The US Copyright Office is about to endorse new legislation that would outlaw peer-to-peer networks and possibly devices like the iPod.

The Inducing Infringement of Copyrights Act aims to make operators of networks such as Kazaa and Grokster liable for their users’ copyright abuse, and also makes it easier for entertainment companies to sue technology firms.

The act could potentially enable copyright owners to force Apple and others to stop making iPods or other music players, and applies harsh measures that indicate that companies who intentionally induce, aid, abet, and profit from infringements of copyrighted works – those who make software or hardware that could conceivably be used to break the rights of the copyright holder, for example – should be held responsible for the infringement.

According to a copy of US Register of Copyrights Marybeth Peters statement seen by Cnet: "The Induce Act is an important improvement over existing law. The 1984 Supreme Court decision should be replaced by a more flexible rule that is more meaningful in the technological age."

The 1984 decision was regarding the sale of video recorders. It determined that VCRs were legal to sell because they were "capable of substantial noninfringing uses". This legal loophole has already been used by one federal court to cover the Grokster and Morpheus file-swapping networks.

More than 40 trade associations and advocacy groups voiced their concerns about the legislation in a letter was sent to senators on July 6, suggesting that The Induce Act "would chill innovation and drive investment in technology" overseas.

Similarly, Cnet reports that Les Vadasz, who retired last year as an Intel executive vice president, denounced the Induce Act as having a wealth of undesirable side effects. "The chilling effect that a law like this would have on innovation cannot be underestimated," he said.

However, the Business Software Alliance, which includes Adobe and Autodesk, has applauded the Act. The alliance described the act as a "reasonable balance between antipiracy and technological innovation".