[Senate Report 105-190]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 358
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-190
_______________________________________________________________________


 
              THE DIGITAL MILLENNIUM COPYRIGHT ACT OF 1998

                                _______
                                

                  May 11, 1998.--Ordered to be printed

_______________________________________________________________________


Mr. Hatch, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 2037]

    The Committee on the Judiciary reported an original bill 
(S. 2037), to amend title 17, United States Code, to implement 
the WIPO Copyright Treaty and the WIPO Performances and 
Phonograms Treaty, to provide limitations on copyright 
liability relating to material online, and for other purposes, 
having considered the same, reports favorably thereon and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose..........................................................1
 II. Legislative history..............................................2
III. Discussion.......................................................8
 IV. Vote of the committee...........................................24
  V. Section-by-section analysis.....................................25
 VI. Cost estimate...................................................62
VII. Regulatory impact statement.....................................64
VIII.Additional views of Mr. Leahy...................................65

 IX. Changes in existing law.........................................70

                               I. PURPOSE

    The ``Digital Millennium Copyright Act of 1998'' is 
designed to facilitate the robust development and world-wide 
expansion of electronic commerce, communications, research, 
development, and education in the digital age. Title I will 
implement the new World Intellectual Property Organization 
(WIPO) Copyright Treaty and the WIPO Performances and 
Phonograms Treaty, thereby bringing U.S. copyright law squarely 
into the digital age and setting a marker for other nations who 
must also implement these treaties. Title II will provide 
certainty for copyright owners and Internet service providers 
with respect to copyright infringement liability online. Title 
III will provide a clarifying exemption in the Copyright Act to 
ensure that the lawful owner or lessee of a computer machine 
May authorize an independent service technician to activate the 
computer in order to service its hardware components. Finally, 
Title IV will begin to update our nation's copyright laws with 
respect to library, archive, and educational uses of 
copyrighted works in the digital age.

                        II. LEGISLATIVE HISTORY

    Copyright laws have struggled through the years to keep 
pace with emerging technology from the struggle over music 
played on a player piano roll in the 1900's 1 to the 
introduction of the VCR in the 1980's.2 With this 
constant evolution in technology, the law must adapt in order 
to make digital networks safe places to disseminate and exploit 
copyrighted materials. The legislation implementing the 
treaties, Title I of this bill, provides this protection and 
creates the legal platform for launching the global digital on-
line marketplace for copyrighted works. It will also make 
available via the Internet the movies, music, software, and 
literary works that are the fruit of American creative genius. 
Title II clarifies the liability faced by service providers who 
transmit potentially infringing material over their networks. 
In short, Title II ensures that the efficiency of the Internet 
will continue to improve and that the variety and quality of 
services on the Internet will expand.
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    \1\ White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1 
(1908).
    \2\ Sony Corporation of America v. Universal City Studios, Inc., 
464 U.S. 417 (1984).
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    The process to update U.S. copyright law with respect to 
digital transmissions began in February, 1993, with the 
formation of the Information Infrastructure Task Force (IITF) 
to implement the Administration's vision for the National 
Information Infrastructure (NII).3 The IITF then 
established the Working Group on Intellectual Property Rights 
to investigate the effects of emerging digital technology on 
intellectual property rights and make recommendations on any 
appropriate changes to U.S. intellectual property law and 
policy. This task force issued a report in 1995 known as the 
White Paper, which discussed the application of existing 
copyright law to the NII and recommended changes to keep 
copyright law current with new technology. 4
---------------------------------------------------------------------------
    \3\ Information Infrastructure Task Force, Intellectual Property 
and the National Information Infrastructure: The Report of the Working 
Group on Intellectual Property Rights 1 (1995). The ``National 
Information Infrastructure'' encompasses digital, interactive services 
now available, such as the Internet, as well as those contemplated for 
the future.
    \4\ Id. at 2.
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    To prepare the report, the Working Group held a public 
hearing in November 1993, at which 30 witnesses testified 
reflecting the views of copyright industries, libraries, 
educators, and beneficiaries of the public domain. The Working 
Group also solicited written comments and received some 70 
statements during a public comment period.5 
Following the Working Group's review of the public comments and 
analysis of the issues, it released a ``Green Paper'' on July 
7, 1994.6 Following the release of the Green Paper, 
the Working Group again heard testimony from the public in four 
days of hearings in Chicago, Los Angeles, and Washington, D.C., 
in September 1994. More than 1,500 pages of written comments 
were filed during the four-month comment period by more than 
150 individuals and organizations. 7
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    \5\ See Request for Comments on Intellectual Property Issues 
Involved in the National Information Infrastructure Initiative, 58 Fed. 
Reg. 53,917 (Oct. 19, 1993).
    \6\ See Information Infrastructure Task Force, Working Group on 
Intellectual Property Rights, Intellectual Property and the National 
Information Infrastructure: A Preliminary Draft of the Report of the 
Working Group on Intellectual Property Rights (July 1994).
    \7\ See Notice of Hearings and Request for Comments on Preliminary 
Draft of the Report of the Working Group on Intellectual Property 
Rights, 59 Fed. Reg. 42,819 (Aug. 19, 1994); Extension of Deadline for 
Comments on Preliminary Draft of the Report of the Working Group on 
Intellectual Property Rights, 59 Fed. Reg. 50,222 (Oct. 3, 1994).
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    The Working Group also convened a Conference on Fair Use 
(CONFU) to explore the particularly complex issue of fair use 
in a digital environment and to develop guidelines for uses of 
copyrighted works by librarians and educators.8 
CONFU issued an Interim Report in December, 1996, and a report 
in September, 1997, that concluded the first phase of 
CONFU.9 The 1997 report addressed the issues of 
digital images, distance learning, educational multimedia, 
electronic reserve systems, and use of computer software in 
libraries.
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    \8\ See, supra note 3, at 4 (1995).
    \9\ See The Conference on Fair Use; An Interim Report to the 
Commissioner (December 1996); Report to the Commissioner on the 
Conclusion of the First Phase of the Conference on Fair Use (September 
1997).
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    Interested parties had numerous opportunities to submit 
their views on the intellectual property implications of the 
development and use of the NII and on the Working Group's Green 
Paper. This open process resulted in a voluminous record 
indicating the views of a wide variety of interested parties 
including service providers, libraries, copyright owners, and 
the entertainment industries.10
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    \10\ See, supra note 3, at 5 (1995).
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    On September 28, 1995, Chairman Hatch, with Senator Leahy, 
introduced the National Information Infrastructure (NII) 
Copyright Protection Act of 1995 (S. 1284), which embodied the 
legislative recommendations of the White Paper. Congressman 
Moorhead introduced identical legislation (H.R. 2441) in the 
House on September 29, 1995, with Congresswoman Schroeder as an 
original cosponsor. 11 The Senate Judiciary 
Committee and the Subcommittee on Courts and Intellectual 
Property of the House Judiciary Committee held a joint hearing 
on November 15, 1995, to consider the NII legislation. Dr. 
Mihaly Ficsor, Assistant Director General, World Intellectual 
Property Organization; Bruce A. Lehman, Assistant Secretary of 
Commerce and Commissioner of Patents and Trademarks; and 
Marybeth Peters, Register of Copyrights and Associate Librarian 
for Copyright Services testified at the hearing.
---------------------------------------------------------------------------
    \11\ Representatives Coble, Bono, Burr, Minge, Luther, and Jacobs 
cosponsored H.R. 2241.
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    The House Subcommittee on Courts and Intellectual Property 
held a second set of hearings to consider H.R. 2441 on February 
7 and 8, 1996. On February 7, the Subcommittee heard testimony 
from Jack Valenti, Chairman and CEO, Motion Picture Association 
of America; Frances W. Preston, President and CEO, Broadcast 
Music, Inc. (BMI); Edward P. Murphy, President and CEO, 
National Music Publishers Association; Robert Holleyman, II, 
President, Business Software Alliance; Edward J. Black, 
Computer & Communications Industry Association; Barbara A. 
Munder, Senior Vice President, Corporate Affairs, McGraw Hill 
Co. and on behalf of the Information Industry Association; Gary 
L. Shapiro, Chairman, Home Recording Rights Coalition and 
President, Consumer Electronics Manufacturers Association; 
Garry L. McDaniels, President, Skills Bank Corporation; and 
David M. Ostfeld, Vice Chairman, U.S. Activities Board 
Institute for Electrical and Electronics Engineers, and Vice 
Chairman, United States Intellectual Property Committee.
    On February 8, the Subcommittee heard testimony from Jeanne 
Hurley Simon, Chair, U.S. National Commission on Libraries and 
Information Science; Dr. Tuck Tinsley III, President, American 
Printing House for the Blind, Inc.; Richard Robinson, Chair, 
President & CEO, Scholastic Corp., for the Association of 
American Publishers; Cornelius Pings, President, Association of 
American Universities; Stephen M. Heaton, Secretary and General 
Counsel, CompuServe, Inc.; Scott Purcell, President, HLC-
Internet, Inc.; William J. Cook, Partner, William, Brinks, 
Hofer, Gilson & Lione; Catherine Simmons-Gill, President, 
International Trademark Association.
    On May 7, 1996, the Senate Judiciary Committee also an 
additional hearing to consider S. 1284. The Committee heard 
testimony from John Bettis of the American Society of 
Composers, Authors, and Publishers (ASCAP); William W. 
Burrington, Assistant General Counsel and Director of Public 
Policy, America Online, Inc.; Robert L. Oakley, Professor of 
Law and Director of the Law Library, Georgetown University Law 
Center, on behalf of the Digital Future Coalition; and Daniel 
Burton, Vice President of Government Relations, Novell, Inc.
    These hearings were supplemented by a series of 
negotiations overseen by Congressman Goodlatte of the House 
Subcommittee on Courts and Intellectual Property in which 
representatives of copyright owners and Internet and online 
service providers sought to resolve the contentious issue of 
the scope of liability of service providers for the infringing 
acts of their users. Agreement was reached on some issues, but 
many of the core issues remained unresolved. Negotiations 
resumed under the auspices of the Patent and Trademark Office 
in the summer of 1996, but produced no resolution of those 
issues. Ultimately, the NII Copyright Protection Act stalled in 
the 104th Congress due largely to the unsettled nature of these 
and other issues.
    Meanwhile, parallel efforts to ensure protection of 
copyrighted works in the digital age proceeded on the 
international front. These efforts originated shortly after the 
United States ratified the Berne Convention in 1989, when the 
governing body of the Berne Union called upon WIPO to form a 
Committee of Experts concerning a possible supplementary 
agreement to the Berne Convention to clarify the existing 
provisions and explore the scope of the treaty.12 
The result was the introduction of formal proposals to update 
the Berne Convention to reflect the challenges of the digital 
age (``Protocol'') and to supplement that instrument with 
enhanced protections for performers and producers of phonograms 
(``New Instrument''). In December, 1996, the World Intellectual 
Property Organization held a diplomatic conference in Geneva, 
Switzerland, which culminated with the adoption of two 
treaties, the ``WIPO Copyright Treaty'' and the ``WIPO 
Performances and Phonograms Treaty,'' which were agreed to by 
consensus of 160 countries.
---------------------------------------------------------------------------
    \12\ Basic Proposal for the Substantive Provisions of the Treaty on 
Certain Questions Concerning the Protection of Literary and Artistic 
Works to Be Considered by the Diplomatic Conference on Certain 
Copyright and Neighboring Rights Questions, WIPO Document AB/XX/2, 
Annex A, item PRG.02(2), paragraph 1 (Aug. 30, 1996).
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    The WIPO Copyright Treaty originally contained a provision, 
article 7, which would have defined the term ``reproduction'' 
of a copyrighted work to include any direct or indirect 
reproduction whether permanent or temporary, in any manner or 
form.13 This article proved to be too controversial 
and was deleted from the treaty prior to its adoption. Instead, 
the treaty was accompanied by an agreed upon statement that 
simply confirmed that the reproduction right in Article 9 of 
the Berne Convention applies fully in the digital environment. 
The treaty also originally contained language that banned 
circumvention devices. Again, controversy resulted in a milder 
declaration that member countries ``shall provide adequate 
legal protection and effective legal remedies against the 
circumvention of effective technological measures that are used 
by authors in connection with the exercise of their rights 
under this Treaty.'' 14 The end result is that the 
treaty shifted the debate over technological circumvention 
measures and on-line service provider liability back to the 
national level, where each nation will determine how to best 
conform with the treaty.
---------------------------------------------------------------------------
    \13\ World Intellectual Property Organization, Basic Proposal for 
the Substantive Provisions of the Treaty on Certain Questions 
Concerning the Protection of Literary and Artistic Works to Be 
Considered by the Diplomatic Conference, art. 7(1) (Aug. 30, 1996).
    \14\ Diplomatic Conference on Certain Copyright and Neighboring 
Rights Questions, WIPO Copyright Treaty, art. 11, WIPO Document CRNR/
DC/94 (December 20, 1996).
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    The President submitted the WIPO treaties to the U.S. 
Senate on July 29, 1997, where they were referred to the 
Foreign Relations Committee. The Administration also submitted 
draft implementing legislation, which Chairman Hatch introduced 
by request as S. 1121 on July 31, 1997. Senators Leahy, 
Thompson, and Kohl joined as original cosponsors. Congressman 
Coble introduced identical legislation in the House as H.R. 
2281 on July 29, 1997.15 S. 1121 later became the 
basis for Title I of the Digital Millennium Copyright Act in 
the Senate Judiciary Committee.
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    \15\ Representatives Hyde, Conyers, Frank, Bono, McCullum, and 
Berman cosponsored the bill.
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    With respect to the issue of service provider liability, 
two bills were introduced in the first session of the 105th 
Congress. Congressman Coble introduced H.R. 2180 on July 17, 
1997, with Congressman Hyde as a cosponsor. Senator Ashcroft 
introduced S. 1146 on September 3, 1997, which proposed 
limitations on copyright liability relating to material on-line 
for service providers as well as amendments to the Copyright 
Act to implement the WIPO Treaties and make certain changes to 
accommodate libraries and educators in the digital environment.
    The Senate Judiciary Committee conducted hearings on 
September 4, 1997, to consider the issues surrounding service 
provider liability. Testimony was heard from Fritz Attaway, 
Senior Vice President, Government Relations and Washington 
General Counsel, Motion Picture Association of America; Cary 
Sherman, General Counsel, Recording Industry Association of 
America; Daniel F. Burton, Vice President, Government 
Relations, Novell; George Vradenburg, Senior Vice President and 
General Counsel, America Online, Inc.; Roy Neel, President and 
C.E.O., U.S. Telephone Association; and Professor Robert L. 
Oakley, Director of Law Library and Professor Law, Georgetown 
University Law Center. At this hearing, parties on all sides 
were urged by Chairman Hatch and the Ranking Member, Senator 
Leahy, to resolve the remaining issues prior to the end of the 
year.
    Shortly thereafter, a series of hearings were held in the 
House on these issues as well as on the issue of WIPO 
implementation. The Subcommittee on Courts and Intellectual 
Property of the House Judiciary Committee held two days of 
hearings on H.R. 2281, the WIPO Copyright Treaties 
Implementation Act, and H.R. 2180, the Online Copyright 
Liability Limitation Act, on September 16 and 17, 1997. Bruce 
Lehman, Assistant Secretary of Commerce and Commissioner of 
Patents and Trademarks, Patent and Trademark Office, and 
Marybeth Peters, Register of Copyrights, Copyright Office of 
the United States, Library of Congress testified on behalf of 
the Administration. The Subcommittee also heard testimony from 
Roy Neel, President and Chief Executive Officer, United States 
Telephone Association; Jack Valenti, President and Chief 
Executive Officer, Motion Picture Association of America; 
Robert Holleyman, II, President, Business Software Alliance; 
M.R.C. Greenwood, Chancellor, University of California, Santa 
Cruz, on behalf of the Association of American Universities and 
the National Association of State Universities and Land Grant 
Colleges; Tushar Patel, Vice President and Managing Director, 
USWeb, Lawrence Kenswil, Executive Vice President, Business and 
Legal Affairs, Universal Music Group; Marc Jacobson, General 
Counsel, Prodigy Services, Inc.; Ken Wasch, President, Software 
Publishers Association; Ronald G. Dunn, President, Information 
Industry Association; John Bettis, Songwriter, on behalf of the 
American Society of Composers, Authors, and Publishers; Allee 
Willis, Songwriter, on behalf of Broadcast Music, Inc. (BMI); 
Robert L. Oakley, Professor of Law, Georgetown University Law 
Center and Director, Georgetown Law Library, on behalf of a 
Coalition of Library and Educational Organizations; Johnny 
Cash, Vocal Artist, with Hilary Rosen, President and Chief 
Executive Officer, Recording Industry Association of America; 
Allan Adler, Vice President, Legal and Governmental Affairs, 
Association of American Publishers; Gail Markels, General 
Counsel and Senior Vice President, Interactive Digital Software 
Association; Mike Kirk, Executive Director, American 
Intellectual Property Law Association; Thomas Ryan, President, 
SciTech Software, Inc.; Mark Belinsky, Vice President Copy 
Protection Group, Macrovision, Inc.; Douglas Bennett, 
President, Earlham College, Vice President, American Council of 
Learned Societies, on behalf of the Digital Futures Coalition; 
Edward J. Black, President, Computer and Communications 
Industry Association; Christopher Byrne, Director of 
Intellectual Property, Silicon Graphics, Inc., on behalf of the 
Information Technology Industry Council; and Gary Shapiro, 
President, Consumer Electronics Manufacturer's Association, and 
Chairman, Home Recording Rights Coalition.
    In January, 1998, Chairman Hatch initiated comprehensive 
negotiations within the Judiciary Committee among copyright 
owners and Internet and online service providers to resolve the 
issue of service provider liability. These negotiations 
centered around a draft proposal put forth by Chairman Hatch, 
which built upon the efforts over the previous two years. These 
negotiations continued under the supervision of the Chairman 
for three months, from January to April, 1998.
    On February 26, 1998, the House Subcommittee on Courts and 
Intellectual Property conducted a markup of H.R. 2281, the WIPO 
Copyright Treaties Implementation Act, and of H.R. 3209, the 
On-Line Copyright Infringement Liability Limitation Act. H.R. 
2281 and H.R. 3209 were reported favorably by voice vote to the 
House Judiciary Committee. On April 1, 1998, the full Committee 
adopted a substitute amendment to H.R. 2281, offered by 
Congressmen Coble, Hyde, Conyers, and Goodlatte, which 
incorporated both the provisions of H.R. 2281 and provisions 
regarding service provider liability in anticipation of a 
resolution of this issue that appeared to be close in the 
Senate Judiciary Committee. H.R. 2281 was then favorably 
reported to the House of Representatives.
    On April 2, 1998, Chairman Hatch offered the ``Digital 
Millennium Copyright Act of 1998'' at an executive business 
meeting of the Committee. This bill incorporated the text of S. 
1121, a proposal for resolving the issue of service provider 
liability for copyright infringement, and a provision that had 
been agreed to by the House Judiciary Committee with respect to 
computer maintenance and repair.
    On April 23, 1998, the Committee met again in executive 
session to consider the bill. At that meeting, the Committee 
considered and accepted two amendments offered by Chairman 
Hatch, with Senators Leahy and Ashcroft, and one amendment 
offered by Senator Ashcroft, with Senators Leahy and Hatch, en 
bloc, by unanimous consent. These amendments dealt with reverse 
engineering of computer programs for interoperability purposes, 
ephemeral recordings, and an exemption for libraries and 
archives from copyright infringement liability.
    On April 30, 1998, the Judiciary Committee resumed 
consideration of the bill and accepted the following ten 
amendments en bloc, by unanimous consent: an amendment by the 
Chairman (for himself, Mr. Leahy and Mr. Ashcroft), with 
respect to ephemeral recordings; an amendment by the Chairman 
(for himself, Mr. Leahy and Mr. Ashcroft), with respect to the 
use of copyright management information in the course of 
certain analog and digital transmissions; an amendment by the 
Chairman (for himself and Mr. Leahy), to make certain 
clarifying amendments; an amendment by Mr. Ashcroft (for 
himself, Mr. Leahy and Mr. Hatch), with respect to protection 
of subscribers of online and Internet service providers; an 
amendment by Mr. Ashcroft (for himself, Mr. Hatch and Mr. 
Leahy), with respect to the accommodation of particular 
technological protection measures; an amendment by Mr. Ashcroft 
(for himself, Mr. Hatch and Mr. Leahy), with respect to 
protection of personal privacy interests; an amendment by Mr. 
Ashcroft (for himself, Mr. Hatch and Mr. Leahy), with respect 
to the preservation of the ability to control minors' access to 
material on the Internet; an amendment by Mr. Ashcroft (for 
himself, Mr. Leahy and Mr. Hatch), with respect to distance 
education through digital technologies; an amendment by Mr. 
Grassley (for himself and Mr. Kyl), with respect to law 
enforcement and intelligence activities; and an amendment by 
Mrs. Feinstein, with respect to the liability of nonprofit 
educational institutions for copyright infringement online. The 
Committee then unanimously ordered the Digital Millennium 
Copyright Act of 1998 reported favorably, as amended.

                            III. DISCUSSION

    The Digital Millennium Copyright Act (DMCA) in Title I 
implements the World Intellectual Property (WIPO) treaties on 
copyright and on performers and phonograms, and in Title II 
limits the copyright infringement liability of on-line and 
Internet service providers (OSPs and ISPs) under certain 
circumstances. The DMCA also provides in Title III a minor but 
important clarification of copyright law that the lawful owner 
or lessee of a computer may authorize someone to turn on their 
computer for the purposes of maintenance or repair. Title IV 
addresses the issues of ephemeral recordings, distance 
education, and digital preservation for libraries and archives.
    Due to the ease with which digital works can be copied and 
distributed worldwide virtually instantaneously, copyright 
owners will hesitate to make their works readily available on 
the Internet without reasonable assurance that they will be 
protected against massive piracy. Legislation implementing the 
treaties provides this protection and creates the legal 
platform for launching the global digital on-line marketplace 
for copyrighted works. It will facilitate making available 
quickly and conveniently via the Internet the movies, music, 
software, and literary works that are the fruit of American 
creative genius. It will also encourage the continued growth of 
the existing off-line global marketplace for copyrighted works 
in digital format by setting strong international copyright 
standards.
    At the same time, without clarification of their liability, 
service providers may hesitate to make the necessary investment 
in the expansion of the speed and capacity of the Internet. In 
the ordinary course of their operations service providers must 
engage in all kinds of acts that expose them to potential 
copyrightinfringement liability. For example, service providers 
must make innumerable electronic copies by simply transmitting 
information over the Internet. Certain electronic copies are made to 
speed up the delivery of information to users. Other electronic copies 
are made in order to host World Wide Web sites. Many service providers 
engage in directing users to sites in response to inquiries by users or 
they volunteer sites that users may find attractive. Some of these 
sites might contain infringing material. In short, by limiting the 
liability of service providers, the DMCA ensures that the efficiency of 
the Internet will continue to improve and that the variety and quality 
of services on the Internet will continue to expand.
    Besides the major copyright owners and the major OSP's and 
ISP's (e.g., the local telephone companies, the long distance 
carriers, America OnLine, etc.), the Committee heard from 
representatives of individual copyright owners and small ISP's, 
from representatives of libraries, archives and educational 
institutions, from representatives of broadcasters, computer 
hardware manufacturers, and consumers. Title II, for example, 
reflects 3 months of negotiations supervised by Chairman Hatch 
and assisted by Senator Ashcroft among the major copyright 
owners and the major OSP's and ISP's. Intense discussions took 
place on distance education too, with the participation of 
representatives of libraries, teachers, and educational 
institutions, under the supervision of Chairman Hatch, Senator 
Leahy, Senator Ashcroft, and the Copyright Office.
    As a result, the Committee took substantial steps to refine 
the discussion draft that Chairman Hatch laid down before the 
Committee through a series of amendments, each of which was 
adopted unanimously. For example, the current legislation 
contains: (1) a provision to ensure that parents will be able 
to protect their children from pornography and other 
inappropriate material on the Internet; (2) provisions to 
provide for the updating of the copyright laws so that 
educators, libraries, and archives will be able to take 
advantage of the promise of digital technology; (3) important 
procedural protections for individual Internet users to ensure 
that they will not be mistakenly denied access to the World 
Wide Web; (4) provisions to ensure that the current practice of 
legitimate reverse engineering for software interoperability 
may continue; and (5) provisions to accommodate the needs of 
broadcasters for ephemeral recordings and regarding copyright 
management information. These provisions are in addition to 
provisions Chairman Hatch had already incorporated into the 
discussion draft, such as provisions on library browsing, 
provisions addressing the special needs of individual creators 
regarding copyright management information, and provisions 
exempting nonprofit archives, nonprofit educational 
institutions, and nonprofit libraries from criminal penalties 
and, in the case of civil penalties, remitting damages entirely 
when such an institution was not aware and had no reason to 
believe that its acts constituted a violation.
    Consequently, the DMCA enjoys widespread support from the 
motion picture, recording, software, and publishing industries, 
as well as the telephone companies, long distance carriers, and 
other OSP's and ISP's. It is also supported by the Information 
Technology Industry Council, which includes the leading 
computer hardware manufacturers, and by representatives of 
individual creators, such as the Writers Guild, the Directors 
Guild, the Screen Actors Guild, and the American Federation of 
Television and Radio Artists. The breadth of support for this 
bill is reflected in the unanimous roll call vote (18-0) by 
which the DMCA was reported out of Committee.

                                title i

    Title I implements the WIPO Copyright Treaty and the WIPO 
Performances and Phonograms Treaty. These treaties were 
concluded by the Clinton administration in December 1996. The 
treaties are best understood as supplements to the Berne 
Convention for the Protection of Literary and Artistic Works. 
The Berne Convention is the leading multilateral treaty on 
copyright and related rights, with 130 countries adhering to 
it. The United States ratified the Berne Convention in 1989. 
The two new WIPO treaties were adopted at a diplomatic 
conference by a consensus of over 150 countries. In general, 
the Copyright Treaty updates the Berne Convention for digital 
works and the growth of the Internet and other digital 
communications networks, and the Performances and Phonograms 
Treaty supplements the Berne Convention with comprehensive 
copyright protection for performances and sound recordings 
(called ``phonograms'' in international parlance).
    The importance of the treaties to the protection of 
American copyrighted works abroad cannot be overestimated. The 
treaties, as well as the Berne Convention, are based on the 
principle of national treatment; that is, that adhering 
countries are obliged to grant the same protection to foreign 
works that they grant to domestic works. Even more importantly, 
the Berne Convention and the treaties set minimum standards of 
protection. Thus, the promise of the treaties is that, in an 
increasing global digital marketplace, U.S. copyright owners 
will be able to rely upon strong, non-discriminatory copyright 
protection in most of the countries of the world.
    The copyright industries are one of America's largest and 
fastest growing economic assets. According to International 
Intellectual Property Alliance statistics, in 1996 (when the 
last full set of figures was available), the U.S. creative 
industries accounted for 3.65 percent of the U.S. gross 
domestic product (GDP)--$278.4 billion. In the last 20 years 
(1977-1996), the U.S. copyright industries' share of GDP grew 
more than twice as fast as the remainder of the economy--5.5 
percent vs. 2.6 percent. Between 1977 and 1996, employment in 
the U.S. copyright industries more than doubled to 3.5 million 
workers--2.8 percent of total U.S. employment. Between 1977 and 
1996 U.S. copyright industry employment grew nearly three times 
as fast as the annual rate of the economy as a whole--4.6 
percent vs. 1.6 percent. In fact, the copyright industries 
contribute more to the U.S. economy and employ more workers 
than any single manufacturing sector, including chemicals, 
industrial equipment, electronics, food processing, textiles 
and apparel, and aircraft. More significantly for the WIPO 
treaties, in 1996 U.S. copyright industries achieved foreign 
sales and exports of $60.18 billion, for the first time leading 
all major industry sectors, including agriculture, automobiles 
and auto parts, and the aircraft industry.
    The WIPO treaties contain many important provisions. For 
example, the Copyright Treaty contains significant provisions 
such as: (1) explicit recognition that computer programs are 
covered by the Berne Convention; (2) recognition of a broad 
right of public distribution; (3) recognition of a broad right 
of communication to the public that includes the Internet; (4) 
an official statement that interprets the existing reproduction 
right of the Berne Convention to ``fully apply in the digital 
environment''; 16 (5) an obligation to provide 
``legal protection and effective legal remedies'' against 
circumventing technological measures, e.g. encryption and 
password protection, that are used by copyright owners to 
protect their works from piracy; 17 and (6) an 
obligation to provide ``adequate and effective legal remedies'' 
to preserve the integrity of ``rights management information.'' 
18 The Performances and Phonograms Treaty recognizes 
certain rights of performers over their performances and 
basically gives the copyright owners of sound recordings the 
same protection for their works as exist in the Berne 
Convention for other works.
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    \16\ Concerning Art. 1(4).
    \17\ Art. 11.
    \18\ Rights management information is ``information which 
identifies the work, the author of the work, the owner of any right in 
the work, or information about the terms and conditions of use of the 
work . . . which is attached to a copy of a work or appears in 
connection with communication of the work to the public.'' Art. 12. 
Rights management information is more commonly referred to in the U.S. 
as copyright management information (CMI). The purpose of CMI is to 
facilitate licensing of copyright for use on the Internet and to 
discourage piracy.
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    The Committee believes that in order to adhere to the WIPO 
treaties, legislation is necessary in two primary areas--
anticircumvention of technological protection measures and 
protection of the integrity of rights management information, 
or ``copyright management information'' (CMI), as it is 
referred to in the bill. This view is shared by the Clinton 
administration. In drafting implementing legislation for the 
WIPO treaties, the Committee has sought to address those two 
areas, as well as avoid government regulation of the Internet 
and encourage technological solutions. The Committee is keenly 
aware that other countries will use U.S. legislation as a 
model.

                          A. Anticircumvention

    Title I encourages technological solutions, in general, by 
enforcing private parties' use of technological protection 
measures with legal sanctions for circumvention and for 
producing and distributing products or providing services that 
are aimed at circumventing technological protection measures 
that effectively protect copyrighted works. For example, if 
unauthorized access to a copyrighted work is effectively 
prevented through use of a password, it would be a violation of 
this section to defeat or bypass the password and to make the 
means to do so, as long as the primary purpose of the means was 
to perform this kind of act.19 This is roughly 
analogous to making it illegal to break into a house using a 
tool, the primary purpose of which is to break into houses.
---------------------------------------------------------------------------
    \19\ Note that even if a device does not have circumvention as its 
primary purpose or design, that is, that it does not fall within the 
prohibition of section 1201(a)(2)(A), the device would still be illegal 
if it fell within the prohibitions of either 1201 (a)(2)(B) and (C).
---------------------------------------------------------------------------
    Legislation prohibiting circumvention devices is not 
unprecedented. The Copyright Act in section 1002(c) already 
protects sound recordings and musical works by prohibiting 
devices which circumvent any program or circuit that implements 
a serial copy management system or similar system included in 
digital audio recording devices and digital audio interface 
devices. The Communications Act in section 605(e)(4) prohibits 
devices that are ``primarily of assistance in the unauthorized 
decryption of satellite cable programming.'' In addition to the 
WIPO Copyright Treaty, the NAFTA in article 1707(b) requires 
each party to make it a criminal offense to make available a 
device or system that is ``primarily of assistance in decoding 
an encrypted program-carrying satellite signal without the 
authorization of the lawful distributor of such signal.'
    Although sections 1201(a)(2) and 1201(b) of the bill are 
worded similarly and employ similar tests, they are designed to 
protect two distinct rights and to target two distinct classes 
of devices. Subsection 1201(a)(2) is designed to protect access 
to a copyrighted work. Section 1201(b) is designed to protect 
the traditional copyright rights of the copyright owner. As a 
consequence, subsection 1201(a)(2) prohibits devices primarily 
designed to circumvent effective technological measures that 
limit access to a work. Subsection 1201(b), on the other hand, 
prohibits devices primarily designed to circumvent effective 
technological protection measures that limit the ability of the 
copyrighted work to be copied, or otherwise protect the 
copyright rights of the owner of the copyrighted work. The two 
sections are not interchangeable, and many devices will be 
subject to challenge only under one of the subsections. For 
example, if an effective technological protection measure does 
nothing to prevent access to the plain text of the work, but is 
designed to prevent that work from being copied, then a 
potential cause of action against the manufacturer of a device 
designed to circumvent the measure lies under subsection 
1201(b), but not under subsection1201(a)(2). Conversely, if an 
effective technological protection measure limits access to the plain 
text of a work only to those with authorized access, but provides no 
additional protection against copying, displaying, performing or 
distributing the work, then a potential cause of action against the 
manufacturer of a device designed to circumvent the measure lies under 
subsection 1201(a)(2), but not under subsection 1201(b).
    This, in turn, is the reason there is no prohibition on 
conduct in 1201(b) akin to the prohibition on circumvention 
conduct in 1201(a)(1). The prohibition in 1201(a)(1) is 
necessary because prior to this Act, the conduct of 
circumvention was never before made unlawful. The device 
limitation in 1201(a)(2) enforces this new prohibition on 
conduct. The copyright law has long forbidden copyright 
infringements, so no new prohibition was necessary. The device 
limitation in 1201(b) enforces the longstanding prohibitions on 
infringements.

Accommodation of particular technological protection measures

    The Committee was concerned that the provisions of 
subsections 1201(a)(2) and (b) might be read to mandate that 
manufacturers of consumer electronics, telecommunications, and 
computing products design their products and components to 
respond to particular technological protection measures 
employed to protect copyrighted works. Subsection 1201(d)(3) 
addresses this concern and clarifies that section 1201 does not 
impose any affirmative design mandates on manufacturers of 
consumer electronics, telecommunications, and computing 
products. The fact that a product or component does not respond 
to any particular technological protection measure, standing 
alone, neither creates liability under section 1201 nor 
immunizes those trafficking in the product, part or component 
from liability. This provision recognizes that there may be 
legitimate reasons for a product or component's failure to 
respond to a particular technological measure--such as design 
efficiency or ensuring high quality output from the product--as 
well as illegitimate reasons--such as an unlawful intent to 
circumvent the protection measure.
    That a component or part's failure to respond to a 
technological measure does not immunize the product or 
component from further review under section 1201 is made clear 
by the following example. Suppose a device expressly intended 
to circumvent an effective technological protection measure 
commonly employed to protect copyrighted works contained a 
component that was critical to the effectiveness of the device 
in achieving its stated purpose. Suppose further that the 
product was marketed as a circumvention device and had no 
commercially significant purposes or use other than to 
circumvent. That component would not provide the desired 
response to the effective technological protection measure, but 
the product would still clearly run afoul of section 1201 in 
light of the device manufacturer's unlawful intent, the 
marketing strategy and the lack of other commercially 
significant uses for the product.
    On the other hand, suppose a manufacturer of a state-of-
the-art consumer electronics device, which did not circumvent 
any technological protection measure when it was introduced 
into the market and which was designed and marketed for a 
purpose other than circumventing any technological protection 
measures, was sued for violating section 1201 because the 
device did not accommodate a particular technological 
protection measure developed after the device was designed and 
sold. In such a case, section 1201(d)(3) would make it clear 
that the device's failure to accommodate this new protection 
measure does not render the device unlawful, and in light of 
the nature of the product, the manner in which it functions, 
the way it had been marketed and its obvious legitimate uses 
(assuming the device continues to be marketed and produced for 
the same legitimate uses), there would clearly be no basis for 
arguing that the device was unlawful under section 1201.

Library browsing

    Section 1201(e) allows nonprofit libraries, archives, and 
educational institutions to gain access to a commercially 
exploited copyrighted work solely to make the determination of 
whether to acquire a copy of the work.

Reverse engineering

    Sections 1201(g)-(j) are intended to allow legitimate 
software developers to continue engaging in certain activities 
for the purpose of achieving interoperability to the extent 
permitted by law prior to the enactment of this chapter. The 
objective is to ensure that the effect of current case law 
interpreting the Copyright Act is not changed by enactment of 
this legislation for certain acts of identification and 
analysis done in respect of computer programs. See, Sega 
Enterprises Ltd. v Accolade, Inc., 977 F.2d 1510, 24 U.S.P.Q.2d 
1561 (9th Cir. 1992.). The purpose of this section is to foster 
competition and innovation in the computer and software 
industry.

Controlling the access of minors to material on the Internet

    The Committee supports the voluntary efforts underway by a 
broad group of Internet users, library groups, publishers and 
other copyright industry groups, family-focused organizations, 
on-line service providers, and civil liberties groups to 
empower parents to supervise and control the material their 
children access from the Internet. Nothing in this bill is 
intended to undercut these efforts.
    To emphasize this point, an amendment (section 1201(k)) 
sponsored by Senator Ashcroft, Chairman Hatch and Senator Leahy 
was adopted unanimously by the Committee to ensure that the 
prohibitions in section 1201(a) did not inadvertently make it 
unlawful for parents to protect their children from pornography 
and other inappropriate material available on the Internet, or 
have unintended legal consequences for manufacturers of 
products designed solely to enable parents to protect their 
children in this fashion. Section 1201(k) makes clear that in a 
suit brought under section 1201(a), a court may consider the 
necessity for a challenged component or part's intended and 
actual incorporation into a technology, product, service or 
device, which does not itself violate the provisions of new 
chapter 12 on Copyright Protection and Management Systems, and 
which has the sole purpose of preventing the access of minors 
to pornography or other inappropriate material on the Internet. 
This provision applies to subsection 1201(a) in its entirety 
(as opposed to subsection 1201(a)(2) alone) in order to clarify 
that the bill protects the actions of parents in ensuring that 
their children do not have access to inappropriate material on-
line.
    A variety of tools available now allow parents to exercise 
control in a manner consistent with their own family values, of 
their children's access to online materials. In the event that, 
in the future, any of these tools incorporates a part or 
component which circumvents a technological protection measure 
effectively controlling access to a copyrighted work solely in 
order to provide a parent with the information necessary to 
ascertain whether that material is appropriate for his or her 
child, this provision authorizes a court to take into 
consideration the necessity for incorporating such part or 
component in a suit alleging a violation of section 1201(a).
    This provision is limited to the application of subsection 
(a) because the Committee does not anticipate that it would be 
necessary for parental empowerment tools to make copies of 
questionable material, or to distribute or perform it, in order 
to carry out their important function of assisting parents in 
guiding their children on the Internet. Accordingly, 
circumvention of copy controls, or of similar measures, should 
never be a necessary capability of a parental empowerment tool. 
By the same token, if a technology, product, service or device 
which (1) has the sole purpose of preventing the access of 
minors to certain materials on the Internet, and (2) that 
technology, product, service or device circumvents a 
technological protection measure that effectively controls 
access to a work as defined in subsection 1201(a)(3) only for 
the purpose of gaining access to the work to ascertain whether 
it is suitable for a minor, but does not otherwise defeat any 
copy protection for that work, then that technology, product, 
service or device is only subject to challenge under subsection 
1201(a)(2) and not subsection 1201(b). In such circumstances, 
no cause of action would lie under section 1201(b) and 
therefore limiting language would be unnecessary.
    This provision is not to be interpreted to allow the 
wholesale access to copyrighted works in their entirety, but 
merely to allow parents to have an ability to determine whether 
a work is inappropriate for that parent's child.

Encryption research

    The purpose of the Committee in proposing enactment of 
section 1201 is to improve the ability of copyright owners to 
prevent the theft of their works, including by applying 
technological protection measures. The effectiveness of such 
measures depends in large part on the rapid and dynamic 
development of better technologies, including encryption-based 
technological protection measures. The development of 
encryption sciences requires, in part, ongoing research and 
testing activities by scientists of existing encryption 
methods, in order to build on those advances, thus promoting 
and advancing encryption technology generally.
    The goals of section 1201 would be poorly served if these 
provisions had the undesirable and unintended consequence of 
chilling legitimate research activities in the area of 
encryption. It is the view of the Committee, after having 
conducted extensive consultations, and having examined a number 
of hypothetical situations, that Section 1201 should not have 
such an unintended negative effect.
    It is the view of the Committee that generally available 
encryption testing tools would not be made illegal by this Act. 
Each of those tools has a legitimate and substantial commercial 
purpose--testing security and effectiveness--and are not 
prohibited by Section 1201. In addition, the testing of 
specific encryption algorithms would not fall within the scope 
of 1201, since mathematical formulas as such are not protected 
by copyright. Thus, testing of an encryption algorithm or 
program that has multiple uses, including a use as a technical 
protection measure for copyrighted works, would not fall within 
the prohibition of section 1201(a) when that testing is 
performed on the encryption when it is in a form not 
implemented as a technical protection measure. Similarly, the 
testing of encryption technologies developed by or on behalf of 
the government of the United States, would not violate section 
1201 since copyright does not subsist in such subject matter. 
Finally, there are many situations in which encryption research 
will be undertaken with the consent or at the direction of the 
copyright owner and therefore will not give rise to any action 
under section 1201.
    For these reasons, it is the view of the Committee that the 
following types of encryption testing are not generally 
prohibited by section 1201.
    If a cryptographer uses various cryptanalytic research 
techniques to discover a flaw in, for example, the U.S. 
government's Escrowed Encryption Standard (EES) used in the 
Clipper Chip and Fortezza cards. The flaw allows users to 
circumvent essential features of the algorithm. Since these 
encryption products are not covered by copyright, because they 
are merely mathematical algorithms in addition to being owned 
by the U.S. government, these acts do not violate 1201, and the 
results may be made available to the public.
    If a company, in the course of developing a new 
cryptographic product, sponsors a crypto-cracking contest with 
cash prizes, contestants would not violate section 1201 since 
the research acts are specifically authorized.
    Significantly, section 1201 does not make illegal 
cryptographic devices that have substantial legitimate purposes 
other than to circumvent technological protection measures as 
applied to a work. For example, many popular word processing 
and other computer programs include a security feature allowing 
users to password-protect documents (employing a low-grade form 
of encryption.) It is not uncommon for users of such products 
to forget or lose their passwords for such documents, making 
their own protected works unrecoverable. As a result, many 
independent programmers have created utilities designed to 
assist in the recovery of passwords or password-protected 
works. Several of these utilities are distributed over the 
Internet as freeware or shareware. Because these utilities have 
a substantial legitimate use, and because they would be used by 
persons to gain access to their own works, these devices do not 
violate section 1201.
    The law would also not prohibit certain kinds of commercial 
``key-cracker'' products, e.g., a computer program optimized to 
crack certain 40-bit encryption keys. Such machines are often 
rented to commercial customers for the purpose of quick data 
recovery of encrypted data. So long as these devices would have 
a substantial legitimate use, and they do not become 
principally used to facilitate infringement, they would not be 
prohibited by section 1201.
    Today, network and web site management and security tools 
increasingly contain components that automatically test systems 
security and identify common vulnerabilities. These programs 
are valuable tools for systems administrators and web site 
operators, to use in the course of their regular testing of 
their systems' security. Again, because these devices do not 
meet the test of section 1201, because they are good products 
put to a good use, the devices do not fall within the scope of 
this statute.

                  B. Copyright Management Information

    Copyright Management Information (CMI) is an important 
element in establishing an efficient Internet marketplace in 
copyrighted works free from governmental regulation. Such 
information will assist in tracking and monitoring uses of 
copyrighted works, as well as licensing of rights and 
indicating attribution, creation and ownership.
    Under the bill, CMI includes such items as the title of the 
work, the author, the copyright owner, and in some instances, 
the writer, performer, and director. CMI need not be in digital 
form, but CMI in digital form is expressly included. It is 
important to note that the DMCA does not require CMI, but if 
CMI is provided, the bill protects it from falsification, 
removal or alteration. Information that is not defined as CMI 
under the bill would not be protected by these provisions, 
although its removal or falsification might be protected under 
other laws, such as unfair trade. The definition of CMI may be 
expanded by regulation prescribed by the Register of 
Copyrights.
    Section 1202(a) prohibits knowingly providing CMI that is 
false or knowingly distributing CMI that is false with the 
intent to induce, enable, facilitate or conceal infringement. 
Section 1202(b) prohibits (1) the intentional removal or 
alteration of CMI, (2) the distribution of CMI knowing that the 
information has been removed or altered, and (3) the 
distribution or public performance of works knowing or having 
reason to know that CMI has been removed or altered, so long 
as, regarding the prohibited acts described in section 1202(b), 
there is knowledge or reasonable grounds to know that these 
acts will induce, enable, facilitate or conceal an 
infringement.
    Section 1202(e) recognizes special problems that certain 
broadcasting entities may have with the transmission of 
copyright management information. Under this subsection, radio 
and television broadcasters, cable systems, and persons who 
provide programming to such broadcasters or systems, who do not 
intend to induce, enable, facilitate or conceal infringement 
(eligible persons) may be eligible for a limitation on 
liability for violation of the copyright management information 
provisions of section 1202(b) in certain, limited 
circumstances.

                C. Civil Remedies and Criminal Penalties

    Section 1203 gives civil remedies and section 1204 imposes 
criminal penalties for violations of sections 1201 and 1202.
    In addition to an award of damages, section 1203(b) 
provides for various kinds of affirmative relief in civil 
actions such as temporary and permanent injunctions, 
impoundment, and, as part of a final judgment or decree finding 
a violation, the court may order remedial modification or 
destruction of the offending device or product. Such 
affirmative relief is currently found in the Copyright Act for 
copyright infringements.
    Regarding monetary relief, section 1203 provides for actual 
damages, profits derived from the unlawful activity, statutory 
damages, and treble damages for repeat offenders. Such monetary 
relief is available under the current Copyright Act.
    An important feature of section 1203 is the remittitur for 
innocent violators and for nonprofit libraries, archives, and 
educational institutions. In the case of a violator who was not 
aware and had no reason to believe that the acts at issue 
constituted a violation, the court may reduce or remit the 
total award of damages. In the cases of nonprofit libraries, 
archives, and educational institutions the court must remit 
damages if the institution was not aware and had no reason to 
believe that its acts constituted a violation.
    The current Copyright Act provides for criminal penalties 
for copyright infringement. Section 1204 of the bill also 
provides criminal penalties for violations of section 1201(a) 
and (b). Specifically, willful violations of sections 1201 or 
1202 for purposes of commercial advantage or private financial 
gain are punished by up to $500,000 in fines or imprisonment 
for up to 5 years. Repeat offenses are punishable by up to 
$1,000,000 in fines or imprisonment for up to 10 years. The 
bill requires that criminal proceedings be commenced within 5 
years after the cause of action arose. Criminal penalties do 
not apply to nonprofit libraries, archives, and educational 
institutions.

                D. Protecting Personal Privacy Interests

    Section 1205 responds to concerns expressed by some that 
certain technologies used to gather personally identifiable 
information from Internet users could be characterized as 
technological protection measures for copyrighted materials, 
and that therefore efforts by Internet users to protect their 
privacy by disabling or bypassing such technologies could be 
prohibited by section 1201. The Committee does not believe that 
enactment of this legislation will have this effect. No 
specific example of such a privacy-invasive technology in use 
today that would be affected in this way has been called to the 
Committee's attention. For example, even if ``cookie'' files--
which are automatically deposited on the hard drives of 
computers of users who visit World Wide Web sites--are 
considered to be invasive of personal privacy (and are deemed 
to be copyrighted works), all commercially significant browser 
programs can be readily configured to reject ``cookies,'' and 
such a configuration raises no issue of any violation of 
section 1201.
    In fact, enactment of section 1201 should have a positive 
impact on the protection of personal privacy on the Internet. 
The same technologies that copyright owners use to control 
access to and use of their works can and will be used to 
protect the personal privacy of Internet users by, for example, 
encrypting e-mail communications, or requiring a password for 
access to personal copyrighted information on an individual's 
web site. By outlawing the activities of those who make it 
their business to provide the tools for circumventing these 
protective technologies, this legislation will substantially 
enhance the degree to which individuals may protect their 
privacy as they work, play and communicate on the Internet.
    However, because of the privacy concerns expressed that 
existing or future technologies may evolve in such a way that 
an individual would have to circumvent a technological 
protection measure to protect his or her privacy, the committee 
concluded that it was prudent to rule out any scenario in which 
section 1201 might be relied upon to make it harder, rather 
than easier, to protect personal privacy on the Internet. 
Accordingly, Senator Ashcroft, Chairman Hatch and Senator Leahy 
proposed a savings clause to clarify that nothing in the new 
chapter 12 will abrogate, diminish or weaken the provisions of 
any Federal or State law that prevents the violation of an 
individual's privacy in connection with the individual's use of 
the Internet. The savings clause also specifies that section 
1201 cannot be used to provide a defense, or an element of 
mitigation, in any civil or criminal action to enforce such a 
law. For example, if a valid Federal or State law regulates, on 
personal privacy grounds, the use of ``cookie'' files, which 
are automatically placed on the computer hard drives of users 
as they visit Internet web sites, and a party with standing 
sues to enforce the limitations contained in that law, the 
defendant may not excuse his actions in violation of those 
limitations by pointing to anything in chapter 12 of title 17.

Law enforcement

    Sections 1201(f) and 1202(d) create exceptions for the 
lawfully authorized investigative, protective, or intelligence 
activities of an officer, agent, or employee of, the United 
States, a State, or a political subdivision of a State, or of 
persons acting pursuant to a contract with such an entity. 
These exceptions will protect officers, agents, employees, or 
contractors of, or other persons acting at the direction of, a 
law enforcement or intelligence agency of the United States, a 
State, or a political subdivision of a State, who are 
performing lawfully authorized investigative, protective, or 
intelligence activities. These exceptions will also protect 
officers, agents, employees, or contractors of, or other 
persons acting at the direction of, elements or divisions of an 
agency or department of the United States, a State, or a 
political subdivision ofa State, which does not have law 
enforcement or intelligence as its primary function, but who may 
nevertheless, in the course of lawfully authorized protective, 
intelligence, or criminal investigative activities, engage in actions 
otherwise prohibited by this bill. These exceptions only apply to 
individuals covered under this section when they are performing 
investigative, protective, or intelligence activities, within the scope 
of their duties and in furtherance of lawfully authorized activities.
    The Committee is concerned that these sections should not 
be misinterpreted as an opportunity to circumvent the WIPO 
Copyright Treaty. It should be clear that this is a routine law 
enforcement and intelligence exception. As such, the exceptions 
under sections 1201(f) and 1202(d) are to be narrowly 
construed. In addition, these exceptions are to be construed in 
a manner consistent with similar law enforcement and 
intelligence exceptions found elsewhere in U.S. law, such as 18 
U.S.C. 1029(f), 1030(f), or 2512(2)(b).

                                Title II

    Although the copyright infringement liability of on-line 
and Internet service providers (OSPs and ISPs) is not expressly 
addressed in the actual provisions of the WIPO treaties, the 
Committee is sympathetic to the desire of such service 
providers to see the law clarified in this area. There have 
been several cases relevant to service provider liability for 
copyright infringement.20 Most have approached the 
issue from the standpoint of contributory and vicarious 
liability. Rather than embarking upon a wholesale clarification 
of these doctrines, the Committee decided to leave current law 
in its evolving state and, instead, to create a series of 
``safe harbors,'' for certain common activities of service 
providers. A service provider which qualifies for a safe 
harbor, receives the benefit of limited liability.
---------------------------------------------------------------------------
    \20\ For example, Religious Technology Center v. Netcom On-line 
Communications Services, 907 F. Supp. 1361 (N.D. Cal. 1995); Playboy 
Enterprises v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993); and Marobie-
FL v. Nat. Assn. Of Fire Equipment Distributors, 983 F. Supp. 1167 
(N.D. Ill. 1997).
---------------------------------------------------------------------------
    In the beginning, the Committee identified the following 
activities: (1) digital network communications, (2) system 
caching, (3) information stored on service providers, and (4) 
information location tools. In the end, Title II contains five 
general categories of activities, which are addressed in a 
newly created section 512 in Chapter 5 of the Copyright Act. 
This new section contains limitations on service providers' 
liability for five general categories of activity set forth in 
subsections (a) through (d) and subsection (f). As provided in 
subsection (k), Section 512 is not intended to imply that a 
service provider is or is not liable as an infringer either for 
conduct that qualifies for a limitation of liability or for 
conduct that fails to so qualify. Rather, the limitations of 
liability apply if the provider is found to be liable under 
existing principles of law.
    The limitations in subsections (a) through (d) protect 
qualifying service providers from liability for all monetary 
relief for direct, vicarious and contributory infringement. 
Monetary relief is defined in subsection (j)(2) as encompassing 
damages, costs, attorneys' fees, and any other form of monetary 
payment. These subsections also limit injunctive relief against 
qualifying service providers to the extent specified in 
subsection (I). To qualify for these protections, service 
providers must meet the conditions set forth in subsection (h), 
and service providers' activities at issue must involve a 
function described in subsection (a), (b), (c), (d) or (f), 
respectively. The liability limitations apply to networks 
``operated by or for the service provider,'' thereby protecting 
both service providers who offer a service and subcontractors 
who may operate parts of, or an entire, system or network for 
another service provider.
    Title II preserves strong incentives for service providers 
and copyright owners to cooperate to detect and deal with 
copyright infringements that take place in the digital 
networked environment. At the same time, it provides greater 
certainty to service providers concerning their legal exposure 
for infringements that may occur in the course of their 
activities.

Particular concerns of educational institutions

    At least two concerns have been raised concerning the 
applicability of section 512 to educational institutions, such 
as universities and libraries, when they act as on-line service 
providers. The first concerns the extent to which the knowledge 
of faculty members using the Internet will be imputed to a 
college or university as a whole or the specific department 
within the college or university responsible for providing 
Internet service. To the extent such knowledge is imputed, the 
on-line service provider might fail to qualify for certain of 
the exceptions to liability included in this section. This is 
one of the specific questions upon which the Copyright Office 
study authorized in section 204 of this Act will focus. Without 
prejudging any issues to be considered in that study, it seems 
that the extent to which knowledge is imputed to the service 
provider in the case of colleges and universities, and in other 
settings in which the service provider and end-user share an 
employee-employer or other relationship, is a matter of the 
relevant State law of respondeat superior, rather than a matter 
of Federal copyright law. As a consequence, there may be much 
that a non-profit educational institution can do to structure 
the internal relationships between its faculty and its online 
service provider functions. What is more, nothing in this Act 
should be read to preclude a Federal court from taking into 
account the special circumstances of a non-profit educational 
institution in applying agency law to determine whether 
knowledge should be imputed to such an institution in its 
capacity as an online service provider.
    The second concern raised about the applicability of 
section 512 to public universities and libraries, and indeed 
other public entities which operate as online service 
providers, is that by complying with the notice and take-down 
provisions of section 512, the public entities might violate 
the due process rights of their users. Any such due process 
objection suffers at least two flaws. In the first place, a 
prerequisite to any due process claim is a state law property 
interest. In the case of the relatively new concept of Internet 
access, the service provider contract, rather than any common 
law property interest, would appear to be the yardstick of the 
Internet user's property interest in continued access. The 
contract for Internet service, therefore, can limit any 
property interest that would form the basis for a procedural 
due process claim. Second, and even more important, the 
procedural protections afforded by the notification 
requirements of subsection 512(c)(3) and the provisions for the 
replacement of removed or disabled materials in subsection 
512(f) provide all the process that is due. The Committee was 
acutely concerned that it provide all end-users--whether 
contracting with private or public sector online service 
providers--with appropriate procedural protections to ensure 
that material is not disabled without proper justification. The 
provisions in the bill balance the need for rapid response to 
potential infringement with the end-users legitimate interests 
in not having material removed without recourse.
    In order to explore these and other issues more fully, the 
Committee provides in section 204 for a study to be conducted 
by the Register of Copyrights.

                               Title III

Computer maintenance or repair

    Title III of the bill amends section 117 of the Copyright 
Act (17 U.S.C. 117) to ensure that independent service 
organizations do not inadvertently become liable for copyright 
infringement merely because they have turned on a machine in 
order to service its hardware components.
    When a computer is activated, that is when it is turned on, 
certain software or parts thereof (generally the machine's 
operating system software) is automatically copied into the 
machine's random access memory, or ``RAM''. During the course 
of activating the computer, different parts of the operating 
system may reside in the RAM at different times because the 
operating system is sometimes larger than the capacity of the 
RAM. Because such copying has been held to constitute a 
``reproduction'' under section 106 of the Copyright Act (17 
U.S.C. 106),21 a person who activated the machine 
without the authorization of the copyright owner of that 
software could be liable for copyright infringement. This 
legislation has the narrow and specific intent of relieving 
independent service providers, persons unaffiliated with either 
the owner or lessee of the machine, from liability under the 
Copyright Act when, solely by virtue of activating the machine 
in which a computer program resides, they inadvertently cause 
an unauthorized copy of that program to be made.
---------------------------------------------------------------------------
    \21\ See MAI Sys. Corp. v. Peak Computer, 991 F.2d 511 (9th Cir. 
1993), cert. denied, 114 S.Ct. 671 (1994).
---------------------------------------------------------------------------
    This title is narrowly crafted to achieve the foregoing 
objective without prejudicing the rights of copyright owners of 
computer software. Thus, for example, 1201(k) does not relieve 
from liability persons who make unauthorized adaptations, 
modifications, or other changes to the software. This title 
also does not relieve from liability persons who make any 
unauthorized copies of software other than those caused solely 
by activation of the machine.

                                Title IV

                        A. Ephemeral Recordings

    Section 401 of the bill amends section 112 of the Copyright 
Act to address two issues concerning the application of the 
ephemeral recording exemption in the digital age.
    The first of these issues is the relationship between the 
ephemeral recording exemption and the Digital Performance Right 
in Sound Recordings Act of 1995 (``DPRA''). The DPRA granted 
sound recording copyright owners the exclusive right to perform 
their works publicly by means of digital audio transmission, 
subject to certain limitations, particularly those set forth in 
section 114(d). Among those limitations is an exemption for 
nonsubscription broadcast transmissions, which are defined as 
those made by terrestrial broadcast stations licensed as such 
by the FCC. 17 U.S.C. 114(d)(1)(A)(iii) and (j)(2). The 
ephemeral recording exemption presently privileges certain 
activities of a transmitting organization when it is entitled 
to transmit a performance or display under a license or 
transfer of copyright ownership or under the limitations on 
exclusive rights in sound recordings specified by section 
114(a). The Committee believes that the ephemeral recording 
exemption should apply to broadcast radio and television 
stations when they make nonsubscription digital broadcasts 
permitted by the DPRA. TheCommittee has therefore changed the 
existing language of the ephemeral recording exemption (redesignated as 
112(a)(1)) to extend explicitly to broadcasters the same privilege they 
already enjoy with respect to analog broadcasts.
    The second of these issues is the relationship between the 
ephemeral recording exemption and the anticircumvention 
provisions that the bill adds as section 1201 of the Copyright 
Act. Concerns were expressed that if use of copy protection 
technologies became widespread, a transmitting organization 
might be prevented from engaging in its traditional activities 
of assembling transmission programs and making ephemeral 
recordings permitted by section 112 for purposes of its own 
transmissions within its local service area and of archival 
preservation and security. To address this concern, the 
Committee has added to section 112 a new paragraph that permits 
transmitting organizations to engage in activities that 
otherwise would violate section 1201(a)(1) in certain limited 
circumstances when necessary for the exercise of the 
transmitting organization's privilege to make ephemeral 
recordings under redesignated section 112(a)(1). By way of 
example, if a radio station could not make a permitted 
ephemeral recording from a commercially available phonorecord 
without violating section 1201(a)(1), then the radio station 
could request from the copyright owner the necessary means of 
making a permitted ephemeral recording. If the copyright owner 
did not then either provide a phonorecord that could be 
reproduced or otherwise provide the necessary means of making a 
permitted ephemeral recording from the phonorecord already in 
the possession of the radio station, the radio station would 
not be liable for violating section 1201(a)(1) for taking the 
steps necessary for engaging in activities permitted under 
section 112(a)(1). The radio station would, of course, be 
liable for violating section 1201(a)(1) if it engaged in 
activities prohibited by that section in other than the limited 
circumstances permitted by section 112(a)(1).

                         B. Distance Education

    New technology, especially digital technology, is 
increasingly being used by educational institutions in their 
distance learning programs. In the past, distance learning 
programs were developed primarily for students who, because of 
their special circumstances, could not be taught in a 
traditional classroom. Section 110(2) of the copyright law 
contains an exemption that accommodates this type of activity. 
The current exemption is designed to cover instructional 
broadcasting, and allows the use of only certain categories of 
works. Future distance education, however, may involve a wider 
range of activities, including the use of interactive digital 
transmissions, and be designed for a broader audience of 
students working from personal computers in their own homes.
    The Committee believes that the scope of the distance 
education exemption should be re-examined in light of the range 
of educational activities made possible by digital 
technologies. The Committee therefore initiated discussions on 
distance learning with representatives of libraries, 
educational institutions and copyright owners, and asked the 
Register of Copyrights to recommend any appropriate legislative 
language for an updated distance education exemption. In 
response to this request by Chairman Hatch, Senator Leahy and 
Senator Ashcroft, the Register reported the conclusion that 
digital distance education is an evolving field, and the range 
of activities contemplated is diverse and potentially far-
reaching in impact and scope.
    In light of the complexity, importance and potential scope 
of the issues implicated by distance education, the Committee 
has determined that further study of the issues would be 
useful. The Committee therefore has directed the Copyright 
Office to provide Congress with a report recommending ways to 
promote distance learning through digital technologies no later 
than six months after enactment of this legislation. In 
conducting this study, the Copyright Office is required to 
consult with representatives of copyright owners, nonprofit 
educational institutions, libraries and archives. The Committee 
anticipates that the Copyright Office will also consult with 
others with relevant expertise, where appropriate, such as the 
Department of Education.
    The Committee underscores the importance to the public of a 
speedy resolution of any copyright issues associated with 
distance learning and commits itself to developing a fair and 
effective distance learning regime promptly after receipt of 
the Register's Report.

Fair use

    The bill does not amend section 107 of the Copyright Act, 
the fair use provision. The Committee determined that no change 
to section 107 was required because section 107, as written, is 
technologically neutral, and therefore, the fair use doctrine 
is fully applicable in the digital world as in the analog 
world.

                C. Exemption for Libraries and Archives

    Section 108 of title 17 permits libraries and archives of 
the type described in that section to make and, in some cases, 
distribute a limited number of copies of certain types of 
copyrighted works, without the permission of the copyright 
holder, for specified purposes relating to these entities' 
functions as repositories of such works for public reference. 
Section 403 of the bill updates section 108 to allow these 
entities to take advantage of digital technologies when 
engaging in specified preservation activities.

                       IV. VOTE OF THE COMMITTEE

    Pursuant to paragraph 7 of rule XXVI of the Standing Rules 
of the Senate, each Committee is to announce the results of 
rollcall votes taken in any meeting of the Committee on any 
measure or amendment. The Senate Committee on the Judiciary, 
with a quorum present, met on Thursday, April 23, 1998, at 10 
a.m., to consider the Digital Millennium Copyright Act of 1998. 
The Committee considered and accepted the following three 
amendments en bloc, by unanimous consent: an amendment by the 
Chairman (for himself, Mr. Leahy, and Mr. Ashcroft), with 
respect to reverse engineering of computer programs for 
interoperability purposes; an amendment by the Chairman (for 
himself, Mr. Leahy and Mr. Ashcroft), with respect to ephemeral 
recordings; and, an amendment by Mr. Ashcroft (for himself, Mr. 
Leahy, and Mr. Hatch), with respect to the exemption from 
copyright infringement liability for libraries and archives.
    The Committee, with a quorum present, met to resume 
consideration of the Digital Millennium Copyright Act on 
Thursday, April 30, 1998, at 10 a.m. The Committee considered 
and accepted the following amendments en bloc, by unanimous 
consent: an amendment by the Chairman (for himself, Mr. Leahy, 
and Mr. Ashcroft), with respect to ephemeral recordings; an 
amendment by the Chairman (for himself, Mr. Leahy, and Mr. 
Ashcroft), with respect to the use of copyright management 
information in the course of certain analog and digital 
transmissions; an amendment by the Chairman (for himself and 
Mr. Leahy), to make certain clarifying amendments; an amendment 
by Mr. Ashcroft (for himself, Mr. Leahy, and Mr. Hatch), with 
respect to protection of subscribers of online and Internet 
service providers; an amendment by Mr. Ashcroft (for himself, 
Mr. Hatch, and Mr. Leahy), with respect to the accommodation of 
particular technological protection measures; an amendment by 
Mr. Ashcroft (for himself, Mr. Hatch, and Mr. Leahy), with 
respect to protection of personal privacy interests; an 
amendment by Mr. Ashcroft (for himself, Mr. Hatch, and Mr. 
Leahy), with respect to the preservation of the ability to 
control minors'' access to material on the Internet; an 
amendment by Mr. Ashcroft (for himself, Mr. Leahy, and Mr. 
Hatch), with respect to distance education through digital 
technologies; an amendment by Mr. Grassley (for himself and Mr. 
Kyl), with respect to law enforcement and intelligence 
activities; and an amendment by Mrs. Feinstein, with respect to 
the liability of nonprofit educational institutions for 
copyright infringement online. The Committee then ordered the 
Digital Millennium Copyright Act of 1998 reported favorably, as 
amended, with a recommendation that the bill do pass, by a 
rollcall vote of 18 yeas to 0 nays.

        YEAS                          NAYS
Thurmond (by proxy)
Grassley (by proxy)
Specter (by proxy)
Thompson
Kyl
DeWine
Ashcroft
Abraham (by proxy)
Sessions
Leahy
Kennedy
Biden (by proxy)
Kohl (by proxy)
Feinstein
Feingold
Durbin (by proxy)
Torricelli (by proxy)
Hatch

                     V. SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    This Act may be cited as the ``Digital Millennium Copyright 
Act of 1998.'

Section 2. Table of contents

                 Title I--WIPO Treaties Implementation

Section 101. Short title

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

Section 102. Technical amendments

    To comply with the obligations of the WIPO Treaties, 
several technical amendments to the U.S. Copyright Act are 
necessary. These amendments are needed to ensure that works 
from countries that jointhe two new WIPO Treaties, including 
works in existence on the date each treaty becomes effective for the 
United States, will be protected in the United States on a formality-
free basis, as required by the provisions of each treaty. Three 
sections of the Copyright Act require amendment: (1) section 104, which 
specifies the conditions on which works from other countries are 
protected in the United States; (2) section 104A, which restores 
protection to certain preexisting works from other countries that have 
fallen into the public domain in the United States; and (3) section 
411(a), which makes copyright registration a precondition to bringing 
suit for infringement for some works. In addition, the amendments made 
to these sections require some additions to, and changes in, the 
definition section of the Copyright Act, section 101.
    Subsection (a)--Amendments to Section 101: Definitions.--
The bill amends section 101 of the Copyright Act (17 U.S.C. 
101) to define ``treaty party'' as ``any country or 
intergovernmental organization that is a party to an 
international agreement'' and to define ``international 
agreement'' to include, inter alia, the two new WIPO Treaties. 
Definitions of the two new WIPO Treaties are also provided. In 
addition, a definition of ``United States work'' was added for 
purposes of section 411 of the Copyright Act (17 U.S.C. 411), 
as amended by the bill.
    Subsection (b)--Amendments to Section 104: Subject Matter 
of Copyright: National Origin.--Section 104 of the Copyright 
Act (17 U.S.C. 104) identifies the criteria that must be met 
for a work to qualify for protection under the U.S. copyright 
law (i.e., ``points of attachment'). Among those protected 
under section 104 are nationals or domiciliaries of those 
countries with which we have an appropriate treaty 
relationship. Section 104, as it is presently written, 
explicitly identifies those treaty relationships, but does not 
refer to the two new WIPO Treaties. Therefore, section 104 
needs to be amended to provide for points of attachment for the 
two new WIPO Treaties.
    Subsection (b) amends section 104 so that all countries 
that have copyright relations with the United States would be 
referred to collectively by the term ``treaty parties.'' This 
change, in conjunction with the amendments to section 101, 
which define ``treaty party'' and ``international agreement,'' 
serves to ensure that the two new WIPO Treaties are covered by 
section 104. This subsection also amends section 104 to extend 
protection to foreign works from any treaty party based on four 
points of attachment: nationality of the author, place of first 
publication of the work, place of fixation of the sounds 
embodied in a sound recording, and the situs of a constructed 
architectural work.
    The way section 104 is presently written requires that it 
be amended each time U.S. treaty membership changes. By 
defining ``treaty party'' in section 101 and amending section 
104 to refer to ``treaty party,'' future changes in the 
treaties to which the U.S. is a party would not require changes 
to section 104. It is much clearer and less unwieldy to have a 
single set of criteria for eligibility in section 104 as 
proposed by this bill, rather than multiple, overlapping 
criteria in a long list of complex definitions in section 101. 
If the U.S. joins any future treaties, those treaties can 
simply be added to the list of ``international agreements'' 
without any detailed amendments repeating the criteria for 
eligibility. The amendment to section 104 also makes clear that 
membership in the Geneva Phonograms Convention and the WIPO 
Performances and Phonograms Treaty provides national 
eligibility for sound recordings only, not other types of 
works.
    Subsection (c)--Amendments to Section 104A: Copyright in 
Restored Works.--Subsection (c) amends section 104A(h) of the 
Copyright Act (17 U.S.C. 104A(h)) by adding the two new WIPO 
Treaties to the definitions of ``date of adherence or 
proclamation'' and ``eligible country.'' It would also add a 
paragraph to the definition of ``restored work'' to ensure that 
copyrighted works other than sound recordings do not qualify as 
restored works where the sole basis for protection in the 
United States is adherence to the WIPO Performances and 
Phonograms Treaty.
    Subsection (d)--Amendments to Section 411(a): Registration 
and Infringement Actions.--In its current form, section 411(a) 
of the Copyright Act (17 U.S.C. 411(a)) requires works to be 
registered with the Copyright Office before suit can be brought 
for their infringement, but exempts Berne Convention works 
whose country of origin is not the United States. Subsection 
(d) amends section 411(a) of the Copyright Act to include works 
from members of the two new WIPO Treaties within the exemption.
    The amendments made by subsection (d) reframe the 
registration requirement in the affirmative--essentially the 
converse of the current section 411(a). In other words, the 
provision would state affirmatively that ``United States 
works'' must be registered before suit. Rather than frame an 
exemption from that requirement for certain works whose origin 
is not the United States, section 411(a) would, as amended by 
this subsection, merely limit the requirement of registration 
as a precondition to suit to those works whose country of 
origin is the United States. ``United States works'' are 
defined in section 101 of the Copyright Act (17 U.S.C. 101), as 
amended by this Title. As discussed with respect to the 
amendments in subsection (b) to section 104 of the Copyright 
Act, section 411(a), as amended by this subsection, may be 
easily updated each time the United States joins another 
treaty, without the need to change several interrelated 
provisions of the Act.
    Subsection (e)--Amendment to section 507(a).--Section 
507(a) of the Copyright Act (17 U.S.C. 507(a)) provides for a 
3-year statute of limitations period for all criminal copyright 
actions. Subsection (e) amends section 507(a) to recognize 
exceptions to the 3-year limitations period if expressly 
provided elsewhere in title 17. This amendment is necessary in 
light of the 5-year criminal limitation period contained in the 
new chapter 12 of title 17, which is created by this title.

Section 103. Copyright protection systems and copyright management 
        information

    The two new WIPO Treaties include substantively identical 
provisions on technological measures of protection (also 
commonly referred to as the ``black box'' or 
``anticircumvention'' provisions). These provisions require 
contracting parties to provide ``adequate legal protection and 
effective legal remedies against the circumvention of effective 
technological measures that are used by authors in connection 
with the exercise of their rights under this Treaty or the 
Berne Convention and that restrict acts, in respect of their 
works, which are not authorized by the authors concerned or 
permitted by law.''
    Both of the new WIPO treaties also include substantively 
identical provisions requiring contracting parties to protect 
the integrity of copyright management information. The treaties 
define copyright management information as ``information which 
identifies the work, the author of the work, the owner of any 
right in the work, or information about the terms and 
conditions of use of the work, and any numbers or codes that 
represent such information, when any of these items of 
information is attached to a copy of a work or appears in 
connection with the communication of a work to the public.'
    Legislation is required to comply with both of these 
provisions. To accomplish this, the bill adds a new chapter 
(chapter twelve) to title 17 of the United States Code. This 
new chapter twelve includes five sections--(1) section 1201, 
which prohibits the circumvention of technological copyright 
protection measures; (2) section 1202, which protects the 
integrity of copyright management information; (3) section 
1203, which provides for civil remedies for violations of 
sections 1201 and 1202; (4) section 1204, which provides for 
criminal penalties for violations of sections 1201 and 1202; 
and (5) section 1205, which provides a savings clause to 
preserve the effectiveness of federal and state laws in 
protecting individual privacy on the Internet.

Section 1201. Circumvention of copyright protection systems

    Subsection (a)--Violations regarding circumvention of 
technological protection measures.--Subsection (a) applies when 
a person has not obtained authorized access to a copy or a 
phonorecord of a work that is protected under the Copyright Act 
and for which the copyright owner has put in place a 
technological measure that effectively controls access to his 
or her work. The relevant terminology is defined in paragraph 
(a)(3), as described below.
    Paragraph (a)(1) establishes a general prohibition against 
gaining unauthorized access to a work by circumventing a 
technological protection measure put in place by the copyright 
owner where such protection measure otherwise effectively 
controls access to a work protected under title 17 of the U.S. 
Code. This paragraph does not apply to the subsequent actions 
of a person once he or she has obtained authorized access to a 
copy of a work protected under title 17, even if such actions 
involve circumvention of other types of technological 
protection measures.
    In order to provide meaningful protection and enforcement 
of the copyright owner's right to control access to his or her 
copyrighted work, paragraph (a)(2) supplements the prohibition 
against the act of circumvention in paragraph (a)(1) with 
prohibitions on creating and making available certain 
technologies, products and services used, developed or 
advertised to defeat technological protections against 
unauthorized access to a work. Similar laws have been enacted 
in related contexts. See, e.g., 17 U.S.C. 1002(a) (prohibiting 
the import, manufacture, or distribution of digital audio 
recording equipment lacking specified characteristics and 
prohibiting the import, manufacture, or distribution of any 
device, or the offer to perform any service, the primary 
purpose or effect of which is to circumvent the serial copy 
management system required for digital audio equipment); 47 
U.S.C. 553(a)(2) (prohibiting the manufacture or distribution 
of equipment intended for the unauthorized reception of cable 
television service); 47 U.S.C. 605(e)(4) (prohibiting the 
manufacture, assembly, import, and sale of equipment used in 
the unauthorized decryption of satellite cable programming.)
    Specifically, paragraph (a)(2) prohibits manufacturing, 
importing, offering to the public, providing, or otherwise 
trafficking in certain technologies, products, services, 
devices, components, or parts that can be used to circumvent a 
technological protection measure that otherwise effectively 
controls access to a work protected under title 17. It is 
drafted carefully to target ``black boxes,'' and to ensure that 
legitimate multipurpose devices can continue to be made and 
sold. For a technology, product, service, device, component, or 
part thereof to be prohibited under this subsection, one of 
three conditions must be met. It must: (1) be primarily 
designed or produced for the purpose of circumventing; (2) have 
only a limited commercially significant purpose or use other 
than to circumvent; or (3) be marketed by the person who 
manufactures it, imports it, offers it to the public, provides 
it or otherwise traffics in it, or by another person acting in 
concert with that person with that person's knowledge, for use 
in circumventing a technological protection measure that 
effectively controls access to a work protected under title 17. 
This provision is designed to protect copyright owners, and 
simultaneously allow the development of technology.
    Paragraph (a)(3) defines certain terms used throughout 
paragraph (a). Subparagraph (1) defines the term ``circumvent a 
technological protection measure'' as meaning ``to descramble a 
scrambled work, todecrypt an encrypted work, or otherwise to 
avoid, bypass, remove, deactivate, or impair a technological protection 
measure, without the authority of the copyright owner.'' This 
definition applies to paragraph (a) only, which covers protections 
against unauthorized initial access to a copyrighted work. Subparagraph 
(2) states that a technological protection measure ``effectively 
controls access to a work'' if the measure, in the ordinary course of 
its operation, requires the application of information, or a process or 
a treatment, with the authority of the copyright owner, to gain access 
to the work.
    Subsection (b)--Additional violations.--Subsection (b) 
applies to those technological measures employed by a copyright 
owner that effectively protect his or her copyright rights in a 
work, as opposed to those technological protection measures 
covered by subsection (a), which prevent unauthorized access to 
a copyrighted work. Unlike subsection (a), which prohibits the 
circumvention of access control technologies, subsection (b) 
does not, by itself, prohibit the circumvention of effective 
technological copyright protection measures. It is anticipated 
that most acts of circumventing a technological copyright 
protection measure will occur in the course of conduct which 
itself implicates the copyright owners rights under title 17. 
This subsection is not intended in any way to enlarge or 
diminish those rights. Thus, for example, where a copy control 
technology is employed to prevent the unauthorized reproduction 
of a work, the circumvention of that technology would not 
itself be actionable under section 1201, but any reproduction 
of the work that is thereby facilitated would remain subject to 
the protections embodied in title 17.
    Paralleling paragraph (a)(2), above, paragraph (b)(1) seeks 
to provide meaningful protection and enforcement of copyright 
owners' use of technological protection measures to protect 
their rights under title 17 by prohibiting the act of making or 
selling the technological means to overcome these protections 
and thereby facilitate copyright infringement. Paragraph (b)(1) 
prohibits manufacturing, importing, offering to the public, 
providing, or otherwise trafficking in certain technologies, 
products, services, devices, components, or parts thereof that 
can be used to circumvent a technological protection measure 
that effectively protects a right of a copyright owner under 
title 17 in a work or portion thereof. Again, for a technology, 
product, service, device, component, or part thereof to be 
prohibited under this subsection, one of three conditions must 
be met. It must: (1) be primarily designed or produced for the 
purpose of circumventing; (2) have only limited commercially 
significant purpose or use other than to circumvent; or (3) be 
marketed by the person who manufactures it, imports it, offers 
it to the public, provides it, or otherwise traffics in it, or 
by another person acting in concert with that person with that 
person's knowledge, for use in circumventing a technological 
protection measure that effectively protects the right of a 
copyright owner under title 17 in a work or a portion thereof. 
Like paragraph (a)(2), this provision is designed to protect 
copyright owners, and simultaneously allow the development of 
technology.
    Paragraph (b)(2) defines certain terms used in subsection 
(b). Subparagraph (b)(2)(A) defines the term ``circumvent 
protection afforded by a technological protection measure'' as 
``avoiding, bypassing, removing, deactivating, or otherwise 
impairing a technological protection measure.'' Subparagraph 
(b)(2)(B) provides that a technological protection measure 
``effectively protects a right of a copyright owner under title 
17'' if the measure, in the ordinary course of its operation, 
prevents, restricts, or otherwise limits the exercise of a 
right under Title 17 of a copyright owner.
    Subsection (c)--Importation.--Subsection (c) prohibits the 
importation, sale for importation, or sale within the United 
States after importation by the owner, importer or consignee of 
any technology, product, service, device, component, or part 
thereof covered by subsections (a) or (b). This paragraph 
further provides that violations of this provision are 
actionable under section 337 of the Tariff Act (19 U.S.C. 
1337), which authorizes actions by the International Trade 
Commission against unfair import practices.
    Subsection (d)--Other rights, etc., not affected.--
Subsection (d) sets forth several provisions clarifying the 
scope of section 1201. Paragraph (d)(1) provides that section 
1201 shall not have any effect on rights, remedies, 
limitations, or defenses to copyright infringement, including 
fair use, under title 17. Paragraph (d)(2) provides that 
section 1201 shall not alter the existing doctrines of 
contributory or vicarious liability for copyright infringement 
in connection with any technology, product, service, device, 
component or part thereof. Together, these provisions are 
intended to ensure that none of the provisions in section 1201 
affect the existing legal regime established in the Copyright 
Act and case law interpreting that statute.
    Paragraph (d)(3) clarifies that nothing in section 1201 
creates a mandate requiring manufacturers of consumer 
electronics, telecommunications, and computing products to 
design their products or their parts and components to respond 
to any particular technological measure employed to protect a 
copyrighted work. The provision also makes clear, however, that 
while the failure of a product to respond to a particular 
technological measure does not in and of itself create 
liability, neither does the failure of the product to respond 
to a particular technological protection measure immunize those 
trafficking in the product from liability under section 
1201(a)(2) or (b), if the tests of liability in those 
provisions are met.
    Subsection (e)--Exemption for nonprofit libraries, 
archives, and educational institutions.--Subsection (e) 
provides a limited exemption from the prohibition on 
circumvention of technological protection measures contained in 
section 1201(a)(1) for qualified nonprofit libraries, archives, 
and educational institutions.
    Paragraph (1) of this subsection allows a nonprofit 
library, nonprofit archives or nonprofit educational 
institution to obtain access to a copyrighted work for the sole 
purpose of making a good faith determination as to whether it 
wishes to acquire a copy, or portion of a copy, of that work in 
order to engage in conduct permitted under the Copyright Act, 
such as a fair use under section 107. A qualifying institution 
may not gain access for a period of time longer than necessary 
to determine whether it wishes to obtain a copy, or portion of 
a copy, for such purposes, and the right to gain access shall 
not apply for any other purpose.
    Paragraph (2) provides that the right to obtain access 
under this paragraph only applies when the nonprofit library, 
nonprofit archives, or nonprofit educational institution cannot 
obtain a copy of an identical work by other means, and such an 
entity may not use the exemption in this paragraph for 
commercial advantage or financial gain without penalty.
    Paragraph (3) seeks to protect the legitimate interests of 
copyright owners by providing a civil remedy against a library, 
archive, or educational institution that violates section 
1201(a) by gaining access to a commercially exploited 
copyrighted work and willfully and for the purpose of 
commercial advantage or financial gain failing to comply with 
the provisions of paragraph (1)(A) (requiring that a qualifying 
library, archive, or educational institution not retain the 
work for longer than necessary to make a good faith 
determination as to whether to acquire a copy or portion of the 
work) or paragraph (1)(B) (requiring that a qualifying library, 
archive, or educational institution not use the work to which 
it has gained access for any purpose other than to make a good 
faith determination as to whether to acquire a copy or portion 
of the work). Under this paragraph, a violator shall be subject 
to civil remedies under section 1203 for the first time it 
gains access in violation of section 1201(a) without complying 
with the requirements of paragraph (1). For subsequent 
offenses, the violator shall not only be subject to civil 
remedies under section 1203, but also lose the benefit of the 
exemption provided by this subsection.
    Paragraph (4) provides that this subsection may not be used 
as a defense to the prohibitions on manufacturing or selling 
devices contained in sections 1201(a)(2) or 1202(b).
    Finally, paragraph (5) provides that a library or archive, 
to be eligible for the exemption in paragraph (1), must 
maintain its collections open to the public and available, not 
only to researchers affiliated with the library or archives or 
with the institution of which it is a part, but also to other 
persons doing research in a specialized field.
    Subsection (f)--Law enforcement and intelligence 
activities.--Subsection (f) creates an exception for the 
lawfully authorized investigative, protective, or intelligence 
activities of an officer, agent, or employee of, the United 
States, a State, or a political subdivision of a State, or of 
persons acting pursuant to a contract with such an entity. This 
exception will protect officers, agents, employees, or 
contractors of, or other persons acting at the direction of, a 
law enforcement or intelligence agency of the United States, a 
State, or a political subdivision of a State, who are 
performing lawfully authorized investigative, protective, or 
intelligence activities. This exception will also protect 
officers, agents, employees, or contractors of, or other 
persons acting at the direction of, elements or divisions of an 
agency or department of the United States, a State, or a 
political subdivision of a State, which does not have law 
enforcement or intelligence as its primary function, but who 
may nevertheless, in the course of lawfully authorized 
protective, intelligence, or criminal investigative activities, 
engage in actions otherwise prohibited by this bill. This 
exception only applies to individuals covered under this 
section when they are performing investigative, protective, or 
intelligence activities, within the scope of their duties and 
in furtherance of lawfully authorized activities.
    Subsections (g)-(j)--Interoperability of computer 
programs.--Subsections (g) through (j) are intended to allow 
legitimate software developers to continue engaging in certain 
activities for the purpose of achieving interoperability to the 
extent permitted by law prior to the enactment of this chapter. 
The objective is to ensure that the effect of current case law 
interpreting the Copyright Act is not changed by enactment of 
this legislation for certain acts of identification and 
analysis done in respect of computer programs. See, Sega 
Enterprises Ltd. v. Accolade, Inc., 977 F.2d 1510, 24 
U.S.P.Q.2d 1561 (9th Cir. 1992.). The purpose of this section 
is to foster competition and innovation in the computer and 
software industry.
    Subsection (g) permits the circumvention of access control 
technologies for the sole purpose of achieving software 
interoperability. For example, this subsection permits a 
software developer to circumvent an access control technology 
applied to a portion or portions of a program in order to 
perform the necessary steps to identify and analyze the 
information necessary to achieve interoperability. Subsection 
(g) permits the act of circumvention in only certain instances. 
First, the copy of the computer program which is the subject of 
the analysis must be lawfully acquired. That is the computer 
program must be acquired from a legitimate source, along with 
any necessary serial codes, passwords, or other such means as 
may be necessary to be able to use the program as it was 
designed to be used by a consumer of the product. The permitted 
acts must be limited to those elements of the program which 
must be analyzed to achieve the sole permitted purpose, which 
is interoperability of an independently created program with 
other programs. Interoperability is defined in subsection (j) 
as the ability of computer programs to exchange information, 
and for such programs mutually to use the information which has 
been exchanged. The resulting product must be a new and 
original work, in that it may not infringe the original 
computer program. In addition, the objective of the analysis 
must be to identify and extract such elements as are necessary 
to achieve interoperability which are not otherwise available 
to the person. Finally, the goal of this section is to ensure 
that current law is not changed, and not to encourage or permit 
infringement. Thus, each of the acts undertaken must avoid 
infringing the copyright of the author of the underlying 
computer program.
    Subsection (h) recognizes that to accomplish the acts 
permitted under subsection (g) a person may, in some instances, 
have to make and use certain tools. In most instances these 
will be generally available tools that programmers use in 
developing computer programs, such as compilers, trace 
analyzers and disassemblers, which are not prohibited by this 
section. In certain instances, it is possible that a person may 
have to develop special tools to achieve the permitted purpose 
of interoperability. Thus, this provision creates an exception 
to the prohibition on making circumvention tools contained in 
subsections 1201(a)(2) and (b). These tools can be either 
software or hardware. Again, this provision is limited by a 
general admonition not to act in a way that constitutes 
infringing activity.
    Subsection (i) recognizes that developing complex computer 
programs often involves the efforts of many persons. For 
example, some of these persons may be hired to develop a 
specific portion of the final product. For that person to 
perform these tasks, some of the information acquired through 
the permitted analysis, and the tools to accomplish it, may 
have to be made available to that person. This subsection 
allows developers of independently created software to rely on 
third parties either to develop the necessary circumvention 
tools or to identify the necessary information to achieve 
interoperability. The ability to rely on third parties is 
particularly important for small software developers who do not 
have the capability of performing these functions in-house. 
This provision permits such sharing of information and tools. 
Recognizing, however, that making such circumvention 
information or tools generally available would undermine the 
objectives of this Act, this section imposes strict 
limitations. Such acts of sharing information and tools is 
permitted solely for the purpose of achieving interoperability 
of an independently created computer program with other 
programs. If a person makes this information available for a 
purpose other than to achieve interoperability of an 
independently created computer program with other programs, 
that action is a violation of this Act. In addition, these acts 
are permitted only to the extent that doing so does not 
constitute infringement under this title, or violate applicable 
law other than this title.
    Subsection (j) defines ``interoperability'' as the ability 
of computer programs to exchange information, and for such 
programs mutually to use the information which has been 
exchanged. The seamless exchange of information is an key 
element of creating such an interoperable independently created 
program. This provision applies to computer programs as such, 
regardless of their medium of fixation and not to works 
generally, such as music or audiovisual works, which may be 
fixed and distributed in digital form. Accordingly, since the 
goal of interoperability is the touchstone of the exceptions 
contained in subsections 1201(g) through (j), nothing in those 
subsections can be read to authorize the circumvention of any 
technological protection measure that controls access to any 
work other than a computer program, or the trafficking in 
products or services for that purpose.
    Subsection (k).--The Committee was concerned that section 
1201(a) might inadvertently make it unlawful for parents to 
protect their children from pornography and other harmful 
material available on the Internet, or have unintended legal 
consequences for manufacturers of products designed solely to 
enable parents to protect their children in this fashion. 
Subsection (k) addresses these concerns.

Section 1202: Integrity of copyright management information

    Section 1202 implements the obligation contained in Article 
12 of the WIPO Copyright Treaty and Article 19 of the WIPO 
Performances and Phonograms Treaty that Contracting Parties 
``provide adequate and effective legal remedies'' against any 
person who knowingly and without authority removes or alters 
copyright management information (CMI), or who distributes, 
imports, broadcasts, or communicates to the public, works or 
copies of works knowing that such information has been removed 
or altered without authority.22 This section does 
not mandate the use of CMI, nor does it prescribe the choice of 
any particular type of CMI for those who do use it. It merely 
protects the integrity of CMI if a party chooses to use it in 
connection with a copyrighted work by prohibiting its 
deliberate deletion or alteration. Furthermore, this section 
imposes liability for specified acts. It does not address the 
question of liability for persons who manufacture devices or 
provide services.
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    \22\ Article 12 of the WIPO Copyright Treaty provides:
    (1) Contracting Parties shall provide adequate and effective legal 
remedies against any person knowingly performing any of the following 
acts knowing, or with respect to civil remedies having reasonable 
grounds to know, that it will induce, enable, facilitate or conceal an 
infringement of any right covered by this Treaty or the Berne 
Convention:
    (i) to remove or alter any electronic rights management information 
without authority;
    (ii) to distribute, import for distribution, broadcast or 
communicate to the public, without authority, works or copies of works 
knowing that electronic rights management information has been removed 
or altered without authority.
    (2) As used in this Article, ``rights management information'' 
means information which identifies the work, the author of the work, 
the owner of any right in the work, or information about the terms and 
conditions of use of the work, and any numbers or codes that represent 
such information, when any of these items of information is attached to 
a copy of a work or appears in connection with the communication of the 
work to the public.
    Article 19 of the WIPO Performances and Phonograms Treaty provides:
    (1) Contracting Parties shall provide adequate and effective legal 
remedies against any person knowingly performing any of the following 
acts knowing, or with respect to civil remedies having reasonable 
grounds to know, that it will induce, enable, facilitate or conceal an 
infringement of any right covered by this Treaty:
    (i) to remove or alter any electronic rights management information 
without authority;
    (ii) to distribute, import for distribution, broadcast, communicate 
or make available to the public, without authority, performances, 
copies of fixed performances or phonograms knowing that electronic 
rights management information has been removed or altered without 
authority.
    (2) As used in this Article, ``rights management information'' 
means information which identifies the performer, the performance of 
the performer, the producer of the phonogram, the phonogram, the owner 
of any right in the performance or phonogram, or information about the 
terms and conditions of use of the performance or phonogram, and any 
numbers or codes that represent such information, when any of these 
items of information is attached to a copy of a fixed performance or a 
phonogram or appears in connection with the communication or making 
available of a fixed performance or a phonogram to the public.
---------------------------------------------------------------------------
    Subsection (a)--False copyright management information.--
Subsection (a) establishes a general prohibition against 
intentionally providing false copyright management information, 
as defined in subsection (c), and against distributing or 
importing for distribution false copyright management 
information. There are two prerequisites that must be met for 
these prohibitions to be violated: (1) the person providing, 
distributing or importing the false CMI must know the CMI is 
false, and (2) the person providing, distributing, or importing 
the false CMI must do so with the intent to induce, enable, 
facilitate or conceal an infringement of any right under title 
17.
    Subsection (b)--Removal or alteration of copyright 
management information.--Subsection (b) establishes general 
prohibitions against removing or altering CMI, against 
distributing or importing for distribution altered CMI, and 
against distributing, importing for distribution or publicly 
performing works in which CMI has been removed. There are three 
specific acts prohibited if they are committed without the 
authority of the copyright owner or the law, and if they are 
done knowing, or with respect to civil remedies under section 
1203, having reasonable grounds to know, that they will induce, 
enable, facilitate or conceal a copyright infringement: (1) 
intentionally removing or altering CMI; (2) distributing or 
importing for distribution CMI knowing that it has been altered 
without the authority of the copyright owner or the law; or (3) 
distributing, importing for distribution, or publicly 
performing works, copies of works, or phonorecords knowing that 
CMI has been removed or altered without the authority of the 
copyright owner or the law.
    Subsection (c)--Definition.--Subsection (c) defines 
``copyright management information.'' To fall within the 
definition, there is a threshold requirement that the 
information be conveyed in connection with copies or 
phonorecords, performances or displays of the copyrighted work. 
The term ``conveyed'' is used in its broadest sense and is not 
meant to require any type of transfer, physical or otherwise, 
of the information. It merely requires that the information be 
accessible in conjunction with, or appear with, the work being 
accessed. Such information is ``copyright management 
information'' as defined in this subsection if it falls within 
the categories enumerated in paragraphs (1) through (6).
    Paragraph (1) describes information that identifies the 
copyrighted work, including the title of a work. This paragraph 
makes clear that the information set forth on a notice of 
copyright is included within the definition of copyright 
management information.
    Paragraph (2) describes information that identifies the 
author of the work.
    Paragraph (3) describes information that identifies the 
copyright owner.
    Paragraph (4) describes information that identifies a 
performer whose performance is fixed in a work, other than an 
audiovisual work. Information that identifies such a performer 
is excluded from the definition of CMI, however, when such 
information is conveyed by a radio or television broadcast 
station in connection with the public performance of a work.
    Paragraph (5) describes, in the case of an audiovisual 
work, information that identifies the writer, performer, or 
director who is credited in the work. Paralleling paragraph 
(4), information that identifies such a writer, performer, or 
director is excluded from the definition of CMI when such 
information is conveyed by a radio or television broadcast 
station in connection with the public performance of a work.
    Paragraph (6) describes numbers and symbols which refer to 
or represent the above information. As noted above, both the 
WIPO Copyright Treaty and the WIPO Performances and Phonograms 
Treaty require that numbers and symbols be included within the 
definition of CMI. Links, such as embedded pointers and 
hypertext links, to the above information are also included. 
The phrase ``links to such information'' was included because 
removing or altering a link to the information will have the 
same adverse effect as removing or altering the information 
itself.
    Finally, paragraph (7) permits the Register of Copyrights 
to prescribe by regulation other information that, if conveyed 
in connection with a work, is to be protected as copyright 
management information. To protect the privacy of users of 
copyrighted works, however, the Register of Copyrights may not 
include within the definition of CMI any information concerning 
users of copyrighted works.
    Consistent with the proviso contained in paragraph (7), it 
should be noted that the definition of ``copyright management 
information'' does not encompass, nor is it intended to 
encompass, tracking or usage information relating to the 
identity of users of the works. The definition of CMI is 
limited by this subsection to the types of information listed, 
and it would be inconsistent with the purpose and construction 
of this bill, and contrary to the protection of privacy to 
include, tracking and usage information within the definition 
of CMI.
    Subsection (d)--Law enforcement and intelligence 
activities.--Section 1202(d) creates an exception for the 
lawfully authorized investigative, protective, or intelligence 
activities of an officer, agent, oremployee of, the United 
States, a State, or a political subdivision of a State, or of persons 
acting pursuant to a contract with such an entity. This exception will 
protect officers, agents, employees, or contractors of, or other 
persons acting at the direction of, a law enforcement or intelligence 
agency of the United States, a State, or a political subdivision of a 
State, who are performing lawfully authorized investigative, 
protective, or intelligence activities. This exception will also 
protect officers, agents, employees, or contractors of, or other 
persons acting at the direction of, elements or divisions of an agency 
or department of the United States, a State, or a political subdivision 
of a State, which does not have law enforcement or intelligence as its 
primary function, but who may nevertheless, in the course of lawfully 
authorized protective, intelligence, or criminal investigative 
activities, engage in actions otherwise prohibited by this section. 
This exception only applies to individuals covered under this 
subsection when they are performing investigative, protective, or 
intelligence activities, within the scope of their duties and in 
furtherance of lawfully authorized activities.
    Subsection (e)--Limitations on Liability.--Subsection (e) 
recognizes special problems that certain broadcasting entities 
may have with the transmission of copyright management 
information. Under this subsection, radio and television 
broadcasters, cable systems, and persons who provide 
programming to such broadcasters or systems, who do not intend 
to induce, enable, facilitate or conceal infringement (eligible 
persons) may be eligible for a limitation on liability for 
violation of the copyright management information provisions of 
subsection (b) in certain, limited circumstances.
    In the case of an analog transmission, paragraph (1) 
provides that an eligible person will not be held liable for 
violating provisions of subsection (b) if it is not 
``technically feasible'' for that person to avoid the violation 
or if avoiding the violation would ``create an undue financial 
hardship.'' Avoiding a violation of subsection (b) with respect 
to the transmission of credits that are of an excessive 
duration in relation to standard practice in the relevant 
industries (for instance, the motion picture and television 
broadcast industries) is one example of an activity that may 
``create an undue financial hardship'' under paragraph (1). As 
indicated above, this limitation on liability applies only if 
such person did not intend, by engaging in such activity, to 
induce, enable, facilitate or conceal infringement.
    Paragraph (2) provides a limitation on liability in the 
case of a digital transmission, and contemplates voluntary 
digital transmission standards for the placement of copyright 
management information. Separate standards are likely to be set 
for the location of copyright management information in 
different categories of works. For instance, the standard(s) 
for the location of the name of the copyright owner in a sound 
recording or musical work to be broadcast by radio stations may 
differ--and be set in a separate standard-setting process(es)--
from the standard for the location of such information in a 
motion picture to be broadcast by television stations.
    Paragraph (2)(A) provides that if a digital transmission 
standard for the placement of copyright management information 
for a category of works is set in a voluntary, consensus 
standard-setting process involving a representative cross-
section of the relevant copyright owners and relevant 
transmitting industry, including but not limited to 
representatives of radio or television broadcast stations, 
cable systems, and copyright owners of a category of works that 
are intended for public performance by such stations or 
systems, an eligible person will not be liable for a violation 
of subsection (b) if the copyright management information 
involved in the violation was not placed in a location 
specified by the standard for that information. The eligible 
person, however, cannot qualify for this limitation on 
liability if that person was responsible for the nonconforming 
placement.
    Paragraph (2)(B)(i) provides that until such a standard is 
set for a category of works, an eligible person will not be 
liable for a violation of subsection (b) if the transmission of 
the copyright management information would cause a perceptible 
visual or aural degradation of the digital signal. Paragraph 
(2)(B)(ii) provides that during this time period before a 
standard is set, an eligible person also will not be liable if 
the digital transmission of the information would conflict with 
an applicable government regulation or industry standard 
relating to transmission of information in a digital signal, 
such as the regulation requiring the placement of closed 
captioning in line 21 of the vertical blanking interval (47 
C.F.R. 79.1, implementing 47 U.S.C. 613). For purposes of this 
paragraph, however, the applicable industry-wide standard must 
be of a type specified in paragraphs (2)(B)(ii)(II) or (III). 
The first type, defined in paragraph (2)(B)(ii)(II), includes 
only those standards that were adopted by a voluntary, 
consensus standards body, such as the Advanced Television 
Systems Committee, before the effective date of section 1202. 
The other type, defined in paragraph (2)(B)(ii)(III), includes 
only those standards adopted in a voluntary, consensus 
standards-setting process open to participation by groups, 
including but not limited to a representative cross-section of 
radio or television broadcast stations, cable systems, and 
copyright owners of a category of works that are intended for 
public performance by such stations or systems.

Section 1203--Civil remedies

    Subsection (a)--Civil actions.--Subsection (a) sets forth 
the general proposition that civil remedies are available for 
violations of sections 1201 and 1202. This paragraph 
establishes the jurisdiction for such civil actions as the 
``appropriate U.S. district court'' and limits standing to 
bring a civil action to those persons injured by a violation of 
section 1201 or 1202.
    Subsection (b)--Powers of the court.--Subsection (b) sets 
out the powers of the court that hears the case. Paragraph (1) 
authorizes the court to grant temporary and permanent 
injunctions on such terms as it deems reasonable to prevent or 
restrain a violation of section 1201 or 1202. Paragraph (2) 
authorizes the court to order the impounding of any device or 
product that is in the custody or control of the alleged 
violator and that the court has reasonable cause to believe was 
involved in a violation. Under paragraph (3), the court may 
award damages as provided in subsection (c). Paragraph (4) 
authorizes the court to allow the recovery of costs by or 
against any party other than the United States or an officer 
thereof. Under paragraph (5), the court may award reasonable 
attorneys' fees to the prevailing party. Finally, paragraph (6) 
authorizes the court to order the remedial modification or the 
destruction of any device or product involved in a violation of 
section 1201 or 1202 that is in the custody or control of the 
violator or has been impounded under paragraph (2).
    Subsection (c)--Award of damages.--Subsection (c) is 
divided into five paragraphs, each of which addresses the 
awarding of damages to the prevailing party.
    Paragraph (1) establishes the general proposition that a 
person who violates section 1201 or 1202 is liable for either 
actual damages and any additional profits of the violator, or 
statutory damages.
    Paragraphs (2) and (3) specify that the complaining party 
may finalize a choice between the two types of damage awards at 
any time until the final judgment is entered.
    Paragraph (2) provides that, when the prevailing party opts 
for actual damages, the court shall award to that party the 
actual damages suffered by the party as a result of the 
violations, as well as any profits of the violator that are 
attributable to the violation and are not taken into account in 
computing the actual damages.
    Paragraph (3) provides different statutory award amounts 
depending upon whether the civil action involves a section 1201 
or 1202 violation. When the violation is a section 1201 
violation and the prevailing party opts to recover an award of 
statutory damages, the prevailing party will be awarded 
statutory damages of not less than $200 or more than $2,500 per 
act of circumvention, device, product, component, offer, or 
performance of service. When the violation is a section 1202 
violation and the prevailing party opts to recover an award of 
statutory damages, the prevailing party will be awarded 
statutory damages of not less than $2,500 or more than $25,000 
for each violation.
    Paragraphs (4) and (5) set forth circumstances in which it 
would be appropriate to increase or decrease a damage award.
    Paragraph (4) provides for an increased damage award when 
the violator is a repeat offender. Specifically, when the 
prevailing party establishes that a person violated section 
1201 or 1202 within three years after a final judgment was 
entered against that person for another such violation, the 
award of damages may be increased to a sum of up to triple the 
amount that would otherwise be awarded.
    Paragraph (5)(A) provides that, when a violator of section 
1201 or 1202 was not aware and had no reason to believe that 
its acts constituted a violation, the damage award may be 
reduced or remitted. Paragraph (5)(B) requires the reduction or 
remission of damages in certain circumstances by providing 
that, when a nonprofit library, nonprofit archives, or 
nonprofit educational institution violator of section 1201 or 
1202 was not aware and had no reason to believe that its acts 
constituted a violation, the damage award shall be remitted 
entirely.

Section 1204--Criminal offenses and penalties

    Subsection (a)--In general.--Subsection (a) provides for 
the availability of criminal penalties for violations of 
sections 1201 and 1202. The standard applicable under this 
subsection is identical to the standard used in section 506 of 
the Copyright Act to establish criminal violations. Subsection 
(a)(1) sets forth the penalties available for a criminal 
violation of sections 1201 and 1202 as ``not more than $500,000 
or imprisonment for not more than five years, or both'' for the 
first offense. If the person who is found guilty of criminal 
violation of sections 1201 or 1202 is a repeat offender, 
subsection (a)(2) provides that penalties may be increased to 
``not more than $1,000,000 or imprisonment for not more than 
ten years, or both.''
    Subsection (b)--Limitation for nonprofit library, archives, 
or educational institution.--Subsection (b) exempts completely 
any nonprofit library, nonprofit archives or nonprofit 
educational institution from the criminal penalties contained 
in subsection (a).
    Subsection (c)--Statute of limitations.--Subsection (c) 
provides for a 5-year statute of limitations for criminal 
offenses under chapter 12.

Section 104. Conforming amendment

    This section amends the table of chapters for title 17 to 
reflect the addition of new chapter 12.

Section 105. Effective date

    Subsection (a)--In general.--Subsection (a) establishes the 
effective date of the proposed amendments in this bill as the 
date the bill is enacted into law, subject to the exceptions 
enumerated in subsection (b).
    Subsection (b)--Amendments relating to certain 
international agreements.--Subsection (b) sets forth several 
exceptions to the effective date established by subsection (a). 
These exceptions only apply to the technical amendments that 
are proposed in section 102 of the bill. Section 105 of the 
bill changes the effective date of any provision in section 102 
of the bill that specifically refers to the WIPO Copyright 
Treaty or the WIPO Performances and Phonograms Treaty from the 
date the bill is enacted into law to the date the Treaty enters 
into force.
    These exceptions are necessary because, as of the drafting 
of this bill, the two treaties have not entered into force and 
will not do so until three months after 30 States deposit their 
instruments of ratification or accession with the Director 
General of WIPO. The exceptions ensure that the amendments that 
refer specifically to the two treaties do not become effective 
until the treaties themselves become effective. In addition, it 
was necessary to refer to each treaty separately in this 
section, because it is possible that the two treaties may enter 
into force at different times and the amendments particular to 
each treaty had to be grouped together to ensure that the 
provisions relating specifically to one treaty do not become 
effective once the other treaty enters into force. Finally, it 
was necessary to add the phrase ``with respect to the United 
States'' in paragraphs (1) and (2) to ensure that, if the 
Treaties enter into force before the United States deposits its 
instrument of accession, the United States does not extend 
benefits to Member States of these Treaties until the United 
States becomes party to the Treaties.

          Title II--Internet Copyright Infringement Liability

    The liability of online service providers and Internet 
access providers for copyright infringements that take place in 
the online environment has been a controversial issue. Title II 
of the Digital Millennium Copyright Act, the Internet Copyright 
Infringement Liability Clarification Act, addresses this 
complex issue. Title II preserves strong incentives for service 
providers and copyright owners to cooperate to detect and deal 
with copyright infringements that take place in the digital 
networked environment. At the same time, it provides greater 
certainty to service providers concerning their legal exposure 
for infringements that may occur in the course of their 
activities.
    New section 512 contains limitations on service providers' 
liability for five general categories of activity set forth in 
subsections (a) through (d) and subsection (f). As provided in 
subsection (k), section 512 is not intended to imply that a 
service provider is or is not liable as an infringer either for 
conduct that qualifies for a limitation of liability or for 
conduct that fails to so qualify. Rather, the limitations of 
liability apply if the provider is found to be liable under 
existing principles of law.
    The limitations in subsections (a) through (d) protect 
qualifying service providers from liability for all monetary 
relief for direct, vicarious and contributory infringement. 
Monetary relief is defined in subsection (j)(2) as encompassing 
damages, costs, attorneys' fees, and any other form of monetary 
payment. These subsections also limit injunctive relief against 
qualifying service providers to the extent specified in 
subsection (i). To qualify for these protections, service 
providers must meet the conditions set forth in subsection (h), 
and service providers' activities at issue must involve a 
function described in subsection (a), (b), (c), (d) or (f), 
respectively. The liability limitations apply to networks 
``operated by or for the service provider,'' thereby protecting 
both service providers who offer a service and subcontractors 
who may operate parts of, or an entire, system or network for 
another service provider.

Section 201. Short title

    This title may be cited as the ``Internet Copyright 
Infringement Liability Clarification Act of 1998.''

Section 202. Limitations on liability for Internet copyright 
        infringement

    This section amends chapter 5 of the Copyright Act (17 
U.S.C. 501, et. seq.) to create a new section 512, titled 
``Liability of service providers for online infringement of 
copyright.''
    Subsection (a)--Digital network communications.--Subsection 
(a) applies to communications functions associated with sending 
digital communications of others across digital networks, such 
as the Internet and other online networks. It establishes a 
limitation on liability for infringements that may occur in the 
provision of services falling within the definition of 
subsection (j)(1)(A). The limitations on injunctive relief set 
forth in subsection (i)(1)(B) are applicable when the functions 
at issue fall within the provisions of subsection (a), and the 
service provider meets the threshold criteria of subsection 
(h).23
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    \23\ These threshold criteria apply to all of the liability 
limitations contained in section 512.
---------------------------------------------------------------------------
    Subsection (a) applies to service providers transmitting, 
routing, or providing connections for material, and some forms 
of intermediate and transient storage of material in the course 
of performing these functions. For example, in the course of 
moving packets of information across digital online networks, 
many intermediate and transient copies of the information may 
be made in routers and servers along the way. Such copies are 
created as an automatic consequence of the transmission 
process. In this context, ``intermediate and transient'' refers 
to such a copy made and/or stored in the course of a 
transmission, not a copy made or stored at the points where the 
transmission is initiated or received.
    The use of the term ``transmitting'' throughout section 512 
is not intended to be limited to transmissions of ``a 
performance or display'' of ``images or sounds'' within the 
meaning of section 101 of the Copyright Act.
    Subsections (a)(1) through (5) limit the range of 
activities that qualify under this subsection to ones in which 
a service provider plays the role of a ``conduit'' for the 
communications of others. This limitation on liability applies 
if: (1) the communication was initiated by or at the direction 
of a person other than the service provider; (2) it is carried 
out through an automatic technical process without selection of 
the material by the service provider; (3) the service provider 
does not select the recipients of the material except as an 
automatic response to the request of another; (4) no copy of 
the material made in the course of intermediate or transient 
storage is maintained on the system or network so that it is 
ordinarily accessible to other than the anticipated recipients, 
and no copy is maintained on the system or network in a manner 
ordinarily accessible to the anticipated recipients for a 
longer period than is reasonably necessary for the 
communication; and (5) the content (but not necessarily the 
form) of the material is not modified in the course of 
transmission. Thus, for example, an e-mail transmission may 
appear to the recipient without bolding or italics resulting 
from format codes contained in the sender's message.
    The Committee intends the term ``selection of the 
material'' in subsection (a)(2) to reflect an editorial 
function of determining what material to send, or the specific 
sources of material to place online (e.g., a radio station), 
rather than ``an automatic technical process'' of responding to 
a command or request, such as one from a user, an Internet 
location tool, or another network. The term ``automatic 
response to the request of another'' is intended to encompass a 
service provider's actions in responding to requests by a user 
or other networks, such as requests to forward e-mail traffic 
or to route messages to a mailing list agent (such as a 
Listserv) or other discussion group. The Committee intends 
subsection (a)(4) to cover copies made of material while it is 
en route to its destination, such as copies made on a router or 
mail server, storage of a web page in the course of 
transmission to a specific user, store and forward functions, 
and other transient copies that occur en route. The term 
``ordinarily accessible'' is intended to encompass stored 
material that is routinely accessible to third parties. For 
example, the fact that an illegal intruder might be able to 
obtain access to the material would not make it ordinarily 
accessible to third parties. Neither, for example, would 
occasional access in the course of maintenance by service 
provider personnel, nor access by law enforcement officials 
pursuant to subpoena make the material ``ordinarily 
accessible.'' However, the term does not include copies made by 
a service provider for the purpose of making the material 
available to other users. Such copying is addressed in 
subsection (b).
    Subsection (b)--System caching.--Subsection (b) applies to 
a different form of intermediate and temporary storage than is 
addressed in subsection (a). In terminology describing current 
technology, this storage is a form of ``caching,'' which is 
used on some networks to increase network performance and to 
reduce network congestion generally, as well as to reduce 
congestion and delays to popular sites. This storage is 
intermediate in the sense that the service provider serves as 
an intermediary between the originating site and ultimate user. 
The material in question is stored on the service provider's 
system or network for some period of time to facilitate access 
by users subsequent to the one who previously sought access to 
it.
    For subsection (b) to apply, the material must be made 
available on an originating site, transmitted at the direction 
of another person through the system or network operated by or 
for the service provider to a different person, and stored 
through an automatic technical process so that users of the 
system or network who subsequently request access to the 
material from the originating site may obtain access to the 
material from the system or network.
    Subsections (b)(1) through (b)(5) further refine the 
circumstances under which subsection (b) applies. Subsection 
(b)(1) provides that the material must be transmitted to 
subsequent users without modification to its content in 
comparison to the way it was originally transmitted from the 
originating site. The Committee intends that this restriction 
apply, for example, so that a service provider who caches 
material from another site does not change the advertising 
associated with the cached material on the originating site 
without authorization from the originating site.
    Subsection (b)(2) limits the applicability of the 
subsection to circumstances where the service provider complies 
with certain updating commands.
    Subsection (b)(3) provides that the service provider shall 
not interfere with the ability of certain technology that is 
associated with the work by the operator of the originating 
site to return to the originating site information, such as 
user ``hit'' counts, that would have been available to the site 
had it not been cached. The technology must: (i) not 
significantly interfere with the performance of the storing 
provider's system or network or with intermediate storage of 
the material; (ii) be consistent with generally accepted 
industrystandard communications protocols applicable to 
Internet and online communications, such as those approved by the 
Internet Engineering Task Force and the World Wide Web Consortium; and 
(iii) not extract information beyond that which would have been 
obtained had the subsequent users obtained access to the material 
directly on the originating site.
    Subsection (b)(4) applies to circumstances in which the 
originating site imposes a prior condition on access.
    Subsection (b)(5) establishes a notification and take down 
procedure for cached material modeled on the procedure under 
subsection (c). However, this take down obligation does not 
apply unless the material has previously been removed from the 
originating site, or the party submitting the notification has 
obtained a court order for it to be removed from the 
originating site and notifies the service provider's designated 
agent of that order. This proviso has been added to subsection 
(b)(5) because storage under subsection (b) occurs 
automatically and unless infringing material has been removed 
from the originating site, the infringing material would 
ordinarily simply be re-cached.
    Subsection (c)--Information stored on service providers.--
Subsection (c) limits the liability of qualifying service 
providers for claims of direct, vicarious and contributory 
infringement for storage at the direction of a user of material 
that resides on a system or network controlled or operated by 
or for the service provider. Examples of such storage include 
providing server space for a user's web site, for a chatroom, 
or other forum in which material may be posted at the direction 
of users. Subsection (c) defines the scope of this limitation 
on liability. It also sets forth procedural requirements that 
copyright owners or their agents and service providers must 
follow with respect to notifications of claimed infringement 
under subsection (c)(3). Information that resides on the system 
or network operated by or for the service provider through its 
own acts or decisions and not at the direction of a user does 
not fall within the liability limitation of subsection (c).
    Subsection (c)(1)--In general.--Subsection (c)(1)(A) sets 
forth the applicable knowledge standard. This standard is met 
either by actual knowledge of infringement or in the absence of 
such knowledge by awareness of facts or circumstances from 
which infringing activity is apparent. The term ``activity'' is 
intended to mean activity using the material on the system or 
network. The Committee intends such activity to refer to 
wrongful activity that is occurring at the site on the 
provider's system or network at which the material resides, 
regardless of whether copyright infringement is technically 
deemed to occur at that site or at the location where the 
material is received. For example, the activity at an online 
site offering audio or video may be unauthorized public 
performance of a musical composition, a sound recording, or an 
audio-visual work, rather than (or in addition to) the creation 
of an unauthorized copy of any of these works.
    Subsection (c)(1)(A)(ii) can best be described as a ``red 
flag'' test. As stated in subsection (l), a service provider 
need not monitor its service or affirmatively seek facts 
indicating infringing activity (except to the extent consistent 
with a standard technical measure complying with subsection 
(h)), in order to claim this limitation on liability (or, 
indeed any other limitation provided by the legislation). 
However, if the service provider becomes aware of a ``red 
flag'' from which infringing activity is apparent, it will lose 
the limitation of liability if it takes no action. The ``red 
flag'' test has both a subjective and an objective element. In 
determining whether the service provider was aware of a ``red 
flag,'' the subjective awareness of the service provider of the 
facts or circumstances in question must be determined. However, 
in deciding whether those facts or circumstances constitute a 
``red flag''--in other words, whether infringing activity would 
have been apparent to a reasonable person operating under the 
same or similar circumstances--an objective standard should be 
used.
    Subsection (c)(1)(A)(iii) provides that once a service 
provider obtains actual knowledge or awareness of facts or 
circumstances from which infringing material or activity on the 
service provider's system or network is apparent, the service 
provider does not lose the limitation of liability set forth in 
subsection (c) if it acts expeditiously to remove or disable 
access to the infringing material. Because the factual 
circumstances and technical parameters may vary from case to 
case, it is not possible to identify a uniform time limit for 
expeditious action.
    Subsection (c)(1)(B) sets forth the circumstances under 
which a service provider would lose the protection of 
subsection (c) by virtue of its benefit from and control over 
infringing activity. In determining whether the financial 
benefit criterion is satisfied, courts should take a common-
sense, fact-based approach, not a formalistic one. In general, 
a service provider conducting a legitimate business would not 
be considered to receive a ``financial benefit directly 
attributable to the infringing activity'' where the infringer 
makes the same kind of payment as non-infringing users of the 
provider's service. Thus, receiving a one-time set-up fee and 
flat periodic payments for service from a person engaging in 
infringing activities would not constitute receiving a 
``financial benefit directly attributable to the infringing 
activity.'' Nor is subparagraph (B) intended to cover fees 
based on the length of the message (per number of bytes, for 
example) or by connect time. It would however, include any such 
fees where the value of the service lies in providing access to 
infringing material.
    Subsection (c)(1)(C) establishes that in cases where a 
service provider is notified of infringing activity by a 
copyright owner or its authorized agent, in accordance with the 
notification procedures of subsection (c)(3), the limitation on 
the service provider's liability shall be maintained only if 
the service provider acts expeditiously either to remove the 
infringing material from its system or to prevent further 
access to the infringing material on the system or network. 
This ``notice and takedown'' procedure is a formalization and 
refinement of a cooperative process that has been employed to 
deal efficiently with network-based copyright infringement.
    Section 512 does not require use of the notice and take-
down procedure. A service provider wishing to benefit from the 
limitation on liability under subsection (c) must ``take down'' 
or disable access to infringing material residing on its system 
or network of which it has actual knowledge or that meets the 
``red flag'' test, even if the copyright owner or its agent 
does not notify it of a claimed infringement. On the other 
hand, the service provider is free to refuse to ``take down'' 
the material or site, even after receiving a notification of 
claimed infringement from the copyright owner; in such a 
situation, the service provider's liability, if any, will be 
decided without reference to section 512(c). For their part, 
copyright owners are not obligated to give notification of 
claimed infringement in order to enforce their rights. However, 
neither actual knowledge nor awareness of a red flag may be 
imputed to a service provider based on information from a 
copyright owner or its agent that does not comply with the 
notification provisions of subsection (c)(3), and the 
limitation of liability set forth in subsection (c) may apply.
    Subsection (c)(2)--Designated agent.--Subsection (c)(2) 
provides that to qualify for the liability limitation of 
subsection (c), the service provider must designate an agent to 
receive notifications under subsection (c)(1)(C). The 
designation, provided to the Register of Copyrights, and made 
available on the service provider's web site is to contain 
certain information necessary to communicate with the service 
provider concerning allegedly infringing material or activity. 
The Register of Copyrights is directed to maintain a directory 
of designated agents available for inspection by the public, 
both on the web site of the Library of Congress, and in hard 
copy format on file at the Copyright Office. The Committee does 
not intend or anticipate that the Register will publish hard 
copies of the directory. The directory shall have entries for 
the name, address, telephone number and electronic mail address 
of an agent designated by service providers. The service 
provider's designation shall substantially comply with these 
elements.
    Subsection (c)(3)--Elements of notification.--Subsection 
(c)(3) sets forth the procedures under which copyright owners 
and their agents may provide effective notification to a 
service provider of allegations of infringement on the 
provider's system or network. Subsection (c)(3)(A) requires 
that to count as an effective notification, the notification 
must be in writing and submitted to the service provider's 
designated agent.
    Subsections (c)(3)(A)(i)-(vi) then set forth the 
information to be included in an effective notification. The 
standard against which a notification is to be judged is one of 
substantial compliance. Subsection (c)(3)(A)(i) provides that 
the notification must be signed by the copyright owner or its 
authorized agent to be effective. The requirement for 
signature, either physical or electronic, relates to the 
verification requirements of subsections (c)(3)(A)(v) and (vi). 
Subsection (c)(3)(A)(ii) requires that the copyright owner 
identify the copyrighted work alleged to be infringed. Where 
multiple works at a single online site are covered by a single 
notification, a representative list of such works at that site 
is sufficient. Thus, where a party is operating an unauthorized 
Internet jukebox from a particular site, it is not necessary 
for a compliant notification to list every musical composition 
or sound recording that has been or could be infringed at that 
site, so long as a representative list of those compositions or 
recordings is provided so that the service provider can 
understand the nature and scope of the infringement being 
claimed.
    Subsection (c)(3)(A)(iii) requires that the copyright owner 
or its authorized agent provide the service provider with 
information reasonably sufficient to permit the service 
provider to identify and locate the allegedly infringing 
material. An example of such sufficient information would be a 
copy or description of the allegedly infringing material and 
the URL address of the location (web page) which is alleged to 
contain the infringing material. The goal of this provision is 
to provide the service provider with adequate information to 
find and address the allegedly infringing material 
expeditiously.
    Subsection (c)(3)(A)(iv) requires that the copyright owner 
or its authorized agent provide reasonably sufficient 
identifying information concerning the owner or its agent who 
submits the notification, such as an address, telephone number, 
and if available an electronic mail address so that the service 
provider may contact the complaining party.
    Subsection (c)(3)(A)(v) makes clear that the notification 
from complaining parties must contain a statement that the 
complaining party has a good faith belief that the use of the 
material in the manner complained of is not authorized by the 
copyright owner, or its agent, or the law.
    Subsection (c)(3)(A)(vi) specifies that the notification 
must contain a statement that the information contained therein 
is accurate. The complaining party--whether the copyright 
owner, or an authorized representative--also must confirm under 
penalty of perjury, that it has authority to act on behalf of 
the owner of the exclusive right that is alleged to be 
infringed. The term ``perjury'' is used in the sense found 
elsewhere in the United States Code. See 28 U.S.C. 1746; 18 
U.S.C. 1621.
    Subsection (c)(3)(B) addresses the effect of notifications 
that do not substantially comply with the requirements of 
subsection (c)(3). Under this subsection, the court shall not 
consider such notifications asevidence of whether the service 
provider has actual knowledge, is aware of facts or circumstances, or 
has received a notification for purposes of subsection (c)(1)(A). 
However, a defective notice provided to the designated agent may be 
considered in evaluating the service provider's knowledge or awareness 
of facts and circumstances, if (i) the complaining party has provided 
the requisite information concerning the identification of the 
copyrighted work, identification of the allegedly infringing material, 
and information sufficient for the service provider to contact the 
complaining party, and (ii) the service provider does not promptly 
attempt to contact the person making the notification or take other 
reasonable steps to assist in the receipt of notification that 
substantially complies with paragraph (3)(A). If the service provider 
subsequently receives a substantially compliant notice, the provisions 
of paragraph (1)(C) would then apply upon receipt of the notice.
    The Committee intends that the substantial compliance 
standard in subsections (c)(2) and (c)(3) be applied so that 
technical errors (such as misspelling a name, supplying an 
outdated area code if the phone number is accompanied by an 
accurate address, or supplying an outdated name if accompanied 
by an e-mail address that remains valid for the successor of 
the prior designated agent or agent of a copyright owner) do 
not disqualify service providers and copyright owners from the 
protections afforded under subsection (c). The Committee 
expects that the parties will comply with the functional 
requirements of the notification provisions--such as providing 
sufficient information so that a designated agent or the 
complaining party submitting a notification may be contacted 
efficiently--in order to ensure that the notification and take 
down procedures set forth in this subsection operate smoothly.
    Subsection (d)--Information location tools.--Subsection (d) 
applies to referring or linking users to an online location 
containing infringing material or infringing activity using 
information location tools. The reference to ``infringing 
activity'' is intended to refer to wrongful activity that is 
occurring at the location to which the link or reference 
refers, without regard to whether copyright infringement is 
technically deemed to occur at that location or at the location 
where the material is received. The term information location 
tools includes, for example: a directory or index of online 
sites or material such as a search engine that identifies pages 
by specified criteria, a reference to other online material 
such as a list of recommended sites, a pointer that stands for 
an Internet location or address, or a hypertext link which 
allows users to access material without entering its address.
    Subsection (d) incorporates the notification and take down 
structure of subsection (c) and applies it to the provision of 
references and links to infringing sites. A service provider is 
entitled to the liability limitations of subsection (d) if it: 
(1) lacks actual knowledge of infringement on the other site, 
and is not aware of facts or circumstances from which 
infringing activity in that location is apparent; (2) does not 
receive a financial benefit directly attributable to the 
infringing activity on the site, where the service provider has 
the right and ability to control the infringing activity; and 
(3) responds expeditiously to remove or disable the reference 
or link upon receiving a notification of claimed infringement 
as described in subsection (c)(3). The notification procedures 
under subsection (d) follow those set forth in subsection (c). 
However, the information submitted by the complaining party 
under subsection (c)(3)(A)(iii) is identification of the 
reference or link to infringing material or activity, and 
information reasonably sufficient to permit the service 
provider to locate that reference or link.
    Section 512(d) provides a safe harbor that would limit the 
liability of a service provider that refers or links users to 
an online location containing infringing material or activity 
by using ``information location tools,'' such as hyperlink 
directories and indexes. A question has been raised as to 
whether a service provider would be disqualified from the safe 
harbor based solely on evidence that it had viewed the 
infringing Internet site. If so, there is concern that online 
directories prepared by human editors and reviewers, who view 
and classify various Internet sites, would be denied 
eligibility to the information location tools safe harbor, in 
an unintended number of cases and circumstances. This is an 
important concern because such online directories play a 
valuable role in assisting Internet users to identify and 
locate the information they seek on the decentralized and 
dynamic networks of the Internet.
    Like the information storage safe harbor in section 512(c), 
a service provider would qualify for this safe harbor if, among 
other requirements, it ``does not have actual knowledge that 
the material or activity is infringing'' or, in the absence of 
such actual knowledge, it is ``not aware of facts or 
circumstances from which infringing activity is apparent.'' 
Under this standard, a service provider would have no 
obligation to seek out copyright infringement, but it would not 
qualify for the safe harbor if it had turned a blind eye to 
``red flags'' of obvious infringement.
    For instance, the copyright owner could show that the 
provider was aware of facts from which infringing activity was 
apparent if the copyright owner could prove that the location 
was clearly, at the time the directory provider viewed it, a 
``pirate'' site of the type described below, where sound 
recordings, software, movies or books were available for 
unauthorized downloading, public performance or public display. 
Absent such ``red flags'' or actual knowledge, a directory 
provider would not be similarly aware merely because it saw one 
or more well known photographs of a celebrity at a site devoted 
to that person. The provider could not be expected, during the 
course of its brief cataloguing visit, to determine whether the 
photograph was still protected by copyright or was in the 
public domain; if the photograph was still protected by 
copyright, whether the use was licensed; and if the use was not 
licensed, whether it was permitted under the fair use doctrine.
    The important intended objective of this standard is to 
exclude sophisticated ``pirate'' directories--which refer 
Internet users to other selected Internet sites where pirate 
software, books, movies, and music can be downloaded or 
transmitted--from the safe harbor. Such pirate directories 
refer Internet users to sites that are obviously infringing 
because they typically use words such as ``pirate,'' 
``bootleg,'' or slang terms in their uniform resource locator 
(URL) and header information to make their illegal purpose 
obvious to the pirate directories and other Internet users. 
Because the infringing nature of such sites would be apparent 
from even a brief and casual viewing, safe harbor status for a 
provider that views such a site and then establishes a link to 
it would not be appropriate. Pirate directories do not follow 
the routine business practices of legitimate service providers 
preparing directories, and thus evidence that they have viewed 
the infringing site may be all that is available for copyright 
owners to rebut their claim to a safe harbor.
    In this way, the ``red flag'' test in section 512(d) 
strikes the right balance. The common-sense result of this 
``red flag'' test is that on-line editors and catalogers would 
not be required to make discriminating judgments about 
potential copyright infringement. If, however, an Internet site 
is obviously pirate, then seeing it may be all that is needed 
for the service provider to encounter a ``red flag.'' A 
provider proceeding in the face of such a red flag must do so 
without the benefit of a safe harbor.
    Information location tools are essential to the operation 
of the Internet; without them, users would not be able to find 
the information they need. Directories are particularly helpful 
in conducting effective searches by filtering out irrelevant 
and offensive material. The Yahoo! directory, for example, 
currently categorizes over 800,000 online locations and serves 
as a ``card catalogue'' to the World Wide Web, which over 
35,000,000 different users visit each month. Directories such 
as Yahoo!'s usually are created by people visiting sites to 
categorize them. It is precisely the human judgment and 
editorial discretion exercised by these cataloguers which makes 
directories valuable.
    This provision is intended to promote the development of 
information location tools generally, and Internet directories 
such as Yahoo!'s in particular, by establishing a safe-harbor 
from copyright infringement liability for information location 
tool providers if they comply with the notice and takedown 
procedures and other requirements of subsection (d). The 
knowledge or awareness standard should not be applied in a 
manner which would create a disincentive to the development of 
directories which involve human intervention. Absent actual 
knowledge, awareness of infringement as provided in subsection 
(d) should typically be imputed to a directory provider only 
with respect to pirate sites or in similarly obvious and 
conspicuous circumstances, and not simply because the provider 
viewed an infringing site during the course of assembling the 
directory.
    Subsection (e)--Misrepresentations.--Subsection (e) 
establishes a right of action against any person who knowingly 
misrepresents that material or activity online is infringing, 
or that material or activity was removed or disabled by mistake 
or misidentification under the ``put back'' procedure set forth 
in subsection (f). Actions may be brought under subsection (e) 
by any copyright owner, copyright owner's licensee, or by a 
service provider, who is injured by such misrepresentation, as 
a result of the service provider relying upon the 
misrepresentation in either taking down material or putting 
material back online. Defendants who make such a knowing 
misrepresentation are liable for any damages, including costs 
and attorneys'' fees, incurred by any of these parties as a 
result of the service provider's reliance upon the 
misrepresentation. This subsection is intended to deter 
knowingly false allegations to service providers in recognition 
that such misrepresentations are detrimental to rights holders, 
service providers, and Internet users.
    Subsection (f)--Immunity for take downs and user put back 
procedure.--Subsection (f) provides immunity to service 
providers for taking down infringing material, and establishes 
a ``put back'' procedure under which subscribers may contest a 
complaining party's notification of infringement provided under 
subsection (c)(3). The put back procedures were added as an 
amendment to this title in order to address the concerns of 
several members of the Committee that other provisions of this 
title established strong incentives for service providers to 
take down material, but insufficient protections for third 
parties whose material would be taken down.
    Subsection (f)(1) immunizes service providers from any 
claim based on the service provider's good faith disabling of 
access to, or removal of, material or activity claimed to be 
infringing. The immunity also applies to material or activity 
that a service provider disables access to or removes based on 
facts or circumstances from which infringing activity is 
apparent. This immunity applies even if the material or 
activity is ultimately determined not to be infringing. The 
purpose of this subsection is to protect service providers from 
liability to third parties whose material service providers 
take down in a good faith effort to comply with the 
requirements of subsection (c)(1).
    Subsection (f)(2) establishes a ``put back'' procedure 
through an exception to the immunity set forth in subsection 
(f)(1). The exception applies in a case in which the service 
provider, pursuant to a notification provided under subsection 
(c)(1)(C) in accordance with subsection (c)(3), takes down 
material that a subscriber has posted to the system or network. 
In such instances, to retain the immunity set forth in 
subsection (f)(1) with respect to the subscriber whose content 
is taken down, the service provider is to follow up to three 
steps.
    Under subsection (f)(2)(A), the service provider is to take 
reasonable steps to notify the subscriber promptly of the 
removal or disabling of access to the subscriber's material. 
The Committee intends that ``reasonable steps'' include, for 
example, sending an e-mail notice to an e-mail address 
associated with a posting, or if only the subscriber's name is 
identified in the posting, sending an e-mail to an e-mail 
address that the subscriber submitted with its subscription. 
The Committee does not intend that this subsection impose any 
obligation on service providers to search beyond the four 
corners of a subscriber's posting or their own records for that 
subscriber in order to obtain contact information. Nor does the 
Committee intend to create any right on the part of subscribers 
who submit falsified information in their postings or 
subscriptions to complain if a service provider relies upon the 
information submitted by the subscriber.
    The subscriber may then file a counter notification, in 
accordance with the requirements of subsection (f)(3), 
contesting the original take down on grounds of mistake or 
misidentification of the material and requesting ``put back'' 
of the material that the service provider has taken down. If a 
subscriber files a counter notification with the service 
provider's designated agent, subparagraph (f)(2) calls for the 
service provider to promptly forward a copy to the complaining 
party who submitted the take down request. Finally, under 
subsection (f)(2)(C), the service provider is to place the 
subscriber's material back online or cease disabling access to 
it between 10 and 14 business days after receiving the counter 
notification unless the designated agent receives a further 
notice from the complaining party that the complaining party 
has filed an action seeking a court order to restrain the 
subscriber from engaging in infringing activity on the service 
provider's system or network with regard to the material in 
question.
    Subscriber counter notifications must substantially comply 
with defined requirements set forth in subsection (f)(3). 
Notifications shall be signed by the subscriber physically or 
by electronic signature; identify the material taken down and 
the location from which it was taken down; include a statement 
under penalty of perjury that the subscriber has a good faith 
belief that the material was taken down as a result of mistake 
or misidentification of the material; and include the 
subscriber's contact information, as well as a statement 
consenting to the jurisdiction of a Federal district court and 
to accept service of process from the complaining party or the 
complaining party's agent. The substantial compliance standard 
is the same as that set forth in subsections (c)(2) and (3).
    Subsection (f)(4) is included to make clear the obvious 
proposition that a service provider's compliance with the put 
back procedure does not subject it to liability for copyright 
infringement or cause it to lose its liability limitation with 
respect to the replaced material.
    Subsection (g)--Identification of direct infringer.--
Subsection (g) creates a procedure by which copyright owners or 
their authorized agents who have submitted or will submit a 
request for notification satisfying the requirements of 
subsection (c)(3)(A) may obtain an order for identification of 
alleged infringers who are users of a service provider's system 
or network. Under this procedure, the copyright owner or agent 
files three documents with the clerk of any U.S. District 
Court: a copy of the notification, a proposed order, and a 
sworn declaration that the purpose of the order is to obtain 
the identity of an alleged infringer and that the information 
obtained will only be used to protect the owner's rights under 
this Title.
    Orders issued under subsection (g) shall authorize and 
order the service provider expeditiously to disclose to the 
person seeking the order information sufficient to identify the 
alleged infringer to the extent such information is available 
to the service provider. The Committee intends that an order 
for disclosure be interpreted as requiring disclosure of 
information in the possession of the service provider, rather 
than obliging the service provider to conduct searches for 
information that is available from other systems or networks. 
The Committee intends that such orders be expeditiously issued 
if the notification meets the provisions of subsection 
(c)(3)(A) and the declaration is properly executed. The issuing 
of the order should be a ministerial function performed quickly 
for this provision to have its intended effect. After receiving 
the order, the service provider shall expeditiously disclose to 
the copyright owner or its agent the information required by 
the order to the extent that the information is available to 
the service provider, regardless of whether the service 
provider responds to the notification of claimed infringement.
    Subsection (h)--Conditions for eligibility.--Subsection (h) 
sets forth two conditions that a service provider must satisfy 
to be eligible for the limitations of liability provided in 
subsections (a) through (d).
    First, the service provider is expected to adopt and 
reasonably implement a policy for the termination in 
appropriate circumstances of the accounts of subscribers 
24 of the provider's service who are repeat online 
infringers of copyright. The Committee recognizes that there 
are different degrees of online copyright infringement, from 
the inadvertent to the noncommercial, to the willful and 
commercial. In addition, the Committee does not intend this 
provision to undermine the principles of subsection (l) or the 
knowledge standard of subsection (c) by suggesting that a 
provider must investigate possible infringements, monitor its 
service, or make difficult judgments as to whether conduct is 
or is not infringing. However, those who repeatedly or 
flagrantly abuse their access to the Internet through 
disrespect for the intellectual property rights of others 
should know that there is a realistic threat of losing that 
access.
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    \24\ By ``subscribers,''the Committee intends to include account 
holders who are parties with a business relationship to the service 
provider that justifies treating them as subscribers, for the purposes 
of section 512, even if no formal subscription agreement exists. 
Examples include students who are granted access to a university's 
system or network for digital online communications; employees who have 
access to their employer's system or network; or household members with 
access to a consumer online service by virtue of a subscription 
agreement between the service provider and another member of that 
household.
---------------------------------------------------------------------------
    Second, a provider's system must accommodate, and not 
interfere with, standard technical measures used to identify or 
protect copyrighted works. The Committee believes that 
technology is likely to be the solution to many of the issues 
facing copyright owners and service providers in this digital 
age. For that reason, we have included subsection (h)(1)(B), 
which is intended to encourage appropriate technological 
solutions to protect copyrighted works. The Committee strongly 
urges all of the affected parties expeditiously to commence 
voluntary, interindustry discussions to agree upon and 
implement the best technological solutions available to achieve 
these goals.
    Subsection (h)(1)(B) is explicitly limited to ``standard 
technical measures'' that have been developed pursuant to a 
broad consensus of both copyright owners and service providers 
in an open, fair, voluntary, multi-industry standards process. 
The Committee anticipates that these provisions could be 
developed both in recognized open standards bodies or in ad hoc 
groups, as long as the process used is open, fair, voluntary, 
and multi-industry and the measures developed otherwise conform 
to the requirements of the definition of standard technical 
measures set forth in paragraph (h)(2). A number of recognized 
open standards bodies have substantial experience with Internet 
issues. The Committee also notes that an ad-hoc approach has 
been successful in developing standards in other contexts, such 
as the process that has developed copy protection technology 
for use in connection with DVD.
    Subsection (i)--Injunctions.--Subsection (i) defines the 
terms and conditions under which an injunction may be issued 
against a service provider that qualifies for the limitations 
of liability set forth in subsections (a) through (d), but is 
otherwise subject to an injunction under existing principles of 
law. Subsection (i)(1) limits the scope of injunctive relief 
that may be ordered against a qualifying provider. Subsection 
(i)(2) identifies factors a court must consider in deciding 
whether to grant injunctive relief and in determining the 
appropriate scope of injunctive relief.
    Subsection (i)(1)--Scope of relief.--Subsection (i)(1) is 
divided into two subparagraphs. Subparagraph (A) defines the 
scope of injunctive relief available against service providers 
who qualify for the limitations of liability set forth in 
subsections (b), (c) or (d). Only three forms of injunctive 
relief may be granted. First, the court may provide for the 
removal or blocking of infringing material or activity that is 
residing at a specific location on the provider's system or 
network. This is essentially an order to take the actions 
identified in subsection (c)(1)(C) to ``remove, or disable 
access'' to the material that is claimed to be infringing or to 
be the subject of infringing activity.
    Second, the court may order the provider to terminate the 
accounts of a subscriber 25 of the provider's 
service who is engaging in infringing activity.
---------------------------------------------------------------------------
    \ 25\ See footnote 24.
---------------------------------------------------------------------------
    Subsection (i)(1)(A) permits the court, under appropriate 
circumstances, to enter a different form of injunction if the 
court considers it necessary to prevent or restrain 
infringement of specific copyrighted material that resides at 
an identified online location. If a court enters an injunction 
other than that contemplated in the first two clauses of 
subparagraph (A), the court must determine that the injunctive 
relief is the least burdensome to the service provider among 
those forms of relief that are comparably effective.
    Subsection (i)(1)(B) sets forth a different set of remedies 
available for injunctions against service providers qualifying 
for the limitation on remedies set forth in subsection (a). In 
such cases, if a court determines that injunctive relief is 
appropriate, it may only grant injunctive relief in one or both 
of two specified forms. The first is an order to the service 
provider to terminate subscriber accounts that are specified in 
the order. The second form of relief, available in cases in 
which a provider is engaging in infringing activity relating to 
a foreign online location, is an order to take reasonable steps 
to block access to a specific, identified foreign online 
location. Such blocking orders are not available against a 
service provider qualifying under subsection (a) in the case of 
infringing activity on a site within the United States or its 
territories.
    Subsection (i)(2)--Considerations.--Subsection (i)(2) sets 
forth mandatory considerations for the court beyond those that 
exist under current law. These additional considerations 
require the court to consider factors of particular 
significance in the digital online environment.
    Subsection (i)(3)--Notice and ex parte orders.--Subsection 
(i)(3) prohibits most forms of ex parte injunctive relief 
(including temporary and preliminary relief) against a service 
provider qualifying for a liability limitation under section 
512. A court may issue an order to ensure the preservation of 
evidence or where the order will have no material adverse 
effect on the operation of the provider's network.
    Subsection (j)--Definitions.--Subsection (j) sets forth two 
definitions of the term ``service provider'' as used in this 
title, as well as a definition of the term ``monetary relief.'' 
Only an entity that is performingthe functions of a ``service 
provider'' is eligible for the limitations on liability set forth in 
section 512 with respect to those functions.
    The first definition of a service provider, set forth in 
subsection (j)(1)(A), defines a narrower range of functions and 
applies to use of the term in subsection (a). As used in that 
subsection the term ``service provider'' means any entity 
offering the transmission, routing or providing of connections 
for digital online communications, between or among points 
specified by a user, of material of a user's choosing without 
modification to the content of the material as sent or 
received. This freestanding definition is derived from the 
definition of ``telecommunications'' found in 47 U.S.C. 153(48) 
in recognition of the fact that the functions covered by this 
definition are conduit activities, but the Committee has 
reworked the definition and written subsection (j)(1)(A) to 
make it appropriate for the Internet and online media. Thus, 
the subsection (j)(1)(A) definition includes the offering of 
transmission, routing or providing of connections. Although the 
transmission, routing or providing of connections may occur 
over digital or analog networks, the service provider must be 
providing such services for communications that are both 
digital and online. By online communications, the Committee 
intends to refer to communications over an interactive computer 
network, such as the Internet. Thus, over-the-air broadcasting, 
whether in analog or digital form, or a cable television 
system, or a satellite television service would not qualify, 
except to the extent it provides users with online access to a 
digital network such as the Internet, or it provides 
transmission, routing or connections to connect material to 
such a network, and then only with respect to those functions. 
An entity is not disqualified from being a ``service provider'' 
because it alters the form of the material, so long as it does 
not alter the content of the material. As a threshold matter, a 
service provider's performance of a particular function with 
respect to allegedly infringing activity falls within the 
(j)(1)(A) definition of service provider if and only if such 
function is within the range of functions set forth in 
subsection (j)(1)(A). For example, hosting a World Wide Web 
site does not fall within the subsection (j)(1)(A) definition; 
providing connectivity for a world wide web site does fall 
within that definition. The subparagraph (A) definition of 
service provider is not intended to exclude providers that 
perform other functions in addition to those set forth in 
subparagraph (A), including the functions identified in 
subsection (j)(1)(B). Conversely, the fact that a provider 
performs some functions that fall within the definition of 
subparagraph (A) does not imply that its other functions that 
do not fall within the definition of subparagraph (A) qualify 
for the limitation of liability under subsection (a).
    The second definition of ``service provider,'' set forth in 
subsection (j)(1)(B), applies to the term as used in any other 
subsection of section 512. This definition is broader than the 
first, covering providers of online services or network access, 
or the operator of facilities therefor. This definition 
includes, for example, services such as providing Internet 
access, e-mail, chat room and web page hosting services. The 
(j)(1)(B) definition of service provider, for example, includes 
universities and schools to the extent they perform the 
functions identified in subsection (j)(1)(B). The definition 
also specifically includes any entity that falls within the 
first definition of service provider. A broadcaster or cable 
television system or satellite television service would not 
qualify, except to the extent it performs functions covered by 
(j)(1)(B).
    Finally, subsection (j)(2) defines the term ``monetary 
relief'' broadly for purposes of this section as encompassing 
damages, costs, attorneys' fees and any other form of monetary 
payment.
    Subsection (k)--Other defenses not affected.--Subsection 
(k) clarifies that other defenses under copyright law are not 
affected and codifies several important principles.
    New section 512 does not define what is actionable 
copyright infringement in the online environment, and does not 
create any new exceptions to the exclusive rights under 
copyright law. The rest of the Copyright Act sets those rules. 
Similarly, new section 512 does not create any new liabilities 
for service providers or affect any defense available to a 
service provider. Enactment of section 512 does not bear upon 
whether a service provider is or is not an infringer when its 
conduct falls within the scope of section 512. Even if a 
service provider's activities fall outside the limitations on 
liability specified in the bill, the service provider is not 
necessarily an infringer; liability in these circumstances 
would be adjudicated based on the doctrines of direct, 
vicarious or contributory liability for infringement as they 
are articulated in the Copyright Act and in the court decisions 
interpreting and applying that statute, which are unchanged by 
section 512. In the event that a service provider does not 
qualify for the limitation on liability, it still may claim all 
of the defenses available to it under current law. New section 
512 simply defines the circumstances under which a service 
provider, as defined in this Section, may enjoy a limitation on 
liability for copyright infringement.
    Subsection (l)--Protection of privacy.--Subsection (l) is 
designed to protect the privacy of Internet users. This 
subsection makes clear that the applicability of subsections 
(a) through (d) is no way conditioned on a service provider: 
(1) monitoring its service or affirmatively seeking facts 
indicating infringing activity except to the extent consistent 
with implementing a standard technical measure under subsection 
(h); or (2) accessing, removing or disabling access to material 
if such conduct is prohibited by law, such as the Electronic 
Communications Privacy Act.
    Subsection (m)--Rule of construction.--Subsection (m) 
establishes a rule of construction applicable to subsections 
(a) through (d). Section 512's limitations on liability are 
based on functions, and each limitation is intended to describe 
a separate and distinct function. Consider, for example, a 
service provider that provides a hyperlink to a site containing 
infringing material which it then caches on its system in order 
to facilitate access to it by its users. This service provider 
is engaging in at least three functions that may be subject to 
the limitation on liability: transitory digital network 
communications under subsection (a), system caching under 
subsection (b), and information location tools under subsection 
(d). If this service provider (as defined in subsection 
(j)(1)(A) in the case of transitory digital communications, or 
as defined in subsection (j)(1)(B) in the case of system 
caching or information location tools) meets the threshold 
criteria spelled out in subsection (h)(1), then for its acts of 
system caching defined in subsection (b), it may avail itself 
of the liability limitations stated in subsection (b), which 
incorporate the limitations on injunctive relief described in 
subsection (i)(1)(B) and (i)(3). If it is claimed that the same 
company is committing an infringement by using information 
location tools to link its users to infringing material, as 
defined in subsection (d), then its fulfillment of the 
requirements to claim the system caching liability limitation 
does not affect whether it qualifies for the liability 
limitation for information location tools; the criteria in 
subsection (d), rather than those in subsection (b), are 
applicable. Section 512(m) codifies this principle by providing 
that the determination of whether a service provider qualifies 
for one liability limitation has no effect on the determination 
of whether it qualifies for a separate and distinct liability 
limitation under another subsection of section 512.

Section 203. Conforming amendment

    This section amends the table of sections for chapter 5 of 
the Copyright Act (17 U.S.C. 501 et. seq.) to reflect the new 
section 512, as created by this title.

Section 204. Liability of educational institutions for online 
        infringement of copyright

    Subsection 204(a) directs the Register of Copyrights to 
consult with representatives of copyright owners and nonprofit 
educational institutions and to submit to the Congress within 6 
months after enactment of the bill recommendations regarding 
the liability of nonprofit educational institutions for 
copyright infringements that take place through the use of the 
institution's computer system or network, where the institution 
qualifies as a ``service provider'' under the provisions of 
this Title. Included in the Register's report are to be any 
recommendations for legislation that the Register considers 
appropriate.
    Subsection 204(b) sets forth specific considerations that 
the Register shall take into account, where relevant, in 
formulating her recommendations to the Congress.

               title III--computer maintenance or repair

Section 301. Limitation on exclusive rights; computer programs

    This section effects a minor, yet important clarification 
in section 117 of the Copyright Act (17 U.S.C. 117) to ensure 
that the lawful owner or lessee of a computer machine may 
authorize an independent service provider--a person 
unaffiliated with either the owner or lessee of the machine--to 
activate the machine for the sole purpose of servicing its 
hardware components. When a computer is activated, certain 
software or parts thereof is automatically copied into the 
machine's random access memory, or ``RAM''. A clarification in 
the Copyright Act is necessary in light of judicial decisions 
holding that such copying is a ``reproduction'' under section 
106 of the Copyright Act (17 U.S.C. 106),\26\ thereby calling 
into question the right of an independent service provider who 
is not the licensee of the computer program resident on the 
client's machine to even activate that machine for the purpose 
of servicing the hardware components. This section does not in 
any way alter the law with respect to the scope of the term 
``reproduction'' as it is used in the Copyright Act. Rather, 
this section it is narrowly crafted to achieve the objectives 
just described--namely, ensuring that an independent service 
provider may turn on a client's computer machine in order to 
service its hardware components, provided that such service 
provider complies with the provisions of this section designed 
to protect the rights of copyright owners of computer software.
---------------------------------------------------------------------------
    \26\ See MAI Sys. Corp. v. Peak Computer, 991 F.2d 511 (9th Cir. 
1993), cert. denied, 114 S.Ct. 671 (1994).
---------------------------------------------------------------------------
    Paragraphs (1) and (2) make technical changes to the 
structure of section 117, dividing the existing provisions 
between two subsections, the first entitled ``(a) Making of 
Additional Copy or Adaptation by Owner of Copy'' and the second 
entitled ``(b) Lease, Sale, or Other Transfer of Additional 
Copy or Adaptation.'' The operative provisions, and 
limitations, are in paragraph (3), which creates two new 
subsections in section 117, subsections (c) and (d).
    Subsection (c)--Machine maintenance or repair.--The bill 
creates a new subsection (c) in section 117 of the Copyright 
Act (17 U.S.C. 117), which delineates the specific 
circumstances under which a reproduction of a computer program 
would not constitute infringement of copyright. The goal is to 
maintain undiminished copyright protection afforded under the 
Copyright Act to authors of computer programs, while making it 
possible for third parties to perform servicing of the 
hardware. This new subsection states that it is not an 
infringement of copyright for the owner or lessee of a machine 
to make or authorize the making of a copy of a computer program 
provided that the following conditions are met:

    First, subsection (c) itself makes clear that the copy of 
the computer program must have been made solely and 
automatically by virtue of turning on the machine in order to 
perform repairs or maintenance on the hardware components of 
the machine. Moreover, the copy of the computer program which 
is reproduced as a direct and sole consequence of activation 
must be an authorized copy that has lawfully been installed in 
the machine. Authorized copies of computer programs are only 
those copies that have been made available with the consent of 
the copyright owner. Also, the acts performed by the service 
provider must be authorized by the owner or lessee of the 
machine.
    Second, in accordance with paragraph (c)(1), the resulting 
copy may not be used by the person performing repairs or 
maintenance of the hardware components of the machine in any 
manner other than to effectuate the repair or maintenance of 
the machine. Once these tasks are completed, the copy of the 
program must be destroyed, which generally will happen 
automatically once the machine is turned off.
    Third, as is made clear in paragraph (c)(2), the amendment 
is not intended to diminish the rights of copyright owners of 
those computer programs, or parts thereof, that also may be 
loaded into RAM when the computer is turned on, but which did 
not need to be so loaded in order for the machine to be turned 
on. A hardware manufacturer or software developer might, for 
example, provide diagnostic and utility programs that load into 
RAM along with or as part of the operating system, even though 
they market those programs as separate products--either as 
freestanding programs, or pursuant to separate licensing 
agreements. Indeed, a password or other technical access device 
is sometimes required for the owner of the machine to be able 
to gain access to such programs. In other cases, it is not the 
hardware or software developer that has arranged for certain 
programs automatically to be reproduced when the machine is 
turned on; rather, the owner of the machine may have configured 
its computer to load certain applications programs into RAM as 
part of the boot-up process (such as a word processing program 
on a personal computer). This subsection is not intended to 
derogate from the rights of the copyright owners of such 
programs. In order to avoid inadvertent copyright infringement, 
these programs need to be covered by subsection (c), but only 
to the extent that they are automatically reproduced when the 
machine is turned on. This subsection is not intended to 
legitimize unauthorized access to and use of such programs just 
because they happen to be resident in the machine itself and 
are reproduced with or as a part of the operating system when 
the machine is turned on. According to paragraph (c)(2), if 
such a program is accessed or used without the authorization of 
the copyright owner, the initial reproduction of the program 
shall not be deemed exempt from infringement by this 
subsection.

    Subsection (d)--Definitions.--Subsection (d) defines two 
terms not previously defined by the Copyright Act. Paragraph 
(1) defines the term ``maintenance'' as the servicing of the 
machine in order to make it work in accordance with its 
original specifications and any changes to those specifications 
authorized for that machine. These acts can include, but are 
not limited to, cleaning the machine, tightening connections, 
installing new components such as memory chips, circuit boards 
and hard disks, checking the proper functioning of these 
components, and other similar acts.
    Paragraph (2) defines the term ``repair'' as the restoring 
of the machine to the state of working in accordance with its 
original specifications and any changes to those specifications 
authorized for that machine. These acts of repairing the 
hardware include, but are not limited to, replacing worn or 
defective components such as memory chips, circuit boards and 
hard disks, correcting the improper installation of new 
components, and other similar acts.
    Both paragraphs (1) and (2) of this subsection are subject 
to the same limitations, which are intended to clarify that 
activating a machine in order to perform maintenance or repair 
does not constitute infringement as provided in subsection (c) 
if the maintenance or repair is undertaken to make the machine 
work in accordance with the parameters specified for such a 
machine and its component parts. Because technological 
improvements may lead customers to upgrade their machines, the 
language of both definitions authorizes service providers to 
maintain those components of the hardware that have been 
installed since the time the machine was originally acquired, 
or to install new components. But their acts shall be 
noninfringing under subsection (c) only if the components being 
serviced have been lawfully acquired and installed. Finally, 
the terms ``maintenance'' and ``repair'' do not include 
unauthorized adaptations, modifications, error corrections or 
any other changes to any software which may be in the machine 
being serviced.

   TITLE IV--EPHEMERAL RECORDINGS; DISTANCE EDUCATION; EXEMPTION FOR 
                         LIBRARIES AND ARCHIVES

Section 401. Ephemeral recordings

    Section 401 amends section 112 of the Copyright Act (17 
U.S.C. 112) to address two issues concerning the application of 
the ephemeral recording exemption in the digital age.
    The first of these issues is the relationship between the 
ephemeral recording exemption and the Digital Performance Right 
in Sound Recordings Act of 1995 (``DPRA''). The DPRA granted 
sound recording copyright owners the exclusive right to perform 
their works publicly by means of digital audio transmission, 
subject to certain limitations, particularly those set forth in 
section 114(d). Among those limitations is an exemption for 
nonsubscription broadcast transmissions, which are defined as 
those made by terrestrial broadcast stations licensed as such 
by the FCC. 17 U.S.C. 114(d)(1)(A)(iii) and (j)(2). The 
ephemeral recording exemption presently privileges certain 
activities of a transmitting organization when it is entitled 
to transmit a performance or display under a license or 
transfer of copyright ownership or under the limitations on 
exclusive rights in sound recordings specified by section 
114(a). The Committee believes that the ephemeral recording 
exemption should apply to broadcast radio and television 
stations when they make nonsubscription digital broadcasts 
permitted by the DPRA. The Committee has therefore changed the 
existing language of the ephemeral recording exemption 
(redesignated as 112(a)(1)) to extend explicitly to 
broadcasters the same privilege they already enjoy with respect 
to analog broadcasts.
    The second of these issues is the relationship between the 
ephemeral recording exemption and the anticircumvention 
provisions that the bill adds as section 1201 of the Copyright 
Act. Concerns were expressed that if use of copy protection 
technologies became widespread, a transmitting organization 
might be prevented from engaging in its traditional activities 
of assembling transmission programs and making ephemeral 
recordings permitted by section 112 for purposes of its own 
transmissions within its local service area and of archival 
preservation and security. To address this concern, the 
Committee has added to section 112 a new paragraph that permits 
transmitting organizations to engage in activities that 
otherwise would violate section 1201(a)(1) in certain limited 
circumstances when necessary for the exercise of the 
transmitting organization's privilege to make ephemeral 
recordings under redesignated section 112(a)(1). By way of 
example, if a radio station could not make a permitted 
ephemeral recording from a commercially available phonorecord 
without violating section 1201(a)(1), then the radio station 
could request from the copyright owner the necessary means of 
making a permitted ephemeral recording. If the copyright owner 
did not then either provide a phonorecord that could be 
reproduced or otherwise provide the necessary means of making a 
permitted ephemeral recording from the phonorecord already in 
the possession of the radio station, the radio station would 
not be liable for violating section 1201(a)(1) for taking the 
steps necessary for engaging in activities permitted under 
section 112(a)(1). The radio station would, of course, be 
liable for violating section 1201(a)(1) if it engaged in 
activities prohibited by that section in other than the limited 
circumstances permitted by section 112(a)(1).

Section 402. Limitation on exclusive rights; distance education

    Section 402(a) directs the Register of Copyrights to 
consult with representatives of copyright owners, nonprofit 
educational institutions, and nonprofit libraries and archives 
and to submit recommendations to the Congress no later than 6 
months after the date of enactment of the bill on how to 
promote distance education through digital technologies, 
including interactive digital networks, while maintaining an 
appropriate balance between the rights of copyright owners and 
the needs of users. Where appropriate, the Register shall 
include legislative recommendations to achieve those 
objectives.
    Section 402(b) specifies considerations which the Register 
shall take into account in formulating such recommendations.

Section 403. Exemption for libraries and archives

    Section 108 of the Copyright Act (17 U.S.C. 108) permits 
libraries and archives of the type described in that section to 
make and, in some cases, distribute a limited number of copies 
of certain types of copyrighted works, without the permission 
of the copyright holder, for specified purposes relating to 
these entities' functions as repositories of such works for 
public reference. Section 403 of the bill updates section 108 
to allow these entities to take advantage of digital 
technologies when engaging in specified preservation 
activities.
    Except for the amendment to paragraph (a)(3), which deals 
with the inclusion of copyright notice on all copies or 
phonorecords of works made or distributed pursuant to section 
108, the amendments revise either subsection (b), which 
addresses the reproduction and distribution of a copy or 
phonorecord of an unpublished work for purposes of preservation 
and security or for deposit for research use in another library 
or archive of the type described; or subsection (c), which 
addresses the reproduction of a copy or phonorecord of a 
published work for the purpose of replacement of a copy of that 
work that is damaged, deteriorating, lost, or stolen, if an 
unused replacement copy cannot be obtained at a fair price.
    The amendment to paragraph (a)(3) of section 108 is 
intended to ease the burden on libraries and archives of the 
current law's requirement that a notice of copyright be 
included on copies that are reproduced under section 108. Under 
this amendment, such notice would be required only where the 
particular copy that is reproduced by the library or archives 
itself bears a notice. In other words, a notice appearing on 
the material copied would still need to be maintained, and 
could not be deleted. On the other hand, if the copy being 
reproduced does not bear a copyright notice, the library or 
archives would fully satisfy its obligation under this section 
by simply placing on the reproduction a legend that states 
``This work may be protected by copyright,'' or words to that 
effect. This minimal obligation is similar to those found in 
subsections (e) and (f) of existing section 108, which 
condition the exemption in those subsections on the display of 
a general notice or warning of potential copyright protection.
    Subsection (b) currently permits a library or archive under 
this section to make and distribute one copy or phonorecord of 
an unpublished work solely for purposes of preservation and 
security or for deposit for research use in another library or 
archives, provided that the duplication of the work occurs ``in 
facsimile form.'' The legislative history to that section makes 
clear that, when this language was enacted more than twenty 
years ago, Congress intended to permit the copy to be made by 
microfilm or electrostatic photocopying process, but not in a 
computerized form i.e., ``in machine readable language for 
storage in an information system.'' 27
---------------------------------------------------------------------------
    \27\ See H.R. Rep. No. 1476, 94th Cong., 2d Sess. (1976).
---------------------------------------------------------------------------
    The amendment to subsection (b) permits a library or 
archive to make (for itself or another library or archive of 
the type described by clause (2) of subsection (a)) up to 3 
copies or phonorecords for these purposes, rather than just 
one, and permits such copies or phonorecords to be made in 
digital as well as analog formats. In recognition of the risk 
that uncontrolled public access to the copies or phonorecords 
in digital formats could substantially harm the interests of 
the copyright owner by facilitating immediate, flawless and 
widespread reproduction and distribution of additional copies 
or phonorecords of the work, the amendment provides that any 
copy of a work that the library or archive makes in a digital 
format must not be otherwise distributed in that format and 
must not be made available in that format to the public outside 
the premises of the library or archives. In this way, the 
amendment permits the utilization of digital technologies 
solely for the purposes of this subsection.
    Similarly, subsection (c) currently permits a library or 
archives under this section to make one copy or phonorecord of 
any published work solely for purposes of replacement of a copy 
or phonorecord that is damaged, deteriorating, lost or stolen, 
provided that the library or archive has determined after a 
reasonable effort that an unused replacement cannot be obtained 
at a fair price, and provided that the duplication of the work 
occurs ``in facsimile form.''
    As in subsection (b), the amendment to subsection (c) 
permits a library or archive to make and use three copies or 
phonorecords for these purposes, rather than just one, and 
permits such copies or phonorecords to be made in digital as 
well as analog formats, with the proviso that any copy of a 
work that the library or archive makes in a digital format must 
not be made available to the public in that format except for 
use on the premises of a library or archives in lawful 
possession of such copy. In the view of the Committee, this 
proviso is necessary to ensure that the amendment strikes the 
appropriate balance, permitting the use of digital technology 
by libraries and archives while guarding against the potential 
harm to the copyright owner's market from patrons obtaining 
unlimited access to digital copies from any location.
    The amendment to subsection (c) also broadens its coverage 
to allow the updating of obsolete formats. It permits the 
making of such copies or phonorecords of a work ``if the 
existing format in which the work is stored has become 
obsolete.'' This provision is intended to permit libraries and 
archives to ensure that copies of works in their collections 
continue to be accessible and useful to their patrons. In order 
to ensure that the provision does not inadvertently result in 
the suppression of ongoing commercial offerings of works in 
still-usable formats, the amendment explicitly provides that, 
for purposes of this subsection, a format will be considered 
obsolete only if the machine or device necessary to render 
perceptible a work stored in that format is no longer 
manufactured or reasonably available in a commercial 
marketplace. Under this language, if the needed machine or 
device can only be purchased in second-hand stores, it should 
not be considered ``reasonably available.''
    Finally, the Committee wants to make clear that, just as 
when section 108 of the Copyright Act was first enacted, the 
term ``libraries'' and ``archives'' as used and described in 
this provision still refer to such institutions only in the 
conventional sense of entities that are established as, and 
conduct their operations through, physical premises in which 
collections of information may be used by researchers and other 
members of the public. Although online interactive digital 
networks have since given birth to online digital ``libraries'' 
and ``archives'' that exist only in the virtual (rather than 
physical) sense on websites, bulletin boards and homepages 
across the Internet, it is not the Committee's intent that 
section 108 as revised apply to such collections of 
information. The ease with which such sites are established 
online literally allows anyone to create his or her own digital 
``library'' or ``archives.'' The extension of the application 
of section 108 to all such sites would be tantamount to 
creating an exception to the exclusive rights of copyright 
holders that would permit any person who has an online website, 
bulletin board or a homepage to freely reproduce and distribute 
copyrighted works. Such an exemption would swallow the general 
rule and severely impair the copyright owners' right and 
ability to commercially exploit their copyrighted works. 
Consequently, the Committee intends that references to ``the 
premises of the library or archives'' in amended sections 108 
(b)(2) and (c)(2) mean only physical premises.

                           VI. COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 11, 1998.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary, U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2037, the Digital 
Millennium Copyright Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kim Cawley 
(for federal costs), Pepper Santalucia (for the state and local 
impact), and Matthew Eyles (for the private-sector impact).
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).
    Enclosure.

               Congressional Budget Office Cost Estimate

           s. 2037--digital millennium copyright act of 1998

    CBO estimates that enacting S. 2037 would have no 
significant impact on the federal budget. Enacting the bill 
would establish new criminal penalties and thus could affect 
both receipts and direct spending. hence, pay-as-you-go 
procedures would apply, but we expect that any changes in 
receipts and direct spending would be insignificant. S. 2037 
contains an intergovernmental and a private-sector mandate as 
defined in the Unfunded Mandates Reform Act of 1995 (UMRA), but 
the costs of the mandates would not exceed the thresholds in 
the law.
    Title I of S. 2037 would amend U.S. copyright law to comply 
with two treaties produced by the December 1996 conference of 
the World Intellectual Property Organization--one regarding the 
use of copyrighted material in digital environments, and the 
other dealing with international copyright protection of 
performers and producers of phonograms. Section 103 would 
establish criminal fines of up to $1 million for anyone 
attempting to circumvent copyright protection systems or 
falsifying or altering copyright management information. 
Enacting this provision could increase governmental receipts 
from the collection of fines, but we estimate that any such 
increase would be less than $500,000 annually. Criminal fines 
are deposited in the Crime Victims Fund and are spent in the 
following year. Thus any change in direct spending from the 
fund would also amount to less than $500,000 annually.
    Title II would limit the liability for copyright 
infringement of persons who are providers of on-line services 
or network access. Title III would amend copyright law to allow 
copies of computer programs to be made for the purpose of 
repairing or maintaining a computer. Title IV would require 
copyright owners that protect their audio recordings with 
technical measures to prevent the reproduction of such work, to 
make available to transmitting organizations entitled to make a 
copy of such work the necessary means of making a copy, 
provided that it is technologically and economically feasible 
for the copyright owner to do so. The bill would direct the 
Copyright Office to make recommendations to the Congress 
concerning the liability for copyright infringement of 
nonprofit educational institutions when they are providers of 
Internet services. The bill also would seek recommendations 
from the Copyright Office in using digital technologies to 
promote distance learning while protecting the rights of 
copyright owners. Based on information from the Copyright 
Office, CBO estimates that preparing these provisions would 
cost less than $300,000.
    Section 4 of UMRA excludes from the application of that act 
any legislative provisions that are necessary for the 
ratification or implementation of international treaty 
obligations. CBO has determined that Title I of the bill fits 
within that exclusion, because it is necessary for the 
implementation of the WIPO Copyright Treaty and the WIPO 
Performances and Phonograms Treaty.
    Title IV of S. 2037 would impose a mandate on certain 
owners of copyrights who apply technical protections to works 
that prevent their reproduction. Title IV would require 
copyright owners who employ mechanisms that prevent the 
reproduction of copyrighted works to make available to 
federally licensed broadcasters the necessary means to copy 
such works. Under current law, federally licensed broadcasters 
are authorized to reproduce copyright-protected material under 
specific conditions. Since this mandate would apply to both 
public and private entities that own copyrights, it would be 
considered both a private-sector and an intergovernmental 
mandate.
    The use of reproduction protections envisioned in the bill 
is not yet widespread. Furthermore, copyright owners may claim 
economic hardship or technical infeasibility to avoid the new 
requirement and the costs of providing federally licensed 
broadcasters with the means to copy technically protected works 
would likely be modest. Therefore, CBO estimates that the 
direct cost of the new mandates would be well below the 
statutory thresholds in UMRA.
    The CBO staff contacts for this estimate are Kim Cawley 
(for Federal costs); Pepper Santalucia (for the State and local 
impact); and Matthew Eyles (for the private-sector impact). 
This estimate was approved by Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                    VII. REGULATORY IMPACT STATEMENT

    In compliance with paragraph 11(b)(1), rule XXVI of the 
Standing Rules of the Senate, the Committee, after due 
consideration, concludes that S. 2037 will not have significant 
regulatory impact.

                  VIII. ADDITIONAL VIEWS OF MR. LEAHY

    The successful adoption by the World Intellectual Property 
Organization (WIPO) in December 1996 of two new copyright 
treaties--one on written material and one on sound recordings--
was appropriately lauded in the United States. The WIPO 
Copyright Treaty and the WIPO Performances and Phonograms 
Treaty will give a significant boost to the protection of 
intellectual property rights around the world, and stand to 
benefit important American creative industries--from movies, 
recordings, computer software and many other copyrighted 
materials that are subject to piracy online.
    According to Secretary Daley of the Department of Commerce, 
for the most part, ``the treaties largely incorporate 
intellectual property norms that are already part of U.S. 
law.'' What the treaties will do is give American owners of 
copyrighted material an important tool to protect their 
intellectual property in those countries that become a party to 
the treaties. With an ever-expanding global marketplace, such 
international protection is critical to protect American 
companies and, ultimately, American jobs and the U.S. economy.
    The President submitted the two WIPO treaties to the U.S. 
Senate on July 29, 1997, as well as draft legislation to 
implement the two treaties. I was proud to introduce this draft 
implementing legislation, S. 1121, with Senators Hatch, 
Thompson, and Kohl on July 29, 1997.
    This legislation is the culmination of an effort to ensure 
that the appropriate copyright protections are in place around 
the world to foster the enormous growth of the Internet and 
other digital computer networks. Our dependence on 
interconnected computers only grows as a means to communicate, 
manage our personal and business affairs and obtain the goods 
and services we want. Indeed, computer networks will 
increasingly become the means of transmitting copyrighted works 
in the years ahead. This presents great opportunities but also 
poses significant risks to authors and our copyright 
industries.
    We must make sure that our copyright laws protect the 
intellectual property rights of creative works available online 
in ways that promote the use of the Internet, both by content 
providers and users. The future growth of computer networks 
like the Internet and of digital, electronic communications 
requires it. Otherwise, owners of intellectual property will be 
unwilling to put their material online. If there is no content 
worth reading online, the growth of this medium will be 
stifled, and public accessibility will be retarded.
    The Clinton administration showed great foresight when it 
formed, in 1993, the Information Infrastructure Task Force 
(IITF), which in turn established the Working Group on 
Intellectual Property Rights to examine and recommend changes 
to keep copyright law current with new technology. In 1995, the 
Administration's Working Group on Intellectual Property Rights 
released its report, ``Intellectual Property and the National 
Information Infrastructure,'' in which it explained the 
importance of adequate copyright protection for the future of 
the Internet:

    The full potential of the NII will not be realized if the 
education, information and entertainment products protected by 
intellectual property laws are not protected effectively when 
disseminated via the NII. Creators and other owners of 
intellectual property will not be willing to put their 
interests at risk if appropriate systems--both in the U.S. and 
internationally--are not in place to permit them to set and 
enforce the terms and conditions under which their works are 
made available in the NII environment. Likewise, the public 
will not use the services available on the NII and generate the 
market necessary for its success unless a wide variety of works 
are available under equitable and reasonable terms and 
conditions, and the integrity of those works is assured. All 
the computers, telephones, fax machines, scanners, cameras, 
keyboards, televisions, monitors, printers, switches, routers, 
wires, cables, networks, and satellites in the world will not 
create a successful NII, if there is no content. What will 
drive the NII is the content moving through it.

    The same year that report was issued, Senator Hatch and I 
joined together to introduce ``The NII Copyright Protection Act 
of 1995'', S. 1284, which incorporated the recommendations of 
the Administration. That legislative proposal confronted 
fundamental questions about the role of copyright in the next 
century--many of which are echoed by the Digital Millennium 
Copyright Act (DMCA), which was reported by the Senate 
Judiciary Committee.
    I note that the Report of the Administration's Working 
Group on Intellectual Property also generally supported ``the 
amendments to the copyright law and the criminal law (which 
sets out sanctions for criminal copyright violations) set forth 
in S. 1122, introduced in the 104th Congress by Senators Leahy 
and Feingold following consultations with the Justice 
Department.'' While the 104th Congress did not act on this 
legislation, I revised and reintroduced this bill as S. 1044 in 
1997. This importantlegislation, the No Electronic Theft Act, 
to adapt to the emerging digital environment was finally enacted in 
this Congress.
    Title I of the DMCA is based on the administration's 
recommendations for legislation to implement the two WIPO 
treaties, as reflected in S. 1121. In sum, Title I makes 
certain technical changes to conform our copyright laws to the 
treaties and substantive amendments to comply with two new 
treaty obligations. Specifically, the treaties oblige the 
signatories to provide legal protections against circumvention 
of technological measures used by copyright owners to protect 
their works, and against violations of the integrity of 
copyright management information (CMI), which identifies a 
work, its author, the copyright owner and any information about 
the terms and conditions of use of the work. The bill adds a 
new chapter to U.S. copyright law to implement the 
anticircumvention and CMI provisions, along with corresponding 
civil and criminal penalties. Title II of the DMCA provides 
limitations, under certain conditions, on copyright 
infringement liability for Internet service providers (ISP's) 
and online service providers (OSP's). Title III provides a 
statutory exemption in the Copyright Act to ensure that the 
lawful owner or lessee of a computer machine may authorize an 
independent service technician to activate the computer in 
order to service its hardware components. Title IV begins the 
process of updating our Nation's copyright laws with respect to 
library, archives, and educational uses of copyrighted works in 
the digital age.
    Following intensive discussions with a number of interested 
parties, including libraries, universities, small businesses, 
ISP's and OSP's, telephone companies, computer users, 
broadcasters, content providers and device manufacturers, the 
Senate Judiciary Committee was able to reach unanimous 
agreement on certain modifications and additions incorporated 
into the DMCA.
    For example, significant provisions were added to the bill 
in Title II to clarify the liability for copyright infringement 
of online and Internet service providers. These provisions set 
forth ``safe harbors'' from liability for ISP's and OSP's under 
clearly defined circumstances, which both encourage responsible 
behavior and protect important intellectual property rights. In 
addition, during the Committee's consideration of this bill, an 
Ashcroft-Leahy-Hatch amendment was adopted to ensure that 
computer users are given reasonable notice of when their Web 
sites are the subject of infringement complaints, and to 
provide procedures for computer users to have material that is 
mistakenly taken down put back online.
    This bill contains a number of provisions designed to help 
libraries and archives. First, libraries expressed concerns 
about the possibility of criminal sanctions or potentially 
ruinous monetary liability for actions taken in good faith. 
This bill makes sure that libraries acting in good faith can 
never be subject to fines or civil damages. Specifically, a 
library is exempt from monetary liability in a civil suit if it 
was not aware and had no reason to believe that its acts 
constituted a violation. In addition, libraries are completely 
exempt from the criminal provisions.
    Second, the bill contains a ``browsing'' exception for 
libraries. Libraries have indicated that in an online 
environment dominated by encrypted works it may be impossible 
for them to gain access to works to decide whether or not to 
acquire them. The current version of the bill permits libraries 
to disregard access prevention technologies in order to make a 
good faith determination of whether or not it would like to buy 
a copy of a work. If the library decides that it wishes to 
acquire the work it must negotiate with the copyright owner 
just as libraries do today.
    Third, Senator Hatch, Senator Ashcroft, and I crafted an 
amendment to provide for the preservation of digital works by 
qualified libraries and archives. The ability of libraries to 
preserve legible copies of works in digital form is one I 
consider critical. Under present law, libraries are permitted 
to make a single facsimile copy of works in their collections 
for preservation purposes, or to replace lost, damaged or 
stolen copies of works that have become commercially 
unavailable. This law, however, has become outmoded by changing 
technology and preservation practices. The bill ensures that 
libraries' collections will continue to be available to future 
generations by permitting libraries to make up to three copies 
in any format--including in digital form. This was one of the 
proposals in The National Information Infrastructure (NII) 
Copyright Protection Act of 1995, which I sponsored in the last 
Congress. The Register of Copyrights, among others, has 
supported that proposal.
    In addition, the bill would permit a library to transfer a 
work from one digital format to another if the equipment needed 
to read the earlier format becomes unavailable commercially. 
This change addresses a problem that should be familiar to 
anyone whose office has boxes of eight-inch floppy disks tucked 
away somewhere.
    These provisions go a long way toward meeting the concerns 
that libraries have expressed about the original bill, S. 1121.
    Another issue that the bill addresses is distance learning. 
When Congress enacted the present copyright law it recognized 
the potential of broadcast and cable technology to supplement 
classroom teaching, and to bring the classroom to those who, 
because of their disabilities or other special circumstances, 
areunable to attend classes. At the same time, Congress also 
recognized the potential for unauthorized transmissions of works to 
harm the markets for educational uses of copyrighted materials. In the 
present Copyright Act, we struck a careful balance and crafted a narrow 
exemption. But as with so many areas of copyright law, the advent of 
digital technology requires us to take another look at the issue.
    I recognize that the issue of distance learning has been 
under consideration for the past several years by the 
Conference on Fair Use (CONFU) that was established by the 
administration to consider issues relating to fair use in the 
digital environment. In spite of the hard work of the 
participants, CONFU has so far been unable to forge a 
comprehensive agreement on guidelines for the application of 
fair use to digital distance learning.
    We made tremendous strides in the Committee to chart the 
appropriate course for updating the Copyright Act to permit the 
use of copyrighted works in valid distance learning activities. 
Senator Hatch, Senator Ashcroft, and I joined together to ask 
the Copyright Office to facilitate discussions among interested 
library and educational groups and content providers with a 
view toward making recommendations that could be incorporated 
into the DMCA at the April 30 markup.
    Based on the Copyright Office's recommendations, we 
incorporated into the DMCA a new section 122 requiring the 
Copyright Office to make broader recommendations to Congress on 
digital distance education within six months. Upon receiving 
the Copyright Office's recommendations, it is my hope that the 
Senate Judiciary Committee will promptly commence hearings on 
the issue and move expeditiously to enact further legislation 
on the matter. I know that all members on this Committee are as 
anxious as I am to complete the process that we started in 
Committee of updating the Copyright Act to permit the 
appropriate use of copyrighted works in valid distance learning 
activities. This step should be viewed as a beginning--not an 
end, and we are committed to reaching that end point as quickly 
as possible.
    Senator Feinstein had sought to clarify when a university 
would be held responsible for the actions of its employees in 
connection with its eligibility for the safe harbors spelled 
out in title II of the bill. I and others on the Committee 
agreed with Senator Feinstein that, because of the importance, 
complexity, and implications for other online service 
providers, including libraries and archives of this issue, we 
should have the Copyright Office examine the issue in a 
comprehensive fashion as well.
    Amendments sponsored by Senator Ashcroft, Senator Hatch, 
and I were also crafted to address the issues of reverse 
engineering, ephemeral recordings and to clarify the use of 
copyright management information in the course of certain 
analog and digital transmissions in broadcasting. Additional 
legislative language was incorporated into the bill to clarify 
that the law enforcement exemptions apply to all government 
agencies which conduct law enforcement and intelligence work, 
as well as to government contractors engaging in intelligence, 
investigative, or protective work.
    Finally, to assuage the concerns of the consumer 
electronics manufacturers and others that the bill might 
require them to design their products to respond to any 
particular technological protection measure, Senator Hatch, 
Senator Ashcroft, and I crafted an amendment that clarified the 
bill on this issue. We also agreed to incorporate provisions 
into the bill clarifying that nothing in the bill will prevent 
parents form controlling their children's access to the 
Internet or individuals from protecting personal identifying 
information.
    The DMCA is a product of the Senate Judiciary Committee's 
recognition that ours is a time of unprecedented challenge to 
copyright protection. Copyright has been the engine that has 
traditionally converted the energy of artistic creativity into 
publicly available arts and entertainment. Historically, the 
Government's role has been to encourage creativity and 
innovation by protecting copyrights that create incentives for 
the dissemination to the public of new works and forms of 
expression. That is the tradition which I have sought to honor 
and which I intend to continue to promote.
    Now, with the DMCA, the Senate Judiciary Committee takes 
another important step toward protecting American ingenuity and 
creative expression. This bill is a well-balanced package of 
proposals that address the needs of creators, consumers and 
commerce in the digital age and well into the next century.
                                                     Patrick Leahy.

                      IX. CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 2037, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

UNITED STATES CODE

           *       *       *       *       *       *       *


                          TITLE 17--COPYRIGHTS

Chap.                                                               Sec.
1. Subject Matter and Scope of Copyright..........................   101
     * * * * * * *
11. Sound Recordings and Music Videos.............................  1101
12. Copyright Protection and Management Systems...................  1201

CHAPTER 1--SUBJECT MATTER AND SCOPE OF COPYRIGHT

           *       *       *       *       *       *       *


Sec. 101. Definitions

    Except as otherwise provided in this title, as used in this 
title, the following terms and their variant forms mean the 
following:

           *       *       *       *       *       *       *

    [A work is a ``Berne Convention work'' if--
          [(1) in the case of an unpublished work, one or more 
        of the authors is a national of a nation adhering to 
        the Berne Convention, or in the case of a published 
        work, one of more of the authors is a national of a 
        nation adhering to the Berne Convention on the date of 
        first publication;
          [(2) the work was first published in a nation 
        adhering to the Berne Convention, or was simultaneously 
        first published in a nation adhering to the Berne 
        Convention and in a foreign nation that does not adhere 
        to the Berne Convention;
          [(3) in the case of an audiovisual work--
                  [(A) if one or more of the authors is a legal 
                entity, that author has its headquarters in a 
                nation adhering to the Berne Convention; or
                  [(B) if one or more of the authors is an 
                individual, that author is domiciled, or has 
                his or her habitual residence in a nation 
                adhering to the Berne Convention;
                  [(4) in the case of a pictorial, graphic, or 
                sculptural work that is incorporated in a 
                building or other structure, the building or 
                structure is located in a nation adhering to 
                the Berne Convention; or
                  [(5) in the case of an architectural work 
                embodied in a building, such building is 
                erected in a country adhering to the Berne 
                Convention.
[For purposes of paragraph (1), an author who is domiciled in 
or has his or her habitual residence in, a nation adhering to 
the Berne Convention is considered to be a national of that 
nation. For purposes of paragraph (2), a work is considered to 
have been simultaneously published in two or more nations if 
its dates of publication are within 30 days of one another.]

           *       *       *       *       *       *       *

    [The ``country of origin'' of a Berne Convention work, for] 
For purposes of section 411, [is the United States] a work is a 
``United States work'' only if--
          (1) in the case of a published work, the work is 
        first published--
                  (A) in the United States;
                  (B) simultaneously in the United States and 
                another [nation or nations adhering to the 
                Berne Convention] treaty party or parties, 
                whose law grants a term of copyright protection 
                that is the same as or longer than the term 
                provided in the United States;
                  (C) simultaneously in the United States and a 
                foreign nation that [does not adhere to the 
                Berne Convention] is not a treaty party; or
                  (D) in a foreign nation that [does not adhere 
                to the Berne Convention] is not a treaty party, 
                and all of the authors of the work are 
                nationals, domiciliaries, or habitual residents 
                of, or in the case of an audiovisual work legal 
                entities with headquarters in, the United 
                States;
          (2) in the case of an unpublished work, all the 
        authors of the work are nationals, domiciliaries, or 
        habitual residents of the United States, or, in the 
        case of an unpublished audiovisual work, all the 
        authors are legal entities with headquarters in the 
        United States; or
          (3) in the case of a pictorial, graphic, or 
        sculptural work incorporated in a building or 
        structure, the building or structure is located in the 
        United States.
[For the purposes of section 411, the ``country of origin'' of 
any other Berne Convention work is not the United States.]

           *       *       *       *       *       *       *

    A work is ``fixed'' in a tangible medium of expression when 
its embodiment in a copy or phonorecord, by or under the 
authority of the author, is sufficiently permanent or stable to 
permit it to be perceived, reproduced, or otherwise 
communicated for a period of more than transitory duration. A 
work consisting of sounds, images, or both, that are being 
transmitted, is ``fixed'' for purposes of this title if a 
fixation of the work is being made simultaneously with its 
transmission.
    The ``Geneva Phonograms Convention'' is the Convention for 
the Protection of Producers of Phonograms Against Unauthorized 
Duplication of Their Phonograms, concluded at Geneva, 
Switzerland on October 29, 1971.
    The terms ``including'' and ``such as'' are illustrative 
and not limitative.
    An ``international agreement'' is--
          (1) the Universal Copyright Convention;
          (2) the Geneva Phonograms Convention;
          (3) the Berne Convention;
          (4) the WTO Agreement;
          (5) the WIPO Copyright Treaty;
          (6) the WIPO Performances and Phonograms Treaty; and
          (7) any other copyright treaty to which the United 
        States is a party.

           *       *       *       *       *       *       *

    To ``transmit'' a performance or display is to communicate 
it by any device or process whereby images or sounds are 
received beyond the place from which they are sent.
    A ``treaty party'' is a country or intergovernmental 
organization other than the United States that is a party to an 
international agreement.

           *       *       *       *       *       *       *

    The author's ``widow'' or ``widower'' is the author's 
surviving spouse under the law of the author's domicile at the 
time of his or her death, whether or not the spouse has later 
re-married.
    The ``WIPO Copyright Treaty'' is the WIPO Copyright Treaty 
concluded at Geneva, Switzerland, on December 20, 1996.
    The ``WIPO Performances and Phonograms Treaty'' is the WIPO 
Performances and Phonograms Treaty concluded at Geneva, 
Switzerland on December 20, 1996.

           *       *       *       *       *       *       *

    A ``work made for hire'' is--
          (1) a work prepared by an employee within the scope 
        of his or her employment; or

           *       *       *       *       *       *       *

    The ``WTO Agreement'' is the Agreement Establishing the 
World Trade Organization entered into on April 15, 1994. The 
terms ``WTO Agreement'' and ``WTO member country'' have the 
meanings given those terms in paragraphs (9) and (10) 
respectively of section 2 of the Uruguay Round Agreements Act.

           *       *       *       *       *       *       *


Sec. 104. Subject matter of copyright: National origin

    (a) Unpublished Works.--The works specified by sections 102 
and 103, while unpublished, are subject to protection under 
this title without regard to the nationality or domicile of the 
author.
    (b) Published Works.--The works specified by sections 102 
and 103, when published, are subject to protection under this 
title if--
          (1) on the date of first publication, one or more of 
        the authors is a national or domiciliary of the United 
        States, or is a national domiciliary, or sovereign 
        authority of a [foreign nation that is a party to a 
        copyright treaty to which the United States is also a 
        party] treaty party, or is a stateless person, wherever 
        that person may be domiciled; or
          (2) the work is first published in the United States 
        or in a foreign nation that, on the date of first 
        publication, is a [party to the Universal Copyright 
        Convention] treaty party; or
          (3) the work is a sound recording that was first 
        fixed in a treaty party; or
          (4) the work is a [Berne Convention work] pictorial, 
        graphic or sculptural work that is incorporated in a 
        building or other structure, or an architectural work 
        that is embodied in a building and the building or 
        structure is located in the United States or a treaty 
        party; or
          [(3)] (5) the work is first published by the United 
        Nations or any of its specialized agencies, or by the 
        Organization of American States; or
          [(5)] (6) the work comes within the scope of a 
        Presidential proclamation. Whenever the President finds 
        that a particular foreign nation extends, to works by 
        authors who are nationals or domiciliaries of the 
        United States or to works that are first published in 
        the United States, copyright protection on 
        substantially the same basis as that on which the 
        foreign nation extends protection to works of its own 
        nationals and domiciliaries and works first published 
        in that nation, the President may by proclamation 
        extend protection under this title to works of which 
        one or more of the authors is, on the date of first 
        publication, a national, domiciliary, or sovereign 
        authority of that nation, or which was first published 
        in that nation. The President may revise, suspend, or 
        revoke any such proclamation or impose any conditions 
        or limitations on protection under a proclamation.
          (7) For purposes of paragraph (2), a work that is 
        published in the United States or a treaty party within 
        thirty days of publication in a foreign nation that is 
        not a treaty party shall be considered first published 
        in the United States or such treaty party as the case 
        may be.

           *       *       *       *       *       *       *

    (d) Effect of Phonograms Treaties.--Notwithstanding the 
provisions of subsection (b), no works other than sound 
recordings shall be eligible for protection under this title 
solely by virtue of the adherence of the United States to the 
Geneva Phonograms Convention or the WIPO Performances and 
Phonograms Treaty.

Sec. 104A. Copyright in restored works

    (a) Automatic Protection and Term.--
          (1) Term.--
                  (A) Copyright subsists, in accordance with 
                this section, in restored works, and vests 
                automatically on the date of restoration.

           *       *       *       *       *       *       *

    (h) Definitions.--For purposes of this section and section 
109(a):
          (1) The term ``date of adherence or proclamation'' 
        means the earlier of the date on which a foreign nation 
        which, as of the date the WTO Agreement enters into 
        force with respect to the United States, is not a 
        nation adhering to the Berne Convention or a WTO member 
        country, becomes--
                  [(A) a nation adhering to the Berne 
                Convention or a WTO member country; or]
                  [(B) subject to a Presidential proclamation 
                under subsection (g).]
                  (A) a nation adhering to the Berne 
                Convention;
                  (B) a WTO member country;
                  (C) a nation adhering to the WIPO Copyright 
                Treaty;
                  (D) a nation adhering to the WIPO 
                Performances and Phonograms Treaty; or
                  (E) subject to a Presidential proclamation 
                under subsection (g).

           *       *       *       *       *       *       *

          [(3) The term ``eligible country'' means a nation, 
        other than the United States, that is a WTO member 
        country, adheres to the Berne Convention, or is subject 
        to a proclamation under section 104A(g).]
          (3) the term ``eligible country'' means a nation, 
        other than the United States that--
                  (A) becomes a WTO member country after the 
                date of enactment of the Uruguay Round 
                Agreements Act;
                  (B) on the date of enactment is, or after the 
                date of enactment becomes, a nation adhering to 
                the Berne Convention;
                  (C) adheres to the WIPO Copyright Treaty;
                  (D) adheres to the WIPO Performances and 
                Phonograms Treaty; or
                  (E) after such date of enactment becomes 
                subject to a proclamation under subsection (g).

           *       *       *       *       *       *       *

          (6) The term ``restored work'' means an original work 
        of authorship that--
                  (A) is protected under subsection (a);
                  (B) is not in the public domain in its source 
                country through expiration of term of 
                protection;
                  (C) is in the public domain in the United 
                States due to--

           *       *       *       *       *       *       *

                          (iii) lack of national eligibility; 
                        [and]
                  (D) has at least one author or rightholder 
                who was, at the time the work was created, a 
                national or domiciliary of an eligible country, 
                and if published, was first published in an 
                eligible country and not published in the 
                United States during the 30-day period 
                following publication in such eligible 
                country[.]; and
                  (E) if the source country for the work is an 
                eligible country solely by virtue of its 
                adherence to the WIPO Performances and 
                Phonograms Treaty, is a sound recording.

           *       *       *       *       *       *       *

          (8) The ``source country'' of a restored work is--
                  (A) a nation other than the United States;
                  (B) in the case of an unpublished work--
                          (i) the eligible country in which the 
                        author or rightholder is a national or 
                        domiciliary, or, if a restored work has 
                        more than 1 author or rightholder, of 
                        which the majority of foreign authors 
                        or rightholders are nationals or 
                        domiciliaries [of eligible countries]; 
                        or

           *       *       *       *       *       *       *

          [(9) The terms ``WTO Agreement'' and ``WTO member 
        country'' have the meanings given those terms in 
        paragraphs (9) and (10), respectively, of section 2 of 
        the Uruguay Round Agreements Act.]

           *       *       *       *       *       *       *


Sec. 108. Limitations on exclusive rights: Reproduction by libraries 
                    and archives

    (a) [Notwithstanding] Except as otherwise provided and 
notwithstanding the provisions of section 106, it is not an 
infringement of copyright for a library or archives, or any of 
its employees acting within the scope of their employment, to 
reproduce no more than one copy or phonorecord of a work except 
as provided in subsections (b) and (c), or to distribute such 
copy or phonorecord, under the conditions specified by this 
section, if--

           *       *       *       *       *       *       *

          (3) the reproduction or distribution of the work 
        includes a notice of copyright if such notice appears 
        on the copy of phonorecord that is reproduced under the 
        provisions of this section, or a legend stating that 
        the work may be protected by copyright if no such 
        notice can be found on the copy or phonorecord that is 
        reproduced under the provisions of this section.
    (b) The rights of reproduction and distribution under this 
section apply to [a copy or phonorecord] three copies or 
phonorecords of an unpublished work duplicated [in facsimile 
form] solely for purposes of preservation and security or for 
deposit for research use in another library or archives of the 
type described by clause (2) of subsection (a), [if the copy or 
phonorecord reproduced is currently in the collections of the 
library or archives.] if--
          (1) the copy or phonorecord reproduced is currently 
        in the collections of the library or archives; and
          (2) any such copy or phonorecord that is reproduced 
        in digital format is not otherwise distributed in that 
        format and is not made available to the public outside 
        the premises of the library or archives in that format.
    (c) The right of reproduction under this section applies to 
[a copy or phonorecord] three copies or phonorecords of a 
published work duplicated [in facsimile form] solely for the 
purpose of replacement of a copy or phonorecord that is 
damaged, deteriorating, lost, or stolen, or if the existing 
format in which the work is stored has become obsolete, [if the 
library or archives has, after a reasonable effort, determined 
that an unused replacement cannot be obtained at a fair price.] 
if--
          (1) the library or archives has, after a reasonable 
        effort, determined that an unused replacement cannot be 
        obtained at a fair price; and
          (2) any such copy or phonorecord that is reproduced 
        in digital format is not made available to the public 
        in that format except for use on the premises of the 
        library or archives in lawful possession of such copy.
    For purposes of this subsection, a format shall be 
considered obsolete if the machine or device necessary to 
render perceptible a work stored in that format is no longer 
manufactured or is no longer reasonably available in the 
commercial marketplace.

           *       *       *       *       *       *       *


Sec. 112. Limitations on exclusive rights: Ephemeral recordings

    [(a)] (a)(1) Notwithstanding the provisions of section 106, 
and except in the case of a motion picture or other audiovisual 
work, it is not an infringement of copyright for a transmitting 
organization entitled to transmit to the public a performance 
or display of a work, under a license or transfer of the 
copyright or under the limitations on exclusive rights in sound 
recordings specified by section, 114(a), or for a transmitting 
organization that is broadcast radio or television station 
licensed as such by the Federal Communications Commission that 
broadcasts a performance of a sound recording in a digital 
format on a nonsubscription basis. to make no more than one 
copy or phonorecord of a particular transmission program 
embodying the performance or display, if--
          [(1)] (A) the copy of phonorecord is retained and 
        used solely by the transmitting organization that made 
        it, and no further copies or phonorecords are 
        reproduced from it; and
          [(2)] (B) the copy or phonorecord is used solely for 
        the transmitting organization's own transmissions 
        within its local service area, or for purposes of 
        archival preservation or security; and
          [(3)] (C) unless preserved exclusively for archival 
        purposes, the copy or phonorecord is destroyed within 
        six months from the date the transmission program was 
        first transmitted to the public.
    (2) Where a transmitting organization entitled to make a 
copy or phonorecord under section 112(a)(1) in connection with 
the transmission to the public of a performance or display or a 
work pursuant to that section is prevented from making such 
copy or phonorecord by reason of the application by the 
copyright owner or technical measures that prevent the 
reproduction of the work, such copyright owner shall make 
available to the transmitting organization the necessary means 
for permitting the making of such copy of phonorecord within 
the meaning of that section, provided that it is 
technologically feasible and economically reasonable for the 
copyright owner to do so, and provided further that, if such 
copyright owner fails to do so in a timely manner in light of 
the transmitting organizations' reasonable business 
requirements, the transmitting organization shall not be liable 
for a violation of section 1201(a)(1) of this title for 
engaging in such activities as are necessary to make such 
copies or phonorecords as permitted under section 112(a)(1).

           *       *       *       *       *       *       *


Sec. 117. Limitations on exclusive rights: Computer programs

    [Notwithstanding] (a) Making of Additional Copy or 
Adaptation by Owner of Copy.--Notwithstanding the provisions of 
section 106, it is not an infringement for the owner of a copy 
of a computer program to make or authorize the making of 
another copy or adaption of that computer program provided:

           *       *       *       *       *       *       *

    [Any exact] (b) Lease, Sale, or Other Transfer of 
Additional Copy or Adaptation.--Any exact copies prepared in 
accordance with the provisions of this section may be leased, 
sold, or otherwise transferred, along with the copy from which 
such copies were prepared, only as part of the lease, sale, or 
other transfer of all rights in the program. Adaptations so 
prepared may be transferred only with the authorization of the 
copyright owner.
    (c) Machine Maintenance or Repair.--Notwithstanding the 
provisions of section 106, it is not an infringement for an 
owner or lessee of a machine to make or authorize the making of 
a copy of a computer program if such copy is made solely by 
virtue of the activation of a machine that lawfully contains an 
authorized copy of the computer program, for purposes only of 
maintenance or repair of that machine, if--
          (1) such new copy is used in no other manner and is 
        destroyed immediately after the maintenance or repair 
        is completed; and
          (2) with respect to any computer program or part 
        thereof that is not necessary for that machine to be 
        activated, such program or part thereof is not accessed 
        or used other than to make such new copy by virtue of 
        the activation of the machine.
    (d) Definitions.--For purposes of this section--
          (1) the ``maintenance'' of a machine is the servicing 
        of the machine in order to make it work in accordance 
        with its original specifications and any changes to 
        those specifications authorized for that machine; and
          (2) the ``repair'' of a machine is the restoring of 
        the machine to the state of working in accordance with 
        its original specifications and any changes to those 
        specifications authorized for that machine.

           *       *       *       *       *       *       *


CHAPTER 4--COPYRIGHT NOTICE, DEPOSIT, AND REGISTRATION

           *       *       *       *       *       *       *


Sec. 411. Registration and infringement actions

    (a) Except for [actions for infringement of copyright in 
Berne Convention works whose country of origin is not the 
United States and] an action brought for a violation of the 
rights of the author under section 106A(a), and subject to the 
provisions of subsection (b), no action for infringement of the 
copyright in any United States work shall be instituted until 
registration of the copyright claim has been made in accordance 
with this title. In any case, however, where the deposit, 
application, and fee required for registration have been 
delivered to the Copyright Office in proper form and 
registration has been refused, the applicant is entitled to 
institute an action for infringement if notice thereof, with a 
copy of the complaint, is served on the Register of Copyrights. 
The Register may, at his or her option, become a party to the 
action with respect to the issue of registrability of the 
copyright claim by entering an appearance within sixty days 
after such service, but the Register's failure to become a 
party shall not deprive the court of jurisdiction to determine 
that issue.

           *       *       *       *       *       *       *


             CHAPTER 5--COPYRIGHT INFRINGEMENT AND REMEDIES

Sec.
501. Infringement of copyright.
     * * * * * * *
511. Liability of States, instrumentalities of States, and State 
          officials for infringement of copyright.
512. Liability of service providers for online infringement of 
          copyright.
     * * * * * * *

Sec. 507. Limitations on actions

    (a) Criminal Proceedings.--Except as expressly provided 
elsewhere in this title, [No] no criminal proceeding shall be 
maintained under the provisions of this title unless it is 
commenced within three years after the cause of action arose.

           *       *       *       *       *       *       *


Sec. 512. Liability of service providers for online infringement of 
                    copyright

    (a) Digital Network Communications.--A service provider 
shall not be liable for monetary relief, or except as provided 
in subsection (i) for injunctive or other equitable relief, for 
infringement for the provider's transmitting, routing, or 
providing connections for, material through a system or network 
controlled or operated by or for the service provider, or the 
intermediate and transient storage of such material in the 
course of such transmitting, routing or providing connections, 
if--
          (1) it was initiated by or at the direction of a 
        person other than the service provider;
          (2) it is carried out through an automatic technical 
        process without selection of such material by the 
        service provider;
          (3) the service provider does not select the 
        recipients of such material except as an automatic 
        response to the request of another;
          (4) no such copy of such material made by the service 
        provider is maintained on the system or network in a 
        manner ordinarily accessible to anyone other than 
        anticipated recipients, and no such copy is maintained 
        on the system or network in a manner ordinarily 
        accessible to the anticipated recipients for a longer 
        period than is reasonably necessary for the 
        communication; and
          (5) the material is transmitted without modification 
        to its content.
    (b) System Caching.--A service provider shall not be liable 
for monetary relief, or except as provided in subsection (i) 
for injunctive or other equitable relief, for infringement for 
the intermediate and temporary storage of material on the 
system or network controlled or operated by or for the service 
provider, where (i) such material is made available online by a 
person other than such service provider, (ii) such material is 
transmitted from the person described in clause (i) through 
such system or network to someone other than that person at the 
direction of such other person, and (iii) the storage is 
carried out through an automatic technical process for the 
purpose of making such material available to users of such 
system or network who subsequently request access to that 
material from the person described in clause (i), provided 
that:
          (1) such material is transmitted to such subsequent 
        users without modification to its content from the 
        manner in which the material otherwise was transmitted 
        from the person described in clause (i);
          (2) such service provider complies with rules 
        concerning the refreshing, reloading or other updating 
        of such material when specified by the person making 
        that material available online in accordance with an 
        accepted industry standard data communications protocol 
        for the system or network through which that person 
        makes the material available; provided that the rules 
        are not used by the person described in clause (i) to 
        prevent or unreasonably impair such intermediate 
        storage;
          (3) such service provider does not interfere with the 
        ability of technology associated with such material 
        that returns to the person described in clause (i) the 
        information that would have been available to such 
        person if such material had been obtained by such 
        subsequent users directly from such person, provided 
        that such technology--
                  (A) does not significantly interfere with the 
                performance of the provider's system or network 
                or with the intermediate storage of the 
                material;
                  (B) is consistent with accepted industry 
                standard communications protocols; and
                  (C) does not extract information from the 
                provider's system or network other than the 
                information that would have been available to 
                such person if such material had been accessed 
                by such users directly from such person;
          (4) either--
                  (A) the person described in clause (i) does 
                not currently condition access to such 
                material; or
                  (B) if access to such material is so 
                conditioned by such person, by a current 
                individual pre-condition, such as a pre-
                condition based on payment of a fee, or 
                provision of a password or other information, 
                the service provider permits access to the 
                stored material in significant part only to 
                users of its system or network that have been 
                so authorized and only in accordance with those 
                conditions; and
          (5) if the person described in clause (i) makes that 
        material available online without the authorization of 
        the copyright owner, then the service provider responds 
        expeditiously to remove, or disable access to, the 
        material that is claimed to be infringing upon 
        notification of claimed infringements described in 
        subsection (c)(3); provided that the material has 
        previously been removed from the originating site, and 
        the party giving the notification includes in the 
        notification a statement confirming that such material 
        has been removed or access to it has been disabled or 
        ordered to be removed or have access disabled.
    (c) Information Stored on Service Providers.--
          (1) In general.--A service provider shall not be 
        liable for monetary relief, or except as provided in 
        subsection (i) for injunctive or other equitable 
        relief, for infringement for the storage at the 
        direction of a user of material that resides on a 
        system or network controlled or operated by or for the 
        service provider, if the service provider--
                  (A)(i) does not have actual knowledge that 
                the material or activity is infringing,
                  (ii) in the absence of such actual knowledge, 
                is not aware of facts or circumstances from 
                which infringing activity is apparent, or
                  (iii) if upon obtaining such knowledge or 
                awareness, the service provider acts 
                expeditiously to remove or disable access to, 
                the material;
                  (B) does not receive a financial benefit 
                directly attributable to the infringing 
                activity, where the service provider has the 
                right and ability to control such activity; and
                  (C) in the instance of a notification of 
                claimed infringement as described in paragraph 
                (3), responds expeditiously to remove, or 
                disable access to, the material that is claimed 
                to be infringing or to be the subject of 
                infringing activity.
          (2) Designated agent.--The limitations on liability 
        established in this subsection apply only if the 
        service provider has designated an agent to receive 
        notifications of claimed infringement described in 
        paragraph (3), by substantially making the name, 
        address, phone number, electronic mail address of such 
        agent, and other contact information deemed appropriate 
        by the Register of Copyrights, available through its 
        service, including on its website, and by providing 
        such information to the Copyright Office. The Register 
        of Copyrights shall maintain a current directory of 
        agents available to the public for inspection, 
        including through the Internet, in both electronic and 
        hard copy formats.
          (3) Elements of notification.--
                  (A) To be effective under this subsection, a 
                notification of claimed infringement means any 
                written communication provided to the service 
                provider's designated agent that includes 
                substantially the following:
                          (i) a physical or electronic 
                        signature of a person authorized to act 
                        on behalf of the owner of an exclusive 
                        right that is allegedly infringed;
                          (ii) identification of the 
                        copyrighted work claimed to have been 
                        infringed, or, if multiple such works 
                        at a single online site are covered by 
                        a single notification, a representative 
                        list of such works at that site;
                          (iii) identification of the material 
                        that is claimed to be infringing or to 
                        be the subject of infringing activity 
                        that is to be removed or access to 
                        which is to be disabled, and 
                        information reasonably sufficient to 
                        permit the service provider to locate 
                        the material;
                          (iv) information reasonably 
                        sufficient to permit the service 
                        provider to contact the complaining 
                        party, such as an address, telephone 
                        number, and, if available an electronic 
                        mail address at which the complaining 
                        party may be contacted;
                          (v) a statement that the complaining 
                        party has a good faith belief that use 
                        of the material in the manner 
                        complained of is not authorized by the 
                        copyright owner, or its agent, or the 
                        law; and
                          (vi) a statement that the information 
                        in the notification is accurate, and 
                        under penalty of perjury, that the 
                        complaining party has the authority to 
                        enforce the owner's rights that are 
                        claimed to be infringed.
                  (B) A notification from the copyright owner 
                or from a person authorized to act on behalf of 
                the copyright owner that fails substantially to 
                conform to the provisions of paragraph (3)(A) 
                shall not be considered under paragraph (1)(A) 
                in determining whether a service provider has 
                actual knowledge or is aware of facts or 
                circumstances from which infringing activity is 
                apparent, provided that the provider promptly 
                attempts to contact the complaining party or 
                takes other reasonable steps to assist in the 
                receipt of notice under paragraph (3)(A) when 
                the notice is provided to the service 
                provider's designated agent and substantially 
                satisfies the provisions of subparagraphs 
                (3)(A)(ii), (iii), and (iv).
    (d) Information Location Tools.--A service provider shall 
not be liable for monetary relief, or except as provided in 
subsection (i) for injunctive or other equitable relief, for 
infringement for the provider referring or linking users to an 
online location containing infringing material or activity by 
using information location tools, including a directory, index, 
reference, pointer or hypertext link, if the provider--
          (1) does not have actual knowledge that the material 
        or activity is infringing or, in the absence of such 
        actual knowledge, is not aware of facts or 
        circumstances from which infringing activity is 
        apparent;
          (2) does not receive a financial benefit directly 
        attributable to the infringing activity, where the 
        service provider has the right and ability to control 
        such activity; and
          (3) responds expeditiously to remove or disable the 
        reference or link upon notification of claimed 
        infringement as described in subsection (c)(3); 
        provided that for the purposes of this paragraph, the 
        element in subsection (c)(3)(A)(iii) shall be 
        identification of the reference or link, to material or 
        activity claimed to be infringing, that is to be 
        removed or access to which is to be disabled, and 
        information reasonably sufficient to permit the service 
        provider to locate such reference or link.
    (e) Misrepresentations.--Any person who knowingly 
materially misrepresents under this section (1) that material 
or activity is infringing, or (2) that material or activity was 
removed or disabled by mistake or misidentification, shall be 
liable for any damages, including costs and attorneys' fees, 
incurred by the alleged infringer, by any copyright owner or 
copyright owner's authorized licensee, or by the service 
provider, who is injured by such misrepresentation, as the 
result of the service provider relying upon such 
misrepresentation in removing or disabling access to the 
material or activity claimed to be infringing, or in replacing 
the removed material or ceasing to disable access to it.
    (f) Replacement of Removed or Disabled Material and 
Limitation on Other Liability.--
          (1) Subject to paragraph (2) of this subsection, a 
        service provider shall not be liable to any person for 
        any claim based on the service provider's good faith 
        disabling of access to, or removal of, material or 
        activity claimed to be infringing or based on facts or 
        circumstances from which infringing activity is 
        apparent, regardless or whether the material or 
        activity is ultimately determined to be infringing.
          (2) Paragraph (1) of this subsection shall not apply 
        with respect to material residing at the direction of a 
        subscriber of the service provider on a system or 
        network controlled or operated by or for the service 
        provider that is removed, or provided under subsection 
        (c)(1)(C), unless the service provider:--
                  (A) takes reasonable steps promptly to notify 
                the subscriber that it has removed or disabled 
                access to the material;
                  (B) upon receipt of a counter notice as 
                described in paragraph (3), promptly provides 
                the person who provided the notice under 
                subsection (c)(1)(C) with a copy of the counter 
                notice, and informs such person that it will 
                replace the removed material or cease disabling 
                access to it in ten business days; and
                  (C) replaces the removed material and ceases 
                disabling access to it not less than ten, nor 
                more than fourteen, business days following 
                receipt of the counter notice, unless its 
                designated agent first receives notice from the 
                person who submitted the notification under 
                subsection (c)(1)(C) that such person has filed 
                an action seeking a court order to restrain the 
                subscriber from engaging in infringing activity 
                relating to the material on the service 
                provider's system or network.
          (3) To be effective under this subsection, a counter 
        notification means any written communication provided 
        to the service provider's designated agent that 
        includes substantially the following:
                  (A) a physical or electronic signature of the 
                subscriber;
                  (B) identification of the material that has 
                been removed or to which access has been 
                disabled and the location at which such 
                material appeared before it was removed or 
                access was disabled;
                  (C) a statement under penalty of perjury that 
                the subscriber has a good faith belief that the 
                material was removed or disabled as a result of 
                mistake or misidentification of the material to 
                be removed or disabled;
                  (D) the subscriber's name, address and 
                telephone number, and a statement that the 
                subscriber consents to the jurisdiction of 
                Federal Court for the judicial district in 
                which the address is located, or if the 
                subscriber's address is outside of the United 
                States, for any judicial district in which the 
                service provider may be found, and that the 
                subscriber will accept service of process from 
                the person who provided notice under subsection 
                (c)(1)(C) or agent of such person.
          (4) A service provider's compliance with paragraph 
        (2) shall not subject the service provider to liability 
        for copyright infringement with respect to the material 
        identified in the notice provided under subsection 
        (c)(1)(C).
    (g) Identification of Direct Infringer.--The copyright 
owner or a person authorized to act on the owner's behalf may 
request an order for release of identification of an alleged 
infringer by filing (i) a copy of a notification described in 
subsection (c)(3)(A), including a proposed order, and (ii) a 
sworn declaration that the purpose of the order is to obtain 
the identity of an alleged infringer and that such information 
will only be used for the purpose of this title, with the clerk 
of any United States district court. The order shall authorize 
and order the service provider receiving the notification to 
disclose expeditiously to the copyright owner or person 
authorized by the copyright owner information sufficient to 
identify the alleged direct infringer of the material described 
in the notification to the extent such information is available 
to the service provider. The order shall be expeditiously 
issued if the accompanying notification satisfies the 
provisions of subsection (c)(3)(A) and the accompanying 
declaration is properly executed. Upon receipt of the order, 
either accompanying or subsequent to the receipt of a 
notification described in subsection (c)(3)(A), a service 
provider shall expeditiously give to the copyright owner or 
person authorized by the copyright owner the information 
required by the order, notwithstanding any other provision of 
law and regardless of whether the service provider responds to 
the notification.
    (h) Conditions for Eligibility.--
          (1) Accommodation of technology.--The limitations on 
        liability established by this section shall apply only 
        if the service provider--
                  (A) has adopted and reasonably implemented, 
                and informs subscribers of the service of, a 
                policy for the termination of subscribers of 
                the service who are repeat infringers; and
                  (B) accommodates and does not interfere with 
                standard technical measures as defined in this 
                subsection.
          (2) Definition.--As used in this section, ``standard 
        technical measures'' are technical measures, used by 
        copyright owners to identify or protect copyrighted 
        works, that--
                  (A) have been developed pursuant to a broad 
                consensus of copyright owners and service 
                providers in an open, fair, voluntary, multi-
                industry standards process;
                  (B) are available to any person on reasonable 
                and nondiscriminatory terms; and
                  (C) do not impose substantial costs on 
                service providers or substantial burdens on 
                their systems or networks.
    (i) Injunctions.--The following rules shall apply in the 
case of any application for an injunction under section 502 
against a service provider that is not subject to monetary 
remedies by operation of this section:
          (1) Scope of relief.--
                  (A) With respect to conduct other than that 
                which qualifies for the limitation on remedies 
                as set forth in subsection (a), the court may 
                only grant injunctive relief with respect to a 
                service provider in one or more of the 
                following forms:
                          (i) an order restraining it from 
                        providing access to infringing material 
                        or activity residing at a particular 
                        online site on the provider's system or 
                        network;
                          (ii) an order restraining it from 
                        providing access to an identified 
                        subscriber of the service provider's 
                        system or network who is engaging in 
                        infringing activity by terminating the 
                        specified accounts of such subscriber; 
                        or
                          (iii) such other injunctive remedies 
                        as the court may consider necessary to 
                        prevent or restrain infringement of 
                        specified copyrighted material at a 
                        particular online location, provided 
                        that such remedies are the least 
                        burdensome to the service provider that 
                        are comparably effective for that 
                        purpose.
                  (B) If the service provider qualifies for the 
                limitation on remedies described in subsection 
                (a), the court may only grant injunctive relief 
                in one or both of the following forms:
                          (i) an order restraining it from 
                        providing access to an identified 
                        subscriber of the service provider's 
                        system or network who is using the 
                        provider's service to engage in 
                        infringing activity by terminating the 
                        specified accounts of such subscriber; 
                        or
                          (ii) an order restraining it from 
                        providing access, by taking specified 
                        reasonable steps to block access, to a 
                        specific, identified, foreign online 
                        location.
          (2) Considerations.--The court, in considering the 
        relevant criteria for injunctive relief under 
        applicable law, shall consider:
                  (A) whether such an injunction, either alone 
                or in combination with other such injunctions 
                issued against the same service provider under 
                this subsection, would significantly burden 
                either the provider or the operation of the 
                provider's system or network;
                  (B) the magnitude of the harm likely to be 
                suffered by the copyright owner in the digital 
                network environment if steps are not taken to 
                prevent or restrain the infringement;
                  (C) whether implementation of such an 
                injunction would be technically feasible and 
                effective, and would not interfere with access 
                to noninfringing material at other online 
                locations; and
                  (D) whether other less burdensome and 
                comparably effective means of preventing or 
                restraining access to the infringing material 
                are available.
          (3) Notice and ex parte orders.--Injunctive relief 
        under this subsection shall not be available without 
        notice to the service provider and an opportunity for 
        such provider to appear, except for orders ensuring the 
        preservation of evidence or other orders having no 
        material adverse effect on the operation of the service 
        provider's communications network.
    (j) Definitions.--
          (1)(A) As used in subsection (a), the term ``service 
        provider'' means an entity offering the transmission, 
        routing or providing of connections for digital online 
        communications, between or among points specified by a 
        user, of material of the user's choosing, without 
        modification to the content of the material as sent or 
        received.
          (B) As used in any other subsection of this section, 
        the term ``service provider'' means a provider of 
        online services or network access, or the operator of 
        facilities therefor, and includes an entity described 
        in the preceding paragraph of this subsection.
          (2) As used in this section, the term ``monetary 
        relief'' means damages, costs, attorneys' fees, and any 
        other form of monetary payment.
    (k) Other Defenses Not Affected.--The failure of a service 
provider's conduct to qualify for limitation of liability under 
this section shall not bear adversely upon the consideration of 
a defense by the service provider that the service provider's 
conduct is not infringing under this title or any other 
defense.
    (l) Protection of Privacy.--Nothing in this section shall 
be construed to condition the applicability of subsections (a) 
through (d) on--
          (1) a service provider monitoring its service or 
        affirmatively seeking facts indicating infringing 
        activity except to the extent consistent with a 
        standard technical measure complying with the 
        provisions of subsection (h); or
          (2) a service provider accessing, removing, or 
        disabling access to material where such conduct is 
        prohibited by law.
    (m) Rule of Construction.--Subsections (a), (b), (c), and 
(d) are intended to describe separate and distinct functions 
for purposes of analysis under this section. Whether a service 
provider qualifies for the limitation on liability in any one 
such subsection and shall be based solely on the criteria in 
each such subsection and shall not affect a determination of 
whether such service provider qualifies for the limitations on 
liability under any other such subsection.

           *       *       *       *       *       *       *


        CHAPTER 12--COPYRIGHT PROTECTION AND MANAGEMENT SYSTEMS

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

Sec. 1201. Circumvention of copyright protection systems

    (a) Violations Regarding Circumvention of Technological 
Protection Measures.--(1) No person shall circumvent a 
technological protection measure that effectively controls 
access to a work protected under this title.
    (2) No person shall manufacture, import, offer to the 
public, provide or otherwise traffic in any technology, 
product, service, device, component, or part thereof that--
          (A) is primarily designed or produced for the purpose 
        of circumventing a technological protection measure 
        that effectively controls access to a work protected 
        under this title;
          (B) has only limited commercially significant purpose 
        or use other than to circumvent a technological 
        protection measure that effectively controls access to 
        a work protected under this title; or
          (C) is marketed by that person or another acting in 
        concert with that person with that person's knowledge 
        for use in circumventing a technological protection 
        measure that effectively controls access to a work 
        protected under this title.
    (3) As used in this subsection--
          (A) to ``circumvent a technological protection 
        measure'' means to descramble a work, to decrypt an 
        encrypted work, or otherwise to avoid, bypass, remove, 
        deactivate, or impair a technological protection 
        measure, without the authority of the copyright owner; 
        and
          (B) a technological protection measure ``effectively 
        controls access to a work'' if the measure, in the 
        ordinary course of its operation, requires the 
        application of information, or a process or a 
        treatment, with the authority of the copyright owner, 
        to gain access to the work.
    (b) Additional Violations.--(1) No person shall 
manufacture, import, offer to the public, provide, or otherwise 
traffic in any technology, product, service, device, component, 
or part thereof that--
          (A) is primarily designed or produced for the purpose 
        of circumventing protection afforded by a technological 
        protection measure that effectively protects a right of 
        a copyright owner under this title in a work or a 
        portion thereof;
          (B) has only limited commercially significant purpose 
        or use other than to circumvent protection afforded by 
        a technological protection measure that effectively 
        protects a right of a copyright owner under this title 
        in a work or a portion thereof; or
          (C) is marketed by that person or another acting in 
        concert with that person with that person's knowledge 
        for use in circumventing protection afforded by a 
        technological protection measure that effectively 
        protects a right of a copyright owner under this title 
        in a work or a portion thereof.
    (2) As used in this subsection--
          (A) to ``circumvent protection afforded by a 
        technological protection measure'' means avoiding, 
        bypassing, removing, deactivating, or otherwise 
        impairing a technological protection measure; and
          (B) a technological protection measure ``effectively 
        protects a right of a copyright owner under this 
        title'' if the measure, in the ordinary course of its 
        operation, prevents, restricts, or otherwise limits the 
        exercise of a right of a copyright owner under this 
        title.
    (c) Importation.--The importation into the United States, 
the sale for importation, or the sale within the United States 
after importation by the owner, importer, or consignee of any 
technology, product, service, device, component, or part 
thereof as described in subsection (a) or (b) shall be 
actionable under section 337 of the Tariff Act of 1930 (19 
U.S.C. 1337).
    (d) Other Rights, Etc., Not Affected.--(1) Nothing in this 
section shall affect rights, remedies, limitations, or defenses 
to copyright infringement, including fair use, under this 
title.
    (2) Nothing in this section shall enlarge or diminish 
vicarious or contributory liability for copyright infringement 
in connection with any technology, product, service, device, 
component or part thereof.
    (3) Nothing in this section shall require that the design 
of, or design and selection of parts and components for, a 
consumer electronics, telecommunications, or computing product 
provide for a response to any particular technological 
protection measure, so long as such part or component or the 
product, in which such part or component is integrated, does 
not otherwise fall within the prohibitions of subsections 
(a)(2) or (b)(1).
    (e) Exemption for Nonprofit Libraries, Archives, and 
Educational Institutions.--(1) A nonprofit library, archives, 
or educational institution which gains access to a commercially 
exploited copyrighted work solely in order to make a good faith 
determination of whether to acquire a copy of that work for the 
sole purpose of engaging in conduct permitted under this title 
shall not be in violation of subsection (a)(1). A copy of a 
work to which access has been gained under this paragraph--
          (A) may not be retained longer than necessary to make 
        such good faith determination; and
          (B) may not be used for any other purpose.
    (2) The exemption made available under paragraph (1) shall 
only apply with respect to a work when an identical copy of 
that work is not reasonably available in another form.
    (3) A nonprofit library, archives, or educational 
institution that willfully for the purpose of commercial 
advantage or financial gain violates paragraph (1)--
          (A) shall, for the first offense, be subject to the 
        civil remedies under section 1203; and
          (B) shall, for repeated or subsequent offenses, in 
        addition to thecivil remedies under section 1203, 
forfeit the exemption provided under paragraph (1).
    (4) This subsection may not be used as a defense to a claim 
under subsection (a)(2) or (b), nor may this subsection permit 
a nonprofit library, archives, or educational institution to 
manufacture, import, offer to the public, provide or otherwise 
traffic in any technology which circumvents a technological 
protection measure.
    (5) In order for a library or archives to qualify for the 
exemption under this subsection, the collections of that 
library or archives shall be--
          (A) open to the public;
          (B) available not only to researchers affiliated with 
        the library or archives or with the institution of 
        which it is a part, but also to other persons doing 
        research in a specialized field.
    (f) Law Enforcement and Intelligence Activities.--This 
section does not prohibit any lawfully authorized 
investigative, protective, or intelligence activity of an 
officer, agent or employee of the United States, a State, or a 
political subdivision of a State, or a person acting pursuant 
to a contract with such entities.
    (g) Notwithstanding the provisions of subsection 
1201(a)(1), a person who has lawfully obtained the right to use 
a copy of a computer program may circumvent a technological 
protection measure that effectively controls access to a 
particular portion of that program for the sole purpose of 
identifying and analyzing those elements of the program that 
are necessary to achieve interoperability of an independently 
created computer program with other programs, and that have not 
previously been readily available to the person engaging in the 
circumvention, to the extent any such acts of identification 
and analysis do not constitute infringement under this title.
    (h) Notwithstanding the provisions of subsections 
1201(a)(2) and (b), a person may develop and employ 
technological means to circumvent for the identification and 
analysis described in subsection (g), or for the limited 
purpose of achieving interoperability of an independently 
created computer program with other programs, where such means 
are necessary to achieve such interoperability, to the extent 
that doing so does not constitute infringement under this 
title.
    (i) The information acquired through the acts permitted 
under subsection (g), and the means permitted under subsection 
(h), may be made available to others if the person referred to 
in subsections (g) or (h) provides such information or means 
solely for the purpose of achieving interoperability of an 
independently created computer program with other programs, and 
to the extent that doing so does not constitute infringement 
under this title, or violate applicable law other than this 
title.
    (j) For purposes of subsections (g), (h) and (i), the term 
``interoperability'' means the ability of computer programs to 
exchange information, and for such programs mutually to use the 
information which has been exchanged.
    (k) In applying subsection (a) to a component or part, the 
court may consider the necessity for its intended and actual 
incorporation in a technology, product, service or device, 
which (i) does not itself violate the provisions of this 
chapter and (ii) has the sole purpose to prevent the access of 
minors to material on the Internet.

Sec. 1202. Integrity of copyright management information

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

Sec. 1203. Civil remedies

    (a) Civil Actions.--Any person injured by a violation of 
section 1201 or 1202 may bring a civil action in an appropriate 
United States district court for such violation.
    (b) Powers of the Court.--In an action brought under 
subsection (a), the court--
          (1) may grant temporary and permanent injunctions on 
        such terms as it deems reasonable to prevent or 
        restrain a violation;
          (2) at any time while an action is pending, may order 
        the impounding, on such terms as it deems reasonable, 
        or any device or product that is in the custody or 
        control of the alleged violator and that the court has 
        reasonable cause to believe was involved in a 
        violation;
          (3) may award damages under subsection(c);
          (4) in its discretion may allow the recovery of costs 
        by or against any party other than the United States or 
        an officer thereof;
          (5) in its discretion may award reasonable attorney's 
        fees to the prevailing party; and
          (6) may, as part of a final judgment or decree 
        finding a violation, order the remedial modification or 
        the destruction of any device or product involved in 
        the violation that is in the custody or control of the 
        violator or has been impounded under paragraph (2).
    (c) Award of Damages.--
          (1) In general.--Except as otherwise provided in this 
        chapter, a person committing a violation of section 
        1201 or 1202 is liable for either--
                  (A) the actual damages and any additional 
                profits of the violator, as provided in 
                paragraph (2), or
                  (B) statutory damages, as provided in 
                paragraph (3).
          (2) Actual damages.--The court shall award to the 
        complaining party the actual damages suffered by the 
        party as a result of the violation, and any profits of 
        the violator that are attributable to the violation and 
        are not taken into account in computing the actual 
        damages, if the complaining party elects such damages 
        at any time before final judgment is entered.
          (3) Statutory damages.--
                  (A) At any time before final judgment is 
                entered, a complaining party may elect to 
                recover an award of statutory damages for each 
                violation of section 1201 in the sum of not 
                less than $200 or more than $2,500 per act of 
                circumvention, device, product, component, 
                offer, or performance of service, as the court 
                considers just.
                  (B) At any time before final judgment is 
                entered, a complaining party may elect to 
                recover an award of statutory damages for each 
                violation of section 1202 in the sum of not 
                less than $2,500 or more than $25,000.
          (4) Repeated violations.--In any case in which the 
        injured party sustains the burden of proving, and the 
        court finds, that a person has violated section 1201 or 
        1202 within three years after a final judgment was 
        entered against the person for another such violation, 
        the court may increase the award of damages up to 
        triple the amount that would otherwise be awarded, as 
        the court considers just.
          (5) Innocent violations.--
                  (A) In general.--The court in its discretion 
                may reduce or remit the total award of damages 
                in any case in which the violator sustains the 
                burden of proving, and the court finds, that 
                the violator was not aware and had no reason to 
                believe that its acts constituted a violation.
                  (B) Nonprofit library, archives, or 
                educational institutions.--In the case of a 
                nonprofit library, archives, or educational 
                institution, the court shall remit damages in 
                any case in which the library archives, or 
                educational institution sustains the burden of 
                proving, and the court finds, that the library, 
                archives, or educational institution was not 
                aware and had no reason to believe that its 
                acts constituted a violation.

Sec. 1204. Criminal offenses and penalties

    (a) In General.--Any person who violates section 1201 or 
1202 willfully and for purposes of commercial advantage or 
private financial gain--
          (1) shall be fined not more than $500,000 or 
        imprisoned for not more than 5 years, or both for the 
        first offense; and
          (2) shall be fined not more than $1,000,000 or 
        imprisoned for not more than 10 years, or both for any 
        or subsequent offense.
    (b) Limitation for Nonprofit Library, Archives, or 
Educational Institution.--Subsection (a) shall not apply to a 
nonprofit library, archives, or educational institution.
    (c) Statute of Limitations.--Notwithstanding section 507(a) 
of this title, no criminal proceeding shall be brought under 
this section unless such proceeding is commenced within five 
years after the cause of action arose.

Sec. 1205. Savings Clause

    Nothing in this chapter abrogates, diminishes or weakens 
the provisions of, nor provides any defense or element or 
mitigation in a criminal prosecution or civil action under, any 
federal or state law that prevents the violation of the privacy 
of an individual in connection with the individual's use of the 
Internet.

                                
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