Here is the key paragraph:

"On the limitations from 3rd party liability: to benefit from safe-harbours, ISPs need to put in place policies to deter unauthorized storage and transmission of IP infringing content (ex: clauses in customers' contracts allowing, inter alia, a graduated response). From what we understood, the US will not propose that authorities need to create such systems. Instead, they require some self-regulation by ISPs."

Threat Level obtained the document on condition it not be posted, and we haven't independently verified its authenticity, or that it accurately reflects the positions of the U.S. trade representatives. The document indicates the U.S. refused to turn over anything in writing itself, and briefed E.U. representatives on the plan orally in the hope of avoiding leaks.

The Obama administration has been obsessively secretive about the draft ACTA treaty — even, at one point, claiming national security could be jeopardized if the proposed treaty's working documents were disclosed to the public. Now, it seems, we know what the administration is hiding.

Obama hasn't asked Congress to implement a three-strike policy, which could anger consumers and watchdog groups. But if the administration gets three strikes written into ACTA, and the United States signs and ratifies the treaty, Congress would be obliged to change the DMCA to comply with it, while the administration throws its hands in the air and says, "It wasn't our idea! It's that damn treaty!"

That practice is common enough to have a name: policy laundering.

Language in the leaked text throws open the door to ISP filtering for unauthorized content, though there's no way for filters to know whether the material constitutes fair use. That plan is similar to a proposal by the Motion Picture Association of America, which wants ISPs to filter for unauthorized motion pictures.

The three-strikes language would be gold to companies like MediaSentry, which browse peer-to-peer networks for infringing content, and identify a user's IP address and ISP. MediaSentry's work was crucial in the RIAA's 6-year-long litigation campaign that amounted to about 30,000 copyright lawsuits against individual file sharers using Kazaa, Limewire and other services.

Until today, the most alarming thing in the proposed ACTA treaty has been the secrecy surrounding it. But now the threat level is higher. It seems the executive branch would rather negotiate with other nations, instead of its own elected officials, about the future of a free and open internet.

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