[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4077 Reported in House (RH)]






                                                 Union Calendar No. 428
108th CONGRESS
  2d Session
                                H. R. 4077

                          [Report No. 108-700]

 To enhance criminal enforcement of the copyright laws, to educate the 
public about the application of copyright law to the Internet, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 31, 2004

     Mr. Smith of Texas (for himself, Mr. Berman, and Mr. Conyers) 
 introduced the following bill; which was referred to the Committee on 
                             the Judiciary

                           September 24, 2004

 Additional sponsors: Mr. Otter, Mr. Hoyer, Mr. Coble, Mrs. Bono, and 
                               Mr. Meehan

                           September 24, 2004

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of the introduced bill, see bill as introduced on March 31, 
                                 2004]

_______________________________________________________________________

                                 A BILL


 
 To enhance criminal enforcement of the copyright laws, to educate the 
public about the application of copyright law to the Internet, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Piracy Deterrence and Education Act 
of 2004''.

SEC. 2. FINDINGS.

    The Congress finds as follows:
            (1) The Internet, while changing the way our society 
        communicates, has also changed the nature of many crimes, 
        including the theft of intellectual property.
            (2) Trafficking in infringing copyrighted works through 
        increasingly sophisticated electronic means, including peer-to-
        peer file trading networks, Internet chat rooms, and news 
        groups, threatens lost jobs, lost income for creators, lower 
        tax revenue, and higher prices for honest purchasers.
            (3) The most popular peer-to-peer file trading software 
        programs have been downloaded by computer users over 
        600,000,000 times. At any one time there are over 3,000,000 
        users simultaneously using just one of these services. Each 
        month, on average, over 2,300,000,000 digital-media files are 
        transferred among users of peer-to-peer systems.
            (4) Many computer users simply believe that they will not 
        be caught or prosecuted for their conduct.
            (5) The security and privacy threats posed by certain peer-
        to-peer networks extend beyond users inadvertently enabling a 
        hacker to access files. Millions of copies of one of the most 
        popular peer-to-peer networks contain software that could allow 
        an independent company to take over portions of users' 
        computers and Internet connections and has the capacity to keep 
        track of users' online habits.
            (6) In light of these considerations, Federal law 
        enforcement agencies should actively pursue criminals who steal 
        the copyrighted works of others, and prevent such activity 
        through enforcement and awareness. The public should be 
        educated about the security and privacy risks associated with 
        being connected to certain peer-to-peer networks.

SEC. 3. VOLUNTARY PROGRAM OF DEPARTMENT OF JUSTICE.

    (a) Voluntary Program.--The Attorney General is authorized to 
establish a program under which the Department of Justice, in cases 
where persons who are subscribers of Internet service providers appear 
to be engaging in copyright infringing conduct in the course of using 
that Internet service, would send to the Internet Service providers 
notices that warn such persons of the penalties for such copyright 
infringement. The Internet service providers may forward the notices to 
such persons.
    (b) Limitations on Program.--
            (1) Extent and length of program.--The program under 
        subsection (a) shall terminate at the end of the 18-month 
        period beginning on the date of the enactment of this Act and 
        shall be limited to not more than 10,000 notices.
            (2) Privacy protections.--No Internet service provider that 
        receives a notice from the Department of Justice under 
        subsection (a) may disclose to the Department any identifying 
        information about the subscriber that is the subject of the 
        notice except pursuant to court order or other applicable legal 
        process that requires such disclosure.
    (c) Reimbursement of Internet Service Providers.--The Department of 
Justice shall reimburse Internet Service providers for all reasonable 
costs incurred by such service providers in forwarding notices under 
subsection (a).
    (d) Reports to Congress.--The Attorney General shall submit to the 
Congress a report on the program established under subsection (a) both 
at the time the program is initiated and at the conclusion of the 
program.

SEC. 4. DESIGNATION AND TRAINING OF AGENTS IN COMPUTER HACKING AND 
              INTELLECTUAL PROPERTY UNITS.

    (a) Designation of Agents in CHIPs Units.--The Attorney General 
shall ensure that any unit in the Department of Justice responsible for 
investigating computer hacking or responsible for investigating 
intellectual property crimes is assigned at least one agent to support 
such unit for the purpose of investigating crimes relating to the theft 
of intellectual property.
    (b) Training.--The Attorney General shall ensure that each agent 
assigned under subsection (a) has received training in the 
investigation and enforcement of intellectual property crimes.

SEC. 5. EDUCATION PROGRAM.

    (a) Establishment.--There shall be established within the Office of 
the Associate Attorney General of the United States an Internet Use 
Education Program.
    (b) Purpose.--The purpose of the Internet Use Education Program 
shall be to--
            (1) educate the general public concerning the value of 
        copyrighted works and the effects of the theft of such works on 
        those who create them; and
            (2) educate the general public concerning the privacy, 
        security, and other risks of using the Internet to obtain 
        illegal copies of copyrighted works.
    (c) Sector Specific Materials.--The Internet Use Educational 
Program shall, to the extent appropriate, develop materials appropriate 
to Internet users in different sectors of the general public where 
criminal copyright infringement is a concern. The Attorney General 
shall consult with appropriate interested parties in developing such 
sector-specific materials.
    (d) Consultations.--The Attorney General shall consult with the 
Register of Copyrights and the Secretary of Commerce in developing the 
Internet Use Education Program under this section.
    (e) Prohibition on Use of Certain Funds.--The program created under 
this section shall not use funds or resources of the Department of 
Justice allocated for criminal investigation or prosecution.
    (f) Additional Prohibition on the Use of Funds.--The program 
created under this section shall not use any funds or resources of the 
Department of Justice allocated for the Civil Rights Division of the 
Department, including any funds allocated for the enforcement of civil 
rights or the Voting Rights Act of 1965.

SEC. 6. ACTIONS BY THE GOVERNMENT OF THE UNITED STATES.

    Section 411(a) of title 17, United States Code, is amended in the 
first sentence by striking ``Except for'' and inserting ``Except for an 
action brought by the Government of the United States or by any agency 
or instrumentality thereof, or'' .

SEC. 7. AUTHORIZED APPROPRIATIONS.

    There are authorized to be appropriated to the Department of 
Justice for fiscal year 2005 not less than $15,000,000 for the 
investigation and prosecution of violations of title 17, United States 
Code.

SEC. 8. CRIMINAL PENALTIES FOR UNAUTHORIZED RECORDING OF MOTION 
              PICTURES IN A MOTION PICTURE EXHIBITION FACILITY.

    (a) In General.--Chapter 113 of title 18, United States Code, is 
amended by adding after section 2319A the following new section:
``Sec. 2319B. Unauthorized recording of motion pictures in a motion 
              picture exhibition facility
    ``(a) Offense.--Any person who, without the authorization of the 
copyright owner, knowingly uses or attempts to use an audiovisual 
recording device to transmit or make a copy of a motion picture or 
other audiovisual work protected under title 17, or any part thereof, 
from a performance of such work in a motion picture exhibition 
facility, shall--
            ``(1) be imprisoned for not more than 3 years, fined under 
        this title, or both; or
            ``(2) if the offense is a second or subsequent offense, be 
        imprisoned for no more than 6 years, fined under this title, or 
        both.
The possession by a person of an audiovisual recording device in a 
motion picture exhibition facility may be considered as evidence in any 
proceeding to determine whether that person committed an offense under 
this subsection, but shall not, by itself, be sufficient to support a 
conviction of that person for such offense.
    ``(b) Forfeiture and Destruction.--When a person is convicted of an 
offense under subsection (a), the court in its judgment of conviction 
shall, in addition to any penalty provided, order the forfeiture and 
destruction or other disposition of all unauthorized copies of motion 
pictures or other audiovisual works protected under title 17, or parts 
thereof, and any audiovisual recording devices or other equipment used 
in connection with the offense.
    ``(c) Authorized Activities.--This section does not prevent any 
lawfully authorized investigative, protective, or intelligence activity 
by an officer, agent, or employee of the United States, a State, or a 
political subdivision of a State, or by a person acting under a 
contract with the United States, a State, or a political subdivision of 
a State.
    ``(d) Immunity for Theaters and Authorized Persons.--With 
reasonable cause, the owner or lessee of a motion picture facility 
where a motion picture is being exhibited, the authorized agent or 
employee of such owner or lessee, the licensor of the motion picture 
being exhibited, or the agent or employee of such licensor--
            ``(1) may detain, in a reasonable manner and for a 
        reasonable time, any person suspected of committing an offense 
        under this section for the purpose of questioning that person 
        or summoning a law enforcement officer; and
            ``(2) shall not be held liable in any civil or criminal 
        action by reason of a detention under paragraph (1).
    ``(e) Victim Impact Statement.--
            ``(1) In general.--During the preparation of the 
        presentence report under rule 32(c) of the Federal Rules of 
        Criminal Procedure, victims of an offense under this section 
        shall be permitted to submit to the probation officer a victim 
        impact statement that identifies the victim of the offense and 
        the extent and scope of the injury and loss suffered by the 
        victim, including the estimated economic impact of the offense 
        on that victim.
            ``(2) Contents.--A victim impact statement submitted under 
        this subsection shall include--
                    ``(A) producers and sellers of legitimate works 
                affected by conduct involved in the offense;
                    ``(B) holders of intellectual property rights in 
                the works described in subparagraph (A); and
                    ``(C) the legal representatives of such producers, 
                sellers, and holders.
    ``(f) Definitions.--In this section:
            ``(1) Audiovisual work, copy, etc.--The terms `audiovisual 
        work', `copy', `copyright owner', `motion picture', and 
        `transmit' have, respectively, the meanings given those terms 
        in section 101 of title 17.
            ``(2) Audiovisual recording device.--The term `audiovisual 
        recording device' means a digital or analog photographic or 
        video camera, or any other technology or device capable of 
        enabling the recording or transmission of a copyrighted motion 
        picture or other audiovisual work, or any part thereof, 
        regardless of whether audiovisual recording is the sole or 
        primary purpose of the device.
            ``(3) Motion picture exhibition facility.--The term `motion 
        picture exhibition facility' means a movie theater, screening 
        room, or other venue that is being used primarily for the 
        exhibition of a copyrighted motion picture, if such exhibition 
        is open to the public or is made to an assembled group of 
        viewers outside of a normal circle of a family and its social 
        acquaintances.
    ``(g) State Law Not Preempted.--Nothing in this section may be 
construed to annul or limit any rights or remedies under the laws of 
any State.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 113 of title 18, United States Code, is amended by inserting 
after the item relating to section 2319A the following:

``2319B. Unauthorized recording of motion pictures in a motion picture 
                            exhibition facility.''.

SEC. 9. SENSE OF THE CONGRESS ON NEED TO TAKE STEPS TO PREVENT ILLEGAL 
              ACTIVITY ON PEER-TO-PEER SERVICES.

    (a) Findings.--The Congress finds as follows:
            (1) The most popular publicly accessible peer-to-peer file 
        sharing software programs combined have been downloaded 
        worldwide over 600,000,000 times.
            (2) The vast majority of software products, including peer-
        to-peer technology, do not pose an inherent risk. Responsible 
        persons making software products should be encouraged and 
        commended for the due diligence and reasonable care they take 
        including by providing instructions, relevant information in 
        the documentation, disseminating patches, updates, and other 
        appropriate modifications to the software.
            (3) Massive volumes of illegal activity, including the 
        distribution of child pornography, viruses, and confidential 
        personal information, and copyright infringement occur on 
        publicly accessible peer-to-peer file sharing services every 
        day. Some publicly accessible peer-to-peer file sharing 
        services expose consumers, particularly children, to serious 
        risks, including legal liability, loss of privacy, threats to 
        computer security, and exposure to illegal and inappropriate 
        material.
            (4) Several studies and reports demonstrate that 
        pornography, including child pornography, is prevalent on 
        publicly available peer-to-peer file sharing services, and 
        children are regularly exposed to pornography when using such 
        peer-to-peer file sharing services.
            (5) The full potential of peer-to-peer technology to 
        benefit consumers has yet to be realized and will not be 
        achieved until these problems are adequately addressed.
            (6) To date, the businesses that run publicly accessible 
        file-sharing services have refused or failed to voluntarily and 
        sufficiently address these problems.
            (7) Many users of publicly available peer-to-peer file-
        sharing services are drawn to these systems by the lure of 
        obtaining ``free'' music and movies.
            (8) While some users use parental controls to protect 
        children from pornography available on the Internet and search 
        engines, not all such controls work on publicly accessible 
        peer-to-peer networks.
            (9) Businesses that run publicly accessible peer-to-peer 
        file sharing services have openly acknowledged, and numerous 
        studies and reports have established, that these services 
        facilitate and profit from massive amounts of copyright 
        infringement, causing enormous damage to the economic well-
        being of the copyright industries whose works are being 
        illegally ``shared'' and downloaded.
            (10) The legitimate digital music marketplace offers 
        consumers a wide and growing array of choices for obtaining 
        music legally, without exposure to the risks posed by publicly 
        accessible peer-to-peer file sharing services.
            (11) The Federal Trade Commission issued a Consumer Alert 
        in July of 2003 warning consumers that some file-sharing 
        services contain damaging viruses and worms and, without the 
        computer user's knowledge or consent, install spyware to 
        monitor a user's browsing habits and send data to third parties 
        or automatically open network connections.
            (12) Publicly available peer-to-peer file-sharing services 
        can and should adopt reasonable business practices and use 
        technology in the marketplace to address the existing risks 
        posed to consumers by their services and facilitate the 
        legitimate use of peer-to-peer file sharing technology and 
        software.
    (b) Sense of Congress.--It is the sense of the Congress that--
            (1) responsible software developers should be commended, 
        recognized, and encouraged for their efforts to protect 
        consumers;
            (2) currently the level of ongoing and persistent illegal 
        and dangerous activity on publicly accessible peer-to-peer file 
        sharing services is harmful to consumers, minors, and the 
        economy; and
            (3) therefore, the Congress and the executive branch should 
        consider all appropriate measures to protect consumers and 
        children, and prevent such illegal activity.

SEC. 10. ENHANCEMENT OF CRIMINAL COPYRIGHT INFRINGEMENT.

    (a) Criminal Infringement.--Section 506 of title 17, United States 
Code, is amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) Criminal Infringement.--Any person who--
            ``(1) infringes a copyright willfully and for purposes of 
        commercial advantage or private financial gain,
            ``(2) infringes a copyright willfully by the reproduction 
        or distribution, including by the offering for distribution to 
        the public by electronic means, during any 180-day period, of 1 
        or more copies or phonorecords of 1 or more copyrighted works, 
        which have a total retail value of more than $1,000, or
            ``(3) infringes a copyright by the knowing distribution, 
        including by the offering for distribution to the public by 
        electronic means, with reckless disregard of the risk of 
        further infringement, during any 180-day period, of--
                    ``(A) 1,000 or more copies or phonorecords of 1 or 
                more copyrighted works,
                    ``(B) 1 or more copies or phonorecords of 1 or more 
                copyrighted works with a total retail value of more 
                than $10,000, or
                    ``(C) 1 or more copies or phonorecords of 1 or more 
                copyrighted pre-release works,
shall be punished as provided under section 2319 of title 18. For 
purposes of this subsection, evidence of reproduction or distribution 
of a copyrighted work, by itself, shall not be sufficient to establish 
the necessary level of intent under this subsection.''; and
            (2) by adding at the end the following:
    ``(g) Limitation on Liability of Service Providers.--No legal 
entity shall be liable for a violation of subsection (a)(3) by reason 
of performing any function described in subsection (a), (b), (c), or 
(d) of section 512 if such legal entity would not be liable for 
monetary relief under section 512 by reason of performing such 
function. Except for purposes of determining whether an entity 
qualifies for the limitation on liability under subsection (a)(3) of 
this section, the legal conclusion of whether an entity qualifies for a 
limitation on liability under section 512 shall not be considered in a 
judicial determination of whether the entity violates subsection (a) of 
this section.
    ``(h) Definitions.--In this section:
            ``(1) Pre-release work.--The term `pre-release work' refers 
        to a work protected under this title which has a commercial and 
        economic value and which, at the time of the act of 
        infringement that is the basis for the offense under subsection 
        (a)(3), the defendant knew or should have known had not yet 
        been made available by the copyright owner to individual 
        members of the general public in copies or phonorecords for 
        sale, license, or rental.
            ``(2) Retail value.--The `retail value' of a copyrighted 
        work is the retail price of that work in the market in which it 
        is sold. In the case of an infringement of a copyright by 
        distribution, if the retail price does not adequately reflect 
        the economic value of the infringement, then the retail value 
        may be determined using other factors, including but not 
        limited to suggested retail price, wholesale price, replacement 
        cost of the item, licensing, or distribution-related fees.''.
    (b) Penalties.--Section 2319 of title 18, United States Code, is 
amended--
            (1) by redesignating subsections (d) and (e) as subsections 
        (e) and (f), respectively;
            (2) by inserting after subsection (c) the following:
    ``(d) Any person who commits an offense under section 506(a)(3) of 
title 17--
            ``(1) shall be imprisoned not more than 3 years, or fined 
        in the amount set forth in this title, or both, or, if the 
        offense was committed for purposes of commercial advantage or 
        private financial gain, imprisoned for not more than 5 years, 
        or fined in the amount set forth in this title, or both; and
            ``(2) shall, if the offense is a second or subsequent 
        offense under paragraph (1), be imprisoned not more than 6 
        years, or fined in the amount set forth in this title, or both, 
        or, if the offense was committed for purposes of commercial 
        advantage or private financial gain, imprisoned for not more 
        than 10 years, or fined in the amount set forth in this title, 
        or both.''; and
            (3) in subsection (f), as so redesignated--
                    (A) in paragraph (1), by striking ``and'' after the 
                semicolon;
                    (B) in paragraph (2), by striking the period and 
                inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(3) the term `financial gain' has the meaning given that 
        term in section 101 (relating to definitions) of title 17.''.
    (c) Civil Remedies for Infringement of a Commercial Pre-Release 
Copyrighted Work.--Section 504(b) of title 17, United States Code, is 
amended--
            (1) by striking ``The copyright owner'' and inserting the 
        following:
            ``(1) In general.--The copyright owner''; and
            (2) by adding at the end the following:
            ``(2) Damages for pre-release infringement.--
                    ``(A) In general.--In the case of any pre-release 
                work, actual damages shall be presumed conclusively to 
                be no less than $10,000 per infringement, if a person--
                            ``(i) distributes such work by making it 
                        available on a computer network accessible to 
                        members of the public; and
                            ``(ii) knew or should have known that the 
                        work was intended for commercial distribution.
                    ``(B) Definition.--For purposes of this subsection, 
                the term `pre-release work' has the meaning given that 
                term in section 506(h).''.

SEC. 11. AMENDMENT OF FEDERAL SENTENCING GUIDELINES REGARDING THE 
              INFRINGEMENT OF COPYRIGHTED WORKS AND RELATED CRIMES.

    (a) Amendment to the Sentencing Guidelines.--Pursuant to its 
authority under section 994 of title 28, United States Code, and in 
accordance with this section, the United States Sentencing Commission 
shall review and, if appropriate, amend the sentencing guidelines and 
policy statements applicable to persons convicted of intellectual 
property rights crimes, including sections 2318, 2319, 2319A, 2319B, 
2320 of title 18, United States Code, and sections 506, 1201, and 1202 
of title 17, United States Code.
    (b) Factors.--In carrying out this section, the Sentencing 
Commission shall--
            (1) take all appropriate measures to ensure that the 
        sentencing guidelines and policy statements applicable to the 
        offenses described in subsection (a) are sufficiently stringent 
        to deter and adequately reflect the nature of such offenses;
            (2) consider whether to provide a sentencing enhancement 
        for those convicted of the offenses described in subsection (a) 
        when the conduct involves the display, performance, 
        publication, reproduction, or distribution of a copyrighted 
        work before the time when the copyright owner has authorized 
        the display, performance, publication, reproduction, or 
        distribution of the original work, whether in the media format 
        used by the infringing good or in any other media format;
            (3) consider whether the definition of ``uploading'' 
        contained in Application Note 3 to Guideline 2B5.3 is adequate 
        to address the loss attributable to people broadly distributing 
        copyrighted works over the Internet without authorization; and
            (4) consider whether the sentencing guidelines and policy 
        statements applicable to the offenses described in subsection 
        (a) adequately reflect any harm to victims from infringement in 
        circumstances where law enforcement cannot determine how many 
        times copyrighted material is reproduced or distributed.
    (c) Promulgation.--The Commission may promulgate the guidelines or 
amendments under this section in accordance with the procedures set 
forth in section 21(a) of the Sentencing Act of 1987, as though the 
authority under that Act had not expired.

SEC. 12. EXEMPTION FROM INFRINGEMENT FOR SKIPPING AUDIO CONTENT IN 
              MOTION PICTURES.

    (a) Short Title.--This section may be cited as the ``Family Movie 
Act of 2004''.
    (b) Exemption From Copyright and Trademark Infringement for 
Skipping of Audio or Video Content of Motion Pictures.--Section 110 of 
title 17, United States Code, is amended--
            (1) in paragraph (9), by striking ``and'' after the 
        semicolon at the end;
            (2) in paragraph (10), by striking the period at the end 
        and inserting ``; and''; and
            (3) by inserting after paragraph (10) the following:
            ``(11)(A) the making of limited portions of audio or video 
        content of a motion picture imperceptible by or for the owner 
        or other lawful possessor of an authorized copy of that motion 
        picture in the course of viewing of that work for private use 
        in a household, by means of consumer equipment or services 
        that--
                    ``(i) are operated by an individual in that 
                household;
                    ``(ii) serve only such household; and
                    ``(iii) do not create a fixed copy of the altered 
                version; and
            ``(B) the use of technology to make such audio or video 
        content imperceptible, that does not create a fixed copy of the 
        altered version.''.
    (c) Exemption From Trademark Infringement.--Section 32 of the 
Trademark Act of 1946 (15 U.S.C. 1114) is amended by adding at the end 
the following:
    ``(3)(A) Any person who engages in the conduct described in 
paragraph (11) of section 110 of title 17, United States Code, and who 
complies with the requirements set forth in that paragraph is not 
liable on account of such conduct for a violation of any right under 
this Act.
    ``(B) A manufacturer, licensee, or licensor of technology that 
enables the making of limited portions of audio or video content of a 
motion picture imperceptible that is authorized under subparagraph (A) 
is not liable on account of such manufacture or license for a violation 
of any right under this Act, if such manufacturer, licensee, or 
licensor ensures that the technology provides a clear and conspicuous 
notice that the performance of the motion picture is altered from the 
performance intended by the director or copyright holder of the motion 
picture.
    ``(C) Any manufacturer, licensee, or licensor of technology 
described in subparagraph (B) who fails to comply with the requirement 
under subparagraph (B) to provide notice with respect to a motion 
picture shall be liable in a civil action brought by the copyright 
owner of the motion picture that is modified by the technology in an 
amount not to exceed $1,000 for each such motion picture.
    ``(D) The requirement under subparagraph (B) to provide notice, and 
the provisions of subparagraph (C), shall apply only with respect to 
technology manufactured after the end of the 180-day period beginning 
on the date of the enactment of the Family Movie Act of 2004.''.
    (d) Definition.--In this section, the term ``Trademark Act of 
1946'' means the Act entitled ``An Act to provide for the registration 
and protection of trademarks used in commerce, to carry out the 
provisions of certain international conventions, and for other 
purposes'', approved July 5, 1946 (15 U.S.C. 1051 et seq.).




                                                 Union Calendar No. 428

108th CONGRESS

  2d Session

                               H. R. 4077

                          [Report No. 108-700]

_______________________________________________________________________

                                 A BILL

 To enhance criminal enforcement of the copyright laws, to educate the 
public about the application of copyright law to the Internet, and for 
                            other purposes.

_______________________________________________________________________

                           September 24, 2004

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed