A group of 17 companies and organisations have offered an alternative to a US Senate bill that would allow artists and entertainment companies to sue firms that market products that "induce" copyright violations.
The alternative, endorsed by companies such as MCI, SBC Communications and Verizon Communications, would soften the Inducing Infringements of Copyright Act, introduced by Senator Orrin Hatch in June.
The new proposal, advanced by the Home Recording Rights Coalition, would penalise only those firms that actively distribute computer tools "specifically designed to cause or enable infringement".
The Recording Industry Association of America (RIAA) has questioned the new proposal, saying it could gut the bill.
"As drafted, it appears that no pirate networks would be found liable," the RIAA said. "But it poses some interesting ideas and concepts."
The RIAA said it is good news that drafters of the proposal are "looking at constructive ways to separate themselves from the bad actors".
The new proposal, sent to Hatch and other sponsors of his bill this week, exempts internet service providers, investors and others whose services could be used for copyright infringement.
It also allows for the recovery of full legal costs of the party that wins a lawsuit, in an attempt to discourage frivolous lawsuits.
The proposal comes in response to a challenge from Hatch, who asked those opposing his bill to craft alternatives.
Several groups, including the Home Recording Rights Coalition, have called the bill too broad, saying it could be used by the music and movie industries to sue venture capitalists who invest in new technologies or journalists who review digital recording products.
While Hatch's legislation is aimed at unauthorised file trading on peer-to-peer services, "it goes far beyond that purview", said Art Brodsky, communications director for Public Knowledge, another group supporting the new proposal.
The bill would allow artists and entertainment companies to sue creators of products that "intentionally induce" copyright violations, based on what a "reasonable person" would consider an inducement.
Currently, civil penalties for copyright infringement can be up to $30,000 (£16,600) per act of infringement, or up to $150,000 per act of willful infringement. Total damages are determined at trial.
"[The proposal] is designed to do what the senators said they wanted it to do - that is, punish the bad actors," said Jeff Joseph, a spokesman for the Home Recording Rights Coalition. "It narrows the scope of what we thought was overly broad legislation."
Grant Gross writes for IDG News Service