[Congressional Record Volume 151, Number 5 (Tuesday, January 25, 2005)]
[Senate]
[Pages S494-S502]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH (for himself, Mr. Leahy, Mr. Cornyn, and Mrs. 
        Feinstein):
  S. 167. A bill to provide for the protection of intellectual property 
rights, and for other purposes; to the Committee on the Judiciary.
  Mr. HATCH. Mr. President, I rise today to introduce the Family 
Entertainment and Copyright Act of 2005. This important legislation 
consists of a package of smaller intellectual property bills that the 
House and Senate have been working to enact since last Congress. This 
legislation passed the Senate not once, but twice, during the waning 
days of the last Congress. Unfortunately, though, it was doomed by a 
non-germane amendment unrelated to intellectual property law. My hope 
is that we can work together this Congress to avoid this type of 
pitfall, and I commit to work with other members to do so.
  Before beginning my substantive discussion of the bill, I would like 
to thank my colleagues Senators Leahy, Cornyn, and Feinstein for their 
ongoing efforts on this legislation. Just as it was last year, this 
legislation is a group effort, and I want to take care to recognize the 
contributions and their excellent work along with that of 
Representatives Sensenbrenner, Smith, Berman, and Conyers in the House.
  Before going into a title-by-title discussion of the bill, I would 
like to express my particular support for the Family Movie Act, which 
has been included in this legislation. Chairman Lamar Smith and I 
worked on this bill last Congress. It's important legislation both to 
parents who want the ability to use new technologies to help shield 
their families from inappropriate content as well as the technology 
companies, such as ClearPlay in my home State of Utah, that are working 
to develop these technologies. The Family Movie Act will give parents 
more say over what their children see, without limiting the creative 
control of directors and movie studios.
  Title I of this Act, the Artists' Rights and Theft Prevention Act of 
2005, (the ART Act), contains a slightly modified version of S. 1932, 
authored by Senators Cornyn and Feinstein in the 108th Congress. This 
bill will close two significant gaps in our copyright laws that are 
feeding some of the piracy now rampant on the Internet.
  First, it criminalizes attempts to record movies off of theater 
screens. These camcorded copies of new movies now appear on filesharing 
networks almost contemporaneously with the theatrical release of a 
film. Several States have already taken steps to criminalize this 
activity, but providing a uniform Federal law--instead of a patchwork 
of State criminal statutes--will assist law enforcement officials in 
combating the theft and redistribution of valuable intellectual 
property embodied in newly-released motion pictures.
  Second, the bill will create a pre-registration system that will 
permit criminal penalties and statutory-damage awards. This will also 
provide a tool for law enforcement officials combating the growing 
problem of music and movies being distributed on filesharing networks 
and circulating on the Internet before they are even released. 
Obviously, the increasingly frequent situation of copyrighted works

[[Page S495]]

being distributed illegally via the Internet before they are even made 
available for sale to the public severely undercuts the ability of 
copyright holders to receive fair and adequate compensation for their 
works.
  Title II of this Act, the Family Movie Act of 2005 (the FMA), 
resolves some ongoing disputes about the legality of so-called ``jump-
and-skip'' technologies that companies like Clearplay in my home State 
of Utah have developed to permit family-friendly viewing of films that 
may contain objectionable content. The FMA creates a narrowly defined 
safe-harbor clarifying that distributors of such technologies will not 
face liability for copyright or trademark infringement, provided that 
they comply with the requirements of the Act. I have been working with 
my colleagues in the Senate and several leaders in the House--
including, most importantly Chairmen Smith and Sensenbrenner--for the 
past couple of years to resolve this issue. The FMA will help to end 
aggressive litigation threatening the viability of small companies like 
Clearplay which are busy creating innovative technologies for consumers 
that allow them to tailor their home viewing experience to their own 
individual or family preferences.
  The Family Movie Act creates a new exemption in section 110(11) of 
the Copyright Act for skipping and muting audio and video content in 
motion pictures during performances of an authorized copy of the motion 
picture taking place in the course of a private viewing in a household. 
The version passed last year by the House explicitly excluded from the 
scope of the new copyright exemption so-called ``ad-skipping'' 
technologies that make changes, deletions, or additions to commercial 
advertisements or to network or station promotional announcements that 
would otherwise be displayed before, during, or after the performance 
of the motion picture. This provision was included on the House floor 
to address the concerns of some Members who were concerned that a court 
might misread the new section 110(11) exemption to apply to ``ad-
skipping''' cases, such as in the recent litigation involving ReplayTV.
  In the Senate, however, some expressed concern that the inclusion of 
such explicit language could create unwanted inferences with respect to 
the merits of the legal positions at the heart of recent ``ad-
skipping'' litigation. Those issues remain unsettled in the courts, and 
it was never the intent of this legislation to resolve or affect those 
issues in any way. Indeed, the Copyright Act contains literally scores 
of similar exemptions, and none of those exemptions have been or should 
be construed to imply anything about the legality of conduct falling 
outside their scope. As a result, the Copyright Office has now 
confirmed that such an explicit exclusion is unnecessary to achieve the 
desired outcome, which is to avoid application of this new exemption in 
potential future cases involving ad-skipping devices. In order to avoid 
unnecessary controversy, the Senate bill omits the exclusionary 
language with the understanding that doing so does not in any way 
change the scope of the bill.
  That this change in no way affects the scope of the exemption is 
clear when considering that the new section 110(11) exemption protects 
the ``making imperceptible . . . limited portions of audio or video 
content of a motion picture. . . .'' An advertisement, under the 
Copyright Act, is itself a ``motion picture,'' and thus a product or 
service that enables the skipping of an entire advertisement, in any 
media, would be beyond the scope of the exemption. Moreover, the phrase 
``limited portions'' is intended to refer to portions that are both 
quantitatively and qualitatively insubstantial in relation to the work 
as a whole. Where any substantial part of a complete work, such as a 
commercial advertisement, is made imperceptible, the new section 
110(11) exemption would not apply. The limited scope of this exemption 
does not, however, imply or show that such conduct or a technology that 
enables such conduct would be infringing. This legislation does not in 
any way deal with that issue. It means simply that such conduct and 
products enabling such conduct are not immunized from liability by this 
exemption.
  This bill also differs from the version passed by the House last year 
in that it adds two ``savings clauses.'' The copyright savings clause 
makes clear that there should be no spillover effect from the passage 
of this law: that is, nothing shall be construed to have any effect on 
rights, defenses, or limitations on rights granted under title 17, 
other than those explicitly provided for in the new section 110(11) 
exemption. The trademark savings clause clarifies that no inference can 
be drawn that a person or company who fails to qualify for the 
exemption from trademark infringement found in this provision is 
therefore liable for trademark infringement.
  Title III of this Act, the National Film Preservation Act of 2004, 
will reauthorize the National Film Preservation Board and the National 
Film Preservation Foundation. These entities have worked successfully 
to recognize and preserve historically or culturally significant 
films--often by providing the grants and expertise that enable local 
historical societies to protect and preserve historically significant 
films for the local communities for which they are most important. This 
fine work will ensure that the history of the 20th century will be 
preserved and available to future generations.
  As a conservative Senator from a socially conservative state, I 
occasionally take a few swings at the movie industry for the quality 
and content of the motion pictures they are currently creating, but I 
will note for the record that I commend efforts to ensure that 
important artistic, cultural, and historically significant films are 
preserved for future generations. I commend my friend from Vermont for 
his perseverance in reauthorizing Federal funds to continue this 
important effort.
  Title IV of this act, the ``Preservation of Orphan Works Act,'' also 
ensures the preservation of valuable historic records by correcting a 
technical error that unnecessarily narrows a limitation on the 
copyright law applicable to librarians and archivists. This will 
strengthen the ability of librarians and archivists to better meet the 
needs of both researchers and ordinary individuals and will result in 
greater accessibility of important works. I applaud my colleague in the 
House--Representative Howard Berman of California--for his efforts on 
this bill and am pleased to see it included in this Senate package.
  Just to conclude, I will again thank Ranking Democratic Member Leahy, 
Senator Cornyn, Chairmen Sensenbrenner and Smith, as well as Mr. 
Conyers and Mr. Berman for their bicameral, bipartisan approach to 
these bills and to intellectual property issues generally.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 167

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Family Entertainment and 
     Copyright Act of 2005''.

             TITLE I--ARTISTS' RIGHTS AND THEFT PREVENTION

     SEC. 101. SHORT TITLE.

       This title may be cited as the ``Artists' Rights and Theft 
     Prevention Act of 2005'' or the ``ART Act''.

     SEC. 102. CRIMINAL PENALTIES FOR UNAUTHORIZED RECORDING OF 
                   MOTION PICTURES IN A MOTION PICTURE EXHIBITION 
                   FACILITY.

       (a) In General.--Chapter 113 of title 18, United States 
     Code, is amended by adding after section 2319A the following 
     new section:

     ``Sec. 2319B. Unauthorized recording of Motion pictures in a 
       Motion picture exhibition facility

       ``(a) Offense.--Any person who, without the authorization 
     of the copyright owner, knowingly uses or attempts to use an 
     audiovisual recording device to transmit or make a copy of a 
     motion picture or other audiovisual work protected under 
     title 17, or any part thereof, from a performance of such 
     work in a motion picture exhibition facility, shall--
       ``(1) be imprisoned for not more than 3 years, fined under 
     this title, or both; or
       ``(2) if the offense is a second or subsequent offense, be 
     imprisoned for no more than 6 years, fined under this title, 
     or both.

     The possession by a person of an audiovisual recording device 
     in a motion picture exhibition facility may be considered as 
     evidence in any proceeding to determine whether that person 
     committed an offense under this subsection, but shall not, by 
     itself, be sufficient

[[Page S496]]

     to support a conviction of that person for such offense.
       ``(b) Forfeiture and Destruction.--When a person is 
     convicted of a violation of subsection (a), the court in its 
     judgment of conviction shall, in addition to any penalty 
     provided, order the forfeiture and destruction or other 
     disposition of all unauthorized copies of motion pictures or 
     other audiovisual works protected under title 17, or parts 
     thereof, and any audiovisual recording devices or other 
     equipment used in connection with the offense.
       ``(c) Authorized Activities.--This section does not prevent 
     any lawfully authorized investigative, protective, or 
     intelligence activity by an officer, agent, or employee of 
     the United States, a State, or a political subdivision of a 
     State, or by a person acting under a contract with the United 
     States, a State, or a political subdivision of a State.
       ``(d) Immunity for Theaters.--With reasonable cause, the 
     owner or lessee of a motion picture exhibition facility where 
     a motion picture or other audiovisual work is being 
     exhibited, the authorized agent or employee of such owner or 
     lessee, the licensor of the motion picture or other 
     audiovisual work being exhibited, or the agent or employee of 
     such licensor--
       ``(1) may detain, in a reasonable manner and for a 
     reasonable time, any person suspected of a violation of this 
     section with respect to that motion picture or audiovisual 
     work for the purpose of questioning or summoning a law 
     enforcement officer; and
       ``(2) shall not be held liable in any civil or criminal 
     action arising out of a detention under paragraph (1).
       ``(e) Victim Impact Statement.--
       ``(1) In general.--During the preparation of the 
     presentence report under rule 32(c) of the Federal Rules of 
     Criminal Procedure, victims of an offense under this section 
     shall be permitted to submit to the probation officer a 
     victim impact statement that identifies the victim of the 
     offense and the extent and scope of the injury and loss 
     suffered by the victim, including the estimated economic 
     impact of the offense on that victim.
       ``(2) Contents.--A victim impact statement submitted under 
     this subsection shall include--
       ``(A) producers and sellers of legitimate works affected by 
     conduct involved in the offense;
       ``(B) holders of intellectual property rights in the works 
     described in subparagraph (A); and
       ``(C) the legal representatives of such producers, sellers, 
     and holders.
       ``(f) State Law Not Preempted.--Nothing in this section may 
     be construed to annul or limit any rights or remedies under 
     the laws of any State.
       ``(g) Definitions.--In this section, the following 
     definitions shall apply:
       ``(1) Title 17 definitions.--The terms `audiovisual work', 
     `copy', `copyright owner', `motion picture', `motion picture 
     exhibition facility', and `transmit' have, respectively, the 
     meanings given those terms in section 101 of title 17.
       ``(2) Audiovisual recording device.--The term `audiovisual 
     recording device' means a digital or analog photographic or 
     video camera, or any other technology or device capable of 
     enabling the recording or transmission of a copyrighted 
     motion picture or other audiovisual work, or any part 
     thereof, regardless of whether audiovisual recording is the 
     sole or primary purpose of the device.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 113 of title 18, United States Code, is 
     amended by inserting after the item relating to section 2319A 
     the following:

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

       (c) Definition.--Section 101 of title 17, United States 
     Code, is amended by inserting after the definition of 
     ``Motion pictures'' the following: ``The term ``motion 
     picture exhibition facility'' means a movie theater, 
     screening room, or other venue that is being used primarily 
     for the exhibition of a copyrighted motion picture, if such 
     exhibition is open to the public or is made to an assembled 
     group of viewers outside of a normal circle of a family and 
     its social acquaintances.''.

     SEC. 103. CRIMINAL INFRINGEMENT OF A WORK BEING PREPARED FOR 
                   COMMERCIAL DISTRIBUTION.

       (a) Prohibited Acts.--Section 506(a) of title 17, United 
     States Code, is amended to read as follows:
       ``(a) Criminal Infringement.--
       ``(1) In general.--Any person who willfully infringes a 
     copyright shall be punished as provided under section 2319 of 
     title 18, if the infringement was committed--
       ``(A) for purposes of commercial advantage or private 
     financial gain;
       ``(B) by the reproduction or distribution, including by 
     electronic means, during any 180-day period, of 1 or more 
     copies or phonorecords of 1 or more copyrighted works, which 
     have a total retail value of more than $1,000; or
       ``(C) by the distribution of a work being prepared for 
     commercial distribution, by making it available on a computer 
     network accessible to members of the public, if such person 
     knew or should have known that the work was intended for 
     commercial distribution.
       ``(2) Evidence.--For purposes of this subsection, evidence 
     of reproduction or distribution of a copyrighted work, by 
     itself, shall not be sufficient to establish willful 
     infringement of a copyright.
       ``(3) Definition.--In this subsection, the term `work being 
     prepared for commercial distribution' means--
       ``(A) a computer program, a musical work, a motion picture 
     or other audiovisual work, or a sound recording, if, at the 
     time of unauthorized distribution--
       ``(i) the copyright owner has a reasonable expectation of 
     commercial distribution; and
       ``(ii) the copies or phonorecords of the work have not been 
     commercially distributed; or
       ``(B) a motion picture, if, at the time of unauthorized 
     distribution, the motion picture--
       ``(i) has been made available for viewing in a motion 
     picture exhibition facility; and
       ``(ii) has not been made available in copies for sale to 
     the general public in the United States in a format intended 
     to permit viewing outside a motion picture exhibition 
     facility.''.
       (b) Criminal Penalties.--Section 2319 of title 18, United 
     States Code, is amended--
       (1) in subsection (a)--
       (A) by striking ``Whoever'' and inserting ``Any person 
     who''; and
       (B) by striking ``and (c) of this section'' and inserting 
     ``, (c), and (d)'';
       (2) in subsection (b), by striking ``section 506(a)(1)'' 
     and inserting ``section 506(a)(1)(A)'';
       (3) in subsection (c), by striking ``section 506(a)(2) of 
     title 17, United States Code'' and inserting ``section 
     506(a)(1)(B) of title 17'';
       (4) by redesignating subsections (d) and (e) as subsections 
     (e) and (f), respectively;
       (5) by adding after subsection (c) the following:
       ``(d) Any person who commits an offense under section 
     506(a)(1)(C) of title 17--
       ``(1) shall be imprisoned not more than 3 years, fined 
     under this title, or both;
       ``(2) shall be imprisoned not more than 5 years, fined 
     under this title, or both, if the offense was committed for 
     purposes of commercial advantage or private financial gain;
       ``(3) shall be imprisoned not more than 6 years, fined 
     under this title, or both, if the offense is a second or 
     subsequent offense; and
       ``(4) shall be imprisoned not more than 10 years, fined 
     under this title, or both, if the offense is a second or 
     subsequent offense under paragraph (2).''; and
       (6) in subsection (f), as redesignated--
       (A) in paragraph (1), by striking ``and'' at the end;
       (B) in paragraph (2), by striking the period at the end and 
     inserting a semicolon; and
       (C) by adding at the end the following:
       ``(3) the term `financial gain' has the meaning given the 
     term in section 101 of title 17; and
       ``(4) the term `work being prepared for commercial 
     distribution' has the meaning given the term in section 
     506(a) of title 17.''.

     SEC. 104. CIVIL REMEDIES FOR INFRINGEMENT OF A WORK BEING 
                   PREPARED FOR COMMERCIAL DISTRIBUTION.

       (a) Preregistration.--Section 408 of title 17, United 
     States Code, is amended by adding at the end the following:
       ``(f) Preregistration of Works Being Prepared for 
     Commercial Distribution.--
       ``(1) Rulemaking.--Not later than 180 days after the date 
     of enactment of this subsection, the Register of Copyrights 
     shall issue regulations to establish procedures for 
     preregistration of a work that is being prepared for 
     commercial distribution and has not been published.
       ``(2) Class of works.--The regulations established under 
     paragraph (1) shall permit preregistration for any work that 
     is in a class of works that the Register determines has had a 
     history of infringement prior to authorized commercial 
     distribution.
       ``(3) Application for registration.--Not later than 3 
     months after the first publication of a work preregistered 
     under this subsection, the applicant shall submit to the 
     Copyright Office--
       ``(A) an application for registration of the work;
       ``(B) a deposit; and
       ``(C) the applicable fee.
       ``(4) Effect of untimely application.--An action under this 
     chapter for infringement of a work preregistered under this 
     subsection, in a case in which the infringement commenced no 
     later than 2 months after the first publication of the work, 
     shall be dismissed if the items described in paragraph (3) 
     are not submitted to the Copyright Office in proper form 
     within the earlier of--
       ``(A) 3 months after the first publication of the work; or
       ``(B) 1 month after the copyright owner has learned of the 
     infringement.''.
       (b) Infringement Actions.--Section 411(a) of title 17, 
     United States Code, is amended by inserting ``preregistration 
     or'' after ``shall be instituted until''.
       (c) Exclusion.--Section 412 of title 17, United States 
     Code, is amended by inserting after ``section 106A(a)'' the 
     following: ``, an action for infringement of the copyright of 
     a work that has been preregistered under section 408(f) 
     before the commencement of the infringement and that has an 
     effective date of registration not later than the earlier of 
     3 months after the first publication of the work or 1 month 
     after the copyright owner has learned of the infringement,''.

     SEC. 105. FEDERAL SENTENCING GUIDELINES.

       (a) Review and Amendment.--Not later than 180 days after 
     the date of enactment of this Act, the United States 
     Sentencing Commission, pursuant to its authority under 
     section 994 of title 28, United States Code, and

[[Page S497]]

     in accordance with this section, shall review and, if 
     appropriate, amend the Federal sentencing guidelines and 
     policy statements applicable to persons convicted of 
     intellectual property rights crimes, including any offense 
     under--
       (1) section 506, 1201, or 1202 of title 17, United States 
     Code; or
       (2) section 2318, 2319, 2319A, 2319B, or 2320 of title 18, 
     United States Code.
       (b) Authorization.--The United States Sentencing Commission 
     may amend the Federal sentencing guidelines in accordance 
     with the procedures set forth in section 21(a) of the 
     Sentencing Act of 1987 (28 U.S.C. 994 note) as though the 
     authority under that section had not expired.
       (c) Responsibilities of United States Sentencing 
     Commission.--In carrying out this section, the United States 
     Sentencing Commission shall--
       (1) take all appropriate measures to ensure that the 
     Federal sentencing guidelines and policy statements described 
     in subsection (a) are sufficiently stringent to deter, and 
     adequately reflect the nature of, intellectual property 
     rights crimes;
       (2) determine whether to provide a sentencing enhancement 
     for those convicted of the offenses described in subsection 
     (a), if the conduct involves the display, performance, 
     publication, reproduction, or distribution of a copyrighted 
     work before it has been authorized by the copyright owner, 
     whether in the media format used by the infringing party or 
     in any other media format;
       (3) determine whether the scope of ``uploading'' set forth 
     in application note 3 of section 2B5.3 of the Federal 
     sentencing guidelines is adequate to address the loss 
     attributable to people who, without authorization, broadly 
     distribute copyrighted works over the Internet; and
       (4) determine whether the sentencing guidelines and policy 
     statements applicable to the offenses described in subsection 
     (a) adequately reflect any harm to victims from copyright 
     infringement if law enforcement authorities cannot determine 
     how many times copyrighted material has been reproduced or 
     distributed.

  TITLE II--EXEMPTION FROM INFRINGEMENT FOR SKIPPING AUDIO AND VIDEO 
                       CONTENT IN MOTION PICTURES

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Family Movie Act of 
     2005''.

     SEC. 202. EXEMPTION FROM INFRINGEMENT FOR SKIPPING AUDIO AND 
                   VIDEO CONTENT IN MOTION PICTURES.

       (a) In General.--Section 110 of title 17, United States 
     Code, is amended--
       (1) in paragraph (9), by striking ``and'' after the 
     semicolon at the end;
       (2) in paragraph (10), by striking the period at the end 
     and inserting ``; and'';
       (3) by inserting after paragraph (10) the following:
       ``(11) the making imperceptible, by or at the direction of 
     a member of a private household, of limited portions of audio 
     or video content of a motion picture, during a performance in 
     or transmitted to that household for private home viewing, 
     from an authorized copy of the motion picture, or the 
     creation or provision of a computer program or other 
     technology that enables such making imperceptible and that is 
     designed and marketed to be used, at the direction of a 
     member of a private household, for such making imperceptible, 
     if no fixed copy of the altered version of the motion picture 
     is created by such computer program or other technology.''; 
     and
       (4) by adding at the end the following:
       ``For purposes of paragraph (11), the term `making 
     imperceptible' does not include the addition of audio or 
     video content that is performed or displayed over or in place 
     of existing content in a motion picture.
       `` Nothing in paragraph (11) shall be construed to imply 
     further rights under section 106 of this title, or to have 
     any effect on defenses or limitations on rights granted under 
     any other section of this title or under any other paragraph 
     of this section.''.
       (b) Exemption From Trademark Infringement.--Section 32 of 
     the Trademark Act of 1946 (15 U.S.C. 1114) is amended by 
     adding at the end the following:
       ``(3)(A) Any person who engages in the conduct described in 
     paragraph (11) of section 110 of title 17, United States 
     Code, and who complies with the requirements set forth in 
     that paragraph is not liable on account of such conduct for a 
     violation of any right under this Act. This subparagraph does 
     not preclude liability, nor shall it be construed to restrict 
     the defenses or limitations on rights granted under this Act, 
     of a person for conduct not described in paragraph (11) of 
     section 110 of title 17, United States Code, even if that 
     person also engages in conduct described in paragraph (11) of 
     section 110 of such title.
       ``(B) A manufacturer, licensee, or licensor of technology 
     that enables the making of limited portions of audio or video 
     content of a motion picture imperceptible as described in 
     subparagraph (A) is not liable on account of such manufacture 
     or license for a violation of any right under this Act, if 
     such manufacturer, licensee, or licensor ensures that the 
     technology provides a clear and conspicuous notice at the 
     beginning of each performance that the performance of the 
     motion picture is altered from the performance intended by 
     the director or copyright holder of the motion picture. The 
     limitations on liability in subparagraph (A) and this 
     subparagraph shall not apply to a manufacturer, licensee, or 
     licensor of technology that fails to comply with this 
     paragraph.
       ``(C) The requirement under subparagraph (B) to provide 
     notice shall apply only with respect to technology 
     manufactured after the end of the 180-day period beginning on 
     the date of the enactment of the Family Movie Act of 2005.
       ``(D) Any failure by a manufacturer, licensee, or licensor 
     of technology to qualify for the exemption under 
     subparagraphs (A) and (B) shall not be construed to create an 
     inference that any such party that engages in conduct 
     described in paragraph (11) of section 110 of title 17, 
     United States Code, is liable for trademark infringement by 
     reason of such conduct.''.
       (c) Definition.--In this section, the term ``Trademark Act 
     of 1946'' means the Act entitled ``An Act to provide for the 
     registration and protection of trademarks used in commerce, 
     to carry out the provisions of certain international 
     conventions, and for other purposes'', approved July 5, 1946 
     (15 U.S.C. 1051 et seq.).

                 TITLE III--NATIONAL FILM PRESERVATION

  Subtitle A--Reauthorization of the National Film Preservation Board

     SEC. 301. SHORT TITLE.

       This subtitle may be cited as the ``National Film 
     Preservation Act of 2005''.

     SEC. 302. REAUTHORIZATION AND AMENDMENT.

       (a) Duties of the Librarian of Congress.--Section 103 of 
     the National Film Preservation Act of 1996 (2 U.S.C. 179m) is 
     amended--
       (1) in subsection (b)--
       (A) by striking ``film copy'' each place that term appears 
     and inserting ``film or other approved copy'';
       (B) by striking ``film copies'' each place that term 
     appears and inserting ``film or other approved copies''; and
       (C) in the third sentence, by striking ``copyrighted'' and 
     inserting ``copyrighted, mass distributed, broadcast, or 
     published''; and
       (2) by adding at the end the following:
       ``(c) Coordination of Program With Other Collection, 
     Preservation, and Accessibility Activities.--In carrying out 
     the comprehensive national film preservation program for 
     motion pictures established under the National Film 
     Preservation Act of 1992, the Librarian, in consultation with 
     the Board established pursuant to section 104, shall--
       ``(1) carry out activities to make films included in the 
     National Film registry more broadly accessible for research 
     and educational purposes, and to generate public awareness 
     and support of the Registry and the comprehensive national 
     film preservation program;
       ``(2) review the comprehensive national film preservation 
     plan, and amend it to the extent necessary to ensure that it 
     addresses technological advances in the preservation and 
     storage of, and access to film collections in multiple 
     formats; and
       ``(3) wherever possible, undertake expanded initiatives to 
     ensure the preservation of the moving image heritage of the 
     United States, including film, videotape, television, and 
     born digital moving image formats, by supporting the work of 
     the National Audio-Visual Conservation Center of the Library 
     of Congress, and other appropriate nonprofit archival and 
     preservation organizations.''.
       (b) National Film Preservation Board.--Section 104 of the 
     National Film Preservation Act of 1996 (2 U.S.C. 179n) is 
     amended--
       (1) in subsection (a)(1) by striking ``20'' and inserting 
     ``22'';
       (2) in subsection (a) (2) by striking ``three'' and 
     inserting ``5'';
       (3) in subsection (d) by striking ``11'' and inserting 
     ``12''; and
       (4) by striking subsection (e) and inserting the following:
       ``(e) Reimbursement of Expenses.--Members of the Board 
     shall serve without pay, but may receive travel expenses, 
     including per diem in lieu of subsistence, in accordance with 
     sections 5702 and 5703 of title 5, United States Code.''.
       (c) National Film Registry.--Section 106 of the National 
     Film Preservation Act of 1996 (2 U.S.C. 179p) is amended by 
     adding at the end the following:
       ``(e) National Audio-Visual Conservation Center.--The 
     Librarian shall utilize the National Audio-Visual 
     Conservation Center of the Library of Congress at Culpeper, 
     Virginia, to ensure that preserved films included in the 
     National Film Registry are stored in a proper manner, and 
     disseminated to researchers, scholars, and the public as may 
     be appropriate in accordance with--
       ``(1) title 17, United States Code; and
       ``(2) the terms of any agreements between the Librarian and 
     persons who hold copyrights to such audiovisual works.''.
       (d) Use of Seal.--Section 107 (a) of the National Film 
     Preservation Act of 1996 (2 U.S.C. 179q(a)) is amended--
       (1) in paragraph (1), by inserting ``in any format'' after 
     ``or any copy''; and
       (2) in paragraph (2), by striking ``or film copy'' and 
     inserting ``in any format''.
       (e) Effective Date.--Section 113 of the National Film 
     Preservation Act of 1996 (2 U.S.C. 179w) is amended by 
     striking ``7'' and inserting ``12''.

     Subtitle B--Reauthorization of the National Film Preservation 
                               Foundation

     SEC. 311. SHORT TITLE.

       This subtitle may be cited as the ``National Film 
     Preservation Foundation Reauthorization Act of 2005''.

[[Page S498]]

     SEC. 312. REAUTHORIZATION AND AMENDMENT.

       (a) Board of Directors.--Section 151703 of title 36, United 
     States Code, is amended--
       (1) in subsection (b)(2)(A), by striking ``nine'' and 
     inserting ``12''; and
       (2) in subsection (b)(4), by striking the second sentence 
     and inserting ``There shall be no limit to the number of 
     terms to which any individual may be appointed.''.
       (b) Powers.--Section 151705 of title 36, United States 
     Code, is amended in subsection (b) by striking ``District of 
     Columbia'' and inserting ``the jurisdiction in which the 
     principal office of the corporation is located''.
       (c) Principal Office.--Section 151706 of title 36, United 
     States Code, is amended by inserting ``, or another place as 
     determined by the board of directors'' after ``District of 
     Columbia''.
       (d) Authorization of Appropriations.--Section 151711 of 
     title 36, United States Code, is amended by striking 
     subsections (a) and (b) and inserting the following:
       ``(a) Authorization of Appropriations.--There are 
     authorized to be appropriated to the Library of Congress 
     amounts necessary to carry out this chapter, not to exceed 
     $530,000 for each of the fiscal years 2005 through 2009. 
     These amounts are to be made available to the corporation to 
     match any private contributions (whether in currency, 
     services, or property) made to the corporation by private 
     persons and State and local governments.
       ``(b) Limitation Related to Administrative Expenses.--
     Amounts authorized under this section may not be used by the 
     corporation for management and general or fundraising 
     expenses as reported to the Internal Revenue Service as part 
     of an annual information return required under the Internal 
     Revenue Code of 1986.''.

                 TITLE IV--PRESERVATION OF ORPHAN WORKS

     SEC. 401. SHORT TITLE.

       This title may be cited as the ``Preservation of Orphan 
     Works Act''.

     SEC. 402. REPRODUCTION OF COPYRIGHTED WORKS BY LIBRARIES AND 
                   ARCHIVES.

       Section 108(i) of title 17, United States Code, is amended 
     by striking ``(b) and (c)'' and inserting ``(b), (c), and 
     (h)''.

  Mr. LEAHY. Mr. President, today I join my colleagues, Senators Hatch, 
Feinstein, and Cornyn, introducing an important piece of bipartisan 
intellectual property legislation. The provisions of the ``Family 
Entertainment and Copyright Act of 2005'' are virtually identical to 
those in the bill we passed in the waning days of the 108th Congress. 
Unfortunately, that package of intellectual property bills was hijacked 
in an effort to use it as a vehicle to pass unrelated legislation. The 
effort failed, and in the end so did Congress: we were not able to send 
to the President the most important package of intellectual property 
legislation on last year's agenda. The legislation passed in the 
Senate--several times in fact--but there was simply not enough time for 
the House of Representatives to act.
  I am pleased that we were able to salvage two components of last 
year's bill. As Congress came to a close, the House passed the Senate 
version of the CREATE Act, legislation I cosponsored with Senator 
Hatch. The new law will continue to encourage collaborative research 
partnerships between private industry and not-for-profits, such as 
universities. We were also able to send to the President the Anti-
counterfeiting Amendments Act, a version of Senator Biden's legislation 
that my friend from Delaware has championed for several years. Both 
laws are important, but our task remains incomplete.
  It is time to enact the remaining components of the Family 
Entertainment and Copyright Act, to finish off the work of the 108th 
Congress as we begin the 109th.
  Title I of the bill contains the ``Artists'' Rights and Theft 
Prevention Act,'' better known as the ART Act. This provision passed 
the Senate as a standalone bill in June of 2004, and again as part of 
the FECA bill at the end of the last Congress. The bill will make 
important inroads in the fight against movie piracy by criminalizing 
the use of camcorders to pilfer movies from the big screen. It will 
also direct the Register of Copyrights to create a registry of pre-
release works in order to better address the problem of movie-theft 
before these works are offered for legal distribution.
  The next title of the bill is the Family Movie Act, which will 
preserve the rights of families to watch motion pictures in the manner 
they see fit. At the same time, the Act protects the rights of 
directors and copyright holders to maintain the artistic vision and 
integrity of their works. A version of this legislation passed the 
other chamber in September of 2004, and it passed the Senate as part of 
the FECA bill at the end of the 108th Congress.
  Title III of the bill is the Film Preservation Act, legislation that 
I sponsored in the last Congress. A version of this bill, too, was part 
of the FECA bill that passed the Senate last Congress. The Film 
Preservation Act will allow the Library of Congress to continue its 
important work in preserving America's fading film treasures. The works 
preserved by this important program include silent-era films, avant-
garde works, ethnic films, newsreels, and home movies that are in many 
ways more illuminating on the question of who we are as a society than 
the Hollywood sound features kept and preserved by major studios. 
What's more, the bill will assist libraries, museums, and archives in 
preserving films, and in making those works available to researchers 
and the public.
  Finally, the bill contains the Preservation of Orphan Works Act. This 
provision corrects for a drafting error in the Sonny Bono Copyright 
Term Extension Act. Correction of this error will allow libraries to 
create copies of certain copyrighted works, such as films and musical 
compositions that are in the last 20 years of their copyright term, are 
no longer commercially exploited, and are not available at a reasonable 
price. Again, this provision ensures that copies of culturally-
illuminating works are not lost to history.
  Anytime we enact a package of legislation as large as the ``Family 
Entertainment and Copyright Act,'' building consensus is difficult. 
However, this is a chamber built on collegiality and compromise, and 
while I may have crafted specific components of this package 
differently, I believe that the final result we have achieved is one 
worthy of enactment. The components of this package have already passed 
the Senate at least once, and I have received assurances from the other 
chamber that the bill will receive swift consideration once it is 
approved in this body.
  The legislative process is functioning well when we work with our 
colleagues across the aisle, and it is at its best when we work on a 
bipartisan basis with our friends in the other chamber. This bill has 
benefited from both. The agenda of the 109th Congress promises many 
issues that divide us, but this is not such a bill: It has garnered 
broad consensus, and I hope that we can finally move to swiftly enact 
it.
  Mr. CORNYN. Mr. President, in the fall of 2003, I introduced S. 1932, 
the Artists' Rights and Theft Prevention Act of 2003, along with my 
friend from California, Senator Feinstein. As introduced, the ART Act 
was a modest but necessary first step to combat the rampant piracy 
plaguing the motion picture, recording and general content industries. 
The Bill focuses on the most egregious form of copyright piracy 
plaguing the entertainment industry today--the piracy of film, movies, 
and other copyrighted materials before copyright owners have had the 
opportunity to market fully their products.
  Now, as part of a comprehensive package, ``the Family Entertainment 
and Copyright Act of 2005,'' it is even more significant. This package 
contains a number of targeted, important reforms that help strengthen 
our intellectual property laws. I rise to express my strong support for 
the bill and ask my colleagues to move it expeditiously.
  Intellectual property laws and the American businesses that rely on 
them deserve our strongest support. Our Nation was founded on a number 
of important ideas. One central one was that the value created by the 
work and sweat of a person should be recognized as that person's 
property and should be protected. Protecting the creativity and capital 
that American innovators invest to make our lives richer is the right 
thing to do. Failure to do so not only would diminish the quality of 
our individual lives, but our country would suffer too. Intellectual 
property-related industries are a central driver of our Nation's 
economy and a staple of our international trade.
  The copyright-based industries alone accounted for more than 5 
percent of the U.S. GDP or $535,100,000,000 in 2001 and almost 6 
percent of U.S. employment, and led all major industry sectors in 
foreign sales and exports in 2001, the last year for which we have 
figures.
  As the Justice Department recently has pointed out:


[[Page S499]]


       Ideas and the people who generate them serve as critical 
     resources both in our daily lives and in the stability and 
     growth of America's economy. The creation of intellectual 
     property--from designs for new products to artistic 
     creations--unleashes our Nation's potential, brings ideas 
     from concept to commerce, and drives future economic and 
     productivity gains. In the increasingly knowledge-driven, 
     information age economy, intellectual property is the new 
     coin of the realm. . . . [Report of the DOJ Task Force on 
     Intellectual Property, p. 7.]

  As the DOJ IP Task Force Report notes, America's economy relies more 
and more on ideas we create, not things we make. We need to protect our 
Nation's innovative and creative works with strong laws and enforcement 
of those laws because doing so is vital to our national economic 
security.
  Having noted and quoted the DOJ Report, I want to pause to thank the 
Justice Department and outgoing Attorney General John Ashcroft for 
taking these issues seriously and for taking significant steps to 
address them. The formation of the Intellectual Property Task Force 
spotlighted these issues at the Justice Department and the work of the 
Task Force, headed by David Israelite did a superb job in developing 
comprehensive and serious steps better protecting our intellectual 
property interests. The DOJ engaged in serious domestic and 
international investigations and prosecutions against digital thieves 
who have misused promising digital technology like the Internet to 
further their attacks on American businesses. General Ashcroft and the 
Justice Department, who deserve our gratitude for so many reasons, 
certainly deserve it for their efforts on this area.
  Having provided that foundation, let me discuss briefly some of the 
important provisions contained in this legislative package.
  We have purposefully compiled a package of legislation that strikes a 
balance between innovation and copyright protection. One needn't be 
sacrificed to encourage the other--rather they go hand-in-hand.
  First, I would mention the Cornyn-Feinstein ``Artist's Rights and 
Theft Prevention Act'' or the ART Act. Notably, it contains a provision 
making it a felony to record a movie in a theater. One of the principal 
ways that movie piracy happens is by thieves sitting in a movie 
theater, or bribing a projectionist to help them, and recording movies 
with small camcorders. These camcorded copies can then make their way 
around the world on the internet and usually land on the streets of 
cities around the world in pirated copies sold on the street, often the 
day the movie opens in the U.S. or even before the movie opens in many 
countries.
  All it takes is a single or a small handful of camcorded copies 
distributed worldwide to have a devastating effect on a movie's 
profitability. Movies are generally an investment of tens or hundreds 
of millions of dollars that rely on box office and home video and other 
subsequent sales to recoup this investment. A camcorded copy released 
early in any of these cycles can undermine the economics of this 
business, and especially if they hit the streets or the internet while 
the movie is still in theaters. This is theft, and it is theft that 
supports organized crime groups, and perhaps, even terrorism. It 
deserves to be stopped by the specter of a federal felony.
  Its second key provision focuses on so-called ``pre-released'' works. 
Because serious harm can be done to both the reputation of and market 
for creative products if they are pirated before they actually come to 
market, we have included reforms in the ART Act and this package that 
make it easier for the Justice Department to prosecute those who steal 
and distribute copies of copyrighted works on the internet before they 
are released to the public by their owners or authorized distributors. 
We make the prosecutor's job easier by allowing certain presumptions 
with regard to the harm caused, including the dollar amount and number 
of copies, necessary to allow the prosecutor to bring a felony action 
where the works in question are being prepared for commercial release 
but have not been released to the public legitimately. This is fair 
because no one can legitimately believe that they are within their 
rights copying and distributing works that are not yet available in the 
marketplace. Again this is a common sense concept, which deserves the 
support of the Congress.
  Also, I would mention the Family Movie Act--another important 
component of this package. This provision allows the use of certain, 
specified technology to skip or mute content that may be objectionable 
to certain viewers when watching a movie at home, so long as no fixed 
copy of the edited work is made.
  Very few would argue that many of the movies produced today contain 
significant amounts of gratuitous sex, violence, foul language or other 
potentially objectionable content. A number of innovative companies 
have stepped forward to solve this problem by providing filters that 
tag such scenes and allows consumers to tailor their viewing 
experience.
  This legislation is designed to solve an on-going controversy 
surrounding the use of such technology. Specifically, there is 
litigation pending over the issue of whether providing edited versions 
of movies to consumers creates a ``derivative work'' that violates the 
rights of those who created or own the copyrights and trademarks for 
the original movies. The existence of this controversy arguably is 
hampering the development of the technology that families may find 
helpful in protecting children from potentially objectionable content.
  Let me make clear that this bill is not designed to deal with ad-
skipping by consumers in the home. I know that there has been some 
misinformation about this by groups who apparently oppose copyright 
protections generally, but this bill has nothing to do with anything 
other than using a certain kind of technology to modify the viewing 
experience of a movie to skip over objectionable content.
  Finally, the two remaining provisions--though relatively small--are 
not insignificant. The Film Preservation Act, legislation that I 
recognize is particularly important to Senator Leahy, and I thank him 
for his efforts in promoting it, will reauthorize a Library of Congress 
Program dedicated to saving rare and significant films. Additionally, 
we make a small but necessary change to the Sonny Bono Copyright Term 
Extension Act. Correction of this error will allow libraries to create 
copies of certain copyrighted works, such as films and musical 
compositions that are in the last 20 years of their copyright term, are 
no longer commercially exploited, and are not available at a reasonable 
price.
  Before I relinquish my time, I do want to thank a number of people 
who have worked tirelessly on behalf of this bill. Allow me to thank 
David Jones and Tom Sydnor of the staff of Chairman Orrin Hatch, who is 
not only our previous Judiciary Committee Chairman, but a leader on 
copyright and intellectual property issues; Susan Davies and Dan Fine 
of Senator Leahy's staff, who also has long been a leader on 
intellectual property issues; and finally, David Hantman of Senator 
Feinstein's staff, a Senator with whom I am happy to have teamed to 
introduce the ART Act in the last Congress.
  Having begun with the staff, who rarely get mentioned as much as they 
deserve for the great work they do, let me also thank the Senators they 
work for: Senators Hatch, Leahy, and Feinstein for their co-
sponsorship, as well as the Majority Leader, who has taken a personal 
interest in this legislation and worked to make it happen.
  Mr. CORNYN. Mr. President, would the Senator yield for a quick 
question?
  Mr. HATCH. I would be happy to yield for a question from the 
distinguished Senator from Texas.
  Mr. CORNYN. As the chairman knows, he and I and our other cosponsors 
have worked throughout last Congress on the provisions of the Family 
Entertainment and Copyright Act of 2005 that we have introduced today. 
With respect to the Family Movie Act portion of the bill, I just wanted 
to raise the point that there had been some concern over the potential 
effect of the FMA on future cases involving ``ad skipping'' 
technologies and ask if you would have any objection to including in 
the record the relevant portion of the floor discussion on that issue 
from last Congress?
  Mr. HATCH. I thank my friend, the Senator from Texas, for that 
reminder. I would certainly have no objection to entering our previous 
colloquy into the Record again and ask unanimous consent that it appear 
after our remarks.

[[Page S500]]

  Mr. HATCH. Mr. President, Section 102 of the ART Act establishes a 
new provision of Title 18 entitled, ``Unauthorized Recording of Motion 
Pictures in a Motion Picture Exhibition Facility.'' I ask Senator 
Cornyn, what is the purpose of this provision?
  Mr. CORNYN. Section 102 addresses a serious piracy issue facing the 
movie business: the use of camcorders in a motion picture theater. Sad 
to say, there are people who go to the movie theater, generally during 
pre-opening ``screenings'' or during the first weekend of theatrical 
release, and using sophisticated digital equipment, record the movie. 
They're not trying to save $8.00 so they can see the movie again. 
Instead, they sell the camcorded version to a local production factory 
or to an overseas producer, where it is converted into DVDs or similar 
products and sold on the street for a few dollars per copy. This misuse 
of camcorders is a significant factor in the estimated $3.5 billion per 
year of losses the movie industry suffers because of hard goods piracy. 
Even worse, these camcorded versions are posted on the Internet through 
``P2P'' networks such as KaZaA, Grokster and Morpheus--and made 
available for millions to download. The goal of our bill is to provide 
a potent weapon in the arsenal of prosecutors to stem the piracy of 
commercially valuable motion pictures at its source.
  Mr. HATCH. I have heard it said that this bill could be used against 
a salesperson or a customer at stores such as Best Buy or Circuit City 
if he or she were to point a video camera at a television screen 
showing a movie. Is this cause for concern?
  Mr. CORNYN. Absolutely not. The offense is only applicable to 
transmitting or copying a movie in a motion picture exhibition 
facility, which has to be a movie theater or similar venue ``that is 
being used primarily for the exhibition of a copyrighted motion 
picture.'' In the example of Best Buy--the store is being used 
primarily to sell electronic equipment, not to exhibit motion pictures. 
For the same reason, the statute would not cover a university student 
who records a short segment of a film being shown in film class, as the 
venue is being used primarily as a classroom, and not as a movie 
theater.
  Mr. HATCH. Does the Senator from California agree with your colleague 
from Texas?
  Mrs. FEINSTEIN. Absolutely on all points.
  Mr. HATCH. I have also heard some say that this statute could be used 
to prosecute someone for camcording a DVD at his home. Is this a fair 
concern?
  Mrs. FEINSTEIN. No, it is not. The definition of a motion picture 
exhibition facility includes the concept that the exhibition has to be 
``open to the public or is made to an assembled group of viewers 
outside of a normal circle of a family and its social acquaintances.'' 
This definition makes clear that someone recording from a television in 
his home does not meet that definition. It is important to emphasize 
that the clause ``open to the public'' applies specifically to the 
exhibition, not to the facility. An exhibition in a place open to the 
public that is itself not made to the public is not the subject of this 
bill.
  Thus, for example, a university film lab may be ``open to the 
public.'' However, a student who is watching a film in that lab for his 
or her own study or research would not be engaging in an exhibition 
that is ``open to the public.'' Thus, if that student copied an excerpt 
from such an exhibition, he or she would not be subject to liability 
under the bill.
  Mr. HATCH. Do the users of hearing aids, cell phones or similar 
devices have anything to fear from this statute?
  Mrs. FEINSTEIN. Of course not. The statute covers only a person who 
``knowingly uses or attempts to use an audiovisual recording device to 
transmit or make a copy of a motion picture or other audiovisual work 
protected under Title 17, or any part thereof. . . .'' In other words, 
the defendant would have to be making, or attempting to make, a copy 
that is itself an audiovisual work, or make, or attempt to make, a 
transmission embodying an audiovisual work, as that term is defined in 
Section 101 of Title 17. As such, the Act would not reach the conduct 
of a person who uses a hearing aid, a still camera, or a picture phone 
to capture an image or mere sound from the movie.
  Mr. HATCH. It appears that there is no fair use exception to this 
provision. Is that correct?
  Mrs. FEINSTEIN. This is a criminal provision under Title 18, not a 
copyright provision under Title 17. Accordingly, there is no fair use 
exception included. However, Federal prosecutors should use their 
discretion not to bring criminal prosecutions against activities within 
movie theaters that would constitute fair use under the copyright laws. 
The object of this legislation is to prevent the copying and 
distribution of motion pictures in a manner that causes serious 
commercial harm. This legislation is not intended to chill legitimate 
free speech.
  Mr. HATCH. Does the Senator from Texas agree?
  Mr. CORNYN. Yes, on all points.
  Mr. CORNYN. Mr. President, would the chairman yield for a question?
  Mr. HATCH. I would be happy to yield for a question from the 
distinguished Senator from Texas.
  Mr. CORNYN. As the chairman knows, he and I and our other co-sponsors 
have worked throughout this Congress on the provisions of the Family 
Entertainment and Copyright Act of 2004 that we have introduced today. 
I just want to confirm what I believe to be our mutual understanding 
about the effect of certain provisions of the Family Movie Act. Title 
II of the Family Entertainment and Copyright Act of 2004 that we 
introduced today modifies slightly the Family Movie Act provisions of 
H.R. 4077 as passed by the House of Representatives. That bill created 
a new exemption in section 110(11) of the Copyright Act for skipping 
and muting audio and video content in motion pictures during 
performances that take place in the course of a private viewing in a 
household from an authorized copy of the motion picture. The House-
passed version specifically excluded from the scope of the new 
copyright exemption computer programs or technologies that make 
changes, deletions, or additions to commercial advertisements or to 
network or station promotional announcements that would otherwise be 
displayed before, during, or after the performance of the motion 
picture.
  My understanding is that this provision reflected a ``belt and 
suspenders'' approach that was adopted to quiet the concerns of some 
Members in the House who were concerned that a court might misread the 
statute to apply to ``ad-skipping'' cases. Some Senators, however, 
expressed concern that the inclusion of such explicit language could 
create unwanted inferences as to the ``ad-skipping'' issues at the 
heart of the recent litigation. Those issues remain unsettled, and it 
was never the intent of this legislation to resolve or affect those 
issues. In the meantime, the Copyright Office has confirmed that such a 
provision is unnecessary to achieve the intent of the bill, which is to 
avoid application of this new exemption in potential future cases 
involving ``ad-skipping'' devices; therefore, the Senate amendment we 
offer removes the unnecessary exclusionary language.
  Would the chairman confirm for the Senators present his understanding 
of the intent and effect, or perhaps stated more appropriately, the 
lack of any effect, of the Senate amendment on the scope of this bill?
  Mr. HATCH. My cosponsor, Senator Cornyn, raises an important point. 
While we removed the ``ad-skipping'' language from the statute to avoid 
this unnecessary controversy, you are absolutely correct that this does 
not in any way change the scope of the bill. The bill protects the 
``making imperceptible . . . limited portions of audio or video content 
of a motion picture . . .'' An advertisement, under the Copyright Act, 
is itself a ``motion picture,'' and thus a product or service that 
enables the skipping of an entire advertisement, in any media, would be 
beyond the scope of the exemption. Moreover, the phrase ``limited 
portions'' is intended to refer to portions that are both 
quantitatively and qualitatively insubstantial in relation to the work 
as a whole. Where any substantial part of a complete work, such as a 
commercial advertisement, is made imperceptible, the new section 
110(11) exemption would not apply.
  The limited scope of this exemption does not, however, imply or show 
that

[[Page S501]]

such a product would be infringing. This legislation does not in any 
way deal with that issue. It means simply that such a product is not 
immunized from liability by this exemption.
  Mr. CORNYN. I thank the chairman. I am pleased that we share a common 
understanding. If the chairman would yield for one more question about 
the Family Movie Act?
  Mr. HATCH. Certainly.
  Mr. CORNYN. This bill also differs from the House-passed version 
because it adds two ``savings clauses.'' As I understand it, the 
``copyright'' savings clause makes clear that there should be no 
``spillover effect'' from the passage of this law: that is, nothing 
shall be construed to have any effect on rights, defenses, or 
limitations on rights granted under title 17, other than those 
explicitly provided for in the new section 110(11) exemption. The 
second, relating to trademark, clarifies that no inference can be drawn 
that a person or company who fails to qualify for the exemption from 
trademark infringement found in this provision is therefore liable for 
trademark infringement. Is that the chairman's understanding as well?
  Mr. HATCH. Yes it is. Let me ask that a copy of the section-by-
section analysis of the Family Movie Act as amended by the Senate be 
included in the Record. This section-by-section analysis contains a 
more complete analysis of the bill as proposed today in the Senate, 
including the limited changes made by the bill Senators Leahy, Cornyn, 
Biden, and I offer today.
  The analysis follows.

 Section-by-Section Analysis of the Family Movie Act of 2004, Amended 
                        and Passed by the Senate


                                overview

       Title II of the Family Entertainment and Copyright Act of 
     2004 incorporates the House-passed provision of the Family 
     Movie Act of 2004, with limited changes as reflected in this 
     section-by-section analysis. As discussed herein, these 
     changes are not intended to and do not affect the scope, 
     effect or application of the bill.
       The purpose of the Family Movie Act is to empower private 
     individuals to use technology to skip and mute material that 
     they find objectionable in movies, without impacting 
     established doctrines of copyright or trademark law or those 
     whose business models depend upon advertising. This amendment 
     to the law should be narrowly construed to effect its 
     intended purpose only. The sponsors of the legislation have 
     been careful to tailor narrowly the legislation to clearly 
     allow specific, consumer-directed activity and not to open or 
     decide collateral issues or to affect any other potential 
     or actual disputes in the law.
       The bill as proposed in the Senate makes clear that, under 
     certain conditions, ``making imperceptible'' of limited 
     portions of audio or video content of a motion picture--that 
     is, skipping and muting limited portions of movies without 
     adding any content--as well as the creation or provision of a 
     computer program or other technology that enables such making 
     imperceptible, does not violate existing copyright or 
     trademark laws. That is true whether the movie is on 
     prerecorded media, like a DVD, or is transmitted to the home, 
     as through pay-per-view and ``video-on-demand'' services.
     Subsection (a): Short Title
       Subsection (a) sets forth the short title of the bill as 
     the Family Movie Act of 2004.
     Subsection (b): Exemption from Copyright and Trademark 
         Infringement for Skipping of Audio or Video Content of 
         Motion Pictures
       Subsection (b) is the Family Movie Act core provision and 
     creates a new exemption at section 110(11) of the Copyright 
     Act for the ``making imperceptible'' of limited portions of 
     audio or video content of a motion picture during a 
     performance in a private household. This new exemption sets 
     forth a number of conditions to ensure that it achieves its 
     intended effect while remaining carefully circumscribed and 
     avoiding any unintended consequences. The conditions that 
     allow an exemption, which are discussed in more detail below, 
     consist of the following:
       The making imperceptible must be ``by or at the direction 
     of a member of a private household.'' This legislation 
     contemplates that any altered performances of the motion 
     picture would be made either directly by the viewer or at the 
     direction of a viewer where the viewer is exercising 
     substantial choice over the types of content they choose to 
     skip or mute.
       The making imperceptible must occur ``during a performance 
     in or transmitted to the household for private home 
     viewing.'' Thus, this provision does not exempt an 
     unauthorized ``public performance'' of an altered version.
       The making imperceptible must be ``from an authorized copy 
     of a motion picture.'' Thus, skipping and muting from an 
     unauthorized or ``bootleg'' copy of a motion picture would 
     not be exempt.
       No ``fixed copy'' of the altered version of the motion 
     picture may be created by the computer program or other 
     technology that makes imperceptible portions of the audio or 
     video content of the motion picture. This provision makes 
     clear that services or technologies that make a fixed copy of 
     the altered version are not afforded the benefit of this 
     exemption.
       The ``making imperceptible'' of limited portions of a 
     motion picture does not include the addition of audio or 
     video content over or in place of other content, such as 
     placing a modified image of a person, a product, or an 
     advertisement in place of another, or adding content of any 
     kind.
       These limitations, and other operative provisions of this 
     new section 110(11) exemption, merit further elaboration as 
     to their purposes and effects.
       The bill makes clear that the ``making imperceptible'' of 
     limited portions of audio or video content of a motion 
     picture must be done by or at the direction of a member of a 
     private household. While this limitation does not require 
     that the individual member of the private household exercise 
     ultimate decision-making over each and every scene or element 
     of dialog in the motion picture that is to be made 
     imperceptible, it does require that the making imperceptible 
     be made at the direction of that individual in response to 
     the individualized preferences expressed by that individual. 
     The test of ``at the direction of an individual'' would be 
     satisfied when an individual selects preferences from among 
     options that are offered by the technology.
       An example is the C1earPlay model. C1earPlay provides so-
     called `` filter files'' that allow a viewer to express his 
     or her preferences in a number of different categories, 
     including language, violence, drug content, sexual content, 
     and several others. The version of the movie that the viewer 
     sees depends upon the preferences expressed by that viewer. 
     Such a model would fall under the liability limitation of the 
     Family Movie Act.
       This limitation, however, would not allow a program 
     distributor, such as a provider of video-on-demand services, 
     a cable or satellite channel, or a broadcaster, to make 
     imperceptible limited portions of a movie in order to provide 
     an altered version of that movie to all of its customers, 
     which could violate a number of the copyright owner's 
     exclusive rights, or to make a determination of scenes to be 
     skipped or dialog to be muted and to offer to its viewers no 
     more of a choice than to view an original or an altered 
     version of that film. Some element of individualized 
     preferences and control must be present such that the viewer 
     exercises substantial choice over the types of content they 
     choose to skip or mute.
       It is also important to emphasize that the new section 
     110(11) exemption is targeted narrowly and specifically at 
     the act of ``making imperceptible'' limited portions of audio 
     or video content of a motion picture during a performance 
     that occurs in, or that is transmitted to, a private 
     household for private home viewing. This section would not 
     exempt from liability an otherwise infringing performance, or 
     a transmission of a performance, during which limited 
     portions of audio or video content of the motion picture are 
     made imperceptible. In other words, where a performance in a 
     household or a transmission of a performance to a household 
     is done lawfully, the making imperceptible limited portions 
     of audio or video content of the motion picture during that 
     performance, consistent with the requirements of this new 
     section, will not result in infringement liability. 
     Similarly, an infringing performance in a household, or an 
     infringing transmission of a performance to a household, are 
     not rendered non-infringing by section 110(11) by virtue of 
     the fact that limited portions of audio or video content of 
     the motion picture being performed are made imperceptible 
     during such performance or transmission in a manner 
     consistent with that section.
       The bill also provides additional guidance, if not an exact 
     definition, of what the term ``making imperceptible'' means. 
     The bill provides specifically that the term ``making 
     imperceptible'' does not include the addition of audio or 
     video content that is performed or displayed over or in place 
     of existing content in a motion picture. This is intended to 
     make clear in the text of the statute what has been expressed 
     throughout the consideration of this legislation, which is 
     that the Family Movie Act does not enable the addition of 
     content of any kind, including the making imperceptible of 
     audio or video content by replacing it or by superimposing 
     other content over it. In other words, for purposes of 
     section 110(11), ``making imperceptible'' refers solely to 
     skipping scenes and portions of scenes or muting audio 
     content from the original, commercially available version of 
     the motion picture. No other modifications of the content are 
     addressed or immunized by this legislation.
       The House sponsor of this legislation noted in his 
     explanation of his bill, and the Senate is also aware, that 
     some copy protection technologies rely on matter placed into 
     the audio or video signal. The phrase ``limited portions of 
     audio or video content of a motion picture'' means what it 
     would naturally seem to mean (i.e., the actual content of 
     the motion picture) and does not refer to any component of 
     a copy protection scheme or technology. This provision 
     does not allow the skipping of technologies or other copy-
     protection-related matter for the purpose of defeating 
     copy protection. Rather, it is expected that skipping and 
     muting of content

[[Page S502]]

     in the actual motion picture will be skipped or muted at 
     the direction of the viewer based on that viewer's desire 
     to avoid seeing or hearing the action or sound in the 
     motion picture. Skipping or muting done for the purpose of 
     or having the effect of avoiding copy protection 
     technologies would be an abuse of the safe harbor outlined 
     in this legislation and may violate section 1201 of title 
     17.
       Violating the Digital Millennium Copyright Act, and 
     particularly its anti-circumvention provisions, is not 
     necessary to enable technology of the kind contemplated under 
     the Family Movie Act. Although the amendment to section 110 
     provides that it is not an infringement of copyright to 
     engage in the conduct that is the subject of the Family Movie 
     Act, the Act does not provide any exemption from the anti-
     circumvention provisions of section 1201 of title 17, or from 
     any other provision of chapter 12 of title 17. It would not 
     be a defense to a claim of violation of section 1201 that the 
     circumvention is for the purpose of engaging in the conduct 
     covered by this new exemption in section 110(11), just as it 
     is not a defense under section 1201 that the circumvention is 
     for the purpose of engaging in any other non-infringing 
     conduct.
       There are a number of companies currently providing the 
     type of products and services covered by this Act. The Family 
     Movie Act is intended to facilitate the offering of such 
     products and services, and it certainly creates no impediment 
     to the technology employed by those companies. Indeed, it is 
     important to underscore the fact that the support for such 
     technology and consumer offerings that is reflected in this 
     legislation is driven in some measure by the desire for 
     copyright law to be respected and to ensure that technology 
     is deployed in a way that supports the continued creation and 
     protection of entertainment and information products that 
     rely on copyright protection. This legislation reflects the 
     firm expectation that those rights and the interests of 
     viewers in their homes can work together in the context 
     defined in this bill. Any suggestion that support for the 
     exercise of viewer choice in modifying their viewing 
     experience of copyrighted works requires violation of either 
     the copyright in the work or of the copy protection schemes 
     that provide protection for such work should be rejected as 
     counter to legislative intent or technological necessity.
       The House-passed bill included an explicit exclusion to the 
     new section 110(11) exemption in cases involving the making 
     imperceptible of commercial advertisements or network or 
     station promotional announcements. This provision was added 
     on the House floor to respond to concerns expressed by 
     Members during the House Judiciary Committee markup that the 
     bill might be read somehow to exempt from copyright 
     infringement liability devices that allow for skipping of 
     advertisements in the playback of recorded television (so 
     called ``ad-skipping'' devices). Such a reading is not 
     consistent with the language of the bill or its intent.
       The phrase ``limited portions of audio or video content of 
     a motion picture'' applies only to the skipping and muting of 
     scenes or dialog that are part of the motion picture itself, 
     and not to the skipping of commercial advertisements, which 
     are themselves considered motions pictures under the 
     Copyright Act. It also should be noted that the phrase 
     ``limited portions'' is intended to refer to portions that 
     are both quantitatively and qualitatively insubstantial in 
     relation to the work as a whole. Where any substantial part 
     of a complete work (including a commercial advertisement) is 
     made imperceptible, the section 110(11) exemption would not 
     apply.
       The House-passed bill adopted a ``belt and suspenders'' 
     approach to this question by adding exclusionary language in 
     the statute itself. Ultimately that provision raised concerns 
     in the Senate that such exclusionary language would result in 
     an inference that the bill somehow expresses an opinion, or 
     even decides, the unresolved legal questions underlying 
     recent litigation related to these so-called ``ad-skipping'' 
     devices. In the meantime, the Copyright Office also made 
     clear that such exclusionary language is not necessary. In 
     other words, the exclusionary language created unnecessary 
     controversy without adding any needed clarity to the statute.
       Thus, the Senate amendment omits the exclusionary language 
     while leaving the scope and application of the bill exactly 
     as it was when it passed the House. The legislation does not 
     provide a defense in cases involving so-called ``ad-
     skipping'' devices, and it also does not affect the legal 
     issues underlying such litigation, one way or another. 
     Consistent with the intent of the legislation to fix a narrow 
     and specific copyright issue, this bill seeks very clearly to 
     avoid unnecessarily interfering with current business models, 
     especially with respect to advertising, promotional 
     announcements, and the like. Simply put, the bill as amended 
     in the Senate is narrowly targeted to the use of technologies 
     and services that filter out content in movies that a viewer 
     finds objectionable, and it in no way relates to or affects 
     the legality of so-called ``ad-skipping'' technologies.
       There are a variety of services currently in litigation 
     that distribute actual copies of altered movies. This type of 
     activity is not covered by the section 110(11) exemption 
     created by the Family Movie Act. There is a basic distinction 
     between a viewer choosing to alter what is visible or audible 
     when viewing a film, the focus of this legislation, and a 
     separate entity choosing to create and distribute a single, 
     altered version to members of the public. The section 110(11) 
     exemption only applies to viewer directed changes to the 
     viewing experience, and not the making or distribution of 
     actual altered copies of the motion picture.
       Related to this point, during consideration of this 
     legislation in the House there were conflicting expert 
     opinions on whether fixation is required to infringe the 
     derivative work right under the Copyright Act, as well as 
     whether evidence of Congressional intent in enacting the 1976 
     Copyright Act supports the notion that fixation should not be 
     a prerequisite for the preparation of an infringing 
     derivative work. This legislation should not be construed to 
     be predicated on or to take a position on whether fixation is 
     necessary to violate the derivative work right, or whether 
     the conduct that is immunized by this legislation would be 
     infringing in the absence of this legislation. Subsection (b) 
     also provides a savings clause to make clear that the newly-
     created copyright exemption is not to be construed to have 
     any effect on rights, defenses, or limitations on rights 
     granted under title 17, other than those explicitly provided 
     for in the new section 110(11) exemption.
     Subsection (c): Exemption from Trademark Infringement
       Subsection (c) provides for a limited exemption from 
     trademark infringement for those engaged in the conduct 
     described in the new section 110(11) of the Copyright Act. In 
     short, this subsection makes clear that a person engaging in 
     the conduct described in section 110(11)--the ``making 
     imperceptible'' of portions of audio or video content of a 
     motion picture or the creation or provision of technology to 
     enable such making available--is not subject to trademark 
     infringement liability based on that conduct, provided that 
     person's conduct complies with the requirements of section 
     110(11). This section provides a similar exemption for a 
     manufacturer, licensee or licensor of technology that enables 
     such making imperceptible, but such manufacturer, licensee or 
     licensor is subject to the additional requirement that it 
     ensure that the technology provides a clear and conspicuous 
     notice at the beginning of each performance that the 
     performance of the motion picture is altered from the 
     performance intended by the director or the copyright holder.
       Of course, nothing in this section would immunize someone 
     whose conduct, apart from the narrow conduct described by 
     110(11), rises to the level of a Lanham Act violation. For 
     example, someone who provides technology to enable the making 
     imperceptible limited portions of a motion picture consistent 
     with section 110(11) could not be held liable on account of 
     such conduct under the Trademark Act, but if in providing 
     such . . .

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