[Congressional Record Volume 144, Number 140 (Thursday, October 8, 1998)]
[House]
[Pages H10048-H10074]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    CONFERENCE REPORT ON H.R. 2281, DIGITAL MILLENNIUM COPYRIGHT ACT

  Mr. COBLE submitted the following conference report and statement on 
the bill (H.R. 2281) to amend title 17, United States Code, to 
implement the World Intellectual Property Organization Copyright Treaty 
and Performances and Phonograms Treaty, and for other purposes:

                  Conference Report (H. Rept. 105-796)

       The committee of conference on the disagreeing votes of the 
     two Houses on the amendment of the Senate to the bill (H.R. 
     2281), to amend title 17, United States Code, to implement 
     the World Intellectual Property Organization Copyright Treaty 
     and Performances and Phonograms Treaty, and for other 
     purposes, having met, after full and free conference, have 
     agreed to recommend and do recommend to their respective 
     Houses as follows:

[[Page H10049]]

       That the House recede from its disagreement to the 
     amendment of the Senate and agree to the same with an 
     amendment as follows:
       In lieu of the matter proposed to be inserted by the Senate 
     amendment, insert the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Digital Millennium Copyright 
     Act''.

     SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.
Sec. 2. Table of contents.

                 TITLE I--WIPO TREATIES IMPLEMENTATION

Sec. 101. Short title.
Sec. 102. Technical amendments.
Sec. 103. Copyright protection systems and copyright management 
              information.
Sec. 104. Evaluation of impact of copyright law and amendments on 
              electronic commerce and technological development.
Sec. 105. Effective date.

      TITLE II--ONLINE COPYRIGHT INFRINGEMENT LIABILITY LIMITATION

Sec. 201. Short title.
Sec. 202. Limitations on liability for copyright infringement.
Sec. 203. Effective date.

      TITLE III COMPUTER MAINTENANCE OR REPAIR COPYRIGHT EXEMPTION

Sec. 301. Short title.
Sec. 302. Limitations on exclusive rights; computer programs.

                   TITLE IV--MISCELLANEOUS PROVISIONS

Sec. 401. Provisions Relating to the Commissioner of Patents and 
              Trademarks and the Register of Copyrights.
Sec. 402. Ephemeral recordings.
Sec. 403. Limitations on exclusive rights; distance education.
Sec. 404. Exemption for libraries and archives.
Sec. 405. Scope of exclusive rights in sound recordings; ephemeral 
              recordings.
Sec. 406. Assumption of contractual obligations related to transfers of 
              rights in motion pictures.
Sec. 407. Effective date.

            TITLE V--PROTECTION OF CERTAIN ORIGINAL DESIGNS

Sec. 501. Short title.
Sec. 502. Protection of certain original designs.
Sec. 503. Conforming amendments.
Sec. 504. Joint study of the effect of this title.
Sec. 505. Effective date.

                 TITLE I--WIPO TREATIES IMPLEMENTATION

     SEC. 101. SHORT TITLE.

       This title may be cited as the ``WIPO Copyright and 
     Performances and Phonograms Treaties Implementation Act of 
     1998''.

     SEC. 102. TECHNICAL AMENDMENTS.

       (a) Definitions.--Section 101 of title 17, United States 
     Code, is amended--
       (1) by striking the definition of ``Berne Convention 
     work'';
       (2) in the definition of ``The `country of origin' of a 
     Berne Convention work''--
       (A) by striking ``The `country of origin' of a Berne 
     Convention work, for purposes of section 411, is the United 
     States if'' and inserting ``For purposes of section 411, a 
     work is a `United States work' only if'';
       (B) in paragraph (1)--
       (i) in subparagraph (B) by striking ``nation or nations 
     adhering to the Berne Convention'' and inserting ``treaty 
     party or parties'';
       (ii) in subparagraph (C) by striking ``does not adhere to 
     the Berne Convention'' and inserting ``is not a treaty 
     party''; and
       (iii) in subparagraph (D) by striking ``does not adhere to 
     the Berne Convention'' and inserting ``is not a treaty 
     party''; and
       (C) in the matter following paragraph (3) by striking ``For 
     the purposes of section 411, the `country of origin' of any 
     other Berne Convention work is not the United States.'';
       (3) by inserting after the definition of ``fixed'' the 
     following:
       ``The `Geneva Phonograms Convention' is the Convention for 
     the Protection of Producers of Phonograms Against 
     Unauthorized Duplication of Their Phonograms, concluded at 
     Geneva, Switzerland, on October 29, 1971.'';
       (4) by inserting after the definition of ``including'' the 
     following:
       ``An `international agreement' is--
       ``(1) the Universal Copyright Convention;
       ``(2) the Geneva Phonograms Convention;
       ``(3) the Berne Convention;
       ``(4) the WTO Agreement;
       ``(5) the WIPO Copyright Treaty;
       ``(6) the WIPO Performances and Phonograms Treaty; and
       ``(7) any other copyright treaty to which the United States 
     is a party.'';
       (5) by inserting after the definition of ``transmit'' the 
     following:
       ``A `treaty party' is a country or intergovernmental 
     organization other than the United States that is a party to 
     an international agreement.'';
       (6) by inserting after the definition of ``widow'' the 
     following:
       ``The `WIPO Copyright Treaty' is the WIPO Copyright Treaty 
     concluded at Geneva, Switzerland, on December 20, 1996.'';
       (7) by inserting after the definition of ``The `WIPO 
     Copyright Treaty' '' the following:
       ``The `WIPO Performances and Phonograms Treaty' is the WIPO 
     Performances and Phonograms Treaty concluded at Geneva, 
     Switzerland, on December 20, 1996.''; and
       (8) by inserting after the definition of ``work made for 
     hire'' the following:
       ``The terms `WTO Agreement' and `WTO member country' have 
     the meanings given those terms in paragraphs (9) and (10), 
     respectively, of section 2 of the Uruguay Round Agreements 
     Act.''.
       (b) Subject Matter of Copyright; National Origin.--Section 
     104 of title 17, United States Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (1) by striking ``foreign nation that is a 
     party to a copyright treaty to which the United States is 
     also a party'' and inserting ``treaty party'';
       (B) in paragraph (2) by striking ``party to the Universal 
     Copyright Convention'' and inserting ``treaty party'';
       (C) by redesignating paragraph (5) as paragraph (6);
       (D) by redesignating paragraph (3) as paragraph (5) and 
     inserting it after paragraph (4);
       (E) by inserting after paragraph (2) the following:
       ``(3) the work is a sound recording that was first fixed in 
     a treaty party; or'';
       (F) in paragraph (4) by striking ``Berne Convention work'' 
     and inserting ``pictorial, graphic, or sculptural work that 
     is incorporated in a building or other structure, or an 
     architectural work that is embodied in a building and the 
     building or structure is located in the United States or a 
     treaty party''; and
       (G) by inserting after paragraph (6), as so redesignated, 
     the following:

     ``For purposes of paragraph (2), a work that is published in 
     the United States or a treaty party within 30 days after 
     publication in a foreign nation that is not a treaty party 
     shall be considered to be first published in the United 
     States or such treaty party, as the case may be.''; and
       (2) by adding at the end the following new subsection:
       ``(d) Effect of Phonograms Treaties.--Notwithstanding the 
     provisions of subsection (b), no works other than sound 
     recordings shall be eligible for protection under this title 
     solely by virtue of the adherence of the United States to the 
     Geneva Phonograms Convention or the WIPO Performances and 
     Phonograms Treaty.''.
       (c) Copyright in Restored Works.--Section 104A(h) of title 
     17, United States Code, is amended--
       (1) in paragraph (1), by striking subparagraphs (A) and (B) 
     and inserting the following:
       ``(A) a nation adhering to the Berne Convention;
       ``(B) a WTO member country;
       ``(C) a nation adhering to the WIPO Copyright Treaty;
       ``(D) a nation adhering to the WIPO Performances and 
     Phonograms Treaty; or
       ``(E) subject to a Presidential proclamation under 
     subsection (g).'';
       (2) by amending paragraph (3) to read as follows:
       ``(3) The term `eligible country' means a nation, other 
     than the United States, that--
       ``(A) becomes a WTO member country after the date of the 
     enactment of the Uruguay Round Agreements Act;
       ``(B) on such date of enactment is, or after such date of 
     enactment becomes, a nation adhering to the Berne Convention;
       ``(C) adheres to the WIPO Copyright Treaty;
       ``(D) adheres to the WIPO Performances and Phonograms 
     Treaty; or
       ``(E) after such date of enactment becomes subject to a 
     proclamation under subsection (g).'';
       (3) in paragraph (6)--
       (A) in subparagraph (C)(iii) by striking ``and'' after the 
     semicolon;
       (B) at the end of subparagraph (D) by striking the period 
     and inserting ``; and''; and
       (C) by adding after subparagraph (D) the following:
       ``(E) if the source country for the work is an eligible 
     country solely by virtue of its adherence to the WIPO 
     Performances and Phonograms Treaty, is a sound recording.'';
       (4) in paragraph (8)(B)(i)--
       (A) by inserting ``of which'' before ``the majority''; and
       (B) by striking ``of eligible countries''; and
       (5) by striking paragraph (9).
       (d) Registration and Infringement Actions.--Section 411(a) 
     of title 17, United States Code, is amended in the first 
     sentence--
       (1) by striking ``actions for infringement of copyright in 
     Berne Convention works whose country of origin is not the 
     United States and''; and
       (2) by inserting ``United States'' after ``no action for 
     infringement of the copyright in any''.
       (e) Statute of Limitations.--Section 507(a) of title 17, 
     United State Code, is amended by striking ``No'' and 
     inserting ``Except as expressly provided otherwise in this 
     title, no''.

     SEC. 103. COPYRIGHT PROTECTION SYSTEMS AND COPYRIGHT 
                   MANAGEMENT INFORMATION.

       (a) In General.--Title 17, United States Code is amended by 
     adding at the end the following new chapter:

       ``CHAPTER 12--COPYRIGHT PROTECTION AND MANAGEMENT SYSTEMS

``Sec.
``1201. Circumvention of copyright protection systems.
``1202. Integrity of copyright management information.
``1203. Civil remedies.
``1204. Criminal offenses and penalties.
``1205. Savings clause.

     ``Sec. 1201. Circumvention of copyright protection systems

       ``(a) Violations Regarding Circumvention of Technological 
     Measures.--(1)(A) No person shall circumvent a technological 
     measure that effectively controls access to a work protected 
     under this title. The prohibition contained in the preceding 
     sentence shall take effect at the end of the 2-year period 
     beginning on the date of the enactment of this chapter.

[[Page H10050]]

       ``(B) The prohibition contained in subparagraph (A) shall 
     not apply to persons who are users of a copyrighted work 
     which is in a particular class of works, if such persons are, 
     or are likely to be in the succeeding 3-year period, 
     adversely affected by virtue of such prohibition in their 
     ability to make noninfringing uses of that particular 
     class of works under this title, as determined under 
     subparagraph (C).
       ``(C) During the 2-year period described in subparagraph 
     (A), and during each succeeding 3-year period, the Librarian 
     of Congress, upon the recommendation of the Register of 
     Copyrights, who shall consult with the Assistant Secretary 
     for Communications and Information of the Department of 
     Commerce and report and comment on his or her views in making 
     such recommendation, shall make the determination in a 
     rulemaking proceeding on the record for purposes of 
     subparagraph (B) of whether persons who are users of a 
     copyrighted work are, or are likely to be in the succeeding 
     3-year period, adversely affected by the prohibition under 
     subparagraph (A) in their ability to make noninfringing uses 
     under this title of a particular class of copyrighted works. 
     In conducting such rulemaking, the Librarian shall examine--
       ``(i) the availability for use of copyrighted works;
       ``(ii) the availability for use of works for nonprofit 
     archival, preservation, and educational purposes;
       ``(iii) the impact that the prohibition on the 
     circumvention of technological measures applied to 
     copyrighted works has on criticism, comment, news reporting, 
     teaching, scholarship, or research;
       ``(iv) the effect of circumvention of technological 
     measures on the market for or value of copyrighted works; and
       ``(v) such other factors as the Librarian considers 
     appropriate.
       ``(D) The Librarian shall publish any class of copyrighted 
     works for which the Librarian has determined, pursuant to the 
     rulemaking conducted under subparagraph (C), that 
     noninfringing uses by persons who are users of a copyrighted 
     work are, or are likely to be, adversely affected, and the 
     prohibition contained in subparagraph (A) shall not apply to 
     such users with respect to such class of works for the 
     ensuing 3-year period.
       ``(E) Neither the exception under subparagraph (B) from the 
     applicability of the prohibition contained in subparagraph 
     (A), nor any determination made in a rulemaking conducted 
     under subparagraph (C), may be used as a defense in any 
     action to enforce any provision of this title other than this 
     paragraph.
       ``(2) No person shall manufacture, import, offer to the 
     public, provide, or otherwise traffic in any technology, 
     product, service, device, component, or part thereof, that--
       ``(A) is primarily designed or produced for the purpose of 
     circumventing a technological measure that effectively 
     controls access to a work protected under this title;
       ``(B) has only limited commercially significant purpose or 
     use other than to circumvent a technological measure that 
     effectively controls access to a work protected under this 
     title; or
       ``(C) is marketed by that person or another acting in 
     concert with that person with that person's knowledge for use 
     in circumventing a technological measure that effectively 
     controls access to a work protected under this title.
       ``(3) As used in this subsection--
       ``(A) to `circumvent a technological measure' means to 
     descramble a scrambled work, to decrypt an encrypted work, or 
     otherwise to avoid, bypass, remove, deactivate, or impair a 
     technological measure, without the authority of the copyright 
     owner; and
       ``(B) a technological measure `effectively controls access 
     to a work' if the measure, in the ordinary course of its 
     operation, requires the application of information, or a 
     process or a treatment, with the authority of the copyright 
     owner, to gain access to the work.
       ``(b) Additional Violations.--(1) No person shall 
     manufacture, import, offer to the public, provide, or 
     otherwise traffic in any technology, product, service, 
     device, component, or part thereof, that--
       ``(A) is primarily designed or produced for the purpose of 
     circumventing protection afforded by a technological measure 
     that effectively protects a right of a copyright owner under 
     this title in a work or a portion thereof;
       ``(B) has only limited commercially significant purpose or 
     use other than to circumvent protection afforded by a 
     technological measure that effectively protects a right of a 
     copyright owner under this title in a work or a portion 
     thereof; or
       ``(C) is marketed by that person or another acting in 
     concert with that person with that person's knowledge for use 
     in circumventing protection afforded by a technological 
     measure that effectively protects a right of a copyright 
     owner under this title in a work or a portion thereof.
       ``(2) As used in this subsection--
       ``(A) to `circumvent protection afforded by a technological 
     measure' means avoiding, bypassing, removing, deactivating, 
     or otherwise impairing a technological measure; and
       ``(B) a technological measure `effectively protects a right 
     of a copyright owner under this title' if the measure, in the 
     ordinary course of its operation, prevents, restricts, or 
     otherwise limits the exercise of a right of a copyright owner 
     under this title.
       ``(c) Other Rights, Etc., Not Affected.--(1) Nothing in 
     this section shall affect rights, remedies, limitations, or 
     defenses to copyright infringement, including fair use, under 
     this title.
       ``(2) Nothing in this section shall enlarge or diminish 
     vicarious or contributory liability for copyright 
     infringement in connection with any technology, product, 
     service, device, component, or part thereof.
       ``(3) Nothing in this section shall require that the design 
     of, or design and selection of parts and components for, a 
     consumer electronics, telecommunications, or computing 
     product provide for a response to any particular 
     technological measure, so long as such part or component, or 
     the product in which such part or component is integrated, 
     does not otherwise fall within the prohibitions of subsection 
     (a)(2) or (b)(1).
       ``(4) Nothing in this section shall enlarge or diminish any 
     rights of free speech or the press for activities using 
     consumer electronics, telecommunications, or computing 
     products.
       ``(d) Exemption for Nonprofit Libraries, Archives, and 
     Educational Institutions.--(1) A nonprofit library, archives, 
     or educational institution which gains access to a 
     commercially exploited copyrighted work solely in order to 
     make a good faith determination of whether to acquire a copy 
     of that work for the sole purpose of engaging in conduct 
     permitted under this title shall not be in violation of 
     subsection (a)(1)(A). A copy of a work to which access has 
     been gained under this paragraph--
       ``(A) may not be retained longer than necessary to make 
     such good faith determination; and
       ``(B) may not be used for any other purpose.
       ``(2) The exemption made available under paragraph (1) 
     shall only apply with respect to a work when an identical 
     copy of that work is not reasonably available in another 
     form.
       ``(3) A nonprofit library, archives, or educational 
     institution that willfully for the purpose of commercial 
     advantage or financial gain violates paragraph (1)--
       ``(A) shall, for the first offense, be subject to the civil 
     remedies under section 1203; and
       ``(B) shall, for repeated or subsequent offenses, in 
     addition to the civil remedies under section 1203, forfeit 
     the exemption provided under paragraph (1).
       ``(4) This subsection may not be used as a defense to a 
     claim under subsection (a)(2) or (b), nor may this subsection 
     permit a nonprofit library, archives, or educational 
     institution to manufacture, import, offer to the public, 
     provide, or otherwise traffic in any technology, product, 
     service, component, or part thereof, which circumvents a 
     technological measure.
       ``(5) In order for a library or archives to qualify for the 
     exemption under this subsection, the collections of that 
     library or archives shall be--
       ``(A) open to the public; or
       ``(B) available not only to researchers affiliated with the 
     library or archives or with the institution of which it is a 
     part, but also to other persons doing research in a 
     specialized field.
       ``(e) Law Enforcement, Intelligence, and Other Government 
     Activities.--This section does not prohibit any lawfully 
     authorized investigative, protective, information security, 
     or intelligence activity of an officer, agent, or employee of 
     the United States, a State, or a political subdivision of a 
     State, or a person acting pursuant to a contract with the 
     United States, a State, or a political subdivision of a 
     State. For purposes of this subsection, the term `information 
     security' means activities carried out in order to identify 
     and address the vulnerabilities of a government computer, 
     computer system, or computer network.
       ``(f) Reverse Engineering.--(1) Notwithstanding the 
     provisions of subsection (a)(1)(A), a person who has lawfully 
     obtained the right to use a copy of a computer program may 
     circumvent a technological measure that effectively controls 
     access to a particular portion of that program for the sole 
     purpose of identifying and analyzing those elements of the 
     program that are necessary to achieve interoperability of an 
     independently created computer program with other programs, 
     and that have not previously been readily available to the 
     person engaging in the circumvention, to the extent any such 
     acts of identification and analysis do not constitute 
     infringement under this title.
       ``(2) Notwithstanding the provisions of subsections (a)(2) 
     and (b), a person may develop and employ technological means 
     to circumvent a technological measure, or to circumvent 
     protection afforded by a technological measure, in order to 
     enable the identification and analysis under paragraph (1), 
     or for the purpose of enabling interoperability of an 
     independently created computer program with other programs, 
     if such means are necessary to achieve such interoperability, 
     to the extent that doing so does not constitute infringement 
     under this title.
       ``(3) The information acquired through the acts permitted 
     under paragraph (1), and the means permitted under paragraph 
     (2), may be made available to others if the person referred 
     to in paragraph (1) or (2), as the case may be, provides such 
     information or means solely for the purpose of enabling 
     interoperability of an independently created computer program 
     with other programs, and to the extent that doing so does not 
     constitute infringement under this title or violate 
     applicable law other than this section.
       ``(4) For purposes of this subsection, the term 
     `interoperability' means the ability of computer programs to 
     exchange information, and of such programs mutually to use 
     the information which has been exchanged.
       ``(g) Encryption Research.--
       ``(1) Definitions.--For purposes of this subsection--
       ``(A) the term `encryption research' means activities 
     necessary to identify and analyze flaws and vulnerabilities 
     of encryption technologies applied to copyrighted works, if 
     these activities are conducted to advance the state 
     of knowledge in the field of encryption technology or to 
     assist in the development of encryption products; and
       ``(B) the term `encryption technology' means the scrambling 
     and descrambling of information using mathematical formulas 
     or algorithms.
       ``(2) Permissible acts of encryption research.--
     Notwithstanding the provisions of subsection (a)(1)(A), it is 
     not a violation of that

[[Page H10051]]

     subsection for a person to circumvent a technological measure 
     as applied to a copy, phonorecord, performance, or display of 
     a published work in the course of an act of good faith 
     encryption research if--
       ``(A) the person lawfully obtained the encrypted copy, 
     phonorecord, performance, or display of the published work;
       ``(B) such act is necessary to conduct such encryption 
     research;
       ``(C) the person made a good faith effort to obtain 
     authorization before the circumvention; and
       ``(D) such act does not constitute infringement under this 
     title or a violation of applicable law other than this 
     section, including section 1030 of title 18 and those 
     provisions of title 18 amended by the Computer Fraud and 
     Abuse Act of 1986.
       ``(3) Factors in determining exemption.--In determining 
     whether a person qualifies for the exemption under paragraph 
     (2), the factors to be considered shall include--
       ``(A) whether the information derived from the encryption 
     research was disseminated, and if so, whether it was 
     disseminated in a manner reasonably calculated to advance the 
     state of knowledge or development of encryption technology, 
     versus whether it was disseminated in a manner that 
     facilitates infringement under this title or a violation of 
     applicable law other than this section, including a violation 
     of privacy or breach of security;
       ``(B) whether the person is engaged in a legitimate course 
     of study, is employed, or is appropriately trained or 
     experienced, in the field of encryption technology; and
       ``(C) whether the person provides the copyright owner of 
     the work to which the technological measure is applied with 
     notice of the findings and documentation of the research, and 
     the time when such notice is provided.
       ``(4) Use of technological means for research activities.--
     Notwithstanding the provisions of subsection (a)(2), it is 
     not a violation of that subsection for a person to--
       ``(A) develop and employ technological means to circumvent 
     a technological measure for the sole purpose of that person 
     performing the acts of good faith encryption research 
     described in paragraph (2); and
       ``(B) provide the technological means to another person 
     with whom he or she is working collaboratively for the 
     purpose of conducting the acts of good faith encryption 
     research described in paragraph (2) or for the purpose of 
     having that other person verify his or her acts of good faith 
     encryption research described in paragraph (2).
       ``(5) Report to congress.--Not later than 1 year after the 
     date of the enactment of this chapter, the Register of 
     Copyrights and the Assistant Secretary for Communications and 
     Information of the Department of Commerce shall jointly 
     report to the Congress on the effect this subsection has had 
     on--
       ``(A) encryption research and the development of encryption 
     technology;
       ``(B) the adequacy and effectiveness of technological 
     measures designed to protect copyrighted works; and
       ``(C) protection of copyright owners against the 
     unauthorized access to their encrypted copyrighted works.

     The report shall include legislative recommendations, if any.
       ``(h) Exceptions Regarding Minors.--In applying subsection 
     (a) to a component or part, the court may consider the 
     necessity for its intended and actual incorporation in a 
     technology, product, service, or device, which--
       ``(1) does not itself violate the provisions of this title; 
     and
       ``(2) has the sole purpose to prevent the access of minors 
     to material on the Internet.
       ``(i) Protection of Personally Identifying Information.--
       (1) Circumvention permitted.--Notwithstanding the 
     provisions of subsection (a)(1)(A), it is not a violation of 
     that subsection for a person to circumvent a technological 
     measure that effectively controls access to a work protected 
     under this title, if--
       ``(A) the technological measure, or the work it protects, 
     contains the capability of collecting or disseminating 
     personally identifying information reflecting the online 
     activities of a natural person who seeks to gain access to 
     the work protected;
       ``(B) in the normal course of its operation, the 
     technological measure, or the work it protects, collects or 
     disseminates personally identifying information about the 
     person who seeks to gain access to the work protected, 
     without providing conspicuous notice of such collection or 
     dissemination to such person, and without providing such 
     person with the capability to prevent or restrict such 
     collection or dissemination;
       ``(C) the act of circumvention has the sole effect of 
     identifying and disabling the capability described in 
     subparagraph (A), and has no other effect on the ability of 
     any person to gain access to any work; and
       ``(D) the act of circumvention is carried out solely for 
     the purpose of preventing the collection or dissemination of 
     personally identifying information about a natural person who 
     seeks to gain access to the work protected, and is not in 
     violation of any other law.
       ``(2) Inapplicability to certain technological measures.--
     This subsection does not apply to a technological measure, or 
     a work it protects, that does not collect or disseminate 
     personally identifying information and that is disclosed to a 
     user as not having or using such capability.
       ``(j) Security Testing.--
       ``(1) Definition.--For purposes of this subsection, the 
     term `security testing' means accessing a computer, computer 
     system, or computer network, solely for the purpose of good 
     faith testing, investigating, or correcting, a security flaw 
     or vulnerability, with the authorization of the owner or 
     operator of such computer, computer system, or computer 
     network.
       ``(2) Permissible acts of security testing.--
     Notwithstanding the provisions of subsection (a)(1)(A), it is 
     not a violation of that subsection for a person to engage in 
     an act of security testing, if such act does not constitute 
     infringement under this title or a violation of applicable 
     law other than this section, including section 1030 of title 
     18 and those provisions of title 18 amended by the Computer 
     Fraud and Abuse Act of 1986.
       ``(3) Factors in determining exemption.--In determining 
     whether a person qualifies for the exemption under paragraph 
     (2), the factors to be considered shall include--
       ``(A) whether the information derived from the security 
     testing was used solely to promote the security of the owner 
     or operator of such computer, computer system or computer 
     network, or shared directly with the developer of such 
     computer, computer system, or computer network; and
       ``(B) whether the information derived from the security 
     testing was used or maintained in a manner that does not 
     facilitate infringement under this title or a violation of 
     applicable law other than this section, including a violation 
     of privacy or breach of security.
       ``(4) Use of technological means for security testing.--
     Notwithstanding the provisions of subsection (a)(2), it is 
     not a violation of that subsection for a person to develop, 
     produce, distribute or employ technological means for the 
     sole purpose of performing the acts of security testing 
     described in subsection (2), provided such technological 
     means does not otherwise violate section (a)(2).
       ``(k) Certain Analog Devices and Certain Technological 
     Measures.--
       ``(1) Certain analog devices.--
       ``(A) Effective 18 months after the date of the enactment 
     of this chapter, no person shall manufacture, import, offer 
     to the public, provide or otherwise traffic in any--
       ``(i) VHS format analog video cassette recorder unless such 
     recorder conforms to the automatic gain control copy control 
     technology;
       ``(ii) 8mm format analog video cassette camcorder unless 
     such camcorder conforms to the automatic gain control 
     technology;
       ``(iii) Beta format analog video cassette recorder, unless 
     such recorder conforms to the automatic gain control copy 
     control technology, except that this requirement shall not 
     apply until there are 1,000 Beta format analog video cassette 
     recorders sold in the United States in any one calendar year 
     after the date of the enactment of this chapter;
       ``(iv) 8mm format analog video cassette recorder that is 
     not an analog video cassette camcorder, unless such recorder 
     conforms to the automatic gain control copy control 
     technology, except that this requirement shall not apply 
     until there are 20,000 such recorders sold in the United 
     States in any one calendar year after the date of the 
     enactment of this chapter; or
       ``(v) analog video cassette recorder that records using an 
     NTSC format video input and that is not otherwise covered 
     under clauses (i) through (iv), unless such device conforms 
     to the automatic gain control copy control technology.
       ``(B) Effective on the date of the enactment of this 
     chapter, no person shall manufacture, import, offer to the 
     public, provide or otherwise traffic in--
       ``(i) any VHS format analog video cassette recorder or any 
     8mm format analog video cassette recorder if the design of 
     the model of such recorder has been modified after such date 
     of enactment so that a model of recorder that previously 
     conformed to the automatic gain control copy control 
     technology no longer conforms to such technology; or
       ``(ii) any VHS format analog video cassette recorder, or 
     any 8mm format analog video cassette recorder that is not an 
     8mm analog video cassette camcorder, if the design of the 
     model of such recorder has been modified after such date of 
     enactment so that a model of recorder that previously 
     conformed to the four-line colorstripe copy control 
     technology no longer conforms to such technology.

     Manufacturers that have not previously manufactured or sold a 
     VHS format analog video cassette recorder, or an 8mm format 
     analog cassette recorder, shall be required to conform to the 
     four-line colorstripe copy control technology in the initial 
     model of any such recorder manufactured after the date of the 
     enactment of this chapter, and thereafter to continue 
     conforming to the four-line colorstripe copy control 
     technology. For purposes of this subparagraph, an analog 
     video cassette recorder `conforms to' the four-line 
     colorstripe copy control technology if it records a signal 
     that, when played back by the playback function of that 
     recorder in the normal viewing mode, exhibits, on a 
     reference display device, a display containing distracting 
     visible lines through portions of the viewable picture.
       ``(2) Certain encoding restrictions.--No person shall apply 
     the automatic gain control copy control technology or 
     colorstripe copy control technology to prevent or limit 
     consumer copying except such copying--
       ``(A) of a single transmission, or specified group of 
     transmissions, of live events or of audiovisual works for 
     which a member of the public has exercised choice in 
     selecting the transmissions, including the content of the 
     transmissions or the time of receipt of such transmissions, 
     or both, and as to which such member is charged a separate 
     fee for each such transmission or specified group of 
     transmissions;
       ``(B) from a copy of a transmission of a live event or an 
     audiovisual work if such transmission is provided by a 
     channel or service where payment is made by a member of the 
     public for such channel or service in the form of a 
     subscription fee that entitles the member of the public to 
     receive all of the programming contained in such channel or 
     service;

[[Page H10052]]

       ``(C) from a physical medium containing one or more 
     prerecorded audiovisual works; or
       ``(D) from a copy of a transmission described in 
     subparagraph (A) or from a copy made from a physical medium 
     described in subparagraph (C).

     In the event that a transmission meets both the conditions 
     set forth in subparagraph (A) and those set forth in 
     subparagraph (B), the transmission shall be treated as a 
     transmission described in subparagraph (A).
       ``(3) Inapplicability.--This subsection shall not--
       ``(A) require any analog video cassette camcorder to 
     conform to the automatic gain control copy control technology 
     with respect to any video signal received through a camera 
     lens;
       ``(B) apply to the manufacture, importation, offer for 
     sale, provision of, or other trafficking in, any professional 
     analog video cassette recorder; or
       ``(C) apply to the offer for sale or provision of, or other 
     trafficking in, any previously owned analog video cassette 
     recorder, if such recorder was legally manufactured and sold 
     when new and not subsequently modified in violation of 
     paragraph (1)(B).
       ``(4) Definitions.--For purposes of this subsection:
       ``(A) An `analog video cassette recorder' means a device 
     that records, or a device that includes a function that 
     records, on electromagnetic tape in an analog format the 
     electronic impulses produced by the video and audio portions 
     of a television program, motion picture, or other form of 
     audiovisual work.
       ``(B) An `analog video cassette camcorder' means an analog 
     video cassette recorder that contains a recording function 
     that operates through a camera lens and through a video input 
     that may be connected with a television or other video 
     playback device.
       ``(C) An analog video cassette recorder `conforms' to the 
     automatic gain control copy control technology if it--
       ``(i) detects one or more of the elements of such 
     technology and does not record the motion picture or 
     transmission protected by such technology; or
       ``(ii) records a signal that, when played back, exhibits a 
     meaningfully distorted or degraded display.
       ``(D) The term `professional analog video cassette 
     recorder' means an analog video cassette recorder that is 
     designed, manufactured, marketed, and intended for use by a 
     person who regularly employs such a device for a lawful 
     business or industrial use, including making, performing, 
     displaying, distributing, or transmitting copies of motion 
     pictures on a commercial scale.
       ``(E) The terms `VHS format,' `8mm format,' `Beta format,' 
     `automatic gain control copy control technology,' 
     `colorstripe copy control technology,' `four-line version of 
     the colorstripe copy control technology,' and `NTSC' have the 
     meanings that are commonly understood in the consumer 
     electronics and motion picture industries as of the date of 
     the enactment of this chapter.
       ``(5) Violations.--Any violation of paragraph (1) of this 
     subsection shall be treated as a violation of subsection 
     (b)(1) of this section. Any violation of paragraph (2) of 
     this subsection shall be deemed an `act of circumvention' for 
     the purposes of section 1203(c)(3)(A) of this chapter.

     ``Sec. 1202. Integrity of copyright management information

       ``(a) False Copyright Management Information.--No person 
     shall knowingly and with the intent to induce, enable, 
     facilitate, or conceal infringement--
       ``(1) provide copyright management information that is 
     false, or
       ``(2) distribute or import for distribution copyright 
     management information that is false.
       ``(b) Removal or Alteration of Copyright Management 
     Information.--No person shall, without the authority of the 
     copyright owner or the law--
       ``(1) intentionally remove or alter any copyright 
     management information,
       ``(2) distribute or import for distribution copyright 
     management information knowing that the copyright management 
     information has been removed or altered without authority of 
     the copyright owner or the law, or
       ``(3) distribute, import for distribution, or publicly 
     perform works, copies of works, or phonorecords, knowing that 
     copyright management information has been removed or altered 
     without authority of the copyright owner or the law,
     knowing, or, with respect to civil remedies under section 
     1203, having reasonable grounds to know, that it will induce, 
     enable, facilitate, or conceal an infringement of any right 
     under this title.
       ``(c) Definition.--As used in this section, the term 
     `copyright management information' means any of the following 
     information conveyed in connection with copies or 
     phonorecords of a work or performances or displays of a work, 
     including in digital form, except that such term does not 
     include any personally identifying information about a user 
     of a work or of a copy, phonorecord, performance, or display 
     of a work:
       ``(1) The title and other information identifying the work, 
     including the information set forth on a notice of copyright.
       ``(2) The name of, and other identifying information about, 
     the author of a work.
       ``(3) The name of, and other identifying information about, 
     the copyright owner of the work, including the information 
     set forth in a notice of copyright.
       ``(4) With the exception of public performances of works by 
     radio and television broadcast stations, the name of, and 
     other identifying information about, a performer whose 
     performance is fixed in a work other than an audiovisual 
     work.
       ``(5) With the exception of public performances of works by 
     radio and television broadcast stations, in the case of an 
     audiovisual work, the name of, and other identifying 
     information about, a writer, performer, or director who is 
     credited in the audiovisual work.
       ``(6) Terms and conditions for use of the work.
       ``(7) Identifying numbers or symbols referring to such 
     information or links to such information.
       ``(8) Such other information as the Register of Copyrights 
     may prescribe by regulation, except that the Register of 
     Copyrights may not require the provision of any information 
     concerning the user of a copyrighted work.
       ``(d) Law Enforcement, Intelligence, and Other Government 
     Activities.--This section does not prohibit any lawfully 
     authorized investigative, protective, information security, 
     or intelligence activity of an officer, agent, or employee of 
     the United States, a State, or a political subdivision of a 
     State, or a person acting pursuant to a contract with the 
     United States, a State, or a political subdivision of a 
     State. For purposes of this subsection, the term `information 
     security' means activities carried out in order to identify 
     and address the vulnerabilities of a government computer, 
     computer system, or computer network.
       ``(e) Limitations on Liability.--
       ``(1) Analog transmissions.--In the case of an analog 
     transmission, a person who is making transmissions in its 
     capacity as a broadcast station, or as a cable system, or 
     someone who provides programming to such station or system, 
     shall not be liable for a violation of subsection (b) if--
       ``(A) avoiding the activity that constitutes such violation 
     is not technically feasible or would create an undue 
     financial hardship on such person; and
       ``(B) such person did not intend, by engaging in such 
     activity, to induce, enable, facilitate, or conceal 
     infringement of a right under this title.
       ``(2) Digital transmissions.--
       ``(A) If a digital transmission standard for the placement 
     of copyright management information for a category of works 
     is set in a voluntary, consensus standard-setting process 
     involving a representative cross-section of broadcast 
     stations or cable systems and copyright owners of a category 
     of works that are intended for public performance by such 
     stations or systems, a person identified in paragraph (1) 
     shall not be liable for a violation of subsection (b) with 
     respect to the particular copyright management information 
     addressed by such standard if--
       ``(i) the placement of such information by someone other 
     than such person is not in accordance with such standard; and
       ``(ii) the activity that constitutes such violation is not 
     intended to induce, enable, facilitate, or conceal 
     infringement of a right under this title.
       ``(B) Until a digital transmission standard has been set 
     pursuant to subparagraph (A) with respect to the placement of 
     copyright management information for a category or works, a 
     person identified in paragraph (1) shall not be liable for a 
     violation of subsection (b) with respect to such copyright 
     management information, if the activity that constitutes such 
     violation is not intended to induce, enable, facilitate, or 
     conceal infringement of a right under this title, and if--
       ``(i) the transmission of such information by such person 
     would result in a perceptible visual or aural degradation of 
     the digital signal; or
       ``(ii) the transmission of such information by such person 
     would conflict with--

       ``(I) an applicable government regulation relating to 
     transmission of information in a digital signal;
       ``(II) an applicable industry-wide standard relating to the 
     transmission of information in a digital signal that was 
     adopted by a voluntary consensus standards body prior to the 
     effective date of this chapter; or
       ``(III) an applicable industry-wide standard relating to 
     the transmission of information in a digital signal that was 
     adopted in a voluntary, consensus standards-setting process 
     open to participation by a representative cross-section of 
     broadcast stations or cable systems and copyright owners of a 
     category of works that are intended for public performance by 
     such stations or systems.

       ``(3) Definitions.--As used in this subsection--
       ``(A) the term `broadcast station' has the meaning given 
     that term in section 3 of the Communications Act of 1934 (47 
     U.S.C. 153)); and
       ``(B) the term `cable system' has the meaning given that 
     term in section 602 of the Communications Act of 1934 (47 
     U.S.C. 522)).

     ``Sec. 1203. Civil remedies

       ``(a) Civil Actions.--Any person injured by a violation of 
     section 1201 or 1202 may bring a civil action in an 
     appropriate United States district court for such violation.
       ``(b) Powers of the Court.--In an action brought under 
     subsection (a), the court--
       ``(1) may grant temporary and permanent injunctions on such 
     terms as it deems reasonable to prevent or restrain a 
     violation, but in no event shall impose a prior restraint on 
     free speech or the press protected under the 1st amendment to 
     the Constitution;
       ``(2) at any time while an action is pending, may order the 
     impounding, on such terms as it deems reasonable, of any 
     device or product that is in the custody or control of the 
     alleged violator and that the court has reasonable cause to 
     believe was involved in a violation;
       ``(3) may award damages under subsection (c);
       ``(4) in its discretion may allow the recovery of costs by 
     or against any party other than the United States or an 
     officer thereof;
       ``(5) in its discretion may award reasonable attorney's 
     fees to the prevailing party; and
       ``(6) may, as part of a final judgment or decree finding a 
     violation, order the remedial modification or the destruction 
     of any device or product

[[Page H10053]]

     involved in the violation that is in the custody or control 
     of the violator or has been impounded under paragraph (2).
       ``(c) Award of Damages.--
       ``(1) In general.--Except as otherwise provided in this 
     title, a person committing a violation of section 1201 or 
     1202 is liable for either--
       ``(A) the actual damages and any additional profits of the 
     violator, as provided in paragraph (2), or
       ``(B) statutory damages, as provided in paragraph (3).
       ``(2) Actual damages.--The court shall award to the 
     complaining party the actual damages suffered by the party as 
     a result of the violation, and any profits of the violator 
     that are attributable to the violation and are not taken into 
     account in computing the actual damages, if the complaining 
     party elects such damages at any time before final judgment 
     is entered.
       ``(3) Statutory damages.--(A) At any time before final 
     judgment is entered, a complaining party may elect to recover 
     an award of statutory damages for each violation of section 
     1201 in the sum of not less than $200 or more than $2,500 per 
     act of circumvention, device, product, component, offer, or 
     performance of service, as the court considers just.
       ``(B) At any time before final judgment is entered, a 
     complaining party may elect to recover an award of statutory 
     damages for each violation of section 1202 in the sum of not 
     less than $2,500 or more than $25,000.
       ``(4) Repeated violations.--In any case in which the 
     injured party sustains the burden of proving, and the court 
     finds, that a person has violated section 1201 or 1202 within 
     three years after a final judgment was entered against the 
     person for another such violation, the court may increase the 
     award of damages up to triple the amount that would otherwise 
     be awarded, as the court considers just.
       ``(5) Innocent violations.--
       ``(A) In general.--The court in its discretion may reduce 
     or remit the total award of damages in any case in which the 
     violator sustains the burden of proving, and the court finds, 
     that the violator was not aware and had no reason to believe 
     that its acts constituted a violation.
       ``(B) Nonprofit library, archives, or educational 
     institutions.--In the case of a nonprofit library, archives, 
     or educational institution, the court shall remit damages in 
     any case in which the library, archives, or educational 
     institution sustains the burden of proving, and the court 
     finds, that the library, archives, or educational institution 
     was not aware and had no reason to believe that its acts 
     constituted a violation.

     ``Sec. 1204. Criminal offenses and penalties

       ``(a) In General.--Any person who violates section 1201 or 
     1202 willfully and for purposes of commercial advantage or 
     private financial gain--
       ``(1) shall be fined not more than $500,000 or imprisoned 
     for not more than 5 years, or both, for the first offense; 
     and
       ``(2) shall be fined not more than $1,000,000 or imprisoned 
     for not more than 10 years, or both, for any subsequent 
     offense.
       ``(b) Limitation for Nonprofit Library, Archives, or 
     Educational Institution.--Subsection (a) shall not apply to a 
     nonprofit library, archives, or educational institution.
       ``(c) Statute of Limitations.--No criminal proceeding shall 
     be brought under this section unless such proceeding is 
     commenced within five years after the cause of action arose.

     ``Sec. 1205. Savings clause

       ``Nothing in this chapter abrogates, diminishes, or weakens 
     the provisions of, nor provides any defense or element of 
     mitigation in a criminal prosecution or civil action under, 
     any Federal or State law that prevents the violation of the 
     privacy of an individual in connection with the individual's 
     use of the Internet.''.
       (b) Conforming amendment.--The table of chapters for title 
     17, United States Code, is amended by adding after the item 
     relating to chapter 11 the following:

``12. Copyright Protection and Management Systems...........1201''.....

     SEC. 104. EVALUATION OF IMPACT OF COPYRIGHT LAW AND 
                   AMENDMENTS ON ELECTRONIC COMMERCE AND 
                   TECHNOLOGICAL DEVELOPMENT.

       (a) Evaluation by the Register of Copyrights and the 
     Assistant Secretary for Communications and Information.--The 
     Register of Copyrights and the Assistant Secretary for 
     Communications and Information of the Department of Commerce 
     shall jointly evaluate--
       (1) the effects of the amendments made by this title and 
     the development of electronic commerce and associated 
     technology on the operation of sections 109 and 117 of title 
     17, United States Code; and
       (2) the relationship between existing and emergent 
     technology and the operation of sections 109 and 117 of title 
     17, United States Code.
       (b) Report to Congress.--The Register of Copyrights and the 
     Assistant Secretary for Communications and Information of the 
     Department of Commerce shall, not later than 24 months after 
     the date of the enactment of this Act, submit to the Congress 
     a joint report on the evaluation conducted under subsection 
     (a), including any legislative recommendations the Register 
     and the Assistant Secretary may have.

     SEC. 105. EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this 
     title, this title and the amendments made by this title shall 
     take effect on the date of the enactment of this Act.
       (b) Amendments Relating to Certain International 
     Agreements.--(1) The following shall take effect upon the 
     entry into force of the WIPO Copyright Treaty with respect to 
     the United States:
       (A) Paragraph (5) of the definition of ``international 
     agreement'' contained in section 101 of title 17, United 
     States Code, as amended by section 102(a)(4) of this Act.
       (B) The amendment made by section 102(a)(6) of this Act.
       (C) Subparagraph (C) of section 104A(h)(1) of title 17, 
     United States Code, as amended by section 102(c)(1) of this 
     Act.
       (D) Subparagraph (C) of section 104A(h)(3) of title 17, 
     United States Code, as amended by section 102(c)(2) of this 
     Act.
       (2) The following shall take effect upon the entry into 
     force of the WIPO Performances and Phonograms Treaty with 
     respect to the United States:
       (A) Paragraph (6) of the definition of ``international 
     agreement'' contained in section 101 of title 17, United 
     States Code, as amended by section 102(a)(4) of this Act.
       (B) The amendment made by section 102(a)(7) of this Act.
       (C) The amendment made by section 102(b)(2) of this Act.
       (D) Subparagraph (D) of section 104A(h)(1) of title 17, 
     United States Code, as amended by section 102(c)(1) of this 
     Act.
       (E) Subparagraph (D) of section 104A(h)(3) of title 17, 
     United States Code, as amended by section 102(c)(2) of this 
     Act.
       (F) The amendments made by section 102(c)(3) of this Act.

      TITLE II--ONLINE COPYRIGHT INFRINGEMENT LIABILITY LIMITATION

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Online Copyright 
     Infringement Liability Limitation Act''.

     SEC. 202. LIMITATIONS ON LIABILITY FOR COPYRIGHT 
                   INFRINGEMENT.

       (a) In General.--Chapter 5 of title 17, United States Code, 
     is amended by adding after section 511 the following new 
     section:

     ``Sec. 512. Limitations on liability relating to material 
       online

       ``(a) Transitory Digital Network Communications.--A service 
     provider shall not be liable for monetary relief, or, except 
     as provided in subsection (j), for injunctive or other 
     equitable relief, for infringement of copyright by reason of 
     the provider's transmitting, routing, or providing 
     connections for, material through a system or network 
     controlled or operated by or for the service provider, or by 
     reason of the intermediate and transient storage of that 
     material in the course of such transmitting, routing, or 
     providing connections, if--
       ``(1) the transmission of the material was initiated by or 
     at the direction of a person other than the service provider;
       ``(2) the transmission, routing, provision of connections, 
     or storage is carried out through an automatic technical 
     process without selection of the material by the service 
     provider;
       ``(3) the service provider does not select the recipients 
     of the material except as an automatic response to the 
     request of another person;
       ``(4) no copy of the material made by the service provider 
     in the course of such intermediate or transient storage is 
     maintained on the system or network in a manner ordinarily 
     accessible to anyone other than anticipated recipients, and 
     no such copy is maintained on the system or network in a 
     manner ordinarily accessible to such anticipated recipients 
     for a longer period than is reasonably necessary for the 
     transmission, routing, or provision of connections; and
       ``(5) the material is transmitted through the system or 
     network without modification of its content.
       ``(b) System Caching.--
       ``(1) Limitation on liability.--A service provider shall 
     not be liable for monetary relief, or, except as provided in 
     subsection (j), for injunctive or other equitable relief, for 
     infringement of copyright by reason of the intermediate and 
     temporary storage of material on a system or network 
     controlled or operated by or for the service provider in a 
     case in which--
       ``(A) the material is made available online by a person 
     other than the service provider,
       ``(B) the material is transmitted from the person described 
     in subparagraph (A) through the system or network to a person 
     other than the person described in subparagraph (A) at the 
     direction of that other person, and
       ``(C) the storage is carried out through an automatic 
     technical process for the purpose of making the material 
     available to users of the system or network who, after the 
     material is transmitted as described in subparagraph (B), 
     request access to the material from the person described in 
     subparagraph (A),
     if the conditions set forth in paragraph (2) are met.
       (2) Conditions.--The conditions referred to in paragraph 
     (1) are that--
       ``(A) the material described in paragraph (1) is 
     transmitted to the subsequent users described in paragraph 
     (1)(C) without modification to its content from the manner in 
     which the material was transmitted from the person described 
     in paragraph (1)(A);
       ``(B) the service provider described in paragraph (1) 
     complies with rules concerning the refreshing, reloading, or 
     other updating of the material when specified by the person 
     making the material available online in accordance with a 
     generally accepted industry standard data communications 
     protocol for the system or network through which that person 
     makes the material available, except that this subparagraph 
     applies only if those rules are not used by the person 
     described in paragraph (1)(A) to prevent or unreasonably 
     impair the intermediate storage to which this subsection 
     applies;
       ``(C) the service provider does not interfere with the 
     ability of technology associated with the material to return 
     to the person described in paragraph (1)(A) the information 
     that would have been available to that person if the material 
     had been obtained by the subsequent users described in 
     paragraph (1)(C) directly from that person, except that 
     this subparagraph applies only if that technology--

[[Page H10054]]

       ``(i) does not significantly interfere with the performance 
     of the provider's system or network or with the intermediate 
     storage of the material;
       ``(ii) is consistent with generally accepted industry 
     standard communications protocols; and
       ``(iii) does not extract information from the provider's 
     system or network other than the information that would have 
     been available to the person described in paragraph (1)(A) if 
     the subsequent users had gained access to the material 
     directly from that person;
       ``(D) if the person described in paragraph (1)(A) has in 
     effect a condition that a person must meet prior to having 
     access to the material, such as a condition based on payment 
     of a fee or provision of a password or other information, the 
     service provider permits access to the stored material in 
     significant part only to users of its system or network that 
     have met those conditions and only in accordance with those 
     conditions; and
       ``(E) if the person described in paragraph (1)(A) makes 
     that material available online without the authorization of 
     the copyright owner of the material, the service provider 
     responds expeditiously to remove, or disable access to, the 
     material that is claimed to be infringing upon notification 
     of claimed infringement as described in subsection (c)(3), 
     except that this subparagraph applies only if--
       ``(i) the material has previously been removed from the 
     originating site or access to it has been disabled, or a 
     court has ordered that the material be removed from the 
     originating site or that access to the material on the 
     originating site be disabled; and
       ``(ii) the party giving the notification includes in the 
     notification a statement confirming that the material has 
     been removed from the originating site or access to it has 
     been disabled or that a court has ordered that the material 
     be removed from the originating site or that access to the 
     material on the originating site be disabled.
       ``(c) Information Residing on Systems or Networks At 
     Direction of Users.--
       ``(1) In general.--A service provider shall not be liable 
     for monetary relief, or, except as provided in subsection 
     (j), for injunctive or other equitable relief, for 
     infringement of copyright by reason of the storage at the 
     direction of a user of material that resides on a system or 
     network controlled or operated by or for the service 
     provider, if the service provider--
       ``(A)(i) does not have actual knowledge that the material 
     or an activity using the material on the system or network is 
     infringing;
       ``(ii) in the absence of such actual knowledge, is not 
     aware of facts or circumstances from which infringing 
     activity is apparent; or
       ``(iii) upon obtaining such knowledge or awareness, acts 
     expeditiously to remove, or disable access to, the material;
       ``(B) does not receive a financial benefit directly 
     attributable to the infringing activity, in a case in which 
     the service provider has the right and ability to control 
     such activity; and
       ``(C) upon notification of claimed infringement as 
     described in paragraph (3), responds expeditiously to remove, 
     or disable access to, the material that is claimed to be 
     infringing or to be the subject of infringing activity.
       ``(2) Designated agent.--The limitations on liability 
     established in this subsection apply to a service provider 
     only if the service provider has designated an agent to 
     receive notifications of claimed infringement described in 
     paragraph (3), by making available through its service, 
     including on its website in a location accessible to the 
     public, and by providing to the Copyright Office, 
     substantially the following information:
       ``(A) the name, address, phone number, and electronic mail 
     address of the agent.
       ``(B) other contact information which the Register of 
     Copyrights may deem appropriate.
     The Register of Copyrights shall maintain a current directory 
     of agents available to the public for inspection, including 
     through the Internet, in both electronic and hard copy 
     formats, and may require payment of a fee by service 
     providers to cover the costs of maintaining the directory.
       ``(3) Elements of notification.--
       ``(A) To be effective under this subsection, a notification 
     of claimed infringement must be a written communication 
     provided to the designated agent of a service provider that 
     includes substantially the following:
       ``(i) A physical or electronic signature of a person 
     authorized to act on behalf of the owner of an exclusive 
     right that is allegedly infringed.
       ``(ii) Identification of the copyrighted work claimed to 
     have been infringed, or, if multiple copyrighted works at a 
     single online site are covered by a single notification, a 
     representative list of such works at that site.
       ``(iii) Identification of the material that is claimed to 
     be infringing or to be the subject of infringing activity and 
     that is to be removed or access to which is to be disabled, 
     and information reasonably sufficient to permit the service 
     provider to locate the material.
       ``(iv) Information reasonably sufficient to permit the 
     service provider to contact the complaining party, such as an 
     address, telephone number, and, if available, an electronic 
     mail address at which the complaining party may be contacted.
       ``(v) A statement that the complaining party has a good 
     faith belief that use of the material in the manner 
     complained of is not authorized by the copyright owner, its 
     agent, or the law.
       ``(vi) A statement that the information in the notification 
     is accurate, and under penalty of perjury, that the 
     complaining party is authorized to act on behalf of the owner 
     of an exclusive right that is allegedly infringed.
       ``(B)(i) Subject to clause (ii), a notification from a 
     copyright owner or from a person authorized to act on behalf 
     of the copyright owner that fails to comply substantially 
     with the provisions of subparagraph (A) shall not be 
     considered under paragraph (1)(A) in determining whether a 
     service provider has actual knowledge or is aware of facts or 
     circumstances from which infringing activity is apparent.
       ``(ii) In a case in which the notification that is provided 
     to the service provider's designated agent fails to comply 
     substantially with all the provisions of subparagraph (A) but 
     substantially complies with clauses (ii), (iii), and (iv) of 
     subparagraph (A), clause (i) of this subparagraph applies 
     only if the service provider promptly attempts to contact the 
     person making the notification or takes other reasonable 
     steps to assist in the receipt of notification that 
     substantially complies with all the provisions of 
     subparagraph (A).
       ``(d) Information Location Tools.--A service provider shall 
     not be liable for monetary relief, or, except as provided in 
     subsection (j), for injunctive or other equitable relief, for 
     infringement of copyright by reason of the provider referring 
     or linking users to an online location containing infringing 
     material or infringing activity, by using information 
     location tools, including a directory, index, reference, 
     pointer, or hypertext link, if the service provider--
       ``(1)(A) does not have actual knowledge that the material 
     or activity is infringing;
       ``(B) in the absence of such actual knowledge, is not aware 
     of facts or circumstances from which infringing activity is 
     apparent; or
       ``(C) upon obtaining such knowledge or awareness, acts 
     expeditiously to remove, or disable access to, the material;
       ``(2) does not receive a financial benefit directly 
     attributable to the infringing activity, in a case in which 
     the service provider has the right and ability to control 
     such activity; and
       ``(3) upon notification of claimed infringement as 
     described in subsection (c)(3), responds expeditiously to 
     remove, or disable access to, the material that is claimed to 
     be infringing or to be the subject of infringing activity, 
     except that, for purposes of this paragraph, the information 
     described in subsection (c)(3)(A)(iii) shall be 
     identification of the reference or link, to material or 
     activity claimed to be infringing, that is to be removed or 
     access to which is to be disabled, and information reasonably 
     sufficient to permit the service provider to locate that 
     reference or link.
       ``(e) Limitation on liability of nonprofit educational 
     institutions.--(1) When a public or other nonprofit 
     institution of higher education is a service provider, and 
     when a faculty member or graduate student who is an employee 
     of such institution is performing a teaching or research 
     function, for the purposes of subsections (a) and (b) such 
     faculty member or graduate student shall be considered to be 
     a person other than the institution, and for the purposes of 
     subsections (c) and (d) such faculty member's or graduate 
     student's knowledge or awareness of his or her infringing 
     activities shall not be attributed to the institution, if--
       ``(A) such faculty member's or graduate student's 
     infringing activities do not involve the provision of online 
     access to instructional materials that are or were required 
     or recommended, within the preceding 3-year period, for a 
     course taught at the institution by such faculty member or 
     graduate student;
       ``(B) the institution has not, within the preceding 3-year 
     period, received more than 2 notifications described in 
     subsection (c)(3) of claimed infringement by such faculty 
     member or graduate student, and such notifications of claimed 
     infringement were not actionable under subsection (f); and
       ``(C) the institution provides to all users of its system 
     or network informational materials that accurately describe, 
     and promote compliance with, the laws of the United States 
     relating to copyright.
       ``(2) Injunctions.--For the purposes of this subsection, 
     the limitations on injunctive relief contained in subsections 
     (j)(2) and (j)(3), but not those in (j)(1), shall apply.
       ``(f) Misrepresentations.--Any person who knowingly 
     materially misrepresents under this section--
       ``(1) that material or activity is infringing, or
       ``(2) that material or activity was removed or disabled by 
     mistake or misidentification,
      shall be liable for any damages, including costs and 
     attorneys' fees, incurred by the alleged infringer, by any 
     copyright owner or copyright owner's authorized licensee, or 
     by a service provider, who is injured by such 
     misrepresentation, as the result of the service provider 
     relying upon such misrepresentation in removing or disabling 
     access to the material or activity claimed to be infringing, 
     or in replacing the removed material or ceasing to disable 
     access to it.
       ``(g) Replacement of Removed or Disabled Material and 
     Limitation on Other Liability.--
       ``(1) No liability for taking down generally.--Subject to 
     paragraph (2), a service provider shall not be liable to any 
     person for any claim based on the service provider's good 
     faith disabling of access to, or removal of, material or 
     activity claimed to be infringing or based on facts or 
     circumstances from which infringing activity is apparent, 
     regardless of whether the material or activity is ultimately 
     determined to be infringing.
       ``(2) Exception.--Paragraph (1) shall not apply with 
     respect to material residing at the direction of a subscriber 
     of the service provider on a system or network controlled or 
     operated by or for the service provider that is removed, or 
     to which access is disabled by the service provider, pursuant 
     to a notice provided under subsection (c)(1)(C), unless the 
     service provider--
       ``(A) takes reasonable steps promptly to notify the 
     subscriber that it has removed or disabled access to the 
     material;
       ``(B) upon receipt of a counter notification described in 
     paragraph (3), promptly provides the

[[Page H10055]]

     person who provided the notification under subsection 
     (c)(1)(C) with a copy of the counter notification, and 
     informs that person that it will replace the removed material 
     or cease disabling access to it in 10 business days; and
       ``(C) replaces the removed material and ceases disabling 
     access to it not less than 10, nor more than 14, business 
     days following receipt of the counter notice, unless its 
     designated agent first receives notice from the person 
     who submitted the notification under subsection (c)(1)(C) 
     that such person has filed an action seeking a court order 
     to restrain the subscriber from engaging in infringing 
     activity relating to the material on the service 
     provider's system or network.
       ``(3) Contents of counter notification.--To be effective 
     under this subsection, a counter notification must be a 
     written communication provided to the service provider's 
     designated agent that includes substantially the following:
       ``(A) A physical or electronic signature of the subscriber.
       ``(B) Identification of the material that has been removed 
     or to which access has been disabled and the location at 
     which the material appeared before it was removed or access 
     to it was disabled.
       ``(C) A statement under penalty of perjury that the 
     subscriber has a good faith belief that the material was 
     removed or disabled as a result of mistake or 
     misidentification of the material to be removed or disabled.
       ``(D) The subscriber's name, address, and telephone number, 
     and a statement that the subscriber consents to the 
     jurisdiction of Federal District Court for the judicial 
     district in which the address is located, or if the 
     subscriber's address is outside of the United States, for any 
     judicial district in which the service provider may be found, 
     and that the subscriber will accept service of process from 
     the person who provided notification under subsection 
     (c)(1)(C) or an agent of such person.
       ``(4) Limitation on other liability.--A service provider's 
     compliance with paragraph (2) shall not subject the service 
     provider to liability for copyright infringement with respect 
     to the material identified in the notice provided under 
     subsection (c)(1)(C).
       ``(h) Subpoena To Identify Infringer.--
       ``(1) Request.--A copyright owner or a person authorized to 
     act on the owner's behalf may request the clerk of any United 
     States district court to issue a subpoena to a service 
     provider for identification of an alleged infringer in 
     accordance with this subsection.
       ``(2) Contents of request.--The request may be made by 
     filing with the clerk--
       ``(A) a copy of a notification described in subsection 
     (c)(3)(A);
       ``(B) a proposed subpoena; and
       ``(C) a sworn declaration to the effect that the purpose 
     for which the subpoena is sought is to obtain the identity of 
     an alleged infringer and that such information will only be 
     used for the purpose of protecting rights under this title.
       ``(3) Contents of subpoena.--The subpoena shall authorize 
     and order the service provider receiving the notification and 
     the subpoena to expeditiously disclose to the copyright owner 
     or person authorized by the copyright owner information 
     sufficient to identify the alleged infringer of the material 
     described in the notification to the extent such information 
     is available to the service provider.
       ``(4) Basis for granting subpoena.--If the notification 
     filed satisfies the provisions of subsection (c)(3)(A), the 
     proposed subpoena is in proper form, and the accompanying 
     declaration is properly executed, the clerk shall 
     expeditiously issue and sign the proposed subpoena and return 
     it to the requester for delivery to the service provider.
       ``(5) Actions of service provider receiving subpoena.--Upon 
     receipt of the issued subpoena, either accompanying or 
     subsequent to the receipt of a notification described in 
     subsection (c)(3)(A), the service provider shall 
     expeditiously disclose to the copyright owner or person 
     authorized by the copyright owner the information required by 
     the subpoena, notwithstanding any other provision of law and 
     regardless of whether the service provider responds to the 
     notification.
       ``(6) Rules applicable to subpoena.--Unless otherwise 
     provided by this section or by applicable rules of the court, 
     the procedure for issuance and delivery of the subpoena, and 
     the remedies for noncompliance with the subpoena, shall be 
     governed to the greatest extent practicable by those 
     provisions of the Federal Rules of Civil Procedure governing 
     the issuance, service, and enforcement of a subpoena duces 
     tecum.
       ``(i) Conditions for Eligibility.--
       ``(1) Accommodation of technology.--The limitations on 
     liability established by this section shall apply to a 
     service provider only if the service provider--
       ``(A) has adopted and reasonably implemented, and informs 
     subscribers and account holders of the service provider's 
     system or network of, a policy that provides for the 
     termination in appropriate circumstances of subscribers and 
     account holders of the service provider's system or network 
     who are repeat infringers; and
       ``(B) accommodates and does not interfere with standard 
     technical measures.
       ``(2) Definition.--As used in this subsection, the term 
     `standard technical measures' means technical measures that 
     are used by copyright owners to identify or protect 
     copyrighted works and--
       ``(A) have been developed pursuant to a broad consensus of 
     copyright owners and service providers in an open, fair, 
     voluntary, multi-industry standards process;
       ``(B) are available to any person on reasonable and 
     nondiscriminatory terms; and
       ``(C) do not impose substantial costs on service providers 
     or substantial burdens on their systems or networks.
       ``(j) Injunctions.--The following rules shall apply in the 
     case of any application for an injunction under section 502 
     against a service provider that is not subject to monetary 
     remedies under this section:
       ``(1) Scope of relief.--(A) With respect to conduct other 
     than that which qualifies for the limitation on remedies set 
     forth in subsection (a), the court may grant injunctive 
     relief with respect to a service provider only in one or more 
     of the following forms:
       ``(i) An order restraining the service provider from 
     providing access to infringing material or activity residing 
     at a particular online site on the provider's system or 
     network.
       ``(ii) An order restraining the service provider from 
     providing access to a subscriber or account holder of the 
     service provider's system or network who is engaging in 
     infringing activity and is identified in the order, by 
     terminating the accounts of the subscriber or account holder 
     that are specified in the order.
       ``(iii) Such other injunctive relief as the court may 
     consider necessary to prevent or restrain infringement of 
     copyrighted material specified in the order of the court at a 
     particular online location, if such relief is the least 
     burdensome to the service provider among the forms of relief 
     comparably effective for that purpose.
       ``(B) If the service provider qualifies for the limitation 
     on remedies described in subsection (a), the court may only 
     grant injunctive relief in one or both of the following 
     forms:
       ``(i) An order restraining the service provider from 
     providing access to a subscriber or account holder of the 
     service provider's system or network who is using the 
     provider's service to engage in infringing activity and is 
     identified in the order, by terminating the accounts of the 
     subscriber or account holder that are specified in the order.
       ``(ii) An order restraining the service provider from 
     providing access, by taking reasonable steps specified in the 
     order to block access, to a specific, identified, online 
     location outside the United States.
       ``(2) Considerations.--The court, in considering the 
     relevant criteria for injunctive relief under applicable law, 
     shall consider--
       ``(A) whether such an injunction, either alone or in 
     combination with other such injunctions issued against the 
     same service provider under this subsection, would 
     significantly burden either the provider or the operation of 
     the provider's system or network;
       ``(B) the magnitude of the harm likely to be suffered by 
     the copyright owner in the digital network environment if 
     steps are not taken to prevent or restrain the infringement;
       ``(C) whether implementation of such an injunction would be 
     technically feasible and effective, and would not interfere 
     with access to noninfringing material at other online 
     locations; and
       ``(D) whether other less burdensome and comparably 
     effective means of preventing or restraining access to the 
     infringing material are available.
       ``(3) Notice and Ex Parte Orders.--Injunctive relief under 
     this subsection shall be available only after notice to the 
     service provider and an opportunity for the service provider 
     to appear are provided, except for orders ensuring the 
     preservation of evidence or other orders having no material 
     adverse effect on the operation of the service provider's 
     communications network.
       ``(k) Definitions.--
       ``(1) Service provider.--(A) As used in subsection (a), the 
     term `service provider' means an entity offering the 
     transmission, routing, or providing of connections for 
     digital online communications, between or among points 
     specified by a user, of material of the user's choosing, 
     without modification to the content of the material as sent 
     or received.
       ``(B) As used in this section, other than subsection (a), 
     the term `service provider' means a provider of online 
     services or network access, or the operator of facilities 
     therefor, and includes an entity described in subparagraph 
     (A).
       ``(2) Monetary relief.--As used in this section, the term 
     `monetary relief' means damages, costs, attorneys' fees, and 
     any other form of monetary payment.
       ``(l) Other Defenses Not Affected.--The failure of a 
     service provider's conduct to qualify for limitation of 
     liability under this section shall not bear adversely upon 
     the consideration of a defense by the service provider that 
     the service provider's conduct is not infringing under this 
     title or any other defense.
       ``(m) Protection of Privacy.--Nothing in this section shall 
     be construed to condition the applicability of subsections 
     (a) through (d) on--
       ``(1) a service provider monitoring its service or 
     affirmatively seeking facts indicating infringing activity, 
     except to the extent consistent with a standard technical 
     measure complying with the provisions of subsection (i); or
       ``(2) a service provider gaining access to, removing, or 
     disabling access to material in cases in which such conduct 
     is prohibited by law.
       ``(n) Construction.--Subsections (a), (b), (c), and (d) 
     describe separate and distinct functions for purposes of 
     applying this section. Whether a service provider qualifies 
     for the limitation on liability in any one of those 
     subsections shall be based solely on the criteria in that 
     subsection, and shall not affect a determination of whether 
     that service provider qualifies for the limitations on 
     liability under any other such subsection.''.
       (b) Conforming Amendment.--The table of sections for 
     chapter 5 of title 17, United States Code, is amended by 
     adding at the end the following:

``512. Limitations on liability relating to material online.''.

     SEC. 203. EFFECTIVE DATE.

       This title and the amendments made by this title shall take 
     effect on the date of the enactment of this Act.

[[Page H10056]]

      TITLE III-COMPUTER MAINTENANCE OR REPAIR COPYRIGHT EXEMPTION

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``Computer Maintenance 
     Competition Assurance Act''.

     SEC. 302. LIMITATIONS ON EXCLUSIVE RIGHTS; COMPUTER PROGRAMS.

       Section 117 of title 17, United States Code, is amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
       ``(a) Making of Additional Copy or Adaptation by Owner of 
     Copy.--Notwithstanding'';
       (2) by striking ``Any exact'' and inserting the following:
       ``(b) Lease, Sale, or Other Transfer of Additional Copy or 
     Adaptation.--Any exact''; and
       (3) by adding at the end the following:
       ``(c) Machine Maintenance or Repair.--Notwithstanding the 
     provisions of section 106, it is not an infringement for the 
     owner or lessee of a machine to make or authorize the making 
     of a copy of a computer program if such copy is made solely 
     by virtue of the activation of a machine that lawfully 
     contains an authorized copy of the computer program, for 
     purposes only of maintenance or repair of that machine, if--
       ``(1) such new copy is used in no other manner and is 
     destroyed immediately after the maintenance or repair is 
     completed; and
       ``(2) with respect to any computer program or part thereof 
     that is not necessary for that machine to be activated, such 
     program or part thereof is not accessed or used other than to 
     make such new copy by virtue of the activation of the 
     machine.
       ``(d) Definitions.--For purposes of this section--
       ``(1) the `maintenance' of a machine is the servicing of 
     the machine in order to make it work in accordance with its 
     original specifications and any changes to those 
     specifications authorized for that machine; and
       ``(2) the `repair' of a machine is the restoring of the 
     machine to the state of working in accordance with its 
     original specifications and any changes to those 
     specifications authorized for that machine.''.

                   TITLE IV--MISCELLANEOUS PROVISIONS

     SEC. 401. PROVISIONS RELATING TO THE COMMISSIONER OF PATENTS 
                   AND TRADEMARKS AND THE REGISTER OF COPYRIGHTS

       (a) Compensation.--(1) Section 3(d) of title 35, United 
     States Code, is amended by striking ``prescribed by law for 
     Assistant Secretaries of Commerce'' and inserting ``in effect 
     for level III of the Executive Schedule under section 5314 of 
     title 5, United States Code''.
       (2) Section 701(e) of title 17, United States Code, is 
     amended--
       (A) by striking ``IV'' and inserting ``III''; and
       (B) by striking ``5315'' and inserting ``5314''.
       (3) Section 5314 of title 5, United States Code, is amended 
     by adding at the end the following:
       ``Assistant Secretary of Commerce and Commissioner of 
     Patents and Trademarks.
       ``Register of Copyrights.''.
       (b) Clarification of Authority of the Copyright Office.--
     Section 701 of title 17, United States Code, is amended--
       (1) by redesignating subsections (b) through (e) as 
     subsections (c) through (f), respectively; and
       (2) by inserting after subsection (a) the following:
       ``(b) In addition to the functions and duties set out 
     elsewhere in this chapter, the Register of Copyrights shall 
     perform the following functions:
       ``(1) Advise Congress on national and international issues 
     relating to copyright, other matters arising under this 
     title, and related matters.
       ``(2) Provide information and assistance to Federal 
     departments and agencies and the Judiciary on national and 
     international issues relating to copyright, other matters 
     arising under this title, and related matters.
       ``(3) Participate in meetings of international 
     intergovernmental organizations and meetings with foreign 
     government officials relating to copyright, other matters 
     arising under this title, and related matters, including as a 
     member of United States delegations as authorized by the 
     appropriate Executive branch authority.
       ``(4) Conduct studies and programs regarding copyright, 
     other matters arising under this title, and related matters, 
     the administration of the Copyright Office, or any function 
     vested in the Copyright Office by law, including educational 
     programs conducted cooperatively with foreign intellectual 
     property offices and international intergovernmental 
     organizations.
       ``(5) Perform such other functions as Congress may direct, 
     or as may be appropriate in furtherance of the functions and 
     duties specifically set forth in this title.''

     SEC. 402. EPHEMERAL RECORDINGS.

       Section 112(a) of title 17, United States Code, is 
     amended--
       (1) by redesignating paragraphs (1), (2), and (3) as 
     subparagraphs (A), (B), and (C), respectively;
       (2) by inserting ``(1)'' after ``(a)'';
       (3) by inserting after ``under a license'' the following: 
     ``, including a statutory license under section 114(f),'';
       (4) by inserting after ``114(a),'' the following: ``or for 
     a transmitting organization that is a broadcast radio or 
     television station licensed as such by the Federal 
     Communications Commission and that makes a broadcast 
     transmission of a performance of a sound recording in a 
     digital format on a nonsubscription basis,''; and
       (5) by adding at the end the following:
       ``(2) In a case in which a transmitting organization 
     entitled to make a copy or phonorecord under paragraph (1) in 
     connection with the transmission to the public of a 
     performance or display of a work is prevented from making 
     such copy or phonorecord by reason of the application by the 
     copyright owner of technical measures that prevent the 
     reproduction of the work, the copyright owner shall make 
     available to the transmitting organization the necessary 
     means for permitting the making of such copy or phonorecord 
     as permitted under that paragraph, if it is technologically 
     feasible and economically reasonable for the copyright owner 
     to do so. If the copyright owner fails to do so in a timely 
     manner in light of the transmitting organization's reasonable 
     business requirements, the transmitting organization shall 
     not be liable for a violation of section 1201(a)(1) of this 
     title for engaging in such activities as are necessary to 
     make such copies or phonorecords as permitted under paragraph 
     (1) of this subsection.''.

     SEC. 403. LIMITATIONS ON EXCLUSIVE RIGHTS; DISTANCE 
                   EDUCATION.

       (a) Recommendations by Register of Copyrights.--Not later 
     than 6 months after the date of the enactment of this Act, 
     the Register of Copyrights, after consultation with 
     representatives of copyright owners, nonprofit educational 
     institutions, and nonprofit libraries and archives, shall 
     submit to the Congress recommendations on how to promote 
     distance education through digital technologies, including 
     interactive digital networks, while maintaining an 
     appropriate balance between the rights of copyright owners 
     and the needs of users of copyrighted works. Such 
     recommendations shall include any legislation the Register of 
     Copyrights considers appropriate to achieve the objective 
     described in the preceding sentence.
       (b) Factors.--In formulating recommendations under 
     subsection (a), the Register of Copyrights shall consider--
       (1) the need for an exemption from exclusive rights of 
     copyright owners for distance education through digital 
     networks;
       (2) the categories of works to be included under any 
     distance education exemption;
       (3) the extent of appropriate quantitative limitations on 
     the portions of works that may be used under any distance 
     education exemption;
       (4) the parties who should be entitled to the benefits of 
     any distance education exemption;
       (5) the parties who should be designated as eligible 
     recipients of distance education materials under any distance 
     education exemption;
       (6) whether and what types of technological measures can or 
     should be employed to safeguard against unauthorized access 
     to, and use or retention of, copyrighted materials as a 
     condition of eligibility for any distance education 
     exemption, including, in light of developing technological 
     capabilities, the exemption set out in section 110(2) of 
     title 17, United States Code;
       (7) the extent to which the availability of licenses for 
     the use of copyrighted works in distance education through 
     interactive digital networks should be considered in 
     assessing eligibility for any distance education exemption; 
     and
       (8) such other issues relating to distance education 
     through interactive digital networks that the Register 
     considers appropriate.

     SEC. 404. EXEMPTION FOR LIBRARIES AND ARCHIVES.

       Section 108 of title 17, United States Code, is amended--
       (1) in subsection (a)--
       (A) by striking ``Notwithstanding'' and inserting ``Except 
     as otherwise provided in this title and notwithstanding'';
       (B) by inserting after ``no more than one copy or 
     phonorecord of a work'' the following: ``, except as provided 
     in subsections (b) and (c)''; and
       (C) in paragraph (3) by inserting after ``copyright'' the 
     following: ``that appears on the copy or phonorecord that is 
     reproduced under the provisions of this section, or includes 
     a legend stating that the work may be protected by copyright 
     if no such notice can be found on the copy or phonorecord 
     that is reproduced under the provisions of this section'';
       (2) in subsection (b)--
       (A) by striking ``a copy or phonorecord'' and inserting 
     ``three copies or phonorecords'';
       (B) by striking ``in facsimile form''; and
       (C) by striking ``if the copy or phonorecord reproduced is 
     currently in the collections of the library or archives.'' 
     and inserting ``if--
       ``(1) the copy or phonorecord reproduced is currently in 
     the collections of the library or archives; and
       ``(2) any such copy or phonorecord that is reproduced in 
     digital format is not otherwise distributed in that format 
     and is not made available to the public in that format 
     outside the premises of the library or archives.''; and
       (3) in subsection (c)--
       (A) by striking ``a copy or phonorecord'' and inserting 
     ``three copies or phonorecords'';
       (B) by striking ``in facsimile form'';
       (C) by inserting ``or if the existing format in which the 
     work is stored has become obsolete,'' after ``stolen,''; and
       (D) by striking ``if the library or archives has, after a 
     reasonable effort, determined that an unused replacement 
     cannot be obtained at a fair price.'' and inserting ``if--
       ``(1) the library or archives has, after a reasonable 
     effort, determined that an unused replacement cannot be 
     obtained at a fair price; and
       ``(2) any such copy or phonorecord that is reproduced in 
     digital format is not made available to the public in that 
     format outside the premises of the library or archives in 
     lawful possession of such copy.''; and
       (E) by adding at the end the following:

     ``For purposes of this subsection, a format shall be 
     considered obsolete if the machine or device necessary to 
     render perceptible a work stored in that format is no longer 
     manufactured or is no longer reasonably available in the 
     commercial marketplace.''.

[[Page H10057]]

     SEC. 405. SCOPE OF EXCLUSIVE RIGHTS IN SOUND RECORDINGS; 
                   EPHEMERAL RECORDINGS.

       (a) Scope of Exclusive Rights in Sound Recordings.--Section 
     114 of title 17, United States Code, is amended as follows:
       (1) Subsection (d) is amended--
       (A) in paragraph (1) by striking subparagraph (A) and 
     inserting the following:
       ``(A) a nonsubscription broadcast transmission;''; and
       (B) by amending paragraph (2) to read as follows:
       ``(2) Statutory Licensing of Certain Transmissions.--The 
     performance of a sound recording publicly by means of a 
     subscription digital audio transmission not exempt under 
     paragraph (1), an eligible nonsubscription transmission, or a 
     transmission not exempt under paragraph (1) that is made by a 
     preexisting satellite digital audio radio service shall be 
     subject to statutory licensing, in accordance with 
     subsection (f) if--
       ``(A)(i) the transmission is not part of an interactive 
     service;
       ``(ii) except in the case of a transmission to a business 
     establishment, the transmitting entity does not automatically 
     and intentionally cause any device receiving the transmission 
     to switch from one program channel to another; and
       ``(iii) except as provided in section 1002(e), the 
     transmission of the sound recording is accompanied, if 
     technically feasible, by the information encoded in that 
     sound recording, if any, by or under the authority of the 
     copyright owner of that sound recording, that identifies the 
     title of the sound recording, the featured recording artist 
     who performs on the sound recording, and related information, 
     including information concerning the underlying musical work 
     and its writer;
       ``(B) in the case of a subscription transmission not exempt 
     under paragraph (1) that is made by a preexisting 
     subscription service in the same transmission medium used by 
     such service on July 31, 1998, or in the case of a 
     transmission not exempt under paragraph (1) that is made by a 
     preexisting satellite digital audio radio service--
       ``(i) the transmission does not exceed the sound recording 
     performance complement; and
       ``(ii) the transmitting entity does not cause to be 
     published by means of an advance program schedule or prior 
     announcement the titles of the specific sound recordings or 
     phonorecords embodying such sound recordings to be 
     transmitted; and
       ``(C) in the case of an eligible nonsubscription 
     transmission or a subscription transmission not exempt under 
     paragraph (1) that is made by a new subscription service or 
     by a preexisting subscription service other than in the same 
     transmission medium used by such service on July 31, 1998--
       ``(i) the transmission does not exceed the sound recording 
     performance complement, except that this requirement shall 
     not apply in the case of a retransmission of a broadcast 
     transmission if the retransmission is made by a transmitting 
     entity that does not have the right or ability to control the 
     programming of the broadcast station making the broadcast 
     transmission, unless--

       ``(I) the broadcast station makes broadcast transmissions--

       ``(aa) in digital format that regularly exceed the sound 
     recording performance complement; or
       ``(bb) in analog format, a substantial portion of which, on 
     a weekly basis, exceed the sound recording performance 
     complement; and

       ``(II) the sound recording copyright owner or its 
     representative has notified the transmitting entity in 
     writing that broadcast transmissions of the copyright owner's 
     sound recordings exceed the sound recording performance 
     complement as provided in this clause;

       ``(ii) the transmitting entity does not cause to be 
     published, or induce or facilitate the publication, by means 
     of an advance program schedule or prior announcement, the 
     titles of the specific sound recordings to be transmitted, 
     the phonorecords embodying such sound recordings, or, other 
     than for illustrative purposes, the names of the featured 
     recording artists, except that this clause does not 
     disqualify a transmitting entity that makes a prior 
     announcement that a particular artist will be featured within 
     an unspecified future time period, and in the case of a 
     retransmission of a broadcast transmission by a transmitting 
     entity that does not have the right or ability to control the 
     programming of the broadcast transmission, the requirement of 
     this clause shall not apply to a prior oral announcement by 
     the broadcast station, or to an advance program schedule 
     published, induced, or facilitated by the broadcast station, 
     if the transmitting entity does not have actual knowledge and 
     has not received written notice from the copyright owner or 
     its representative that the broadcast station publishes or 
     induces or facilitates the publication of such advance 
     program schedule, or if such advance program schedule is a 
     schedule of classical music programming published by the 
     broadcast station in the same manner as published by that 
     broadcast station on or before September 30, 1998;
       ``(iii) the transmission--

       ``(I) is not part of an archived program of less than 5 
     hours duration;
       ``(II) is not part of an archived program of 5 hours or 
     greater in duration that is made available for a period 
     exceeding 2 weeks;
       ``(III) is not part of a continuous program which is of 
     less than 3 hours duration; or
       ``(IV) is not part of an identifiable program in which 
     performances of sound recordings are rendered in a 
     predetermined order, other than an archived or continuous 
     program, that is transmitted at--

       ``(aa) more than 3 times in any 2-week period that have 
     been publicly announced in advance, in the case of a program 
     of less than 1 hour in duration, or
       ``(bb) more than 4 times in any 2-week period that have 
     been publicly announced in advance, in the case of a program 
     of 1 hour or more in duration,

     except that the requirement of this subclause shall not apply 
     in the case of a retransmission of a broadcast transmission 
     by a transmitting entity that does not have the right or 
     ability to control the programming of the broadcast 
     transmission, unless the transmitting entity is given notice 
     in writing by the copyright owner of the sound recording that 
     the broadcast station makes broadcast transmissions that 
     regularly violate such requirement;

       ``(iv) the transmitting entity does not knowingly perform 
     the sound recording, as part of a service that offers 
     transmissions of visual images contemporaneously with 
     transmissions of sound recordings, in a manner that is likely 
     to cause confusion, to cause mistake, or to deceive, as to 
     the affiliation, connection, or association of the copyright 
     owner or featured recording artist with the transmitting 
     entity or a particular product or service advertised by the 
     transmitting entity, or as to the origin, sponsorship, or 
     approval by the copyright owner or featured recording artist 
     of the activities of the transmitting entity other than the 
     performance of the sound recording itself;
       ``(v) the transmitting entity cooperates to prevent, to the 
     extent feasible without imposing substantial costs or 
     burdens, a transmission recipient or any other person or 
     entity from automatically scanning the transmitting entity's 
     transmissions alone or together with transmissions by other 
     transmitting entities in order to select a particular sound 
     recording to be transmitted to the transmission recipient, 
     except that the requirement of this clause shall not apply to 
     a satellite digital audio service that is in operation, or 
     that is licensed by the Federal Communications Commission, 
     on or before July 31, 1998;
       ``(vi) the transmitting entity takes no affirmative steps 
     to cause or induce the making of a phonorecord by the 
     transmission recipient, and if the technology used by the 
     transmitting entity enables the transmitting entity to limit 
     the making by the transmission recipient of phonorecords of 
     the transmission directly in a digital format, the 
     transmitting entity sets such technology to limit such making 
     of phonorecords to the extent permitted by such technology;
       ``(vii) phonorecords of the sound recording have been 
     distributed to the public under the authority of the 
     copyright owner or the copyright owner authorizes the 
     transmitting entity to transmit the sound recording, and the 
     transmitting entity makes the transmission from a phonorecord 
     lawfully made under the authority of the copyright owner, 
     except that the requirement of this clause shall not apply to 
     a retransmission of a broadcast transmission by a 
     transmitting entity that does not have the right or ability 
     to control the programming of the broadcast transmission, 
     unless the transmitting entity is given notice in writing by 
     the copyright owner of the sound recording that the broadcast 
     station makes broadcast transmissions that regularly violate 
     such requirement;
       ``(viii) the transmitting entity accommodates and does not 
     interfere with the transmission of technical measures that 
     are widely used by sound recording copyright owners to 
     identify or protect copyrighted works, and that are 
     technically feasible of being transmitted by the transmitting 
     entity without imposing substantial costs on the transmitting 
     entity or resulting in perceptible aural or visual 
     degradation of the digital signal, except that the 
     requirement of this clause shall not apply to a satellite 
     digital audio service that is in operation, or that is 
     licensed under the authority of the Federal Communications 
     Commission, on or before July 31, 1998, to the extent that 
     such service has designed, developed, or made commitments to 
     procure equipment or technology that is not compatible with 
     such technical measures before such technical measures are 
     widely adopted by sound recording copyright owners; and
       ``(ix) the transmitting entity identifies in textual data 
     the sound recording during, but not before, the time it is 
     performed, including the title of the sound recording, the 
     title of the phonorecord embodying such sound recording, if 
     any, and the featured recording artist, in a manner to permit 
     it to be displayed to the transmission recipient by the 
     device or technology intended for receiving the service 
     provided by the transmitting entity, except that the 
     obligation in this clause shall not take effect until 1 year 
     after the date of the enactment of the Digital Millennium 
     Copyright Act and shall not apply in the case of a 
     retransmission of a broadcast transmission by a transmitting 
     entity that does not have the right or ability to control the 
     programming of the broadcast transmission, or in the case in 
     which devices or technology intended for receiving the 
     service provided by the transmitting entity that have the 
     capability to display such textual data are not common in the 
     marketplace.''.
       (2) Subsection (f) is amended--
       (A) in the subsection heading by striking ``Nonexempt 
     Subscription'' and inserting ``Certain Nonexempt'';
       (B) in paragraph (1)--
       (i) in the first sentence--

       (I) by striking ``(1) No'' and inserting ``(1)(A) No'';
       (II) by striking ``the activities'' and inserting 
     ``subscription transmissions by preexisting subscription 
     services and transmissions by preexisting satellite digital 
     audio radio services''; and

       (III) by striking ``2000'' and inserting ``2001''; and

       (ii) by amending the third sentence to read as follows: 
     ``Any copyright owners of sound recordings, preexisting 
     subscription services, or preexisting satellite digital audio 
     radio services may submit to the Librarian of Congress 
     licenses

[[Page H10058]]

     covering such subscription transmissions with respect to such 
     sound recordings.''; and
       (C) by striking paragraphs (2), (3), (4), and (5) and 
     inserting the following:
       ``(B) In the absence of license agreements negotiated under 
     subparagraph (A), during the 60-day period commencing 6 
     months after publication of the notice specified in 
     subparagraph (A), and upon the filing of a petition in 
     accordance with section 803(a)(1), the Librarian of Congress 
     shall, pursuant to chapter 8, convene a copyright arbitration 
     royalty panel to determine and publish in the Federal 
     Register a schedule of rates and terms which, subject to 
     paragraph (3), shall be binding on all copyright owners of 
     sound recordings and entities performing sound recordings 
     affected by this paragraph. In establishing rates and terms 
     for preexisting subscription services and preexisting 
     satellite digital audio radio services, in addition to the 
     objectives set forth in section 801(b)(1), the copyright 
     arbitration royalty panel may consider the rates and terms 
     for comparable types of subscription digital audio 
     transmission services and comparable circumstances under 
     voluntary license agreements negotiated as provided in 
     subparagraph (A).
       ``(C)(i) Publication of a notice of the initiation of 
     voluntary negotiation proceedings as specified in 
     subparagraph (A) shall be repeated, in accordance with 
     regulations that the Librarian of Congress shall prescribe--
       ``(I) no later than 30 days after a petition is filed by 
     any copyright owners of sound recordings, any preexisting 
     subscription services, or any preexisting satellite digital 
     audio radio services indicating that a new type of 
     subscription digital audio transmission service on which 
     sound recordings are performed is or is about to become 
     operational; and
       ``(II) in the first week of January, 2001, and at 5-year 
     intervals thereafter.
       ``(ii) The procedures specified in subparagraph (B) shall 
     be repeated, in accordance with regulations that the 
     Librarian of Congress shall prescribe, upon filing of a 
     petition in accordance with section 803(a)(1) during a 60-day 
     period commencing--
       ``(I) 6 months after publication of a notice of the 
     initiation of voluntary negotiation proceedings under 
     subparagraph (A) pursuant to a petition under clause (i)(I) 
     of this subparagraph; or
       ``(II) on July 1, 2001, and at 5-year intervals thereafter.
       ``(iii) The procedures specified in subparagraph (B) shall 
     be concluded in accordance with section 802.
       ``(2)(A) No later than 30 days after the date of the 
     enactment of the Digital Millennium Copyright Act, the 
     Librarian of Congress shall cause notice to be published in 
     the Federal Register of the initiation of voluntary 
     negotiation proceedings for the purpose of determining 
     reasonable terms and rates of royalty payments for public 
     performances of sound recordings by means of eligible 
     nonsubscription transmissions and transmissions by new 
     subscription services specified by subsection (d)(2) during 
     the period beginning on the date of the enactment of such Act 
     and ending on December 31, 2000, or such other date as the 
     parties may agree. Such rates and terms shall distinguish 
     among the different types of eligible nonsubscription 
     transmission services and new subscription services then 
     in operation and shall include a minimum fee for each such 
     type of service. Any copyright owners of sound recordings 
     or any entities performing sound recordings affected by 
     this paragraph may submit to the Librarian of Congress 
     licenses covering such eligible nonsubscription 
     transmissions and new subscription services with respect 
     to such sound recordings. The parties to each negotiation 
     proceeding shall bear their own costs.
       ``(B) In the absence of license agreements negotiated under 
     subparagraph (A), during the 60-day period commencing 6 
     months after publication of the notice specified in 
     subparagraph (A), and upon the filing of a petition in 
     accordance with section 803(a)(1), the Librarian of Congress 
     shall, pursuant to chapter 8, convene a copyright arbitration 
     royalty panel to determine and publish in the Federal 
     Register a schedule of rates and terms which, subject to 
     paragraph (3), shall be binding on all copyright owners of 
     sound recordings and entities performing sound recordings 
     affected by this paragraph during the period beginning on the 
     date of the enactment of the Digital Millennium Copyright Act 
     and ending on December 31, 2000, or such other date as the 
     parties may agree. Such rates and terms shall distinguish 
     among the different types of eligible nonsubscription 
     transmission services then in operation and shall include a 
     minimum fee for each such type of service, such differences 
     to be based on criteria including, but not limited to, the 
     quantity and nature of the use of sound recordings and the 
     degree to which use of the service may substitute for or may 
     promote the purchase of phonorecords by consumers. In 
     establishing rates and terms for transmissions by eligible 
     nonsubscription services and new subscription services, the 
     copyright arbitration royalty panel shall establish rates and 
     terms that most clearly represent the rates and terms that 
     would have been negotiated in the marketplace between a 
     willing buyer and a willing seller. In determining such rates 
     and terms, the copyright arbitration royalty panel shall base 
     its decision on economic, competitive and programming 
     information presented by the parties, including--
       ``(i) whether use of the service may substitute for or may 
     promote the sales of phonorecords or otherwise may interfere 
     with or may enhance the sound recording copyright owner's 
     other streams of revenue from its sound recordings; and
       ``(ii) the relative roles of the copyright owner and the 
     transmitting entity in the copyrighted work and the service 
     made available to the public with respect to relative 
     creative contribution, technological contribution, capital 
     investment, cost, and risk.

     In establishing such rates and terms, the copyright 
     arbitration royalty panel may consider the rates and terms 
     for comparable types of digital audio transmission services 
     and comparable circumstances under voluntary license 
     agreements negotiated under subparagraph (A).
       ``(C)(i) Publication of a notice of the initiation of 
     voluntary negotiation proceedings as specified in 
     subparagraph (A) shall be repeated in accordance with 
     regulations that the Librarian of Congress shall prescribe--
       ``(I) no later than 30 days after a petition is filed by 
     any copyright owners of sound recordings or any eligible 
     nonsubscription service or new subscription service 
     indicating that a new type of eligible nonsubscription 
     service or new subscription service on which sound recordings 
     are performed is or is about to become operational; and
       ``(II) in the first week of January 2000, and at 2-year 
     intervals thereafter, except to the extent that different 
     years for the repeating of such proceedings may be determined 
     in accordance with subparagraph (A).
       ``(ii) The procedures specified in subparagraph (B) shall 
     be repeated, in accordance with regulations that the 
     Librarian of Congress shall prescribe, upon filing of a 
     petition in accordance with section 803(a)(1) during a 60-day 
     period commencing--
       ``(I) 6 months after publication of a notice of the 
     initiation of voluntary negotiation proceedings under 
     subparagraph (A) pursuant to a petition under clause (i)(I); 
     or
       ``(II) on July 1, 2000, and at 2-year intervals thereafter, 
     except to the extent that different years for the repeating 
     of such proceedings may be determined in accordance with 
     subparagraph (A).
       ``(iii) The procedures specified in subparagraph (B) shall 
     be concluded in accordance with section 802.
       ``(3) License agreements voluntarily negotiated at any time 
     between 1 or more copyright owners of sound recordings and 1 
     or more entities performing sound recordings shall be given 
     effect in lieu of any determination by a copyright 
     arbitration royalty panel or decision by the Librarian of 
     Congress.
       ``(4)(A) The Librarian of Congress shall also establish 
     requirements by which copyright owners may receive reasonable 
     notice of the use of their sound recordings under this 
     section, and under which records of such use shall be kept 
     and made available by entities performing sound recordings.
       ``(B) Any person who wishes to perform a sound recording 
     publicly by means of a transmission eligible for statutory 
     licensing under this subsection may do so without infringing 
     the exclusive right of the copyright owner of the sound 
     recording--
       ``(i) by complying with such notice requirements as the 
     Librarian of Congress shall prescribe by regulation and by 
     paying royalty fees in accordance with this subsection; or
       ``(ii) if such royalty fees have not been set, by agreeing 
     to pay such royalty fees as shall be determined in accordance 
     with this subsection.
       ``(C) Any royalty payments in arrears shall be made on or 
     before the twentieth day of the month next succeeding the 
     month in which the royalty fees are set.''.
       (3) Subsection (g) is amended--
       (A) in the subsection heading by striking ``Subscription'';
       (B) in paragraph (1) in the matter preceding subparagraph 
     (A), by striking ``subscription transmission licensed'' and 
     inserting ``transmission licensed under a statutory 
     license'';
       (C) in subparagraphs (A) and (B) by striking 
     ``subscription''; and
       (D) in paragraph (2) by striking ``subscription''.
       (4) Subsection (j) is amended--
       (A) by striking paragraphs (4) and (9) and redesignating 
     paragraphs (2), (3), (5), (6), (7), and (8) as paragraphs 
     (3), (5), (9), (12), (13), and (14), respectively;
       (B) by inserting after paragraph (1) the following:
       ``(2) An `archived program' is a predetermined program that 
     is available repeatedly on the demand of the transmission 
     recipient and that is performed in the same order from the 
     beginning, except that an archived program shall not include 
     a recorded event or broadcast transmission that makes no more 
     than an incidental use of sound recordings, as long as such 
     recorded event or broadcast transmission does not contain an 
     entire sound recording or feature a particular sound 
     recording.'';
       (C) by inserting after paragraph (3), as so redesignated, 
     the following:
       ``(4) A `continuous program' is a predetermined program 
     that is continuously performed in the same order and that is 
     accessed at a point in the program that is beyond the control 
     of the transmission recipient.'';
       (D) by inserting after paragraph (5), as so redesignated, 
     the following:
       ``(6) An `eligible nonsubscription transmission' is a 
     noninteractive nonsubscription digital audio transmission not 
     exempt under subsection (d)(1) that is made as part of a 
     service that provides audio programming consisting, in whole 
     or in part, of performances of sound recordings, including 
     retransmissions of broadcast transmissions, if the primary 
     purpose of the service is to provide to the public such audio 
     or other entertainment programming, and the primary purpose 
     of the service is not to sell, advertise, or promote 
     particular products or services other than sound 
     recordings, live concerts, or other music-related events.
       ``(7) An `interactive service' is one that enables a member 
     of the public to receive a transmission of a program 
     specially created for the recipient, or on request, a 
     transmission of a particular sound recording, whether or not 
     as part

[[Page H10059]]

     of a program, which is selected by or on behalf of the 
     recipient. The ability of individuals to request that 
     particular sound recordings be performed for reception by the 
     public at large, or in the case of a subscription service, by 
     all subscribers of the service, does not make a service 
     interactive, if the programming on each channel of the 
     service does not substantially consist of sound recordings 
     that are performed within 1 hour of the request or at a time 
     designated by either the transmitting entity or the 
     individual making such request. If an entity offers both 
     interactive and noninteractive services (either concurrently 
     or at different times), the noninteractive component shall 
     not be treated as part of an interactive service.
       ``(8) A `new subscription service' is a service that 
     performs sound recordings by means of noninteractive 
     subscription digital audio transmissions and that is not a 
     preexisting subscription service or a preexisting satellite 
     digital audio radio service.'';
       (E) by inserting after paragraph (9), as so redesignated, 
     the following:
       ``(10) A `preexisting satellite digital audio radio 
     service' is a subscription satellite digital audio radio 
     service provided pursuant to a satellite digital audio radio 
     service license issued by the Federal Communications 
     Commission on or before July 31, 1998, and any renewal of 
     such license to the extent of the scope of the original 
     license, and may include a limited number of sample channels 
     representative of the subscription service that are made 
     available on a nonsubscription basis in order to promote the 
     subscription service.
       ``(11) A `preexisting subscription service' is a service 
     that performs sound recordings by means of noninteractive 
     audio-only subscription digital audio transmissions, which 
     was in existence and was making such transmissions to the 
     public for a fee on or before July 31, 1998, and may include 
     a limited number of sample channels representative of the 
     subscription service that are made available on a 
     nonsubscription basis in order to promote the subscription 
     service.''; and
       (F) by adding at the end the following:
       ``(15) A `transmission' is either an initial transmission 
     or a retransmission.''.
       (5) The amendment made by paragraph (2)(B)(i)(III) of this 
     subsection shall be deemed to have been enacted as part of 
     the Digital Performance Right in Sound Recordings Act of 
     1995, and the publication of notice of proceedings under 
     section 114(f)(1) of title 17, United States Code, as in 
     effect upon the effective date of that Act, for the 
     determination of royalty payments shall be deemed to have 
     been made for the period beginning on the effective date of 
     that Act and ending on December 1, 2001.
       (6) The amendments made by this subsection do not annul, 
     limit, or otherwise impair the rights that are preserved by 
     section 114 of title 17, United States Code, including the 
     rights preserved by subsections (c), (d)(4), and (i) of such 
     section.
       (b) Ephemeral Recordings.--Section 112 of title 17, United 
     States Code, is amended--
       (1) by redesignating subsection (e) as subsection (f); and
       (2) by inserting after subsection (d) the following:
       ``(e) Statutory License.--(1) A transmitting organization 
     entitled to transmit to the public a performance of a sound 
     recording under the limitation on exclusive rights specified 
     by section 114(d)(1)(C)(iv) or under a statutory license in 
     accordance with section 114(f) is entitled to a statutory 
     license, under the conditions specified by this subsection, 
     to make no more than 1 phonorecord of the sound recording 
     (unless the terms and conditions of the statutory license 
     allow for more), if the following conditions are satisfied:
       ``(A) The phonorecord is retained and used solely by the 
     transmitting organization that made it, and no further 
     phonorecords are reproduced from it.
       ``(B) The phonorecord is used solely for the transmitting 
     organization's own transmissions originating in the United 
     States under a statutory license in accordance with section 
     114(f) or the limitation on exclusive rights specified by 
     section 114(d)(1)(C)(iv).
       ``(C) Unless preserved exclusively for purposes of archival 
     preservation, the phonorecord is destroyed within 6 months 
     from the date the sound recording was first transmitted to 
     the public using the phonorecord.
       ``(D) Phonorecords of the sound recording have been 
     distributed to the public under the authority of the 
     copyright owner or the copyright owner authorizes the 
     transmitting entity to transmit the sound recording, and the 
     transmitting entity makes the phonorecord under this 
     subsection from a phonorecord lawfully made and acquired 
     under the authority of the copyright owner.
       ``(3) Notwithstanding any provision of the antitrust laws, 
     any copyright owners of sound recordings and any transmitting 
     organizations entitled to a statutory license under this 
     subsection may negotiate and agree upon royalty rates and 
     license terms and conditions for making phonorecords of such 
     sound recordings under this section and the proportionate 
     division of fees paid among copyright owners, and may 
     designate common agents to negotiate, agree to, pay, or 
     receive such royalty payments.
       ``(4) No later than 30 days after the date of the enactment 
     of the Digital Millennium Copyright Act, the Librarian of 
     Congress shall cause notice to be published in the Federal 
     Register of the initiation of voluntary negotiation 
     proceedings for the purpose of determining reasonable terms 
     and rates of royalty payments for the activities specified by 
     paragraph (2) of this subsection during the period beginning 
     on the date of the enactment of such Act and ending on 
     December 31, 2000, or such other date as the parties may 
     agree. Such rates shall include a minimum fee for each type 
     of service offered by transmitting organizations. Any 
     copyright owners of sound recordings or any transmitting 
     organizations entitled to a statutory license under this 
     subsection may submit to the Librarian of Congress licenses 
     covering such activities with respect to such sound 
     recordings. The parties to each negotiation proceeding shall 
     bear their own costs.
       ``(5) In the absence of license agreements negotiated under 
     paragraph (3), during the 60-day period commencing 6 months 
     after publication of the notice specified in paragraph (4), 
     and upon the filing of a petition in accordance with section 
     803(a)(1), the Librarian of Congress shall, pursuant to 
     chapter 8, convene a copyright arbitration royalty panel to 
     determine and publish in the Federal Register a schedule of 
     reasonable rates and terms which, subject to paragraph (6), 
     shall be binding on all copyright owners of sound recordings 
     and transmitting organizations entitled to a statutory 
     license under this subsection during the period beginning on 
     the date of the enactment of the Digital Millennium Copyright 
     Act and ending on December 31, 2000, or such other date as 
     the parties may agree. Such rates shall include a minimum fee 
     for each type of service offered by transmitting 
     organizations. The copyright arbitration royalty panel 
     shall establish rates that most clearly represent the fees 
     that would have been negotiated in the marketplace between 
     a willing buyer and a willing seller. In determining such 
     rates and terms, the copyright arbitration royalty panel 
     shall base its decision on economic, competitive, and 
     programming information presented by the parties, 
     including--
       ``(A) whether use of the service may substitute for or may 
     promote the sales of phonorecords or otherwise interferes 
     with or enhances the copyright owner's traditional streams of 
     revenue; and
       ``(B) the relative roles of the copyright owner and the 
     transmitting organization in the copyrighted work and the 
     service made available to the public with respect to relative 
     creative contribution, technological contribution, capital 
     investment, cost, and risk.

     In establishing such rates and terms, the copyright 
     arbitration royalty panel may consider the rates and terms 
     under voluntary license agreements negotiated as provided in 
     paragraphs (3) and (4). The Librarian of Congress shall also 
     establish requirements by which copyright owners may receive 
     reasonable notice of the use of their sound recordings under 
     this section, and under which records of such use shall be 
     kept and made available by transmitting organizations 
     entitled to obtain a statutory license under this subsection.
       ``(6) License agreements voluntarily negotiated at any time 
     between 1 or more copyright owners of sound recordings and 1 
     or more transmitting organizations entitled to obtain a 
     statutory license under this subsection shall be given effect 
     in lieu of any determination by a copyright arbitration 
     royalty panel or decision by the Librarian of Congress.
       ``(7) Publication of a notice of the initiation of 
     voluntary negotiation proceedings as specified in paragraph 
     (4) shall be repeated, in accordance with regulations that 
     the Librarian of Congress shall prescribe, in the first week 
     of January 2000, and at 2-year intervals thereafter, except 
     to the extent that different years for the repeating of such 
     proceedings may be determined in accordance with paragraph 
     (4). The procedures specified in paragraph (5) shall be 
     repeated, in accordance with regulations that the Librarian 
     of Congress shall prescribe, upon filing of a petition in 
     accordance with section 803(a)(1), during a 60-day period 
     commencing on July 1, 2000, and at 2-year intervals 
     thereafter, except to the extent that different years for the 
     repeating of such proceedings may be determined in accordance 
     with paragraph (4). The procedures specified in paragraph (5) 
     shall be concluded in accordance with section 802.
       ``(8)(A) Any person who wishes to make a phonorecord of a 
     sound recording under a statutory license in accordance with 
     this subsection may do so without infringing the exclusive 
     right of the copyright owner of the sound recording under 
     section 106(1)--
       ``(i) by complying with such notice requirements as the 
     Librarian of Congress shall prescribe by regulation and by 
     paying royalty fees in accordance with this subsection; or
       ``(ii) if such royalty fees have not been set, by agreeing 
     to pay such royalty fees as shall be determined in accordance 
     with this subsection.
       ``(B) Any royalty payments in arrears shall be made on or 
     before the 20th day of the month next succeeding the month in 
     which the royalty fees are set.
       ``(9) If a transmitting organization entitled to make a 
     phonorecord under this subsection is prevented from making 
     such phonorecord by reason of the application by the 
     copyright owner of technical measures that prevent the 
     reproduction of the sound recording, the copyright owner 
     shall make available to the transmitting organization the 
     necessary means for permitting the making of such phonorecord 
     as permitted under this subsection, if it is technologically 
     feasible and economically reasonable for the copyright owner 
     to do so. If the copyright owner fails to do so in a timely 
     manner in light of the transmitting organization's reasonable 
     business requirements, the transmitting organization shall 
     not be liable for a violation of section 1201(a)(1) of this 
     title for engaging in such activities as are necessary to 
     make such phonorecords as permitted under this subsection.
       ``(10) Nothing in this subsection annuls, limits, impairs, 
     or otherwise affects in any way the existence or value of any 
     of the exclusive rights of the copyright owners in a sound 
     recording, except as otherwise provided in this subsection, 
     or in a musical work, including the exclusive rights to 
     reproduce and distribute a sound recording or musical work, 
     including by means of

[[Page H10060]]

     a digital phonorecord delivery, under section 106(1), 106(3), 
     and 115, and the right to perform publicly a sound recording 
     or musical work, including by means of a digital audio 
     transmission, under sections 106(4) and 106(6).''.
       (c) Scope of Section 112(a) of Title 17 Not Affected.--
     Nothing in this section or the amendments made by this 
     section shall affect the scope of section 112(a) of title 17, 
     United States Code, or the entitlement of any person to an 
     exemption thereunder.
       (d) Procedural Amendments to Chapter 8.--Section 802 of 
     title 17, United States Code, is amended--
       (1) in subsection (f)--
       (A) in the first sentence by striking ``60'' and inserting 
     ``90''; and
       (B) in the third sentence by striking ``that 60-day 
     period'' and inserting ``an additional 30-day period''; and
       (2) in subsection (g) by inserting after the second 
     sentence the following: ``When this title provides that the 
     royalty rates or terms that were previously in effect are to 
     expire on a specified date, any adjustment by the Librarian 
     of those rates or terms shall be effective as of the day 
     following the date of expiration of the rates or terms that 
     were previously in effect, even if the Librarian's decision 
     is rendered on a later date.''.
       (e) Conforming Amendments.--(1) Section 801(b)(1) of title 
     17, United States Code, is amended in the second sentence by 
     striking ``sections 114, 115, and 116'' and inserting 
     ``sections 114(f)(1)(B), 115, and 116''.
       (2) Section 802(c) of title 17, United States Code, is 
     amended by striking ``section 111, 114, 116, or 119, any 
     person entitled to a compulsory license'' and inserting 
     ``section 111, 112, 114, 116, or 119, any transmitting 
     organization entitled to a statutory license under section 
     112(f), any person entitled to a statutory license''.
       (3) Section 802(g) of title 17, United States Code, is 
     amended by striking ``sections 111, 114'' and inserting 
     ``sections 111, 112, 114''.
       (4) Section 802(h)(2) of title 17, United States Code, is 
     amended by striking ``section 111, 114'' and inserting 
     ``section 111, 112, 114''.
       (5) Section 803(a)(1) of title 17, United States Code, is 
     amended by striking ``sections 114, 115'' and inserting 
     ``sections 112, 114, 115''.
       (6) Section 803(a)(5) of title 17, United States Code, is 
     amended--
       (A) by striking ``section 114'' and inserting ``section 112 
     or 114''; and
       (B) by striking ``that section'' and inserting ``those 
     sections''.

     SEC. 406. ASSUMPTION OF CONTRACTUAL OBLIGATIONS RELATED TO 
                   TRANSFERS OF RIGHTS IN MOTION PICTURES.

       (a) In General.--Part VI of title 28, United States Code, 
     is amended by adding at the end the following new chapter:

      ``CHAPTER 180--ASSUMPTION OF CERTAIN CONTRACTUAL OBLIGATIONS

``Sec. 4001. Assumption of contractual obligations related to transfers 
              of rights in motion pictures.

     ``Sec. 4001. Assumption of contractual obligations related to 
       transfers of rights in motion pictures

       ``(a) Assumption of Obligations.--(1) In the case of a 
     transfer of copyright ownership under United States law in a 
     motion picture (as the terms `transfer of copyright 
     ownership' and `motion picture' are defined in section 101 of 
     title 17) that is produced subject to 1 or more collective 
     bargaining agreements negotiated under the laws of the United 
     States, if the transfer is executed on or after the effective 
     date of this chapter and is not limited to public performance 
     rights, the transfer instrument shall be deemed to 
     incorporate the assumption agreements applicable to the 
     copyright ownership being transferred that are required by 
     the applicable collective bargaining agreement, and the 
     transferee shall be subject to the obligations under each 
     such assumption agreement to make residual payments and 
     provide related notices, accruing after the effective date of 
     the transfer and applicable to the exploitation of the rights 
     transferred, and any remedies under each such assumption 
     agreement for breach of those obligations, as those 
     obligations and remedies are set forth in the applicable 
     collective bargaining agreement, if--
       ``(A) the transferee knows or has reason to know at the 
     time of the transfer that such collective bargaining 
     agreement was or will be applicable to the motion picture; or
       ``(B) in the event of a court order confirming an 
     arbitration award against the transferor under the collective 
     bargaining agreement, the transferor does not have the 
     financial ability to satisfy the award within 90 days after 
     the order is issued.
       ``(2) For purposes of paragraph (1)(A), `knows or has 
     reason to know' means any of the following:
       ``(A) Actual knowledge that the collective bargaining 
     agreement was or will be applicable to the motion picture.
       ``(B)(i) Constructive knowledge that the collective 
     bargaining agreement was or will be applicable to the motion 
     picture, arising from recordation of a document pertaining to 
     copyright in the motion picture under section 205 of title 17 
     or from publication, at a site available to the public on-
     line that is operated by the relevant union, of information 
     that identifies the motion picture as subject to a collective 
     bargaining agreement with that union, if the site permits 
     commercially reasonable verification of the date on which the 
     information was available for access.
       ``(ii) Clause (i) applies only if the transfer referred to 
     in subsection (a)(1) occurs--
       ``(i) after the motion picture is completed, or
       ``(ii) before the motion picture is completed and--
       ``(I) within 18 months before the filing of an application 
     for copyright registration for the motion picture under 
     section 408 of title 17, or
       ``(II) if no such application is filed, within 18 months 
     before the first publication of the motion picture in the 
     United States.
       ``(C) Awareness of other facts and circumstances pertaining 
     to a particular transfer from which it is apparent that the 
     collective bargaining agreement was or will be applicable to 
     the motion picture.
       ``(b) Scope of Exclusion of Transfers of Public Performance 
     Rights.--For purposes of this section, the exclusion under 
     subsection (a) of transfers of copyright ownership in a 
     motion picture that are limited to public performance 
     rights includes transfers to a terrestrial broadcast 
     station, cable system, or programmer to the extent that 
     the station, system, or programmer is functioning as an 
     exhibitor of the motion picture, either by exhibiting the 
     motion picture on its own network, system, service, or 
     station, or by initiating the transmission of an 
     exhibition that is carried on another network, system, 
     service, or station. When a terrestrial broadcast station, 
     cable system, or programmer, or other transferee, is also 
     functioning otherwise as a distributor or as a producer of 
     the motion picture, the public performance exclusion does 
     not affect any obligations imposed on the transferee to 
     the extent that it is engaging in such functions.
       ``(c) Exclusion for Grants of Security Interests.--
     Subsection (a) shall not apply to--
       ``(1) a transfer of copyright ownership consisting solely 
     of a mortgage, hypothecation, or other security interest; or
       ``(2) a subsequent transfer of the copyright ownership 
     secured by the security interest described in paragraph (1) 
     by or under the authority of the secured party, including a 
     transfer through the exercise of the secured party's rights 
     or remedies as a secured party, or by a subsequent 
     transferee.

     The exclusion under this subsection shall not affect any 
     rights or remedies under law or contract.
       ``(d) Deferral Pending Resolution of Bona Fide Dispute.--A 
     transferee on which obligations are imposed under subsection 
     (a) by virtue of paragraph (1) of that subsection may elect 
     to defer performance of such obligations that are subject to 
     a bona fide dispute between a union and a prior transferor 
     until that dispute is resolved, except that such deferral 
     shall not stay accrual of any union claims due under an 
     applicable collective bargaining agreement.
       ``(e) Scope of Obligations Determined by Private 
     Agreement.--Nothing in this section shall expand or diminish 
     the rights, obligations, or remedies of any person under the 
     collective bargaining agreements or assumption agreements 
     referred to in this section.
       ``(f) Failure To Notify.--If the transferor under 
     subsection (a) fails to notify the transferee under 
     subsection (a) of applicable collective bargaining 
     obligations before the execution of the transfer instrument, 
     and subsection (a) is made applicable to the transferee 
     solely by virtue of subsection (a)(1)(B), the transferor 
     shall be liable to the transferee for any damages suffered by 
     the transferee as a result of the failure to notify.
       ``(g) Determination of Disputes and Claims.--Any dispute 
     concerning the application of subsections (a) through (f) 
     shall be determined by an action in United States district 
     court, and the court in its discretion may allow the recovery 
     of full costs by or against any party and may also award a 
     reasonable attorney's fee to the prevailing party as part of 
     the costs.
       ``(h) Study.--The Comptroller General, in consultation with 
     the Register of Copyrights, shall conduct a study of the 
     conditions in the motion picture industry that gave rise to 
     this section, and the impact of this section on the motion 
     picture industry. The Comptroller General shall report the 
     findings of the study to the Congress within 2 years after 
     the effective date of this chapter.''.
       (b) Conforming Amendment.--The table of chapters for part 
     VI of title 28, United States Code, is amended by adding at 
     the end the following:

``180. Assumption of Certain Contractual Obligations........4001''.....

     SEC. 407. EFFECTIVE DATE.

       Except as otherwise provided in this title, this title and 
     the amendments made by this title shall take effect on the 
     date of the enactment of this Act.

            TITLE V--PROTECTION OF CERTAIN ORIGINAL DESIGNS

     SEC. 501. SHORT TITLE.

       This Act may be referred to as the ``Vessel Hull Design 
     Protection Act''.

     SEC. 502. PROTECTION OF CERTAIN ORIGINAL DESIGNS.

       Title 17, United States Code, is amended by adding at the 
     end the following new chapter:

              ``CHAPTER 13--PROTECTION OF ORIGINAL DESIGNS

``Sec.
``1301. Designs protected.
``1302. Designs not subject to protection.
``1303. Revisions, adaptations, and rearrangements.
``1304. Commencement of protection.
``1305. Term of protection.
``1306. Design notice.
``1307. Effect of omission of notice.
``1308. Exclusive rights.
``1309. Infringement.
``1310. Application for registration.
``1311. Benefit of earlier filing date in foreign country.
``1312. Oaths and acknowledgments.
``1313. Examination of application and issue or refusal of 
              registration.

[[Page H10061]]

``1314. Certification of registration.
``1315. Publication of announcements and indexes.
``1316. Fees.
``1317. Regulations.
``1318. Copies of records.
``1319. Correction of errors in certificates.
``1320. Ownership and transfer.
``1321. Remedy for infringement.
``1322. Injunctions.
``1323. Recovery for infringement.
``1324. Power of court over registration.
``1325. Liability for action on registration fraudulently obtained.
``1326. Penalty for false marking.
``1327. Penalty for false representation.
``1328. Enforcement by Treasury and Postal Service .
``1329. Relation to design patent law.
``1330. Common law and other rights unaffected.
``1331. Administrator; Office of the Administrator.
``1332. No retroactive effect.

     ``Sec. 1301. Designs protected

       ``(a) Designs Protected.--
       ``(1) In general.--The designer or other owner of an 
     original design of a useful article which makes the article 
     attractive or distinctive in appearance to the purchasing or 
     using public may secure the protection provided by this 
     chapter upon complying with and subject to this chapter.
       ``(2) Vessel hulls.--The design of a vessel hull, including 
     a plug or mold, is subject to protection under this chapter, 
     notwithstanding section 1302(4).
       ``(b) Definitions.--For the purpose of this chapter, the 
     following terms have the following meanings:
       ``(1) A design is `original' if it is the result of the 
     designer's creative endeavor that provides a distinguishable 
     variation over prior work pertaining to similar articles 
     which is more than merely trivial and has not been copied 
     from another source.
       ``(2) A `useful article' is a vessel hull, including a plug 
     or mold, which in normal use has an intrinsic utilitarian 
     function that is not merely to portray the appearance of the 
     article or to convey information. An article which normally 
     is part of a useful article shall be deemed to be a useful 
     article.
       ``(3) A `vessel' is a craft, especially one larger than a 
     rowboat, designed to navigate on water, but does not include 
     any such craft that exceeds 200 feet in length.
       ``(4) A `hull' is the frame or body of a vessel, including 
     the deck of a vessel, exclusive of masts, sails, yards, and 
     rigging.
       ``(5) A `plug' means a device or model used to make a mold 
     for the purpose of exact duplication, regardless of whether 
     the device or model has an intrinsic utilitarian function 
     that is not only to portray the appearance of the product or 
     to convey information.
       ``(6) A `mold' means a matrix or form in which a substance 
     for material is used, regardless of whether the matrix or 
     form has an intrinsic utilitarian function that is not only 
     to portray the appearance of the product or to convey 
     information.

     ``Sec. 1302. Designs not subject to protection

       ``Protection under this chapter shall not be available for 
     a design that is--
       ``(1) not original;
       ``(2) staple or commonplace, such as a standard geometric 
     figure, a familiar symbol, an emblem, or a motif, or another 
     shape, pattern, or configuration which has become standard, 
     common, prevalent, or ordinary;
       ``(3) different from a design excluded by paragraph (2) 
     only in insignificant details or in elements which are 
     variants commonly used in the relevant trades;
       ``(4) dictated solely by a utilitarian function of the 
     article that embodies it; or
       ``(5) embodied in a useful article that was made public by 
     the designer or owner in the United States or a foreign 
     country more than 1 year before the date of the application 
     for registration under this chapter.

     ``Sec. 1303. Revisions, adaptations, and rearrangements

       ``Protection for a design under this chapter shall be 
     available notwithstanding the employment in the design of 
     subject matter excluded from protection under section 1302 if 
     the design is a substantial revision, adaptation, or 
     rearrangement of such subject matter. Such protection shall 
     be independent of any subsisting protection in subject matter 
     employed in the design, and shall not be construed as 
     securing any right to subject matter excluded from protection 
     under this chapter or as extending any subsisting protection 
     under this chapter.

     ``Sec. 1304. Commencement of protection

       ``The protection provided for a design under this chapter 
     shall commence upon the earlier of the date of publication of 
     the registration under section 1313(a) or the date the design 
     is first made public as defined by section 1310(b).

     ``Sec. 1305. Term of protection

       ``(a) In General.--Subject to subsection (b), the 
     protection provided under this chapter for a design shall 
     continue for a term of 10 years beginning on the date of the 
     commencement of protection under section 1304.
       ``(b) Expiration.--All terms of protection provided in this 
     section shall run to the end of the calendar year in which 
     they would otherwise expire.
       ``(c) Termination of Rights.--Upon expiration or 
     termination of protection in a particular design under this 
     chapter, all rights under this chapter in the design shall 
     terminate, regardless of the number of different articles in 
     which the design may have been used during the term of its 
     protection.

     ``Sec. 1306. Design notice

       ``(a) Contents of Design Notice.--(1) Whenever any design 
     for which protection is sought under this chapter is made 
     public under section 1310(b), the owner of the design shall, 
     subject to the provisions of section 1307, mark it or have it 
     marked legibly with a design notice consisting of--
       ``(A) the words `Protected Design', the abbreviation 
     `Prot'd Des.', or the letter `D' with a circle, or the symbol 
     *D*;
       ``(B) the year of the date on which protection for the 
     design commenced; and
       ``(C) the name of the owner, an abbreviation by which the 
     name can be recognized, or a generally accepted alternative 
     designation of the owner.
     Any distinctive identification of the owner may be used for 
     purposes of subparagraph (C) if it has been recorded by the 
     Administrator before the design marked with such 
     identification is registered.
       ``(2) After registration, the registration number may be 
     used instead of the elements specified in subparagraphs (B) 
     and (C) of paragraph (1).
       ``(b) Location of Notice.--The design notice shall be so 
     located and applied as to give reasonable notice of design 
     protection while the useful article embodying the design is 
     passing through its normal channels of commerce.
       ``(c) Subsequent Removal of Notice.--When the owner of a 
     design has complied with the provisions of this section, 
     protection under this chapter shall not be affected by the 
     removal, destruction, or obliteration by others of the design 
     notice on an article.

     ``Sec. 1307. Effect of omission of notice

       ``(a) Actions With Notice.--Except as provided in 
     subsection (b), the omission of the notice prescribed in 
     section 1306 shall not cause loss of the protection under 
     this chapter or prevent recovery for infringement under this 
     chapter against any person who, after receiving written 
     notice of the design protection, begins an undertaking 
     leading to infringement under this chapter.
       ``(b) Actions Without Notice.--The omission of the notice 
     prescribed in section 1306 shall prevent any recovery under 
     section 1323 against a person who began an undertaking 
     leading to infringement under this chapter before receiving 
     written notice of the design protection. No injunction shall 
     be issued under this chapter with respect to such undertaking 
     unless the owner of the design reimburses that person for any 
     reasonable expenditure or contractual obligation in 
     connection with such undertaking that was incurred before 
     receiving written notice of the design protection, as the 
     court in its discretion directs. The burden of providing 
     written notice of design protection shall be on the owner of 
     the design.

     ``Sec. 1308. Exclusive rights

       ``The owner of a design protected under this chapter has 
     the exclusive right to--
       ``(1) make, have made, or import, for sale or for use in 
     trade, any useful article embodying that design; and
       ``(2) sell or distribute for sale or for use in trade any 
     useful article embodying that design.

     ``Sec. 1309. Infringement

       ``(a) Acts of Infringement.--Except as provided in 
     subjection (b), it shall be infringement of the exclusive 
     rights in a design protected under this chapter for any 
     person, without the consent of the owner of the design, 
     within the United States and during the term of such 
     protection, to--
       ``(1) make, have made, or import, for sale or for use in 
     trade, any infringing article as defined in subsection (e); 
     or
       ``(2) sell or distribute for sale or for use in trade any 
     such infringing article.
       ``(b) Acts of Sellers and Distributors.--A seller or 
     distributor of an infringing article who did not make or 
     import the article shall be deemed to have infringed on a 
     design protected under this chapter only if that person--
       ``(1) induced or acted in collusion with a manufacturer to 
     make, or an importer to import such article, except that 
     merely purchasing or giving an order to purchase such article 
     in the ordinary course of business shall not of itself 
     constitute such inducement or collusion; or
       ``(2) refused or failed, upon the request of the owner of 
     the design, to make a prompt and full disclosure of that 
     person's source of such article, and that person orders or 
     reorders such article after receiving notice by registered or 
     certified mail of the protection subsisting in the design.
       ``(c) Acts Without Knowledge.--It shall not be infringement 
     under this section to make, have made, import, sell, or 
     distribute, any article embodying a design which was created 
     without knowledge that a design was protected under this 
     chapter and was copied from such protected design.
       ``(d) Acts in Ordinary Course of Business.--A person who 
     incorporates into that person's product of manufacture an 
     infringing article acquired from others in the ordinary 
     course of business, or who, without knowledge of the 
     protected design embodied in an infringing article, makes or 
     processes the infringing article for the account of another 
     person in the ordinary course of business, shall not be 
     deemed to have infringed the rights in that design under this 
     chapter except under a condition contained in paragraph (1) 
     or (2) of subsection (b). Accepting an order or reorder from 
     the source of the infringing article shall be deemed ordering 
     or reordering within the meaning of subsection (b)(2).
       ``(e) Infringing Article Defined.--As used in this section, 
     an `infringing article' is any article the design of which 
     has been copied from a design protected under this chapter, 
     without the consent of the owner of the protected design. An 
     infringing article is not an illustration or picture of a 
     protected design in an advertisement,

[[Page H10062]]

     book, periodical, newspaper, photograph, broadcast, motion 
     picture, or similar medium. A design shall not be deemed to 
     have been copied from a protected design if it is original 
     and not substantially similar in appearance to a protected 
     design.
       ``(f) Establishing Originality.--The party to any action or 
     proceeding under this chapter who alleges rights under this 
     chapter in a design shall have the burden of establishing the 
     design's originality whenever the opposing party introduces 
     an earlier work which is identical to such design, or so 
     similar as to make prima facie showing that such design was 
     copied from such work.
       ``(g) Reproduction for Teaching or Analysis.--It is not an 
     infringement of the exclusive rights of a design owner for a 
     person to reproduce the design in a useful article or in any 
     other form solely for the purpose of teaching, analyzing, or 
     evaluating the appearance, concepts, or techniques embodied 
     in the design, or the function of the useful article 
     embodying the design.

     ``Sec. 1310. Application for registration

       ``(a) Time Limit for Application for Registration.--
     Protection under this chapter shall be lost if application 
     for registration of the design is not made within two years 
     after the date on which the design is first made public.
       ``(b) When Design Is Made Public.--A design is made public 
     when an existing useful article embodying the design is 
     anywhere publicly exhibited, publicly distributed, or offered 
     for sale or sold to the public by the owner of the design or 
     with the owner's consent.
       ``(c) Application by Owner of Design.--Application for 
     registration may be made by the owner of the design.
       ``(d) Contents of Application.--The application for 
     registration shall be made to the Administrator and shall 
     state--
       ``(1) the name and address of the designer or designers of 
     the design;
       ``(2) the name and address of the owner if different from 
     the designer;
       ``(3) the specific name of the useful article embodying the 
     design;
       ``(4) the date, if any, that the design was first made 
     public, if such date was earlier than the date of the 
     application;
       ``(5) affirmation that the design has been fixed in a 
     useful article; and
       ``(6) such other information as may be required by the 
     Administrator.
     The application for registration may include a description 
     setting forth the salient features of the design, but the 
     absence of such a description shall not prevent registration 
     under this chapter.
       ``(e) Sworn Statement.--The application for registration 
     shall be accompanied by a statement under oath by the 
     applicant or the applicant's duly authorized agent or 
     representative, setting forth, to the best of the applicant's 
     knowledge and belief--
       ``(1) that the design is original and was created by the 
     designer or designers named in the application;
       ``(2) that the design has not previously been registered on 
     behalf of the applicant or the applicant's predecessor in 
     title; and
       ``(3) that the applicant is the person entitled to 
     protection and to registration under this chapter.
     If the design has been made public with the design notice 
     prescribed in section 1306, the statement shall also describe 
     the exact form and position of the design notice.
       ``(f) Effect of Errors.--(1) Error in any statement or 
     assertion as to the utility of the useful article named in 
     the application under this section, the design of which is 
     sought to be registered, shall not affect the protection 
     secured under this chapter.
       ``(2) Errors in omitting a joint designer or in naming an 
     alleged joint designer shall not affect the validity of the 
     registration, or the actual ownership or the protection of 
     the design, unless it is shown that the error occurred with 
     deceptive intent.
       ``(g) Design Made in Scope of Employment.--In a case in 
     which the design was made within the regular scope of the 
     designer's employment and individual authorship of the design 
     is difficult or impossible to ascribe and the application so 
     states, the name and address of the employer for whom the 
     design was made may be stated instead of that of the 
     individual designer.
       ``(h) Pictorial Representation of Design.--The application 
     for registration shall be accompanied by two copies of a 
     drawing or other pictorial representation of the useful 
     article embodying the design, having one or more views, 
     adequate to show the design, in a form and style suitable for 
     reproduction, which shall be deemed a part of the 
     application.
       ``(i) Design in More Than One Useful Article.--If the 
     distinguishing elements of a design are in substantially the 
     same form in different useful articles, the design shall be 
     protected as to all such useful articles when protected as to 
     one of them, but not more than one registration shall be 
     required for the design.
       ``(j) Application for More Than One Design.--More than one 
     design may be included in the same application under such 
     conditions as may be prescribed by the Administrator. For 
     each design included in an application the fee prescribed for 
     a single design shall be paid.

     ``Sec. 1311. Benefit of earlier filing date in foreign 
       country

       ``An application for registration of a design filed in the 
     United States by any person who has, or whose legal 
     representative or predecessor or successor in title has, 
     previously filed an application for registration of the same 
     design in a foreign country which extends to designs of 
     owners who are citizens of the United States, or to 
     applications filed under this chapter, similar protection to 
     that provided under this chapter shall have that same effect 
     as if filed in the United States on the date on which the 
     application was first filed in such foreign country, if the 
     application in the United States is filed within 6 months 
     after the earliest date on which any such foreign application 
     was filed.

     ``Sec. 1312. Oaths and acknowledgments

       ``(a) In General.--Oaths and acknowledgments required by 
     this chapter--
       ``(1) may be made--
       ``(A) before any person in the United States authorized by 
     law to administer oaths; or
       ``(B) when made in a foreign country, before any diplomatic 
     or consular officer of the United States authorized to 
     administer oaths, or before any official authorized to 
     administer oaths in the foreign country concerned, whose 
     authority shall be proved by a certificate of a diplomatic or 
     consular officer of the United States; and
       ``(2) shall be valid if they comply with the laws of the 
     State or country where made.
       ``(b) Written Declaration in Lieu of Oath.--(1) The 
     Administrator may by rule prescribe that any document which 
     is to be filed under this chapter in the Office of the 
     Administrator and which is required by any law, rule, or 
     other regulation to be under oath, may be subscribed to by a 
     written declaration in such form as the Administrator may 
     prescribe, and such declaration shall be in lieu of the oath 
     otherwise required.
       ``(2) Whenever a written declaration under paragraph (1) is 
     used, the document containing the declaration shall state 
     that willful false statements are punishable by fine or 
     imprisonment, or both, pursuant to section 1001 of title 18, 
     and may jeopardize the validity of the application or 
     document or a registration resulting therefrom.

     ``Sec. 1313. Examination of application and issue or refusal 
       of registration

       ``(a) Determination of Registrability of Design; 
     Registration.--Upon the filing of an application for 
     registration in proper form under section 1310, and upon 
     payment of the fee prescribed under section 1316, the 
     Administrator shall determine whether or not the application 
     relates to a design which on its face appears to be subject 
     to protection under this chapter, and, if so, the Register 
     shall register the design. Registration under this subsection 
     shall be announced by publication. The date of registration 
     shall be the date of publication.
       ``(b) Refusal To Register; Reconsideration.--If, in the 
     judgment of the Administrator, the application for 
     registration relates to a design which on its face is not 
     subject to protection under this chapter, the Administrator 
     shall send to the applicant a notice of refusal to register 
     and the grounds for the refusal. Within 3 months after the 
     date on which the notice of refusal is sent, the applicant 
     may, by written request, seek reconsideration of the 
     application. After consideration of such a request, the 
     Administrator shall either register the design or send to the 
     applicant a notice of final refusal to register.
       ``(c) Application To Cancel Registration.--Any person who 
     believes he or she is or will be damaged by a registration 
     under this chapter may, upon payment of the prescribed fee, 
     apply to the Administrator at any time to cancel the 
     registration on the ground that the design is not subject to 
     protection under this chapter, stating the reasons for the 
     request. Upon receipt of an application for cancellation, the 
     Administrator shall send to the owner of the design, as shown 
     in the records of the Office of the Administrator, a notice 
     of the application, and the owner shall have a period of 3 
     months after the date on which such notice is mailed in which 
     to present arguments to the Administrator for support of the 
     validity of the registration. The Administrator shall also 
     have the authority to establish, by regulation, conditions 
     under which the opposing parties may appear and be heard 
     in support of their arguments. If, after the periods 
     provided for the presentation of arguments have expired, 
     the Administrator determines that the applicant for 
     cancellation has established that the design is not 
     subject to protection under this chapter, the 
     Administrator shall order the registration stricken from 
     the record. Cancellation under this subsection shall be 
     announced by publication, and notice of the 
     Administrator's final determination with respect to any 
     application for cancellation shall be sent to the 
     applicant and to the owner of record.

     ``Sec. 1314. Certification of registration

       ``Certificates of registration shall be issued in the name 
     of the United States under the seal of the Office of the 
     Administrator and shall be recorded in the official records 
     of the Office. The certificate shall state the name of the 
     useful article, the date of filing of the application, the 
     date of registration, and the date the design was made 
     public, if earlier than the date of filing of the 
     application, and shall contain a reproduction of the drawing 
     or other pictorial representation of the design. If a 
     description of the salient features of the design appears in 
     the application, the description shall also appear in the 
     certificate. A certificate of registration shall be admitted 
     in any court as prima facie evidence of the facts stated in 
     the certificate.

     ``Sec. 1315. Publication of announcements and indexes

       ``(a) Publications of the Administrator.--The Administrator 
     shall publish lists and indexes of registered designs and 
     cancellations of designs and may also publish the drawings or 
     other pictorial representations of registered designs for 
     sale or other distribution.
       ``(b) File of Representatives of Registered Designs.--The 
     Administrator shall establish and maintain a file of the 
     drawings or other pictorial representations of registered 
     designs. The file shall be available for use by the public 
     under such conditions as the Administrator may prescribe.

[[Page H10063]]

     ``Sec. 1316. Fees

       ``The Administrator shall by regulation set reasonable fees 
     for the filing of applications to register designs under this 
     chapter and for other services relating to the administration 
     of this chapter, taking into consideration the cost of 
     providing these services and the benefit of a public record.

     ``Sec. 1317. Regulations

       ``The Administrator may establish regulations for the 
     administration of this chapter.

     ``Sec. 1318. Copies of records

       ``Upon payment of the prescribed fee, any person may obtain 
     a certified copy of any official record of the Office of the 
     Administrator that relates to this chapter. That copy shall 
     be admissible in evidence with the same effect as the 
     original.

     ``Sec. 1319. Correction of errors in certificates

       ``The Administrator may, by a certificate of correction 
     under seal, correct any error in a registration incurred 
     through the fault of the Office, or, upon payment of the 
     required fee, any error of a clerical or typographical nature 
     occurring in good faith but not through the fault of the 
     Office. Such registration, together with the certificate, 
     shall thereafter have the same effect as if it had been 
     originally issued in such corrected form.

     ``Sec. 1320. Ownership and transfer

       ``(a) Property Right in Design.--The property right in a 
     design subject to protection under this chapter shall vest in 
     the designer, the legal representatives of a deceased 
     designer or of one under legal incapacity, the employer for 
     whom the designer created the design in the case of a design 
     made within the regular scope of the designer's employment, 
     or a person to whom the rights of the designer or of such 
     employer have been transferred. The person in whom the 
     property right is vested shall be considered the owner of the 
     design.
       ``(b) Transfer of Property Right.--The property right in a 
     registered design, or a design for which an application for 
     registration has been or may be filed, may be assigned, 
     granted, conveyed, or mortgaged by an instrument in writing, 
     signed by the owner, or may be bequeathed by will.
       ``(c) Oath or Acknowledgement of Transfer.--An oath or 
     acknowledgment under section 1312 shall be prima facie 
     evidence of the execution of an assignment, grant, 
     conveyance, or mortgage under subsection (b).
       ``(d) Recordation of Transfer.--An assignment, grant, 
     conveyance, or mortgage under subsection (b) shall be void as 
     against any subsequent purchaser or mortgagee for a valuable 
     consideration, unless it is recorded in the Office of the 
     Administrator within 3 months after its date of execution or 
     before the date of such subsequent purchase or mortgage.

     ``Sec. 1321. Remedy for infringement

       ``(a) In General.--The owner of a design is entitled, after 
     issuance of a certificate of registration of the design under 
     this chapter, to institute an action for any infringement 
     of the design.
       ``(b) Review of Refusal To Register.--(1) Subject to 
     paragraph (2), the owner of a design may seek judicial review 
     of a final refusal of the Administrator to register the 
     design under this chapter by bringing a civil action, and may 
     in the same action, if the court adjudges the design subject 
     to protection under this chapter, enforce the rights in that 
     design under this chapter.
       ``(2) The owner of a design may seek judicial review under 
     this section if--
       ``(A) the owner has previously duly filed and prosecuted to 
     final refusal an application in proper form for registration 
     of the design;
       ``(B) the owner causes a copy of the complaint in the 
     action to be delivered to the Administrator within 10 days 
     after the commencement of the action; and
       ``(C) the defendant has committed acts in respect to the 
     design which would constitute infringement with respect to a 
     design protected under this chapter.
       ``(c) Administrator as Party to Action.--The Administrator 
     may, at the Administrator's option, become a party to the 
     action with respect to the issue of registrability of the 
     design claim by entering an appearance within 60 days after 
     being served with the complaint, but the failure of the 
     Administrator to become a party shall not deprive the court 
     of jurisdiction to determine that issue.
       ``(d) Use of Arbitration To Resolve Dispute.--The parties 
     to an infringement dispute under this chapter, within such 
     time as may be specified by the Administrator by regulation, 
     may determine the dispute, or any aspect of the dispute, by 
     arbitration. Arbitration shall be governed by title 9. The 
     parties shall give notice of any arbitration award to the 
     Administrator, and such award shall, as between the parties 
     to the arbitration, be dispositive of the issues to which it 
     relates. The arbitration award shall be unenforceable until 
     such notice is given. Nothing in this subsection shall 
     preclude the Administrator from determining whether a design 
     is subject to registration in a cancellation proceeding under 
     section 1313(c).

     Sec. 1322. Injunctions

       ``(a) In General.--A court having jurisdiction over actions 
     under this chapter may grant injunctions in accordance with 
     the principles of equity to prevent infringement of a design 
     under this chapter, including, in its discretion, prompt 
     relief by temporary restraining orders and preliminary 
     injunctions.
       ``(b) Damages for Injunctive Relief Wrongfully Obtained.--A 
     seller or distributor who suffers damage by reason of 
     injunctive relief wrongfully obtained under this section has 
     a cause of action against the applicant for such injunctive 
     relief and may recover such relief as may be appropriate, 
     including damages for lost profits, cost of materials, loss 
     of good will, and punitive damages in instances where the 
     injunctive relief was sought in bad faith, and, unless the 
     court finds extenuating circumstances, reasonable attorney's 
     fees.

     ``Sec. 1323. Recovery for infringement

       ``(a) Damages.--Upon a finding for the claimant in an 
     action for infringement under this chapter, the court shall 
     award the claimant damages adequate to compensate for the 
     infringement. In addition, the court may increase the damages 
     to such amount, not exceeding $50,000 or $1 per copy, 
     whichever is greater, as the court determines to be just. The 
     damages awarded shall constitute compensation and not a 
     penalty. The court may receive expert testimony as an aid to 
     the determination of damages.
       ``(b) Infringer's Profits.--As an alternative to the 
     remedies provided in subsection (a), the court may award the 
     claimant the infringer's profits resulting from the sale of 
     the copies if the court finds that the infringer's sales are 
     reasonably related to the use of the claimant's design. In 
     such a case, the claimant shall be required to prove only the 
     amount of the infringer's sales and the infringer shall be 
     required to prove its expenses against such sales.
       ``(c) Statute of Limitations.--No recovery under subsection 
     (a) or (b) shall be had for any infringement committed more 
     than 3 years before the date on which the complaint is filed.
       ``(d) Attorney's Fees.--In an action for infringement under 
     this chapter, the court may award reasonable attorney's fees 
     to the prevailing party.
       ``(e) Disposition of Infringing and Other Articles.--The 
     court may order that all infringing articles, and any plates, 
     molds, patterns, models, or other means specifically adapted 
     for making the articles, be delivered up for destruction or 
     other disposition as the court may direct.

     ``Sec. 1324. Power of court over registration

       ``In any action involving the protection of a design under 
     this chapter, the court, when appropriate, may order 
     registration of a design under this chapter or the 
     cancellation of such a registration. Any such order shall be 
     certified by the court to the Administrator, who shall make 
     an appropriate entry upon the record.

     ``Sec. 1325. Liability for action on registration 
       fraudulently obtained

       ``Any person who brings an action for infringement knowing 
     that registration of the design was obtained by a false or 
     fraudulent representation materially affecting the rights 
     under this chapter, shall be liable in the sum of $10,000, or 
     such part of that amount as the court may determine. That 
     amount shall be to compensate the defendant and shall be 
     charged against the plaintiff and paid to the defendant, in 
     addition to such costs and attorney's fees of the defendant 
     as may be assessed by the court.

     ``Sec. 1326. Penalty for false marking

       ``(a) In General.--Whoever, for the purpose of deceiving 
     the public, marks upon, applies to, or uses in advertising in 
     connection with an article made, used, distributed, or sold, 
     a design which is not protected under this chapter, a design 
     notice specified in section 1306, or any other words or 
     symbols importing that the design is protected under this 
     chapter, knowing that the design is not so protected, shall 
     pay a civil fine of not more than $500 for each such offense.
       ``(b) Suit by Private Persons.--Any person may sue for the 
     penalty established by subsection (a), in which event one-
     half of the penalty shall be awarded to the person suing and 
     the remainder shall be awarded to the United States.

     ``Sec. 1327. Penalty for false representation

       ``Whoever knowingly makes a false representation materially 
     affecting the rights obtainable under this chapter for the 
     purpose of obtaining registration of a design under this 
     chapter shall pay a penalty of not less than $500 and not 
     more than $1,000, and any rights or privileges that 
     individual may have in the design under this chapter shall be 
     forfeited.

     ``Sec. 1328. Enforcement by Treasury and Postal Service

       ``(a) Regulations.--The Secretary of the Treasury and the 
     United States Postal Service shall separately or jointly 
     issue regulations for the enforcement of the rights set forth 
     in section 1308 with respect to importation. Such regulations 
     may require, as a condition for the exclusion of articles 
     from the United States, that the person seeking exclusion 
     take any one or more of the following actions:
       ``(1) Obtain a court order enjoining, or an order of the 
     International Trade Commission under section 337 of the 
     Tariff Act of 1930 excluding, importation of the articles.
       ``(2) Furnish proof that the design involved is protected 
     under this chapter and that the importation of the articles 
     would infringe the rights in the design under this chapter.
       ``(3) Post a surety bond for any injury that may result if 
     the detention or exclusion of the articles proves to be 
     unjustified.
       ``(b) Seizure and Forfeiture.--Articles imported in 
     violation of the rights set forth in section 1308 are subject 
     to seizure and forfeiture in the same manner as property 
     imported in violation of the customs laws. Any such forfeited 
     articles shall be destroyed as directed by the Secretary of 
     the Treasury or the court, as the case may be, except that 
     the articles may be returned to the country of export 
     whenever it is shown to the satisfaction of the Secretary of 
     the Treasury that the importer had no reasonable grounds for 
     believing that his or her acts constituted a violation of the 
     law.

[[Page H10064]]

     ``Sec. 1329. Relation to design patent law

       ``The issuance of a design patent under title 35 for an 
     original design for an article of manufacture shall terminate 
     any protection of the original design under this chapter.

     ``Sec. 1330. Common law and other rights unaffected

       ``Nothing in this chapter shall annul or limit--
       ``(1) common law or other rights or remedies, if any, 
     available to or held by any person with respect to a design 
     which has not been registered under this chapter; or
       ``(2) any right under the trademark laws or any right 
     protected against unfair competition.

     ``Sec. 1331. Administrator; Office of the Administrator

       ``In this chapter, the `Administrator' is the Register of 
     Copyrights, and the `Office of the Administrator' and the 
     `Office' refer to the Copyright Office of the Library of 
     Congress.

     ``Sec. 1332. No retroactive effect

       ``Protection under this chapter shall not be available for 
     any design that has been made public under section 1310(b) 
     before the effective date of this chapter.''.

     SEC. 503. CONFORMING AMENDMENTS.

       (a) Table of Chapters.--The table of chapters for title 17, 
     United States Code, is amended by adding at the end the 
     following:

``13. Protection of Original Designs........................1301''.....

       (b) Jurisdiction of District Courts Over Design Actions.--
     (1) Section 1338(c) of title 28, United States Code, is 
     amended by inserting ``, and to exclusive rights in designs 
     under chapter 13 of title 17,'' after ``title 17''.
       (2)(A) The section heading for section 1338 of title 28, 
     United States Code, is amended by inserting ``designs,'' 
     after ``mask works,''.
       (B) The item relating to section 1338 in the table of 
     sections at the beginning of chapter 85 of title 28, United 
     States Code, is amended by inserting ``designs,'' after 
     ``mask works,''.
       (c) Place for Bringing Design Actions.--(1) Section 1400(a) 
     of title 28, United States Code, is amended by inserting ``or 
     designs'' after ``mask works''.
       (2) The section heading for section 1400 of title 28, 
     United States Code is amended to read as follows:

     ``Sec. Patents and copyrights, mask works, and designs''.

       (3) The item relating to section 1400 in the table of 
     sections at the beginning of chapter 87 of title 28, United 
     States Code, is amended to read as follows:

``1400.  Patents and copyrights, mask works, and designs.''.

       (d) Actions Against the United States.--Section 1498(e) of 
     title 28, United States Code, is amended by inserting ``, and 
     to exclusive rights in designs under chapter 13 of title 
     17,'' after ``title 17''.

     SEC. 504. JOINT STUDY OF THE EFFECT OF THIS TITLE.

       (a) In general.--Not later than 1 year after the date of 
     the enactment of this Act, and not later than 2 years after 
     such date of enactment, the Register of Copyrights and the 
     Commissioner of Patents and Trademarks shall submit to the 
     Committees on the Judiciary of the Senate and the House of 
     Representatives a joint report evaluating the effect of the 
     amendments made by this title.
       (b) Elements For Consideration.--In carrying out subsection 
     (a), the Register of Copyrights and the Commissioner of 
     Patents and Trademarks shall consider--
       (1) the extent to which the amendments made by this title 
     has been effective in suppressing infringement of the design 
     of vessel hulls;
       (2) the extent to which the registration provided for in 
     chapter 13 of title 17, United States Code, as added by this 
     title, has been utilized;
       (3) the extent to which the creation of new designs of 
     vessel hulls have been encouraged by the amendments made by 
     this title;
       (4) the effect, if any, of the amendments made by this 
     title on the price of vessels with hulls protected under such 
     amendments; and
       (5) such other considerations as the Register and the 
     Commissioner may deem relevant to accomplish the purposes of 
     the evaluation conducted under subsection (a).

     SEC. 505. EFFECTIVE DATE.

       The amendments made by sections 502 and 503 shall take 
     effect on the date of the enactment of this Act and shall 
     remain in effect until the end of the 2-year period beginning 
     on such date of enactment. No cause of action based on 
     chapter 13 of title 17, United States Code, as added by this 
     title, may be filed after the end of that 2-year period.

       Amend the title so as to read: ``A bill to amend title 17, 
     United States Code, to implement the World Intellectual 
     Property Organization Copyright Treaty and Performances and 
     Phonograms Treaty, and for other purposes.''.
       And the Senate agree to the same.

     From the Committee on Commerce, for consideration of the 
     House bill, and the Senate amendment, and modifications 
     committed to conference:
     Tom Bliley,
     Billy Tauzin,
     John D. Dingell,
     From the Committee on the Judiciary, for consideration of the 
     House bill, and the Senate amendment, and modifications 
     committed to conference:
     Henry J. Hyde,
     Howard Coble,
     Bob Goodlatte,
     John Conyers, Jr.,
     Howard L. Berman,
                                Managers on the Part of the House.

     Orrin G. Hatch,
     Strom Thurmond,
     Patrick J. Leahy,
                               Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

       The managers on the part of the House and the Senate at the 
     conference on the disagreeing votes of the two Houses on the 
     amendment of the Senate to the bill (H.R. 2281) to amend 
     title 17, United States Code, to implement the World 
     Intellectual Property Organization Copyright Treaty and 
     Performances and Phonograms Treaty, and for other purposes, 
     submit the following joint statement to the House and the 
     Senate in explanation of the effect of the action agreed upon 
     by the managers and recommended in the accompanying 
     conference report:
       The Senate amendment struck all of the House bill after the 
     enacting clause and inserted a substitute text.
       The House recedes from its disagreement to the amendment of 
     the Senate with an amendment that is a substitute for the 
     House bill and the Senate amendment. The differences between 
     the House bill, the Senate amendment, and the substitute 
     agreed to in conference are noted below, except for clerical 
     corrections, conforming changes made necessary by agreements 
     reached by the conferees, and minor drafting and clerical 
     changes.

                 Title I--WIPO Treaties Implementation

       This title implements two new intellectual property 
     treaties, the WIPO Copyright Treaty and the WIPO Performances 
     and Phonograms Treaty, signed in Geneva, Switzerland in 
     December 1996.


                        section 101. short title

       The House recedes to the Senate section 101. This section 
     sets forth the short title of the Act. As between the short 
     titles in the House bill and the Senate amendment, it is 
     believed that the title in Section 101 of the Senate 
     amendment more accurately reflects the effect of the Act.


                   section 102. technical amendments

       The Senate recedes to House section 102. This section makes 
     technical and conforming amendments to the U.S. Copyright Act 
     in order to comply with the obligations of the two WIPO 
     treaties.


  section 103. copyright protection systems and copyright management 
                              information

       The Senate recedes to House section 103 with modification. 
     The two new WIPO Treaties include substantively identical 
     provisions on technological measures of protection (also 
     commonly referred to as the ``black box'' or 
     ``anticircumvention'' provisions). These provisions require 
     contracting parties to provide ``adequate legal protection 
     and effective legal remedies against the circumvention of 
     effective technological measures that are used by authors in 
     connection with the exercise of their rights under this 
     Treaty or the Berne Convention and that restrict acts, in 
     respect of their works, which are not authorized by the 
     authors concerned or permitted by law.''
       Both of the new WIPO treaties also include substantively 
     identical provisions requiring contracting parties to protect 
     the integrity of copyright management information. The 
     treaties define copyright management information as 
     ``information which identifies the work, the author of the 
     work, the owner of any right in the work, or information 
     about the terms and conditions of use of the work, and any 
     numbers or codes that represent such information, when any of 
     these items of information is attached to a copy of a work or 
     appears in connection with the communication of a work to the 
     public.''
       Legislation is required to comply with both of these 
     provisions. To accomplish this, both the House bill and the 
     Senate amendment, in section 103, would add a new chapter 
     (chapter twelve) to title 17 of the United States Code. This 
     new chapter twelve includes five sections--(1) section 1201, 
     which prohibits the circumvention of technological measures 
     of protection; (2) section 1202, which protects the integrity 
     of copyright management information; (3) section 1203, which 
     provides for civil remedies for violations of sections 1201 
     and 1202; (4) section 1204, which provides for criminal 
     penalties for violations of sections 1201 and 1202; and (5) 
     section 1205, which provides a savings clause to preserve the 
     effectiveness of federal and state laws in protecting 
     individual privacy on the Internet. The House bill and the 
     Senate amendment differ in several respects, primarily 
     related to the scope and availability of exemptions from 
     the prohibitions under section 1201.
       Section 1201(a)(1)--Rulemaking by the Librarian of 
     Congress. Section 1201(a)(1)(C) provides that the 
     determination of affected classes of works described in 
     subparagraph (A) shall be made by the Librarian of Congress 
     ``upon the recommendation of the Register of Copyrights, who 
     shall consult with the Assistant Secretary for Communications 
     and Information of the Department of Commerce and report and 
     comment on his or her views in making such recommendation.'' 
     The determination will be made in a rulemaking proceeding on 
     the record. It is the intention of the conferees that, as is 
     typical with other rulemaking under title 17, and in 
     recognition of the expertise of the Copyright Office, the 
     Register of Copyrights will conduct the rulemaking, including 
     providing notice of the rulemaking, seeking comments from the 
     public, consulting with the Assistant Secretary for 
     Communications and Information

[[Page H10065]]

     of the Department of Commerce and any other agencies that are 
     deemed appropriate, and recommending final regulations in the 
     report to the Librarian.
       Section 1201(a) and 1202--technological measures. It is the 
     understanding of the conferees that technological measures 
     will most often be developed through consultative, private 
     sector efforts by content owners, and makers of computers, 
     consumer electronics and telecommunications devices. The 
     conferees expect this consultative approach to continue as a 
     constructive and positive method. One of the benefits of such 
     consultation is to allow testing of proposed technologies to 
     determine whether there are adverse effects on the ordinary 
     performance of playback and display equipment in the 
     marketplace, and to take steps to eliminate or substantially 
     mitigate those effects before technologies are introduced. 
     The public interest is well-served by such activities.
       Persons may also choose to implement a technological 
     measure without vetting it through an inter-industry 
     consultative process, or without regard to the input of 
     affected parties. Under such circumstances, such a 
     technological measure may materially degrade or otherwise 
     cause recurring appreciable adverse effects on the authorized 
     performance or display of works. Steps taken by the makers or 
     servicers of consumer electronics, telecommunications or 
     computing products used for such authorized performances or 
     displays solely to mitigate these adverse effects on product 
     performance (whether or not taken in combination with other 
     lawful product modifications) shall not be deemed a violation 
     of sections 1201(a) or (b).
       However, this construction is not meant to afford 
     manufacturers or servicers an opportunity to give persons 
     unauthorized access to protected content, or to exercise the 
     rights under the Copyright Act of copyright owners in such 
     works, under the guise of ``correcting'' a performance 
     problem that results from the implementation of a particular 
     technological measure. Thus, it would violate sections 
     1201(a) or (b) for a manufacturer or servicer to take 
     remedial measures if they are held out for or undertaken 
     with, or result in equipment with only limited commercially 
     significant use other than, the prohibited purpose of 
     allowing users to gain unauthorized access to protected 
     content or to exercise the rights under the Copyright Act of 
     copyright owners in such works.
       With regard to section 1202, product adjustments made to 
     eliminate recurring appreciable adverse effects on the 
     authorized performance or display of works caused by 
     copyright management information will not be deemed a 
     violation of section 1202 unless such steps are held out for 
     or undertaken with a prohibited purpose, or the requisite 
     knowledge, of inducing, enabling, facilitating or concealing 
     infringement of rights of copyright owners under the 
     Copyright Act.
       Section 1201(e) and 1202(d)--Law enforcement, intelligence, 
     and other government activities. Sections 1201(e) and 1202(d) 
     create and exception to the prohibitions of sections 1201 and 
     1202 for the lawfully authorized investigative, protective, 
     or intelligence activities of an officer, agent, or employee 
     of, the United States, a State, or a political subdivision of 
     a State, or of persons acting pursuant to a contract with 
     such an entity. The anticircumvention provisions of this 
     legislation might be read to prohibit some aspects of the 
     information security testing that is critical to preventing 
     cyber attacks against government computers, computer systems, 
     and computer networks. The conferees have added language to 
     sections 1201(e) and 1202(d) to make it clear that the 
     anticircumvention prohibition does not apply to lawfully 
     authorized information security activities of the federal 
     government, the states, political subdivisions of states, or 
     persons acting within the scope of their government 
     information security contract. In this way, the bill will 
     permit the continuation of information security activities 
     that protect the country against one of the greatest threats 
     to our national security as well as to our economic security.
       At the same time, this change is narrowly drafted so that 
     it does not open the door to the very piracy the treaties are 
     designed to prevent. For example, the term ``information 
     security'' activities is intended to include presidential 
     directives and executive orders concerning the 
     vulnerabilities of a computer, computer system, or computer 
     network. By this, the conferees intent to include the 
     recently-issued Presidential Decision Directive 63 on 
     Critical Infrastructure Protection. PDD-63 contains a number 
     of initiatives to ensure that the United States takes all 
     necessary measures to swiftly eliminate any significant 
     vulnerability to both physical and cyber attacks on the 
     nation's critical infrastructures, including especially our 
     cyber systems.
       The Term ``computer system'' has the same definition for 
     purposes of this section as that term is defined in the 
     Computer Security Act, 15 U.S.C. Sec. 278g-3(d)(1).
       Subsection 1201(g)--Encryption Research. Subsection (g) 
     permits the circumvention of access control technologies in 
     certain circumstances for the purpose of good faith 
     encryption research. The conferees note that section 
     1201(g)(3)(A) does not imply that the results of encryption 
     research must be disseminated. There is no requirement that 
     legitimate encryption researchers disseminate their findings 
     in order to quality for the encryption research exemption in 
     section 1201(g). Rather, the subsection describes 
     circumstances in which dissemination, if any, would be 
     weighed in determining eligibility.
       Section 1201(j)--Security Testing. Subsection (j) clarifies 
     the intended effect of the bill with respect to information 
     security. The conferees understand this act to prohibit 
     unauthorized circumvention of technological measures applied 
     to works protected under title 17. The conferees recognize 
     that technological measures may also be used to protect the 
     integrity and security of computers, computer systems or 
     computer networks. It is not the intent of this act to 
     prevent persons utilizing technological measures in respect 
     of computers, computer systems or networks from testing the 
     security value and effectiveness of the technological 
     measures they employ, or from contracting with companies that 
     specialize in such security testing.
       Thus, in addition to the exception for good faith 
     encryption research contained in Section 1201(g), the 
     conferees have adopted Section 1201(j) to resolve additional 
     issues related to the effect of the anti-circumvention 
     provision on legitimate information security activities. 
     First, the conferees were concerned that Section 1201(g)'s 
     exclusive focus on encryption-related research does not 
     encompass the entire range of legitimate information 
     security activities. Not every technological means that is 
     used to provide security relies on encryption technology, 
     or does so to the exclusion of other methods. Moreover, an 
     individual who is legitimately testing a security 
     technology may be doing so not to advance the state of 
     encryption research or to develop encryption products, but 
     rather to ascertain the effectiveness of that particular 
     security technology.
       The conferees were also concerned that the anti-
     circumvention provision of Section 1201(a) could be construed 
     to inhibit legitimate forms of security testing. It is not 
     unlawful to test the effectiveness of a security measure 
     before it is implemented to protect the work covered under 
     title 17. Not it is unlawful for a person who has implemented 
     a security measure to test its effectiveness. In this 
     respect, the scope of permissible security testing under the 
     Act should be the same as permissible testing of a simple 
     door lock; a prospective buyer may test the lock at the store 
     with the store's consent, or may purchase the lock and test 
     it at home in any manner that he or she sees fit--for 
     example, by installing the lock on the front door and seeing 
     if it can be picked. What that person may not do, however, it 
     test the lock once it has been installed on someone's else's 
     door, without the consent of the person whose property is 
     protected by the lock.
       In order to resolve these concerns, Section 1201(j) creates 
     a exception of ``security testing.'' Section 1201(j)(1) 
     defines ``security testing'' as obtaining access to a 
     computer, computer system, or computer network for the sole 
     purpose of testing, investigating, or correcting a security 
     flaw or vulnerability, provided that the person engaging in 
     such testing is doing so with the consent of the owner or 
     operator of the computer, computer system, or computer 
     network. Section 102(j)(2) provides that, notwithstanding the 
     provisions of Section 1201(a), a person may engage in such 
     testing, provided that the act does not constitute 
     infringement or violate any other applicable law. Section 
     1201(j)(3) provides a non-exclusive list of factors that a 
     court shall consider in determining whether a person benefits 
     from this exception.
       Section 1201(j)(4) permits an individual, notwithstanding 
     the prohibition contained in Section 1201(a)(2), to develop, 
     produce, distribute, or employ technological means for the 
     sole purpose of performing acts of good faith security 
     testing under Section 1201(j)(2), provided that technological 
     means do not otherwise violate section 1201(a)(2). It it 
     Congress' intent for this subsection to have application only 
     with respect to good faith security testing. The intent is to 
     ensure that parties engaged in good faith security testing 
     have the tools available to them to complete such acts. The 
     conferees understand that such tools may be coupled with 
     additional tools that serve purposes wholly unrelated to the 
     purposes of this Act. Eligibility for this exemption should 
     not be precluded because these tools are coupled in such a 
     way. The exemption would not be available, however, when such 
     tools are coupled with a product or technology that violates 
     section 1201(a)(2),
       Section 1201(k)--Certain Analog Devices and Certain 
     Technological Measures.--The conferees included a provision 
     in the final legislation to require that analog video 
     cassette recorders must conform to the two forms of copy 
     control technology that are in wide use in the market today--
     the automatic gain control copy control technology and the 
     colorstripe copy control technology. Neither are currently 
     required elements of any format of video recorder, and the 
     ability of each technology to work as intended depends on the 
     consistency of design of video recorders or on incorporation 
     of specific response elements in video recorders. 
     Moreover, they do not employ encryption or scrambling of 
     the content being protected.
       As a consequence, these analog copy control technologies 
     may be rendered ineffective either by redesign of video 
     recorders or by intervention of ``black box'' devices or 
     software ``hacks''. The conferees believe, and specifically 
     intend, that the general circumvention prohibition in Section 
     1201(b)(2) will prohibit the manufacture and sale of ``black 
     box'' devices that defeat these technologies. Moreover, the 
     conferees believe and intend that the term ``technology'' 
     should be read to include the software ``hacks'' of this

[[Page H10066]]

     type, and that such ``hacks'' are equally prohibited by the 
     general circumvention provision. Devices have been marketed 
     that claim to ``fix'' television picture disruptions 
     allegedly caused by these technologies. However, as described 
     in more detail below, there is no justification for the 
     existence of any intervention device to ``fix'' such problems 
     allegedly caused by these technologies, including ``fixes'' 
     allegedly related to stabilization or clean up of the picture 
     quality. Such devices should be seen for what they are--
     circumvention devices prohibited by this legislation.
       The conferees emphasize that this particular provision is 
     being included in this bill in order to deal with a very 
     specific situation involving the protection of analog 
     television programming and prerecorded movies and other 
     audiovisual works in relation to recording capabilities of 
     ordinary consumer analog video cassette recorders. The 
     conferees also acknowledge that numerous other activities are 
     underway in the private sector to develop, test, and apply 
     copy control technologies, particularly in the digital 
     environment. Subject to the other requirements of this 
     section, circumvention of these technologies may be 
     prohibited under this Act. Moreover, in some cases, these 
     technologies are subject to licensing arrangements that 
     provide legally enforceable obligations. The conferees 
     applaud these undertakings and encourage their continuation, 
     including the inter-industry meetings and working groups that 
     are essential to their success. If, as a result of such 
     activities, the participants request further Congressional 
     action, the conferees expect that the Congress, and the 
     committees involved in this Conference specifically, will 
     consider whether additional statutory requirements are 
     necessary and appropriate.
       Before agreeing to include this requirement in the final 
     legislation, the conferees assured themselves in relation to 
     two critical issues--that these analog copy control 
     technologies do not create ``playability'' problems on normal 
     consumer electronics products and that the intellectual 
     property necessary for the operation of these technologies 
     will be available on reasonable and non-discriminatory terms.
       In relation to the playability issue, the conferees have 
     received authoritative assurances that playability issues 
     have already been resolved in relation to the current 
     specifications for these technologies and that an inter-
     industry forum will be established to resolve any playability 
     issues that may arise in the future in relation to either 
     revisions to the copy control specifications or development 
     of new consumer technologies and products.
       As further explanation on the playability issue, the 
     conferees understand that the existing technologies were the 
     subject of extensive testing that included all or virtually 
     all of the major consumer electronics manufacturers and that 
     this testing resulted in modification of the specifications 
     to assure that the technologies do not produce noticeable 
     adverse effects on the normal display of content that is 
     protected utilizing these technologies. Currently, 
     all manufacturers are effectively ``on notice'' of the 
     existence of these technologies and their specifications 
     and should be able to design their products to avoid any 
     adverse effects.
       In relation to the intellectual property licensing issues, 
     the owner of the analog copy control intellectual property--
     Macrovision Corporation--has written a letter to the Chairman 
     of the Conference Committee to provide the following 
     assurances in relation to the licenses for intellectual 
     property necessary to implement these analog copy control 
     technologies: (1) that its intellectual property is generally 
     available on reasonable and non-discriminatory terms, as that 
     phrase is used in normal industry parlance; (2) that 
     manufacturers of the analog video cassette recorders that are 
     required by this legislation to conform to the technologies 
     will be provided royalty-free licenses for the use of its 
     relevant intellectual property in any device that plays back 
     packaged, prerecorded content, or that reads and responds to 
     or generates or carries forward the elements of these 
     technologies associated with such content; (3) in the same 
     circumstances as described in (2), other manufacturers of 
     devices that generate, carry forward, or read and respond to 
     these technologies will be provided licenses carrying only 
     modest fees (in the range of $25,000--in current dollars--
     initial payment and lesser amounts as recurring annual fees); 
     (4) that manufacturers of other products, including set-top-
     boxes and devices that perform similar functions (including 
     integrated devices containing such functionality), will 
     receive licenses on reasonable and non-discriminatory terms, 
     including royalty terms and other considerations; and (5) 
     that playability issues will not be the subject of license 
     requirements but rather will be handled through an inter-
     industry forum that is being established for this purpose. 
     The conferees emphasize the need for the technology's 
     proprietor to adhere to these assurances in all future 
     licensing.
       With regard to the specific elements of this provision:
       First, these technologies operate within the general NTSC 
     television signal environment, and the conferees understand 
     that this means that they work in relation to television 
     signals that are of the 525/60 interlaced type, i.e., the 
     standard definition television signal that has been used in 
     the United States. The S-video and Hi-8 versions of covered 
     devises are, of course, included with the coverage. Further, 
     the new format analog video cassette recorders that are 
     covered by paragraph (1)(A)(v) are those that receive the 
     525/60 interlaced type of input.
       Second, it is the conferees understanding that not all 
     analog video signals will utilize this technology, and, 
     obviously, a device that receives a signal that does not 
     contain these technologies need not read and respond to what 
     might have been there if the signal had utilized the 
     technology.
       Third, a violation of paragraph (1) is a form of 
     circumvention under Section 1201(b)(1). Accordingly, the 
     enforcement of this provision is through the penalty 
     provisions applicable to Section 1201 generally. A violation 
     of paragraph (2) is also a violation of Section 1201 and 
     hence subject to those penalty provisions. The inclusion of 
     paragraph (5) with regard to enforcement of paragraph (2) is 
     intended merely to allow the particular statutory damage 
     provisions of Section 1203 to apply to violations of this 
     subsection.
       Fourth, the conferees understand that minor modifications 
     may be necessary in the specifications for these technologies 
     and intend that any such modifications (and related new 
     ``revised specifications'') should not negate in any way the 
     requirements imposed by this subsection. The modifications 
     should, however, be sufficiently minor that manufacturers of 
     analog video cassette recorders should be free to continue to 
     design products to conform to these technologies on the basis 
     of the specifications existing, or actually implemented by 
     manufacturers, as of the date of enactment of this Act.
       Fifth, the provisions of paragraph (2) are intended to 
     operate to allow copyright owners to use these technologies 
     to prevent the making of a viewable copy of a pay-per-view, 
     near video on demand, or video on demand transmission or 
     prerecorded tape or disc containing one or more motion 
     pictures or other audiovisual works, at the same time as 
     consumers are afforded their customary ability to make analog 
     copies of programming offered through other channels or 
     services. Copyright owners may utilize these technologies to 
     prevent the making of a ``second generation'' copy where the 
     original transmission was through a pay television service 
     (such as HBO, Showtime, or the like). The basic and extended 
     basic tiers of programming services, whether provided through 
     cable or other wireline, satellite, or future over the air 
     terrestrial systems, may not be encoded with these 
     technologies at all. The inclusion of paragraph (2)(D) is not 
     intended to be read to authorize the making of a copy by 
     consumers or others in relation to pay-per-view, near video 
     on demand or video-on-demand transmissions or prerecorded 
     media.
       Sixth, the exclusion of professional analog video cassette 
     recorders is necessary in order to allow the motion picture, 
     broadcasting, and other legitimate industries and individual 
     businesses to obtain and use equipment that is essential to 
     their normal, lawful business operations. As a further 
     explanation of the types of equipment that are to be subject 
     to this exception, the following factors should be used in 
     evaluating whether a specific product is a ``professional'' 
     product:
       (1) whether, in the preceding year, only a small number of 
     the devices that are of the same kind, nature, and 
     description were sold to consumers other than professionals 
     employing such devices in a lawful business or industrial 
     use;
       (2) whether the device has special features designed for 
     use by professionals employing the device in a lawful 
     business or industrial use;
       (3) whether the advertising, promotional and descriptive 
     literature or other materials used to market the device were 
     directed at professionals employing such devices in a lawful 
     business or industrial use;
       (4) whether the distribution channels and retail outlets 
     through which the device is distributed and sold are ones 
     used primarily to make sales to professionals employing such 
     devices in a lawful business or industrial use; and
       (5) whether the uses to which the device is most commonly 
     put are those associated with the work of professionals 
     employing the device in a lawful business or industrial use.
       Seventh, paragraph (1)(B) contains a number of points 
     worthy of explanation. In general, the requirement in 
     paragraph (1)(B) is that manufacturers not materially reduce 
     the responsiveness of their existing products and is also 
     intended to be carried forward in the introduction of new 
     models. This is particularly important in relation to the 
     four-line colorstripe copy control technology, where the 
     basic requirement in the statute is that a model of a 
     recorder not be modified to eliminate conformance with the 
     four-line colorstripe technology and where the standard for 
     ``conformance'' is simply that the lines be visible and 
     distracting in the display of a copy of material that was 
     protected with the technology when the copy is played back, 
     in normal viewing mode, by the recorder that made the copy 
     and displayed on a reference display device. Specific 
     elements of that requirement include:
       (1) ``Normal viewing mode'' is intended to mean the viewing 
     of a program in its natural sequence at the regular speed for 
     playback and is not intended to allow ``AGC-stripping viewing 
     modes'' to be developed. It is intended to exclude still 
     frame or slow motion viewing from this definition.
       (2) The ``reference display device'' concept is used in the 
     legislation to acknowledge that manufacturers of analog video 
     cassette

[[Page H10067]]

     recorders may use a specific display device to test their 
     responsiveness to the colorstripe technology and then may use 
     the level of such responsiveness as their baseline to achieve 
     compliance. The reference display device for manufacturers 
     that make televisions is intended to be a television set also 
     made by that manufacturer. Where an analog video cassette 
     recorder manufacturer does not make display devices, that 
     manufacturer may choose a display device made by another 
     manufacturer to serve as a reference. In general, a reference 
     display device should be one that is generally representative 
     of display devices in the U.S. market at the time of the 
     testing.
       (3) The conferees intend that the word ``model'' should be 
     interpreted broadly and is not to be determined exclusively 
     by alphabetic, numeric, name, or other label. Courts should 
     look with suspicion at ``new models'' that reduce or 
     eliminate conformance with this technology, as compared with 
     that manufacturer's ``previous models.'' Further, a 
     manufacturer should not replace a previous model that showed 
     intense lines with a model that shows weak lines in the 
     played back picture.
       For any new entrant into the VHS format analog video 
     cassette recorder manufacturing business, the legislation 
     provides that such a manufacturer will build its initial 
     devices so as to be in conformance with the four-line 
     colorstripe copy control technology based on the playback on 
     a reference display device and thereafter not modify the 
     design so that its products no longer conform to this 
     technology.
       Finally, the proprietor of the colorstripe copy control 
     technology has supplied the Committee with a description of 
     how the technology should work so as to provide the desired 
     copy protection benefits. That description is as follows: the 
     colorstripe copy control technology works as intended if a 
     recorder records a signal that, when played back by the 
     playback function of that recorder in the normal viewing 
     mode, exhibits on a reference display device a significant 
     distortion of color on the lines which begin with a 
     colorstripe colorburst, or a complete or intermittent loss of 
     color throughout at least 50% of the visible image. While the 
     conferees realize that there may be variations among 
     recorders in relation to this technology, the conferees 
     expect the affected manufacturers to work with the proprietor 
     of the technology to ensure that the basic goal of content 
     protection through this technology is achieved. The conferees 
     understand that content protection through this technology is 
     to the manufacturers' benefit, as well, since it encourages 
     content providers to release more valuable content than they 
     might otherwise release without such protection. The 
     conferees further intend that manufacturers should seek to 
     respond to the colorstripe technology at the highest feasible 
     level and should not modify their recorder designs, or 
     substitute weaker responding recorders for stronger 
     responding recorders in order to avoid the requirements of 
     this subsection.
       Eighth, the type of colorstrip copy control technology to 
     which the legislation requires conformance is the four-line 
     ``half burst'' type version of this technology. The content 
     provider may shift, in an adaptive fashion, from no 
     colorstripe encoding to the two-line version to the four-line 
     version, in order to balance the copy control features of 
     the technology against the possible playback distortion 
     that the four-line technology occasionally creates. This 
     legislation requires conformance only to the four-line 
     version, but prohibits any effort to eliminate or reduce 
     materially the effectiveness of the two-line version in 
     relation to any particular analog video cassette recorder 
     that, in fact, provides a response to the two-line 
     version. The legislation also applies the ``encoding 
     rules'' in paragraph (2) to either the two-line or four-
     line versions of this technology.


 Section 104. Evaluation of Impact of Copyright Law and Amendments on 
           Electronic Commerce and Technological Development

       The Senate recedes to House section 105 with modification.


                      Section 105. Effective Date

       The Senate recedes to House section 106. This section sets 
     forth the effective date of the amendments made by this 
     title. The corresponding sections of the House bill and the 
     Senate amendment are substantively identical.

      Title II--Online Copyright Infringement Liability Limitation

       Title II preserves strong incentives for service providers 
     and copyright owners to cooperate to detect and deal with 
     copyright infringements that take place in the digital 
     networked environment. At the same time, it provides greater 
     certainty to service providers concerning their legal 
     exposure for infringements that may occur in the course of 
     their activities.


                        Section 201. Short Title

       The Senate recedes to House section 201. This section sets 
     forth the short title of the Act. The Senate accepts the 
     House formulation.


    Section 202. Limitations on Liability for Copyright Infringement

       The Senate recedes to House section 202 with modification. 
     This section amends chapter 5 of the Copyright Act (17 U.S.C. 
     501, et. seq.) to create a new section 512, titled 
     ``Limitations on liability relating to material online.'' New 
     Section 512 contains limitations on service providers' 
     liability for five general categories of activity set forth 
     in subsections (a) through (d) and subsection (g). As 
     provided in subsection (l), Section 512 is not intended to 
     imply that a service provider is or is not liable as an 
     infringer either for conduct that qualifies for a limitation 
     of liability or for conduct that fails to so qualify. Rather, 
     the limitations of liability apply if the provider is found 
     to be liable under existing principles of law. This 
     legislation is not intended to discourage the service 
     provider from monitoring its service for infringing material. 
     Courts should not conclude that the service provider loses 
     eligibility for limitations on liability under section 512 
     solely because it engaged in a monitoring program.
       The limitations in subsections (a) through (d) protect 
     qualifying service providers from liability for all monetary 
     relief for direct, vicarious and contributory infringement. 
     Monetary relief is defined in subsection (k)(2) as 
     encompassing damages, costs, attorneys' fees, and any other 
     form of monetary payment. These subsections also limit 
     injunctive relief against qualifying service providers to the 
     extent specified in subsection (j). To qualify for these 
     protections, service providers must meet the conditions set 
     forth in subsection (i), and service providers' activities at 
     issue must involve a function described in subsection (a), 
     (b), (c), (d) or (g), respectively. The liability limitations 
     apply to networks ``operated by or for the 
     service provider,'' thereby protecting both service 
     providers who offer a service and subcontractors who may 
     operate parts of, or an entire, system or network for 
     another service provider.
       Subsection (b) provides for a limitation on liability with 
     respect to certain acts of ``system caching''. Paragraphs (5) 
     and (6) of this subsection refer to industry standard 
     communications protocols and technologies that are only now 
     in the initial stages of development and deployment. The 
     conferees expect that the Internet industry standards setting 
     organizations, such as the Internet Engineering Task Force 
     and the World Wide Web Consortium, will act promptly and 
     without delay to establish these protocols so that subsection 
     (b) can operate as intended.
       Subsection (e) is included by the conferees in order to 
     clarify the provisions of the bill with respect to the 
     liability of nonprofit institutions of higher learning that 
     act as service providers. This provision serves as a 
     substitute for section 512(c)(2) of the House bill and for 
     the study proposed by section 204 of the Senate amendment.
       In general, Title II provides that a university or other 
     public or nonprofit institution of higher education which is 
     also a ``service provider'' (as that term is defined in title 
     II) is eligible for the limitations on liability provided in 
     title II to the same extent as any other service provider.
       However, the conferees recognize that the university 
     environment is unique. Ordinarily, a service provider may 
     fail to qualify for the liability limitations in Title II 
     simply because the knowledge or actions of one of its 
     employees may be imputed to it under basic principles of 
     respondeat superior and agency law. The special relationship 
     which exists between universities and their faculty members 
     (and their graduate student employees) when they are engaged 
     in teaching or research is different from the ordinary 
     employer-employee relationship. Since independence--freedom 
     of thought, word and action--is at the core of academic 
     freedom, the actions of university faculty and graduate 
     student teachers and researchers warrant special 
     consideration in the context of this legislation. This 
     special consideration is embodied in new subsection (e), 
     which provides special rules for determining whether 
     universities, in their capacity as a service provider, may or 
     may not be liable for acts of copyright infringement by 
     faculty members or graduate students in certain 
     circumstances.
       Subsection (e)(1) provides that the online infringing 
     actions of faculty members or graduate student employees, 
     which occur when they are ``performing a teaching or research 
     function,'' will not be attributed to an institution of 
     higher education in its capacity as their employer for 
     purposes of section 512, if certain conditions are met. For 
     the purposes of subsections (a) and (b) of section 512, such 
     faculty member or graduate student shall be considered to be 
     a person other than the institution, and for the purposes of 
     subsections (c) and (d) of section 512 the faculty member's 
     or graduate student's knowledge or awareness of his or her 
     infringing activities will not be attributed to the 
     institution, when they are performing a teaching or research 
     function and the conditions in paragraphs (A)-(C) are met.
       When the faculty member or the graduate student employee is 
     performing a function other than teaching or research, this 
     subsection provides no protection against liability for the 
     institution if infringement occurs. For example, a faculty 
     member or graduate student is performing a function other 
     than teaching or research when the faculty member or graduate 
     student is exercising institutional administrative 
     responsibilities, or is carrying out operational 
     responsibilities that relate to the institution's function as 
     a service provider. Further, for the exemption to apply on 
     the basis of research activity, the research must be a 
     genuine academic exercise--i.e. a legitimate scholarly or 
     scientific investigation or inquiry--rather than an 
     activity which is claimed to be research

[[Page H10068]]

     but is undertaken as a pretext for engaging in infringing 
     activity.
       In addition to the ``teaching or research function'' test, 
     the additional liability protections contained in subsection 
     (e)(1) do not apply unless the conditions in paragraphs (A) 
     through (C) are satisfied. First, paragraph (A) requires that 
     the infringing activities must not involve providing online 
     access to instructional materials that are ``required or 
     recommended'' for a course taught by the infringing faculty 
     member and/or the infringing graduate student within the last 
     three years. The reference to ``providing online access'' to 
     instructional materials includes the use of e-mail for that 
     purpose. The phrase ``required or recommended'' is intended 
     to refer to instructional materials that have been formally 
     and specifically identified in a list of course materials 
     that is provided to all students enrolled in the course for 
     credit; it is not intended, however, to refer to the other 
     materials which, from time to time, the faculty member or 
     graduate student may incidentally and informally bring to the 
     attention of students for their consideration during the 
     course of instruction.
       Second, under paragraph (B) the institution must not have 
     received more than two notifications of claimed infringement 
     with respect to the particular faculty member or particular 
     graduate student within the last three years. If more than 
     two such notifications have been received, the institution 
     may be considered to be on notice of a pattern of infringing 
     conduct by the faculty member or graduate student, and the 
     limitation of subsection (e) does not apply with respect to 
     the subsequent infringing actions of that faculty member or 
     that graduate student. Where more than two notifications have 
     previously been received with regard to a particular faculty 
     member or graduate student, the institution will only become 
     potentially liable for the infringing actions of that faculty 
     member or that graduate student. Any notification of 
     infringement that gives rise to a cause of action for 
     misrepresentation under subsection (f) does not count for 
     purposes of paragraph (B).
       Third, paragraph (C) states that the institution must 
     provide to the users of its system or network--whether they 
     are administrative employees, faculty, or students--materials 
     that accurately describe and promote compliance with 
     copyright law. The legislation allows, but does not require, 
     the institutions to use relevant informational materials 
     published by the U.S. Copyright Office in satisfying the 
     condition imposed by paragraph (C).
       Subsection (e)(2) defines the terms and conditions under 
     which an injunction may be issued against an institution of 
     higher education that is a service provider in cases to which 
     subsection (e)(1) applies. First, all the factors and 
     considerations taken into account by a court under 17 U.S.C. 
     Sec. 502 will apply in the case of any application for an 
     injunction in cases covered by this subsection. In addition, 
     the court is also required to consider the factors of 
     particular significance in the digital environment listed in 
     subsection (j)(2). Finally, the provisions contained in 
     (j)(3), concerning notice to the service provider and the 
     opportunity to appear, are also applicable in cases to which 
     subsection (e)(1) applies.
       The conferees also want to emphasize that nothing contained 
     in subsection (e) should be interpreted to establish new 
     liability for institutions of higher education, including 
     under the doctrines of respondeat superior, or of 
     contributory liability, where liability does not now exist. 
     Further, subsection (e) does not alter any of the existing 
     limitations on the rights of copyright owners that are 
     already contained in the Copyright Act. So, for example, 
     subsection (e) has no impact on the fair use (section 107) 
     doctrine or the availability of fair use in a university 
     setting; similarly, section 110 of the Copyright Act 
     dealing with classroom performance and distance learning 
     is not changed by subsection (e). In this regard, 
     subsection (e) is fully consistent with the rest of 
     section 512, which neither creates any new liabilities for 
     service providers, nor affects any defense to infringement 
     available to a service provider. Finally, subsection (e) 
     has no applicability to any case asserting that a 
     university is liable for copyright infringement in any 
     capacity other than as a service provider.


                      Section 203. Effective Date

       The Senate recedes to House section 203. This section sets 
     forth the effective date of the amendments made by this 
     title. The corresponding sections of the House bill and the 
     Senate amendment are substantively identical.

     Title III--Computer Maintenance or Repair Copyright Exemption


                            Sections 301-302

       The Senate recedes to the House sections 301-302. These 
     sections effect a minor, yet important clarification in 
     section 117 of the Copyright Act to ensure that the lawful 
     owner or lessee of a computer machine may authorize an 
     independent service provider--a person unaffiliated with 
     either the owner or lessee of the machine--to activate the 
     machine for the sole purpose of servicing its hardware 
     components. When a computer is activated, certain software or 
     parts thereof is automatically copied into the machine's 
     random access memory, or ``RAM''. A clarification in the 
     Copyright Act is necessary in light of judicial decisions 
     holding that such copying is a ``reproduction'' under section 
     106 of the Copyright Act (17 U.S.C. 106),\1\ thereby calling 
     into question the right of an independent service provider 
     who is not the licensee of the computer program resident on 
     the client's machine to even activate that machine for the 
     purpose of servicing the hardware components. This section 
     does not in any way alter the law with respect to the scope 
     of the term ``reproduction'' as it is used the Copyright Act. 
     Rather, this section it is narrowly crafted to achieve the 
     objectives just described--namely, ensuring that an 
     independent service provider may turn on a client's computer 
     machine in order to service its hardware components, provided 
     that such service provider complies with the provisions of 
     this section designed to protect the rights of copyright 
     owners of computer software. The corresponding sections of 
     the House bill and the Senate amendment are substantively 
     identical.
---------------------------------------------------------------------------
     \1\ See MAI Sys. Corp. v. Peak Computer, 991 F. 2d 511 (9th 
     Cir. 1993), cert. denied, 114 S. Ct. 671 (1994).
---------------------------------------------------------------------------

                   Title IV--Miscellaneous Provisions


   Sec. 401. Provisions Relating to the Commissioner of Patents and 
               Trademarks and the Register of Copyrights

       The Senate recedes to the House sections 401-402 with 
     modification. This section provides parity in compensation 
     between the Register of Copyrights and the Commissioner of 
     Patent and Trademarks and clarifies the duties and functions 
     of the Register of Copyrights.
       The new subsection to be added to 17 U.S.C. Sec. 701 sets 
     forth in express statutory language the functions presently 
     performed by the Register of Copyrights under her 
     general administrative authority under subsection 701(a). 
     Like the Library of Congress, its parent agency, the 
     Copyright Office is a hybrid entity that historically has 
     performed both legislative and executive or administrative 
     functions. Eltra Corp. v. Ringer, 579 F.2d 294 (4th Cir. 
     1978). Existing subsection 701(a) addresses some of the 
     latter functions. New subsection 701(b) is intended to 
     codify the other traditional roles of the Copyright Office 
     and to confirm the Register's existing areas of 
     jurisdiction.
       Paragraph (1) of new subsection 701(b) reflects the 
     Copyright Office's longstanding role as advisor to Congress 
     on matters within its competence. This includes copyright and 
     all matters within the scope of title 17 of the U.S. Code. 
     Such advice, which often takes the form of testimony of 
     pending legislation, is separate from testimony or other 
     recommendations by the Administration pursuant to the 
     President's concurrent constitutional power to make 
     recommendations to Congress.
       Paragraph (2) reflects the Copyright Office's longstanding 
     role in advising federal agencies on matters within its 
     competence. For example, the Copyright Office advises the 
     U.S. Trade Representative and the State Department on an 
     ongoing basis on the adequacy of foreign copyright laws, and 
     serves as a technical consultant to those agencies in 
     bilateral, regional and multilateral consultations or 
     negotiations with other countries on copyright-related 
     issues.
       Paragraph (3) reflects the Copyright Office's longstanding 
     role as a key participant in international meetings of 
     various kinds, including as part of U.S. delegations as 
     authorized by the Executive Branch, serving as substantive 
     experts on matters within the Copyright Office's competence. 
     Recent examples of the Copyright Office acting in the 
     capacity include its central role on the U.S. delegation that 
     negotiated the two new WIPO treaties at the 1996 Diplomatic 
     Conference in Geneva, and its ongoing contributions of 
     technical assistance in the TRIPS Council of the World Trade 
     Organization and the Register's role as a featured speaker at 
     numerous WIPO conferences.
       Paragraph (4) describes the studies and programs that the 
     Copyright Office has long carried out as the agency 
     responsible for administering the copyright law and other 
     chapters of title 17. Among the most important of these 
     studies historically was a series of comprehensive reports on 
     various issues produced in the 1960's as the foundation of 
     the last general revision of U.S. copyright law, enacted as 
     the 1976 Copyright Act. Most recently the Copyright Office 
     has completed reports on the cable and satellite compulsory 
     licenses, legal protection for databases, and the economic 
     and policy implications of term extension. Consistent with 
     the Copyright Office's role as a legislative branch agency, 
     these studies have often included specific policy 
     recommendations to Congress. The reference to ``programs'' 
     includes such projects as the conferences the Copyright 
     Office cosponsored in 1996-97 on the subject of technology-
     based intellectual property management, and the International 
     Copyright Institutes that the Copyright Office has conducted 
     for foreign government officials at least annually over the 
     past decade, often in cooperation with WIPO.
       Paragraph (5) makes clear that the functions and duties set 
     forth in this subsection are illustrative, not exhaustive. 
     The Register of Copyrights would continue to be able to carry 
     out other functions under her general authority under 
     subsection 701(a), or as Congress may direct. The latter may 
     include specific requests by Committees for studies and 
     recommendations on subjects within the Copyright Office's 
     area of competence. It may also include, when appropriate or 
     required for constitutional reasons, directions to the Office 
     in separate legislation.


                     sec. 402. ephemeral recordings

       The Senate recedes to House section 411 with modification. 
     This section amends section 112 of the Copyright Act (17 
     U.S.C. 112)

[[Page H10069]]

     to address two issues concerning the application of the 
     ephemeral recording exemption in the digital age. The first 
     of these issues is the relationship between the ephemeral 
     recording exemption and the Digital Performance Right in 
     Sound Recordings Act of 1995 (``DPRA''). The DPRA granted 
     sound recording copyright owners the exclusive right to 
     perform their works publicly by means of digital audio 
     transmission, subject to certain limitations, particularly 
     those set forth in section 114(d). Among those limitations is 
     an exemption for nonsubscription broadcast transmissions, 
     which are defined as those made by terrestrial broadcast 
     stations licensed as such by the FCC. 17 U.S.C. 
     Sec. Sec. 114(d)(1)(A)(iii) and (j)(2). The ephemeral 
     recording exemption presently privileges certain activities 
     of a transmitting organization when it is entitled to 
     transmit a performance or display under a license or transfer 
     of copyright ownership or under the limitations on exclusive 
     rights in sound recordings specified by section 114(a). The 
     House bill and the Senate amendment propose changing the 
     existing language of the ephemeral recording exemption 
     (redesignated as 112(a)(1)) to extend explicitly to 
     broadcasters the same privilege they already enjoy with 
     respect to analog broadcasts.
       The second of these issues is the relationship between the 
     ephemeral recording exemption and the anticircumvention 
     provisions that the bill adds as section 1201 of the 
     Copyright Act. Concerns were expressed that if use of copy 
     protection technologies became widespread, a transmitting 
     organization might be prevented from engaging in its 
     traditional activities of assembling transmission programs 
     and making ephemeral recordings permitted by section 112 for 
     purposes of its own transmissions within its local service 
     area and of archival preservation and security. To address 
     this concern, the House bill and the Senate amendment propose 
     adding to section 112 a new paragraph that permits 
     transmitting organizations to engage in activities that 
     otherwise would violate section 1201(a)(1) in certain limited 
     circumstances when necessary for the exercise of the 
     transmitting organization's privilege to make ephemeral 
     recordings under redesignated section 112(a)(1). By way of 
     example, if a radio station could not make a permitted 
     ephemeral recording from a commercially available phonorecord 
     without violating section 1201(a)(1), then the radio station 
     could request from the copyright owner the necessary means of 
     making a permitted ephemeral recording. If the copyright 
     owner did not then either provide a phonorecord that could be 
     reproduced or otherwise provide the necessary means of making 
     a permitted ephemeral recording from the phonorecord already 
     in the possession of the radio station, the radio station 
     would not be liable for violating section 1201(a)(1) for 
     taking the steps necessary for engaging in activities 
     permitted under section 112(a)(1). The radio station would, 
     of course, be liable for violating section 1201(a)(1) if it 
     engaged in activities prohibited by that section in other 
     than the limited circumstances permitted by section 
     112(a)(1).
       House section 411 is modified in two respects. First, the 
     House provision is modified by adding a new paragraph (3) to 
     include specific reference to section 114(f) in section 
     112(a) of the Copyright Act. The addition to section 112(a) 
     of a reference to section 114(f) is intended to make clear 
     that subscription music services, webcasters, satellite 
     digital audio radio services and others with statutory 
     licenses for the performance of sound recordings under 
     section 114(f) are entitled to the benefits of section 112(a) 
     with repsect to the sound recordings they transmit.
       Second, the House provision is modified in paragraph (4). 
     This amendment to section 112(a) is intended to clarify the 
     application of section 112(a) to FCC-licensed broadcasters 
     with respect to digital nonsubscription broadcast 
     transmissions. Notwithstanding this clarification, neither 
     the amendment in paragraph (4) of section 411 nor the 
     creation of a statutory license in section 112(e) is in any 
     manner intended to narrow the scope of section 112(a) or the 
     entitlement of any transmitting entity to the exemption 
     provided thereunder with respect to copies made for other 
     transmissions.


    Section 403. Limitations on Exclusive Rights; Distance Education

       The Senate recedes to House section 412. The corresponding 
     sections of the House bill and the Senate amendment are 
     substantively identical.


           Section 404. Exemption for Libraries and Archives

       The Senate recedes to House section 413. The corresponding 
     sections of the House bill and the Senate amendment are 
     substantively identical.


 Section 405. Scope of Exclusive Rights in Sound Recordings; Ephemeral 
                               Recordings

       The Senate recedes to section 415 of the House bill with 
     modification.
       The amendments to sections 112 and 114 of the Copyright Act 
     that are contained in this section of the bill are intended 
     to achieve two purposes: first, to further a stated objective 
     of Congress when it passed the Digital Performance Right in 
     Sound Recordings Act of 1995 (``DPRA'') to ensure that 
     recording artists and record companies will be protected as 
     new technologies affect the ways in which their creative 
     works are used; and second, to create fair and efficient 
     licensing mechanisms that address the complex issues facing 
     copyright owners and copyright users as a result of the rapid 
     growth of digital audio services. This section contains 
     amendments to sections 112 and 114 of Title 17 as follows:
       Section 114(d)(1). Exempt Transmissions and 
     Retransmissions. Section 114(d)(1)(A) is amended to delete 
     two exemptions that were either the cause of confusion as to 
     the application of the DPRA to certain nonsubscription 
     services (especially webcaster) or which overlapped with 
     other exemptions (such as the exemption in subsection 
     (A)(iii) for nonsubscription broadcast transmissions). The 
     deletion of these two exemptions is not intended to affect 
     the exemption for nonsubscription broadcast transmissions.
       Section 114(d)(2). Statutory Licensing of Certain 
     Transmissions. The amendment to subsection (d)(2) extends the 
     availability of a statutory license for subscription 
     transmissions to cover certain eligible nonsubscription 
     transmissions. ``Eligible nonsubscription transmissions'' are 
     defined in subsection (j)(6). The amendment subdivides 
     subsection (d)(2) into three subparagraphs ((A), (B), and 
     (C)), each of which contains conditions of a statutory 
     license for certain nonexempt subscription and eligible 
     nonsubscription transmissions.
       The conferees note that if a sound recording copyright 
     owner authorizes a transmitting entity to take an action with 
     respect to that copyright owner's sound recordings that is 
     inconsistent with the requirements set forth in section 
     114(d)(2), the conferees do not intend that the transmitting 
     entity be disqualified from obtaining a statutory license by 
     virtue of such authorized actions.
       The conferees intend that counts considering claims of 
     infringement involving violation of the requirements set 
     forth in section 114(d)(2) should judiciously apply the 
     doctrine of de minimis non curat lex. A transmitting entity's 
     statutory license should not be lost, and it becomes subject 
     to infringement damages for transmissions that have been made 
     as part of its service, merely because, through error, it has 
     committed nonmaterial violations of these conditions that, 
     once recognized, are not repeated. Similarly, if a service 
     has multiple channels, the transmitting entity's statutory 
     license should not be lost, and it become subject to 
     infringement damages for transmissions that have been made 
     on other channels, merely because of a violation in 
     connection with one channel. Conversely, courts should not 
     apply such doctrine in cases in which repeated or 
     intentional violations occur.
       Subparagraph (A) sets forth three conditions of a statutory 
     license applicable to all nonexempt subscription and eligible 
     nonsubscription transmissions. These three conditions are 
     taken from previous subsection (d)(2).
       Subparagraphs (B) and (C) are alternatives: a service is 
     subject to the conditions in one or the other in addition to 
     those in subparagraph (A). Subparagraph (B) contains 
     conditions applicable only to nonexempt subscription 
     transmissions made by a preexisting subscription service in 
     the same transmission medium as was used by the service on 
     July 31, 1998 or a preexisting satellite digital audio radio 
     service. A preexisting subscription service is defined in 
     subsection (j)(11); a preexisting satellite digital audio 
     radio service is defined in (j)(10). The purpose of 
     distinguishing preexisting subscription services making 
     transmissions in the same medium as on July 31, 1998, was to 
     prevent disruption of the existing operations by such 
     services. There was only three such services that exist: DMX 
     (operated by TCI Music), Music Choice (operated by Digital 
     Cable Radio Associates), and the DiSH Network (operated by 
     Muzak). As of July 31, 1998, DMX and Music Choice made 
     transmissions via both cable and satellite media; the DiSH 
     Network was available only via satellite. The purpose of 
     distinguishing the preexisting satellite digital audio radio 
     services is similar. The two preexisting satellite digital 
     audio radio services, CD Radio and American Mobile Radio 
     Corporation, have purchased licenses at auction from the FCC 
     and have begun developing their satellite systems.
       The two conditions contained in subparagraph (B) are taken 
     directly from previous subsection (d)(2). Thus, preexisting 
     satellite digital audio radio services and the historical 
     operations of preexisting subscription services are subject 
     to the same five conditions for eligibility for a statutory 
     license, as set forth in subparagraphs (A) and (B), as have 
     applied previously to these services.
       Subparagraph (C) sets forth additional conditions for a 
     statutory license applicable to all transmissions not subject 
     to subparagraph (B), namely all eligible nonsubscription 
     transmissions, subscription transmissions made by a new 
     subscription service, and subscription transmissions made by 
     a preexisting subscription service other than those made in 
     the same transmission medium. Subparagraph (C) contains nine 
     conditions.
       Subparagraph (C)(i) requires that transmissions subject to 
     a statutory license cannot exceed the sound recording 
     performance complement defined in subsection (j)(13), which 
     is unchanged by this amendment. Subparagraph (C)(i) 
     eliminates this requirement for retransmissions of over-the-
     air broadcast transmissions by a transmitting entity that 
     does not have the right or ability to control the programming 
     of the broadcast station making the initial broadcast 
     transmission, subject to two limitations.
       First, the retransmissions are not eligible for statutory 
     licensing if the retransmitted

[[Page H10070]]

     broadcast transmissions are in digital format and regularly 
     exceed the sound recording performance complement. Second, 
     the retransmissions are not eligible for statutory licensing 
     if the retransmitted broadcast transmissions are in analog 
     format and a substantial portion of the transmissions, 
     measured on a weekly basis, violate the sound recording 
     performance complement. In both cases, however, the 
     retransmitter is disqualified from making its 
     transmissions under a statutory license only if the sound 
     recording copyright owner or its representative notifies 
     the retransmitter in writing that the broadcast 
     transmissions exceed the sound recording performance 
     complement. Once notification is received, the 
     transmitting entity making the retransmissions must cease 
     retransmitting those broadcast transmissions that exceed 
     the sound recording performance complement.
       Subparagraph (C)(ii) imposes limitations on the types of 
     prior announcements, in text, video or audio, that may be 
     made by a service under the statutory license. Services may 
     not publish advance program schedules or make prior 
     announcements of the titles of specific sound recordings or 
     the featured artists to be performed on the service. 
     Moreover, services may not induce or facilitate the advance 
     publication of schedules or the making of prior 
     announcements, such as by providing a third party the list of 
     songs or artists to be performed by the transmitting entity 
     for publication or announcement by the third party. The 
     conferees do not intend that the term ``prior announcement'' 
     preclude a transmitting entity from identifying specific 
     sound recordings immediately before they are performed.
       However, services may generally use the names of several 
     featured recording artists to illustrate the type of music 
     being performed on a particular channel. Subparagraph 
     (C)(iii) addresses limitations for archived programs and 
     continuous programs, which are defined in subsections (j)(2) 
     and (j)(4), respectively. Subparts (I) and (II) address 
     archived programs. Archived programs often are available to 
     listeners indefinitely or for a substantial period of time, 
     thus permitting listeners to hear the same songs on demand 
     any time the visitor wishes. Transmissions that are part of 
     archived programs that are less than five hours long are 
     ineligible for a statutory license. Transmissions that are 
     part of archived programs more than five hours long are 
     eligible only if the archived program is available on the 
     webcaster's site or a related site for two weeks or less. The 
     two-week limitation is to be applied in a reasonable manner 
     to achieve the objectives of this subparagraph, so that, for 
     example, archived programs that have been made available for 
     two weeks are not removed from a site for a short period of 
     time and then made available again. Furthermore, altering an 
     archived program only in insignificant respects, such as by 
     replacing or reordering only a small number of the songs 
     comprising the program, does not render the program eligible 
     for statutory licensing.
       Subparagraph (C)(iii) also limits eligibility for a 
     statutory license to transmissions that are not part of a 
     continuous program of less than three hours duration 
     (subparagraph (C)(iii)(III)). A listener to a continous 
     program hears that portion of the program that is being 
     transmitted to all listeners at the particular time that the 
     listener accesses the program, much like a person who tunes 
     in to an over-the-air broadcast radio station.
       Finally, subparagraph (C)(iii)(IV) limits eligibility for a 
     statutory license to transmissions that are not part of an 
     identifiable program in which performances of sound 
     recordings are rendered in a predetermined order that is 
     transmitted at (a) more than three times in any two week 
     period, which times have been publicly announced in advance, 
     if the program is of less than one hour duration, or (b) more 
     than four times in any two week period, which times have been 
     publicly announced in advance, if the program is one hour or 
     more. It is the conferee's intention that the two-week 
     limitation in subclause (IV) be applied in a reasonable 
     manner consistent with its purpose so that, for example, a 
     transmitting entity does not regularly make all of the 
     permitted repeat performances within several days.
       Subparagraph (C)(iv) states that the transmitting entity 
     may not avail itself of a statutory license if it knowingly 
     performs a sound recording, as part of a service that offers 
     transmissions of visual images contemporaneous with 
     transmissions of sound recordings, in a manner that is likely 
     to cause a listener to believe that there is an affiliation 
     or association between the sound recording copyright owner or 
     featured artist and a particular product or service 
     advertised by the transmitting entity. This would cover, for 
     example, transmitting an advertisement for a particular 
     product or service every time a particular sound recording or 
     artist is transmitted; it would not cover more general 
     practices such as targeting advertisements of particular 
     products or services to specific channels of the service 
     according to user demographics. If, for example, 
     advertisements are transmitted randomly while sound 
     recordings are performed, this subparagraph would be 
     satisfied.
       Subparagraph (C)(v) provides that, in order to qualify for 
     a statutory license, a transmitting entity must cooperate 
     with sound recording copyright owners to prevent a 
     transmission recipient from scanning the transmitting 
     entity's transmissions to select particular sound recordings. 
     In the future, a device or software may be developed that 
     would enable its user to scan one or more digital 
     transmissions to select particular sound recordings or 
     artists requested by its user. Such devices or software would 
     be the equivalent of an on demand service that would not be 
     eligible for the statutory license. Technology may be 
     developed to defeat such scanning, and transmitting entities 
     taking a statutory license are required to cooperate with 
     sound recording copyright owners to prevent such scanning, 
     provided that such cooperation does not impose substantial 
     costs or burdens on the transmitting entity. This requirement 
     does not apply to a satellite digital audio service, 
     including a preexisting satellite digital audio radio 
     service, that is in operation, or that is licensed by the 
     FCC, on or before July 31, 1998.
       Subparagraph (C)(vi) requires that if the technology used 
     by the transmitting entity enables the transmitting entity to 
     limit the making by the transmission recipient of 
     phonorecords in a digital format directly of the 
     transmission, the transmitting entity sets such technology to 
     limit such making of phonorecords to the extent permitted by 
     such technology. The conferees note that some software used 
     to ``stream'' transmissions of sound recordings enables the 
     transmitting entity to disable such direct digital copying of 
     the transmitted data by transmission recipients. In such 
     circumstances the transmitting entity must disable that 
     direct copying function. Likewise, a transmitting entity may 
     not take affirmative steps to cause or induce the making of 
     any copies by a transmission recipient. For example, a 
     transmitting entity may not encourage a transmission 
     recipient to make either digital or analog copies of the 
     transmission such as by suggesting that recipients should 
     record copyrighted programming transmitted by the entity.
       Subparagraph (C)(vii) requires that each sound recording 
     transmitted by the transmitting entity must have been 
     distributed to the public under authority of the copyright 
     owner or provided to the transmitting entity with 
     authorization that the transmitting entity may perform such 
     sound recording. The conferees recognize that a disturbing 
     trend on the Internet is the unauthorized performance of 
     sound recordings not yet released for broadcast or sale to 
     the public. The transmission of such pre-released sound 
     recordings is not covered by the statutory license unless the 
     sound recording copyright owner has given explicit 
     authorization to the transmitting entity. This subparagraph 
     also requires that the transmission be made from a 
     phonorecord lawfully made under the authority of the 
     copyright owner. A phonorecord provided by the copyright 
     owner or an authorized phonorecord purchased through 
     commercial distribution channels would qualify. However, 
     the transmission of bootleg sound recordings (e.g., the 
     recording of a live musical performance without the 
     authority of the performer, as prohibited by Chapter 11) 
     is ineligible for a statutory license.
       Subparagraph (C)(viii) conditions a statutory license on 
     whether a transmitting entity has accommodated and does not 
     interfere with technical measures widely used by sound 
     recording copyright owners to identify or protect their 
     copyrighted works. Thus, the transmitting entity must ensure 
     that widely used forms of identifying information, embedded 
     codes, encryption or the like are not removed during the 
     transmission process, provided that accommodating such 
     measures is technologically feasible, does not impose 
     substantial costs or burdens on the transmitting entity, and 
     does not result in perceptible degradation of the digital 
     audio or video signals being transmitted. This requirement 
     shall not apply to a satellite digital audio service, 
     including a preexisting satellite digital audio radio 
     service, that is in operation, or that is licensed under the 
     authority of the Federal communications Commission, on or 
     before July 31, 1998, to the extent that such service has 
     designed, developed or made commitments to procure equipment 
     or technology that is not compatible with such technical 
     measures before such technical measures are widely adopted by 
     sound recording copyright owners.
       Subparagraph (C)(ix) requires transmitting entities 
     eligible for the statutory license to identify in textual 
     data the title of the sound recording, the title of the album 
     on which the sound recording appears (if any), and the name 
     of the featured recording artist. These titles and names must 
     be made during, but not before, the performance of the sound 
     recording. A transmitting entity must ensure that the 
     identifying information can easily be seen by the 
     transmission recipient in visual form. For example, the 
     information might be displayed by the software player used on 
     a listener's computer to decode and play the sound recordings 
     that are transmitted. Many webcasters already provide such 
     information, but in order to give those who do not an 
     adequate opportunity to do so this obligation does not take 
     effect until one year after the effective date of the 
     amendment. This requirement does not apply to the 
     retransmission of broadcast transmissions by a transmitting 
     entity that does not have the right or ability to control the 
     programming of the broadcast station making the broadcast 
     transmission, or where devices or technology intended for 
     receiving the service that have the capability to display the 
     identifying information are not common in the marketplace.
       Section 114(f). Licenses for Certain Nonexempt 
     Transmissions. Section 114(f) is amended to

[[Page H10071]]

     set forth procedures for determining reasonable rates and 
     terms for those transmissions that qualify for statutory 
     licensing under section 114(d)(2). Section 114(f) is divided 
     into two parts: one applying to transmissions by preexisting 
     subscription services and preexisting satellite digital audio 
     radio services (subsection (f)(1)), and the other applying to 
     transmissions by new subscription services (including 
     subscription transmissions made by a preexisting subscription 
     service other than those that qualify under subsection 
     (f)(1)) as well as eligible nonsubscription transmissions 
     (subsection (f)(2)).
       Subsection (f)(1) provides for procedures applicable to 
     subscription transmission by preexisting subscription 
     services and preexisting satellite digital audio radio 
     services. The conferees note that this subsection applies 
     only to the three services considered 
     preexisting subscription services, DMX, Music Choice and 
     the DiSH Network, and the two services considered 
     preexisting satellite digital audio radio services, CD 
     Radio and American Mobile Radio Corporation. The 
     procedures in this subsection remain the same as those 
     applicable before the amendment, except that the rate 
     currently in effect under prior section 114(f) is extended 
     from December 31, 2000 until December 31, 2001. That rate 
     currently applies to the three preexisting subscription 
     services, and the Conferees take no position on its 
     applicability to the two preexisting satellite digital 
     audio radio services. Likewise, the initiation of the next 
     voluntary negotiation period shall take place in the first 
     week of January 2001 instead of January 2000 (subsection 
     (f)(1)(C)(i)). These extensions are made purely to 
     facilitate the scheduling of proceedings.
       Subsection (f)(1)(B), which sets forth procedures for 
     arbitration in the absence of negotiated license agreement, 
     continues to provide that a copyright arbitration royalty 
     panel should consider the objectives set forth in section 
     801(b)(1) as well as rates and terms for comparable types of 
     subscription services.
       Subsection (f)(2) addresses procedures applicable to 
     eligible nonsubscription transmissions and subscription 
     transmissions by new subscription services. The first such 
     voluntary negotiation proceeding is to commence within 30 
     days after the enactment of this amendment upon publication 
     by the Librarian of Congress of a notice in the Federal 
     Register. The terms and rates established will cover 
     qualified transmissions made between the effective date of 
     this amendment and December 31, 2000, or such other date as 
     the parties agree.
       Subsection (f)(2) directs that rates and terms must 
     distinguish between the different types of eligible 
     nonsubscription transmission services and new subscription 
     services then in operation. The conferees recognize that the 
     nature of qualified transmissions may differ significantly 
     based on a variety of factors. The conferees intend that 
     criteria including, but not limited to, the quantity and 
     nature of the use of sound recordings, and the degree to 
     which use of the services substitutes for or promotes the 
     purchase of phonorecords by consumers may account for 
     differences in rates and terms between different types of 
     transmissions.
       Subsection (f)(2) also directs that a minimum fee should be 
     established for each type of service. A minimum fee should 
     ensure that copyright owners are fairly compensated in the 
     event that other methodologies for setting rates might deny 
     copyright owners an adequate royalty. For example, a 
     copyright arbitration royalty panel should set a minimum fee 
     that guarantees that a reasonable royalty rate is not 
     diminished by different types of marketing practices or 
     contractual relationships. For example, if the base royalty 
     for a service were a percentage of revenues, the minimum fee 
     might be a flat rate per year (or a flat rate per subscriber 
     per year for a new subscription service).
       Also, although subsection (f)(1) remains silent on the 
     setting of a minimum fee for preexisting subscription 
     services and preexisting satellite digital audio radio 
     services, the Conferees do not intend that silence to mean 
     that a minimum fee may or may not be established in 
     appropriate circumstances when setting rates under subsection 
     (f)(1) for preexisting subscription services and preexisting 
     satellite digital audio radio services. Likewise, the absence 
     of criteria that should be taken into account for 
     distinguishing rates and terms for different services in 
     subsection (f)(1) does not mean that evidence relating to 
     such criteria may not be considered when adjusting rates and 
     terms for preexisting subscription services and preexisting 
     satellite digital audio radio services in the future.
       Subsection (f)(2)(B) sets forth procedures in the absence 
     of a negotiated license agreement for rates and terms for 
     qualifying transmissions under this subsection. Consistent 
     with existing law, a copyright arbitration proceeding should 
     be empaneled to determine reasonable rates and terms. The 
     test applicable to establishing rates and terms is what a 
     willing buyer and willing seller would have arrived at in 
     marketplace negotiations. In making that determination, the 
     copyright arbitration royalty panel shall consider economic, 
     competitive and programming information presented by the 
     parties including, but not limited to, the factors set forth 
     in clauses (i) and (ii).
       Subsection (f)(2)(C) specifies that rates and terms for new 
     subscription and eligible nonsubscription transmissions 
     should be adjusted every two years, unless the parties agree 
     as to another schedule. These two-year intervals are based 
     upon the conferees' recognition that the types of 
     transmission services in existence and the media in which 
     they are delivered can change significantly in a short period 
     of time.
       Subsection (j)(2)--``archived program.'' A program is 
     considered an ``archived program'' if it is prerecorded or 
     preprogrammed, available repeatedly on demand to the public 
     and is performed in virtually the same order from the 
     beginning.
       The exception to the definition of ``archived program'' for 
     a recorded event or broadcast transmission is intended to 
     allow webcasters to make available on demand transmissions of 
     recorded events or broadcast shows that do not include 
     performances of entire sound recordings or feature 
     performances of sound recordings (such as a commercially 
     released sound recording used as a theme song), but that 
     instead use sound recordings only in an incidental manner 
     (such as in the case of brief musical transitions in and out 
     of commercials and music played in the background at sporting 
     events). Some broadcast shows may be part of series that do 
     not regularly feature performances of sound recordings but 
     that occasionally prominently include a sound recording (such 
     as a performance of a sound recording in connection with an 
     appearance on the show by the recording artist). The recorded 
     broadcast transmission of the show should not be considered 
     an ``archived program'' merely because of such a prominent 
     performance in a show that is part of a series that does not 
     regularly feature performances of sound recordings. The 
     inclusion of this exception to the definition of ``archived 
     program'' is not intended to impose any new license 
     requirement where the broadcast programmer or syndicator 
     grants the webcaster the right to transmit a sound recording, 
     such as may be the case where the sound recording has been 
     specially created for use in a broadcast show.
       Subsection 114(j)(4)--``continuous program.'' A 
     ``continuous program'' is one that is continuously performed 
     in the same predetermined order. Such a program generally 
     takes the form of a loop whereby the same set of sound 
     recordings is performed repeatedly; rather than stopping at 
     the end of the set, the program automatically restarts 
     generally without interruption. In contrast to an archived 
     program (which always is accessed from the beginning of the 
     program), a transmission recipient typically accesses a 
     continuous program in the middle of the program. Minor 
     alterations in the program should not render a program 
     outside the definition of ``continuous program.''
       Subsection 114(j)(6)--``eligible nonsubscription 
     transmission''. An ``eligible nonsubscription transmission'' 
     is one that meets the following criteria. First, the 
     transmission must be noninteractive and nonsubscription in 
     nature. Second, the transmission must be made as part of a 
     service that provides audio programming consisting in whole 
     or in part of performances of sound recordings. Third, the 
     purpose of the transmission service must be to provide 
     audio or entertainment programming, not to sell, advertise 
     or promote particular goods or services. Thus, for 
     example, an ordinary commercial Web site that was 
     primarily oriented to the promotion of a particular 
     company or to goods or services that are unrelated to the 
     sound recordings or entertainment programming, but that 
     provides background music would not qualify as a service 
     that makes eligible nonsubscription transmissions. The 
     site's background music transmissions would need to be 
     licensed through voluntary negotiations with the copyright 
     owners. However, the sale or promotion of sound 
     recordings, live concerts or other musical events does not 
     disqualify a service making a nonsubscription 
     transmission. Furthermore, the mere fact that a 
     transmission service is advertiser-based or may promote 
     itself or an affiliated entertainment service does not 
     disqualify it from being considered an eligible 
     nonsubscription transmission service.
       Subsection 114(j)(7)--``interactive service.'' The 
     definition of ``interactive service'' is amended in several 
     respects. First, personalized tranmissions--those that are 
     specially created for a particular individual--are to be 
     considered interactive. The recipient of the transmission 
     need not select the particular recordings in the program for 
     it to be considered personalized, for example, the recipient 
     might identify certain artists that become the basis of the 
     personal program. The conferees intend that the phrase 
     ``program specially created for the recipient'' be 
     interpreted reasonably in light of the remainder of the 
     definition of ``interactive service.'' For example, a service 
     would be interactive if it allowed a small number of 
     individuals to request that sound recordings be performed in 
     a program specially created for that group and not available 
     to any individuals outside of that group. In contrast, a 
     service would not be interactive if it merely transmitted to 
     a large number of recipients of the service's transmissions a 
     program consisting of sound recordings requested by a small 
     number of those listeners.
       Second, a transmission of a particular sound recording on 
     request is considered interactive ``whether or not [the sound 
     recording is] part of a program.'' This language clarifies 
     that if a transmission recipient is permitted to select 
     particular sound recordings in a prerecorded or predetermined 
     program, the transmission is considered interactive. For 
     example, if a transmission recipient has the ability to move 
     forward and

[[Page H10072]]

     backward between songs in a program, the transmission is 
     interactive. It is not necessary that the transmission 
     recipient be able to select the actual songs that comprise 
     the program. Additionally, a program consisting only of one 
     sound recording would be considered interactive.
       Third, the definition of ``interactive service'' is amended 
     to clarify that certain channels or programs are not 
     considered interactive provided that they do not 
     substantially consist of requested sound recordings that are 
     performed within one hour of the request or at a designated 
     time. Thus, a service that engaged in the typical broadcast 
     programming practice of including selections requested by 
     listeners would not be considered interactive, so long as the 
     programming did not substantially consist of requests 
     regularly performed within an hour of the request, or at a 
     time that the transmitting entity informs the recipient it 
     will be performed.
       The last sentence of the definition is intended to make 
     clear that if a transmitting entity offers both interactive 
     and noninteractive services then the noninteractive 
     components are not to be treated as part of an interactive 
     service, and thus are eligible for statutory licensing 
     (assuming the other requirements of the statutory license are 
     met). For example, if a Web site offered certain programming 
     that was transmitted to all listeners who chose to receive it 
     at the same time and also offered certain sound recordings 
     that were transmitted to particular listeners on request, 
     the fact that the latter are interactive transmissions 
     would not preclude statutory licensing of the former.
       Subsection 114(j)(8)--``new subscription service.'' A ``new 
     subscription service'' is any service that is not a 
     preexisting subscription service as defined in subsection 
     (j)(11) or a preexisting satellite digital audio radio 
     service as defined in subsection (j)(10).
       Subsection 114(j)(10)--``preexisting satellite digital 
     audio radio service.'' A ``preexisting satellite digital 
     audio service'' is a subscription digital audio radio service 
     provided pursuant to a satellite digital audio radio service 
     license issued by the Federal Communications Commission on or 
     before July 31, 1998. Subscription services offered by these 
     licensed entities do not qualify as ``preexisting 
     subscription services'' under section 114(j)(11) because they 
     had not commenced making transmissions to the public for a 
     fee on or before July 31, 1998. Only two entities received 
     these licenses: CD Radio and American Mobile Radio 
     Corporation.
       A ``preexisting satellite digital audio radio service'' and 
     ``preexisting subscription service'' may both include a 
     limited number of sample channels representative of the 
     subscription service that are made available on a 
     nonsubscription basis in order to promote the subscription 
     service. Such sample channels are to be treated as part of 
     the subscription service and should be considered in 
     determining the royalty rate for such subscription service. 
     The conferees do not intend that the ability to offer such 
     sample channels be used as a means to offer a nonsubscription 
     service under the provisions of section 114 applicable to 
     subscription services. The term ``limited number'' should be 
     evaluated in the context of the overall service. For example, 
     a service consisting of 100 channels should have no more than 
     a small percentage of its channels as sample channels.
       Subsection 114(j)(11)--``preexisting subscription 
     service.'' A ``preexisting subscription service'' is a 
     noninteractive subscription service that was in existence and 
     was making transmissions to the public on or before July 31, 
     1998, and which is making transmissions similar in character 
     to such transmissions made on or before July 31, 1998. Only 
     three services qualify as a preexisting subscription 
     service--DMX, Music Choice and the DiSH Network. As of July 
     31, 1998, DMX and Music Choice made transmissions via both 
     cable and satellite media; the DiSH Network was available 
     only via satellite.
       In grandfathering these services, the conferee's objective 
     was to limit the grandfather to their existing services in 
     the same transmission medium and to any new services in a new 
     transmission medium where only transmissions similar to their 
     existing service are provided. Thus, if a cable subscription 
     music service making transmissions on July 31, 1998, were to 
     offer the same music service through the Internet, then such 
     Internet service would be considered part of a preexisting 
     subscription service.
       If, however, a subscription service making transmissions on 
     July 31, 1998, were to offer a new service either in the same 
     or new transmission medium by taking advantages of the 
     capabilities of that medium, such new service would not 
     qualify as a preexisting subscription service. For example, a 
     service that offers video programming, such as advertising or 
     other content, would not qualify as a preexisting service, 
     provided that the video programming is not merely information 
     about the service itself, the sound recordings being 
     transmitted, the featured artists, composers or songwriters, 
     or an advertisement to purchase the sound recording 
     transmitted.
       Section 114 in General. These amendments are fully subject 
     to all the existing provisions of section 114. Specifically, 
     these amendments and the statutory licenses they create are 
     all fully subject to the safeguards for copyright owners of 
     sound recordings and musical works contained in sections 
     114(c), 114(d)(4) and 114(i), as well as the other provisions 
     of section 114. In addition, the conferees do not intend to 
     affect any of the rights in section 115 that were clarified 
     and confirmed in the DPRA.
       Section 112(e)--Statutory License. Section 112(e) creates a 
     statutory license for the making of an ``ephemeral 
     recording'' of a sound recording by certain transmitting 
     organizations. The new statutory license in section 112(e) is 
     intended primarily for the benefit of entities that transmit 
     performances of sound recordings to business establishments 
     pursuant to the limitation on exclusive rights set forth in 
     section 114(d)(1)(C)(iv). However, the new section 112(e) 
     statutory license also is available to a transmitting entity 
     with a statutory license under section 114(f) that chooses to 
     avail itself of the section 112(e) statutory license to make 
     more than the one phonorecord it is entitled to make under 
     section 112(a). For example, the conferees understand that a 
     webcaster might wish to reproduce multiple copies of a sound 
     recording to use on different servers or to make 
     transmissions at different transmission rates or using 
     different transmission software. Under section 112(a), as 
     amended by this bill, a webcaster with a section 114(f) 
     statutory license is entitled to make only a single copy of 
     the sound recording. Thus, the webcaster might choose to 
     obtain a statutory license under section 112(e) to allow it 
     to make such multiple copies. The conferees intend that the 
     royalty rate payable under the statutory license may reflect 
     the number of phonorecords of a sound recording made under a 
     statutory license for use in connection with each type of 
     service.
       Ephemeral recordings of sound recordings made by certain 
     transmitting organizations under section 112(e) may embody 
     copyrighted musical compositions. The making of an ephemeral 
     recording by such a transmitting organization of each 
     copyrighted musical composition embodied in a sound recording 
     it transmits is governed by existing section 112(a) (or 
     section 112(a)(1) as revised by the Digital Millennium 
     Copyright Act), and, pursuant to that section, authorization 
     for the making of an ephemeral recording is conditioned in 
     part on the transmitting organization being entitled to 
     transmit to the public the performance of a musical 
     composition under a license or transfer of the copyright.
       The conditions listed in section 112(e)(1), most of which 
     are also found in section 112(a), must be met before a 
     transmitting organization is eligible for statutory licensing 
     in accordance with section 112(e). First, paragraph (1)(A) 
     provides that the transmitting organization may reproduce and 
     retain only one phonorecord, solely for its own use (unless 
     the terms and conditions of the statutory license allow for 
     more). Thus, trafficking in ephemeral recordings, such as by 
     preparing prerecorded transmission programs for use by third 
     parties, is not permitted. This paragraph provides that the 
     transmitting organization may reproduce and retain more than 
     one ephemeral recording, in the manner permitted under the 
     terms and conditions as negotiated or arbitrated under the 
     statutory license. This provision is intended to facilitate 
     efficient transmission technologies, such as the use of 
     phonorecords encoded for optimal performance at different 
     transmission rates or use of different software programs to 
     receive the transmissions.
       Second, paragraph (1)(B) requires that the phonorecord be 
     used only for the transmitting organization's own 
     transmissions originating in the United States, and such 
     transmissions must be made under statutory license pursuant 
     to section 114(f) or the exemption in section  
     114(d)(1)(C)(iv). Third, paragraph (1)(C) mandates that, 
     unless preserved exclusively for archival purposes, the 
     phonorecord be destroyed within six months from the time 
     that the sound recording was first performed publicly by 
     the transmitting organization. Fourth, paragraph (1)(D) 
     limits the statutory license to reproductions of sound 
     recordings that have been distributed to the public and 
     that are made from a phonorecord lawfully made and 
     acquired under the authority of the copyright owner.
       Subsection (e)(3) clarifies the applicability of the 
     antitrust laws to the use of common agents in negotiations 
     and agreements relating to statutory licenses and other 
     licenses. Under this subsection, the copyright owners of 
     sound recordings and transmitting organizations entitled to 
     obtain the statutory license in this section may negotiate 
     collectively regarding rates and terms for the statutory 
     license or other licenses. This subsection provides that such 
     copyright owners and transmitting organizations may designate 
     common agents to represent their interests to negotiate or 
     administer such license agreements. This subsection closely 
     follows the language of existing antitrust exemptions in 
     copyright law, including the exemption found in the statutory 
     licenses for transmitting sound recordings by digital audio 
     transmission found in section 114(f).
       Subsections (e)(4) and (5) address the procedures for 
     determining rates and terms for the statutory license 
     provided for in this section. These procedures are parallel 
     to the procedures found in section 114(f)(2) for public 
     performances of sound recordings by digital audio 
     transmission by new subscription services and services making 
     eligible Nonsubscription transmissions.
       Subsection (e)(4) provides that the Librarian of Congress 
     should publish notice of voluntary negotiation proceedings 30 
     days after enactment of this amendment. Such voluntary 
     negotiation proceedings should address rates and terms for 
     the making of ephemeral recordings under the conditions of

[[Page H10073]]

     this section for the period beginning on the date of 
     enactment and ending on December 31, 2000. This subsection 
     requires that a minimum fee be established as part of the 
     rates and terms.
       In the event that interested parties do not arrive at 
     negotiated rates and terms during the voluntary negotiation 
     proceedings, subsection (e)(5) provides for the convening of 
     a copyright arbitration royalty panel to determine reasonable 
     rates and terms for the making of ephemeral recordings under 
     this subsection. This paragraph requires the copyright 
     arbitration royalty panel to establish rates that reflect the 
     fees that a willing buyer and seller would have agreed to in 
     marketplace negotiations. In so doing, the copyright 
     arbitration royalty panel should base its decision on 
     economic, competitive and programming information presented 
     by the parties, including, but not limited to, such evidence 
     as described in subparagraphs (A) and (B).
       Subseciton (e)(7) states that rates and terms either 
     negotiated or established pursuant to arbitration shall be 
     effective for two-year periods, and the procedures set forth 
     in subsections (e)(4) and (5) shall be repeated every two 
     years unless otherwise agreed to by the parties.
       The conferees intend that the amendments regarding the 
     statutory licenses in sections 112 and 114 contained in 
     section 415 of this bill apply only to those statutory 
     licenses.


section 406. assumption of contractual obligations related to transfers 
                      of rights in motion pictures

       The Senate recedes to House section 416 with modification.
       Paragraph (a)--Assumption of obligations. The conferees 
     have added to paragraph (a) language that defines more 
     specifically the meaning of the ``knows or has reason to 
     know'' standard in subsection (a)(1). There are three ways to 
     satisfy this standard. The first is actual knowledge that a 
     motion picture is or will be covered by a collective 
     bargaining agreement. Subparagraph (ii) provides for 
     constructive knowledge, established through two 
     alternative mechanisms: recordation with the Copyright 
     Office or identification of the motion picture on an 
     online web site maintained by the relevant Guild, where 
     the site makes it possible for users to verify their 
     access date in a commercially reasonable way. In order to 
     ensure that the transferee has a reasonable opportunity to 
     obtain the relevant information, these mechanisms for 
     providing constructive notice apply with respect to 
     transfers that take place after the motion picture is 
     completed. They also apply to transfer that take place 
     before the motion picture is completed, but only if the 
     transfer is within eighteen months prior to the filing of 
     an application for copyright registration for the motion 
     picture or, if there is no application for registration, 
     within eighteen months of its first publication in the 
     United States.
       The constructive notice established by recordation for 
     purposes of application of this section is entirely separate 
     and independent from the constructive notice established by 
     recordation under section 205(c) of the Copyright Act. This 
     section does not condition constructive notice on prior 
     registration of the motion picture with the Copyright Office, 
     and does not have any hearing on the issue of priority 
     between conflicting transfers as described in section 205(d) 
     of the Copyright Act.
       Subparagraph (iii) provides a more general standard for 
     circumstances where the transferee does not have actual 
     knowledge or constructive knowledge through one of the two 
     mechanisms set out in subparagraph (ii), but is aware of 
     facts and circumstances about the transfer that make it 
     apparent that the motion picture is subject to a collective 
     bargaining agreement. Such facts and information might 
     include, for example, budget, location of principal 
     photography, the identity of the talent associated with a 
     project, or the existence of a personal service contract that 
     references terms or conditions of collective bargaining 
     agreements.
       Paragraph (b)--Scope of exclusion of transfer of public 
     performance rights.--New paragraph (b) clarifies that the 
     ``public performance'' exclusion from the operation of 
     paragraph (a) is intended to include performances described 
     in paragraph (b) that reach viewers through transmission or 
     retransmission of programming or program services via 
     satellite, MMDS, cable, and other means of carriage. This 
     paragraph does not expand or restrict in any way what 
     constitutes a ``public performance'' for any other purpose. 
     The public performance exclusion would not be rendered 
     inoperable simply because a transfer of public performance 
     rights is accompanied by a transfer of limited, incidental 
     other rights necessary to implement or facilitate the 
     exercise of the performance rights.
       Paragraph (c)--Exclusion for grants of security 
     interests.--The purpose of this paragraph is to ensure that 
     banks and others providing financing for motion pictures will 
     not be made subject to the assumption of obligations required 
     by this section merely because they obtain a security 
     interest in the motion picture. Because the term ``transfer 
     of copyright ownership'' is defined in section 101 of the 
     Copyright Act to include a ``mortgage . . . or 
     hypothecation'' of any exclusive copyright right, this could 
     be the unintended result of the statutory language. Under 
     this exclusion, a bank or other party would not be subject to 
     the application of paragraph (a) based solely on the acts of 
     taking a security interest in a motion picture, foreclosing 
     on that interest or otherwise exercising its rights as a 
     secured party, or transferring or authorizing transfer of 
     copyright ownership rights secured by its security interest 
     to a third party. Neither would any subsequent transferee 
     downstream from the initial secured party be subject 
     to paragraph (a). The exclusion would apply irreespective 
     of the form or language used to grant or create the 
     security interest.
       It should be clear that the only agreements whose terms are 
     enforced by this section are collective bargaining agreements 
     and assumption agreements. In the course of financing a 
     motion picture, a lender, other financier or completion 
     guarantor may execute an inter-creditor or subordination 
     agreement with a union including obligations with respect to 
     the payment of residuals or the obtaining of assumption 
     agreements. Such agreements are not within the scope of this 
     section, and nothing in this section obligates lenders, other 
     financiers or completion guarantors to enter into these 
     agreements, enforces any terms thereof or diminishes any 
     rights that the parties may have under these agreements.
       Paragraph (d)--Deferral pending resolution of bona fide 
     dispute. Paragraph (d) allows a remote transferee obligated 
     under paragraph (a)(1) to stay enforcement of this section 
     while there exists a bona fide dispute between the applicable 
     union and a prior transferor regarding obligations under this 
     section. It contemplates that union claims not subject to 
     bona fide dispute will be payable when due under the 
     applicable collective bargaining agreement or through 
     application of this section. Such disputes may be manifested 
     through grievance or arbitration claims, litigation, or other 
     claims resolution procedures in effect between the applicable 
     parties.
       Paragraph (e)--Scope of obligations determined by private 
     agreement. Paragraph (e) states explicitly the basic 
     principle of operation of this section. It makes clear that 
     the section simply provides an enforcement mechanism for 
     obligations that have already been agreed to in a collective 
     bargaining agreement. It is not intended to affect in any way 
     the scope or interpretation of the provisions of, or the acts 
     required by, any collective bargaining agreement. The rights 
     and obligations themselves, as well as the remedies for 
     breach, are those that have been agreed to among the parties. 
     Accordingly, they can be changed at any time by agreement.
       The collective bargaining agreements contemplate that 
     producers will obtain assumption agreements from distributors 
     in certain circumstances. The statute states that where a 
     producer does not comply with the obligation and obtain an 
     assumption agreement where required, the law will act as 
     though the producer has in fact done so. Thus, it removes the 
     possibility of noncompliance with the obligation to obtain an 
     assumption agreement. It does not require assumption 
     agreements to be obtained in circumstances where the 
     collective bargaining agreement would not require it. If 
     there is a dispute over the meaning and applicabiity of 
     provisions in the collective bargaining agreement, for 
     example over the question of which distributors must be 
     required to execute an assumption agreement, the statue does 
     not resolve the dispute. It only requires whatever the 
     collective bargaining agreement would require, and relegates 
     the parties to the dispute mechanisms set out in that 
     agreement.
       This section does not expand or diminish rights or 
     obligations under other laws that might regulate contractual 
     obligations beyond the purpose of enforcing assumption 
     agreements required by applicable collective bargaining 
     agreements. Nor does this section prevent a person or entity 
     that is subject to obligations under an assumption agreement 
     (whether through application of this section or otherwise) 
     from transferring any such obligations to a subsequent 
     transferee of the applicable copyright rights, and thereby 
     being relieved of its own obligations under the assumption 
     agreement, to the extent permitted by, and under the 
     conditions established in, the applicable assumption 
     agreements.

            Title V--Protection of Certain Original Designs

       Sections 501-505. The Senate recedes to House sections 601-
     602 with modification.

     From the Committee on Commerce for consideration of the House 
     bill, and the Senate amendment, and modifications committed 
     to conference:
     Tom Bliley,
     Billy Tauzin,
     John D. Dingell,
     From the Committee on Judiciary for consideration of the 
     House bill, and the Senate amendment, and modifications 
     committed to conference:
     Henry J. Hyde,
     Howard Coble,
     Bob Goodlatte,
     John Conyers, Jr.,
     Howard L. Berman,
                                Managers on the Part of the House.

     Orrin G. Hatch,
     Strom Thurmond,
     Patrick J. Leahy,
                               Managers on the Part of the Senate.

[[Page H10074]]

                              {time}  0140
                              ADJOURNMENT

  Mr. LEACH. Mr. Speaker, I move that the House do now adjourn.
  The motion was agreed to; accordingly (at 1 o'clock and 40 minutes 
a.m.), the House adjourned until 9 a.m. today.

                          ____________________