[Congressional Record (Bound Edition), Volume 145 (1999), Part 21]
[Senate]
[Pages 31312-31313]
[From the U.S. Government Publishing Office, www.gpo.gov]



 DIGITAL THEFT DETERRENCE AND COPYRIGHT DAMAGES IMPROVEMENT ACT OF 1999

 Mr. LEAHY. Mr. President, the Senate is today passing an 
important bill, H.R. 3456, which is the Hatch-Leahy-Schumer ``Digital 
Theft Deterrence and Copyright Damages Improvement Act of 1999.'' This 
legislation should help our copyright industries, which in turn helps 
both those who are employed in those industries and those who enjoy the 
wealth of consumer products, including books, magazines, movies, and 
computer software, that makes the vibrant culture of this country the 
envy of the world.
  This legislation has already traveled an unnecessarily bumpy road to 
get to this stage of final passage, and it should be sent promptly to 
the President's desk.
  On July 1, 1999, the Senate passed four intellectual property bills, 
which Senator Hatch and I had joined in introducing and which the 
Judiciary Committee had unanimously reported. Each of these bills (S. 
1257, the text of which is considered today as H.R. 3456; S. 1258, the 
``Patent Fee Integrity and Innovation Protection Act''; S. 1259, the 
``Trademark Amendments Act''; and S. 1260, the ``Copyright Act 
Technical Corrections Act'') make important improvements to our 
intellectual property laws, and I congratulate Senator Hatch for his 
leadership in moving these bills promptly through the Committee and the 
Senate.
  Three of those four bills then passed the House without amendment and 
were signed by the President on August 5, 1999. The House sent back to 
the Senate S. 1257, the ``Digital Theft Deterrence and Copyright 
Damages Improvement Act,'' with two modifications which I will describe 
below. Working with Senator Hatch and our colleagues in the House, we 
agreed upon additional revisions in the bill, which was then introduced 
as H.R. 3456 and passed by the House yesterday in time for Senate 
consideration before the end of this congressional session.
  I have long been concerned about reducing the levels of software 
piracy in this country and around the world. The theft of digital 
copyrighted works and, in particular, of software, results in lost jobs 
to American workers, lost taxes to Federal and State governments, and 
lost revenue to American companies. A recent report released by the 
Business Software Alliance estimates that worldwide theft of 
copyrighted software in 1998 amounted to nearly $11 billion. According 
to the report, if this ``pirated software has instead been legally 
purchased, the industry would have been able to employ 32,700 more 
people. In 2008, if software piracy remains at its current rate, 52,700 
jobs will be lost in the core software industry.'' This theft also 
reflects losses of $991 million in tax revenue in the United States.

[[Page 31313]]

  These statistics about the harm done to our economy by the theft of 
copyrighted software alone, prompted me to introduce the ``Criminal 
Copyright Improvement Act'' in both the 104th and 105th Congresses, and 
to work for passage of this legislation, which was finally enacted as 
the ``No Electronic Theft Act of 1997,'' Pub. L. 105-147. The current 
rates of software piracy show that we need to do better to combat this 
theft, both with enforcement of our current copyright laws and with 
strengthened copyright laws to deter potential infringes.
  The Hatch-Leahy-Schumer ``Digital Theft Deterrence and Copyright 
Damages Improvement Act'' would help provide additional deterrence by 
amending the Copyright Act, 17 U.S.C. Sec. 504(c), to increase the 
amounts of statutory damages recoverable for copyright infringements. 
These amounts were last increased in 1988 when the United States 
acceded to the Berne Convention. Specifically, the bill would increase 
the cap on statutory damages by 50 percent, raising the minimum from 
$500 to $750 and raising the maximum from $20,000 to $30,000. In 
addition, the bill would raise from $100,000 to $150,000 the amount of 
statutory damages for willful infringements.
  Courts determining the amount of statutory damages in any given case 
would have discretion to impose damages within these statutory ranges 
at just and appropriate levels, depending on the harm caused, ill-
gotten profits obtained and the gravity of the offense. The bill 
preserves provisions of the current law allowing the court to reduce 
the award of statutory damages to as little as $200 in cases of 
innocent infringement and requiring the court to remit damages in 
certain cases involving nonprofit educational institutions, libraries, 
archives, or public broadcasting entities.
  Finally, the bill provides authority for the Sentencing Commission 
expeditiously to fulfill its responsibilities under the ``No Electronic 
Theft Act,'' which directed the Commission to ensure that the 
guidelines provide for consideration of the retail value and quantity 
of the items with respect to which the intellectual property offense 
was committed. Since the time that this law became effective, the 
Sentencing Commission has not had a full slate of Commissioners 
serving. In fact, we have had no Commissioners since October, 1998. 
This situation was corrected on November 10th with the confirmation of 
seven new Commissioners.
  As I noted, the House amended the version of S. 1257 that the Senate 
passed in July in two ways. First, the original House version of this 
legislation, H.R. 1761, contained a new proposed enhanced penalty for 
infringers who engage in a repeated pattern of infringement, but 
without any scienter requirement. I shared the concerns raised by the 
Copyright Office that this provision, absent a willfulness scienter 
requirement, would permit imposition of the enhanced penalty even 
against person who negligently, albeit repeatedly, engaged in acts of 
infringement. Consequently, the Hatch-Leahy-Schumer bill, S. 1257, that 
we sent to the House in July avoided casting such a wide net, which 
could chill legitimate fair uses of copyrighted works. Instead, the 
bill we sent to the House would have created a new tier of statutory 
damages allowing a court to award damages in the amount of $250,000 per 
infringed work where the infringement is part of a willful and repeated 
pattern or practice of infringement. The entire ``pattern and 
practice'' provision, which originated in the House, was removed from 
the version of S. 1257 sent back to the Senate.
  Second, the original House version of this legislation provided a 
direction to the Sentencing Commission to amend the guidelines to 
provide an enhancement based upon the retail price of the legitimate 
items that are infringed and the quantity of the infringing items. I 
was concerned that this direction would require the Commission and, 
ultimately, sentencing judges to treat similarly a wide variety of 
infringement crimes, no matter the type and magnitude of harm. This was 
a problem we avoided in the carefully crafted Sentencing Commission 
directive originally passed as part of the ``No Electronic Theft Act.'' 
Consequently, the version of S. 1257 passed by the Senate in July did 
not include the directive to the Sentencing Commission. Nevertheless, 
the House returned S. 1257 to the Senate with the same problematic 
directive to the Sentencing Commission.
  I appreciate that my House colleagues and interested stakeholders 
have worked over the past months to address my concerns over the 
breadth of the proposed directive to the Sentencing Commission, and to 
find a better definition of the categories of cases in which it would 
be appropriate to compute the applicable sentencing guideline based 
upon the retail value of the infringed upon item. A better solution 
than the one contained in the ``No Electronic Theft Act'' remains 
elusive, however.
  For example, one recent proposal sought to add to S. 1257 a direction 
to the Sentencing Commission to enhance the guideline offense level for 
copyright and trademark infringements based upon the retail price of 
the legitimate products multiplied by the quantity of the infringing 
products, except where ``the infringing products are substantially 
inferior to the infringed upon products and there is substantial price 
disparity between the legitimate products and the infringing 
products.'' This proposed direction appears to be under-inclusive since 
it would not allow a guideline enhancement in cases where fake goods 
are passed off as the real item to unsuspecting consumers, even though 
this is clearly a situation in which the Commission may decide to 
provide an enhancement.
  In view of the fact that the full Sentencing Commission has not had 
an opportunity for the past two years to consider and implement the 
original direction in the ``No Electronic Theft Act,'' passing a new 
and flawed directive appears to be both unnecessary and unwise. This is 
particularly the case since the new Commissioners have already 
indicated a willingness to consider this issue promptly. In response to 
questions posed at their confirmation hearings, each of the nominated 
Sentencing Commissioners indicated that they would make this issue a 
priority. For example, Judge William Sessions of the District of 
Vermont specifically noted that:

       If confirmed, our first task must be to address Congress' 
     longstanding directives, including implementation of the 
     guidelines pursuant to the NET Act. Congress directed the 
     Sentencing Commission to fashion guidelines under the NET Act 
     that are sufficiently severe to deter such criminal activity. 
     I personally favor addressing penalties under this statute 
     expeditiously.

  I fully concur in the judgment of Chairman Hatch that the Sentencing 
Commission directive provision added by the House should be stricken. 
The House addressed these concerns by doing just that in the new 
version of the bill, H.R. 3456, which was introduced and passed by the 
House yesterday in time for Senate consideration before the end of this 
session.
  This bill represents an improvement in current copyright law, and I 
commend its final passage.

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