7 out of 10 Dutch ISPs censor content on bogus copyright claim

Joi Ito's Web: Copyright Takedown Experiment Reveals Horrible ISP Policies: "Dutch civil rights organization Bits of Freedom has run an interesting experiment: They put up a text by a famous Dutch author, written in 1871 to accounts with 10 different ISPs. Then they made up an imaginary society that is supposed to be the copyright holder of the author in question, and sent copyright infringement takedown notices to those 10 ISP via email (using a Hotmail account). 7 out of 10 ISPs took down the material, sometimes within hours and without even informing the account holder."

How should an ISP decide to handle a situation like this? If you refuse the request you are open to liability lawsuits, if you blindly obey it you're someone's tool -- or do you spend time investigating every complaint and then hope you bet on the right horse? Doom9 implies that it is somehow bad to act on the notice of some imaginary society that owns the rights. What if it had been someone they'd heard of, a big publisher or TV station? Now, it's OK for the ISP to take down the material? What if a big media company, powered by Akamai was using an independent's creative content material for commercial purposes? Now what do you think the mechanism should be?

As I was fascinated by the implications of Gimme the Mermaid video on the Illegal Art site, I thought about what would happen if we were hosting that video and were asked by Disney to take it down? It seems, to me, to be fair use, albeit provocative fair use. Do I have to fight Disney's lawyers to protect my customer?

I think the first thing I'd do is call EFF. In an ideal (Coasean) world, what would the process be? What's the best EFF could suggest, these days?