[Congressional Record Volume 143, Number 102 (Thursday, July 17, 1997)]
[Extensions of Remarks]
[Pages E1452-E1453]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


             THE ON-LINE COPYRIGHT LIABILITY LIMITATION ACT

                                 ______
                                 

                           HON. HOWARD COBLE

                           of north carolina

                    in the house of representatives

                        Thursday, July 17, 1997

  Mr. COBLE. Mr. Speaker, the On-Line Copyright Liability Limitation 
Act is being introduced in response to concerns raised by a number of 
on-line service and Internet access providers regarding their potential 
liability for copyright infringement when infringing material is 
transmitted on-line through their services. While several judicially 
created doctrines currently address the question of when liability is 
appropriate, providers have sought greater certainty through 
legislation as to how these doctrines will apply in the digital 
environment. Undoubtedly, service providers will be concerned that the 
exemption contained in this bill does not go far enough and copyright 
owners will be concerned that it goes too far. This bill is meant to be 
a new starting point for discussion among the groups affected by its 
provisions.
  Bob Goodlatte of Virginia invested months of his time in the last 
Congress leading negotiation sessions between on-line service and 
Internet access providers, telephone companies, libraries, 
universities, and copyright owners. He will continue to steer the 
negotiation process in this Congress as the parties involved begin 
discussions starting from the framework established in the On-Line 
Copyright Liability Limitation Act.


                            general approach

  The general approach of the bill is to be as simple and streamlined 
as possible. It provides a single exemption, written broadly so as to 
cover a range of acts dealt with in separate exemptions in drafts under 
discussion last year. The availability of the exemption depends on the 
actor's level of control, participation, and knowledge of the 
infringement, rather than on the particular type of technology used or 
the particular type of business being conducted. Similarly, the 
exemption is available to any person engaging in the covered activity, 
not limited to those falling within a defined category of ``service 
provider.''
  A decision was made not to attempt to codify industry-specific codes 
of conduct or detailed notification procedures at this time. The bill 
does not foreclose these possibilities, however, should the parties who 
will be affected directly by the provisions of this bill concur that 
they are desirable. It also provides certain legal protections for 
parties who act responsibly to assist in preventing infringement.

                      Section by Section Analysis

     SEC. 1 SHORT TITLE

       This act may be referred to as the ``On-Line Copyright 
     Liability Limitation Act''.

     SEC. 2. LIMITATIONS ON LIABILITY

       Paragraph (a) would amend Chapter 5 of Title 17, U.S. Code, 
     the chapter setting out what constitutes infringement and 
     establishing remedies, to add a new section 512, entitled 
     ``Limitations on liability relating to material on-line.'' 
     Paragraph (a) contains the substance of the new exemption.
       Paragraph (a)(1) provides an exemption from both liability 
     for direct infringement and vicarious liability, based solely 
     on acts of transmitting or otherwise providing access to 
     material online, if certain criteria are met. The exemption 
     does not specify any particular right of the copyright owner 
     under section 106; it would excuse the infringement of any of 
     the rights.
       If a person making use of copyrighted material on-line does 
     not qualify for the exemption because of a failure to fall 
     within one or more of the criteria, that does not mean that 
     the person is necessarily liable for infringement. If the 
     exemption does not apply, the doctrines of existing law will 
     come into play, and liability will only attach to the extent 
     that the court finds that the requirements for direct 
     infringement, contributory infringement or vicarious 
     liability have been met, and the conduct is not excused by 
     any other exception or limitation.
       ``Transmitting'' refers to moving material from one place 
     to another so that it is received beyond the place from which 
     it is sent. ``Providing access'' is a broader term; it could 
     be accomplished by transmitting or by otherwise placing 
     material on-line in a location where individuals may gain 
     access to it on demand. The terms ``transmitting'' and 
     ``providing access'' are intended to cover any means of 
     accomplishing these acts. Such means could include any of the 
     following: the carriage and routing of telecommunications 
     signals; the services of on-line service providers or 
     Internet access providers; the operation of bulletin boards; 
     and the sending of private electronic or real-time 
     communications.
       The term ``solely'' is intended to make clear that the 
     exemption applies only to the acts of transmission or 
     providing access in themselves. If the person engaging in 
     these acts also makes further use of the copyrighted 
     material, such as making additional copies or using copies 
     for other purposes, the exemption will not apply.


                                Criteria

       The exemption is aimed essentially at passive, intermediary 
     types of conduct. The criteria determining its applicability 
     are adapted from a combination of case law and prior 
     discussions of the issue in Congress in the last session. 
     Some of the concepts are similar to those specified in the 
     ``passive carrier'' exemption in section 111(a)(3) of the 
     Copyright Act.\1\ The overall goal is to exempt conduct where 
     liability does not seem appropriate because of a low level of 
     participation, control and knowledge, while at the same time 
     ensuring that adequate incentives remain to assist copyright 
     owners in preventing infringement, without ensuring that 
     adequate incentives remain to assist copyright owners in 
     preventing infringement, without obligating service providers 
     generally to monitor or police communications over the 
     Internet.
---------------------------------------------------------------------------
     \1\ That section exempts from liability secondary 
     transmissions made by a carrier who ``has no direct or 
     indirect control over the content or selection of the primary 
     transmission or over the particular recipients of the 
     secondary transmission, and whose activities consist solely 
     of providing wires, cables, or other communications channels 
     for the use of others: Provided, That the provisions of this 
     clause extend only to the activities of said carrier with 
     respect to secondary transmissions and do not exempt from 
     liability the activities of others with respect to their own 
     primary or secondary transmissions.'' 17 U.S.C. 
     Sec. 111(a)(3).
---------------------------------------------------------------------------
       The failure to meet any one of the criteria would 
     disqualify a person from the benefit of the exemption, since 
     the person would then be performing a more active or 
     knowledgeable role in distributing the infringing material. 
     The ordinary rules of respondeat superior and enterprise 
     liability would determine whether conduct by someone acting 
     on behalf of the person seeking the exemption is attributed 
     to that person.
       The first three criteria all relate to the concept of 
     acting as an intermediary in the chain of dissemination, 
     rather than an initiator or director of the dissemination of 
     the material.
     Subparagraph (A)
       The first criterion is that the person seeking the 
     exemption did not initiate the circulation of the infringing 
     material. Someone else was responsible for placing it on-
     line. For example, a service provider would not be 
     disqualified under this criterion where a work was placed on-
     line by a subscriber.
     Subparagraph (B)
       The second criterion is that the person has no control over 
     the content of the material: he or she did not create the 
     material, choose it, or make any changes in it.
     Subparagraph (C)
       The third criterion requires that the person not be the one 
     to decide who will receive the material. The fact that the 
     person may have control over the universe of possible 
     recipients, for example by controlling the list of 
     subscribers to an on-line service or a bulletin board, would 
     not disqualify him or her, since the choice of all 
     subscribers does not determine which subscriber receives 
     which material.
     Subparagraph (D)
       The fourth criterion rules out the possibility of receiving 
     a financial benefit directly from a particular act of 
     infringement. It would prevent someone who obtained a 
     percentage of the revenue on each piece of pirated software 
     transmitted from claiming the benefit of the exemption. It 
     would not, however, bar someone whose financial benefit 
     consisted of charging users of its service by the length of 
     the message (per number of bytes, for example) or by time 
     unit.

[[Page E1453]]

     Subparagraph (E)
       The fifth criterion requires that the person not play an 
     active role in encouraging others to use the infringing 
     material. The exemption would not be available to one who 
     affirmately sponsored, endorsed or advertised the material--
     acts that are likely to lead to greater dissemination to a 
     wider audience, and therefore greater harm to the copyright 
     owner. Accordingly, such acts should engender some degree of 
     responsibility, and it is reasonable to expect the actor to 
     check the material being recommended (which would not be 
     necessary if the exemption applied). Hyperlinking in and of 
     itself would not be disqualifying under this criterion, to 
     the extent that it is purely informational and directional. 
     If, however, the context or presentation indicates an 
     affirmative recommendation, a higher level of care would be 
     appropriate, and the exemption would not apply.
     Subparagraph (F)
       The sixth and final criterion is a knowledge standard. If 
     the person knows of the infringement, he or she should not be 
     entirely exempt. The level of knowledge required is critical. 
     If the exemption were limited to actual knowledge, it would 
     provide an incentive to look the other way and deliberately 
     avoid learning of the infringement. At the other extreme, a 
     general negligence standard would be too broad to the extent 
     that it could be interpreted to impose an affirmative duty to 
     investigate, since service providers should not have a duty 
     to investigate every transmission taking place through their 
     services.
       Subparagraph (F) therefore adopts an intermediate standard: 
     if a person becomes aware of information that causes 
     suspicion, he or she should have some obligation to check 
     further. Such information may be obtained through the receipt 
     of a notice from a copyright owner, or may be provided 
     independently in the course of ordinary business. For 
     example, a service provider who learns that a subscriber is 
     operating a bulletin board called ``PIRATES-R-US,'' or ``POP 
     MUSIC FOR FREE,'' and makes no inquiries and takes no further 
     action should not obtain the benefit of this exemption. On 
     the other hand, the service provider should not have to check 
     sites or transmissions in the absence of obtaining such 
     information. In other words, a red flag should not be 
     ignored, but a provider should not ordinarily be required to 
     go out and search for red flags.
       The bill incorporates these concepts in two clauses within 
     paragraph (a)(1). Clause (i) of subparagraph (F) sets a 
     general standard of ``does not know, and is not aware by 
     notice or other information indicating, that the material is 
     infringing.'' The language ``is not aware'' is a higher 
     standard than ``is in possession of facts,'' since a person 
     may have facts within his possession, for example in a file 
     somewhere, without being aware of them. The information need 
     only indicate that the material is infringing, however; this 
     would cover the type of red flag discussed above, and would 
     not require such evidence as would be sufficient to establish 
     infringement in a court of law. A separate sentence at the 
     end of paragraph (a) states explicitly that ``[n]othing in 
     [that clause] shall impose an affirmative obligation to seek 
     information described in such clause.'' In other words, the 
     knowledge standard in the clause does not itself impose any 
     obligation to monitor for infringement or to search out 
     suspicious information. Once one becomes aware of such 
     information, however, one may have an obligation to check 
     further.
       The other way to meet the subparagraph (F) criterion is if 
     the person is prohibited by law from accessing the material. 
     For example, the Electronic Communications Privacy Act makes 
     it unlawful to access private e-mail communications. 18 
     U.S.C. Sec. 2510 et seq. In such circumstances, the exemption 
     would be available without reference to the person's level of 
     knowledge.
       Many of the circumstances proposed for exemptions last year 
     in the course of negotiating draft bill language would fall 
     within the scope of this general exemption. The exemption 
     would clearly cover the mere provision of physical 
     facilities, such as lines or cables. It would also cover 
     various activities that have been referred to as ``mere 
     conduit services,'' including the provision of local access, 
     local exchange, telephone toll, trunk line, or backbone 
     services, since the concept of ``mere conduit'' was similarly 
     based on the passive, non-participatory nature of the 
     activity. In addition, acts of hosting or operating bulletin 
     boards and web pages would fall within the scope of the 
     exemption where the operator does not have the requisite 
     level of control or knowledge of infringing postings or 
     content. The transmission of private or real time electronic 
     communications such as e-mail would be exempted where the law 
     does not permit the service provider to access the 
     communication.
       Paragraph (a)(2) deals with contributory infringement. 
     Because contributory infringement, unlike direct infringement 
     and vicarious liability, contains a knowledge requirement, it 
     is treated separately. This subparagraph substantially limits 
     remedies available for contributory infringement for conduct 
     that qualifies for the exemption from liability for direct 
     infringement or vicarious liability under subparagraph (1). 
     In such cases, no monetary remedies will be available, and a 
     court could issue an injunction requiring acts such as 
     removing or blocking access to infringing material, only to 
     the extent such acts are technically feasible and 
     economically reasonable. The rationale for not barring 
     injunctive relief is that a person who knows or should know 
     of the infringement, and can reasonably do something to 
     prevent it, should continue to have some legal incentive to 
     do so. In many cases, a service provider may be the only 
     person capable as a practical matter of preventing infringing 
     material from being transmitted around the world, or the only 
     one over whom a copyright owner can obtain jurisdiction.
       Paragraphs (b) through (d) are intended to protect 
     providers when they remove, disable or block access to 
     material and remove possible disincentives to cooperate with 
     copyright owners by taking steps to prevent infringement. 
     These paragraphs ensure that a person who responds to 
     information indicating infringement by removing, disabling or 
     blocking access to material will not be penalized for having 
     done so.
       Paragraph (b) is essentially a ``Good Samaritan'' defense. 
     It ensures that a person who acts responsibly upon obtaining 
     information indicating an infringement, whether by receiving 
     a notice or otherwise, and removes, disables or blocks access 
     to the relevant material, cannot be held liable for having 
     done so. This section would block claims by anyone based on 
     the take-down itself (e.g., interference with contract 
     claims).
       Paragraph (c) preserves potential legal defense. It ensures 
     that whatever decision is made by a person who has obtained 
     information indicating infringement, whether to remove, 
     disable or block access to the material, or not to do so 
     because of a potential defense, cannot be used against that 
     person in an infringement suit.
       Paragraph (d) protects against losses caused by reliance on 
     false information. It provides penalties for knowing material 
     misrepresentations that material on-line is infringing, 
     allowing the recovery of any damages incurred by a person who 
     relies on such misrepresentations in removing, disabling or 
     blocking access to such material.


                       Comparison to Existing Law

       This exemption supplements doctrines of existing law, 
     including contributory infringement and vicarious liability; 
     it does not supersede or alter them. In some circumstances, 
     it would exempt a person from liability where these doctrines 
     would lead to the same result. In other circumstances, it 
     would provide greater immunity, exempting a person where 
     existing law would impose liability. While some of the 
     criteria in paragraph (a)(1) are similar to some of the 
     requirements for contributory infringement or vicarious 
     liability, they are also narrower in certain respects, as 
     described below. This exemption is not intended to indicate 
     to the courts that the elements of contributory infringement 
     or vicarious liability should be narrowed generally, or 
     interpreted in accordance with the language of this 
     provision. The intent is to continue the common law doctrines 
     unchanged, and allow the courts to continue to develop them.
     Direct infringement
       Under current law, a person is liable for direct 
     infringement who engages in an act within section 106 without 
     authorization, with or without knowledge of infringement. The 
     exemption would remove liability for a person who engages in 
     such acts in the course of transmitting or otherwise 
     providing access to material on-line in a passive, limited 
     way, without the defined level of knowledge.
     Vicarious liability
       Under current law, a person is vicariously liable for the 
     infringement of another if he has the right and ability to 
     control the infringement, and receives a direct financial 
     benefit, with or without knowledge of infringement. The 
     exemption would add an element of actual control, require a 
     more direct link to an infringement, and add a knowledge 
     requirement. It would thus remove liability for a person who 
     has no actual control of the placement of the material on-
     line, its content, or its particular recipients, if he or she 
     receives no direct financial benefit attributable to a 
     particular infringement, and does not have the defined level 
     of knowledge.
     Contributory infringement
       Under current law, a person is liable for contributory 
     infringement who induces, causes or materially contributes to 
     another's infringement, knowing or having reason to know of 
     the infringement. The exemption would remove monetary 
     liability, and place some limits on injunctive relief, where 
     the contribution to the infringement is of a passive nature 
     and where the person has no actual knowledge and is not aware 
     of information indicating infringement (but meets the lower 
     standard of having reason to know).
       Hearings on this bill will be conducted in the Judiciary 
     Subcommittee on Courts and Intellectual Property, which I 
     chair, simultaneously with a bill to implement the WIPO 
     treaties negotiated in Geneva, Switzerland in December, 1996. 
     The implementation legislation will be introduced soon after 
     the introduction of this bill. It is my intent to move the 
     bills together.



     

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