[House Report 106-216]
[From the U.S. Government Publishing Office]



106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    106-216

======================================================================



 
               COPYRIGHT DAMAGES IMPROVEMENT ACT OF 1999

                                _______


  July 1, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 1761]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 1761) to amend provisions of title 17, United States 
Code, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill as amended do 
pass.

                           TABLE OF CONTENTS

                                                                  

                                                                 Page
The Amendment..............................................           1
Purpose and Summary........................................           2
Background and Need for the Legislation....................           2
Hearings...................................................           4
Committee Consideration....................................           4
Committee on Government Reform Findings....................           5
New Budget Authority and Tax Expenditures..................           5
Congressional Budget Office Cost Estimate..................           5
Constitutional Authority Statement.........................           6
Section-by-Section Analysis................................           6
Changes in Existing Law Made by the Bill, as Reported......           9

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Copyright Damages Improvement Act of 
1999''.

SEC. 2. STATUTORY DAMAGES ENHANCEMENT.

    Section 504(c) of title 17, United States Code, is amended--
            (1) in paragraph (1)--
                    (A) by striking ``$500'' and inserting ``$750''; 
                and
                    (B) by striking ``$20,000'' and inserting 
                ``$30,000''; and
            (2) in paragraph (2)--
                    (A) by inserting ``(A)'' after ``(2)'';
                    (B) by striking ``$100,000'' and inserting 
                ``$300,000'';
                    (C) by inserting after the second sentence the 
                following:
            ``(B) In a case where the copyright owner demonstrates that 
        the infringement was part of a repeated pattern or practice of 
        infringement, the court may increase the award of statutory 
        damages to a sum of not more than $250,000 per work.''; and
                    (D) by striking ``The court shall remit statutory 
                damages'' and inserting the following:
            ``(C) The court shall remit statutory damages''.

SEC. 3. SENTENCING COMMISSION GUIDELINES.

    Section 2(g) of the No Electronic Theft (NET) Act (28 U.S.C. 994 
note) is amended by striking paragraph (2) and inserting the following:
    ``(2) In implementing paragraph (1), the Sentencing Commission 
shall amend the guideline applicable to criminal infringement of a 
copyright or trademark to provide an enhancement based upon the retail 
price of the legitimate items that are infringed upon and the quantity 
of the infringing items. To the extent the conduct involves a violation 
of section 2319A of title 18, United States Code, the enhancement shall 
be based upon the retail price of the infringing items and the quantity 
of the infringing items.
    ``(3) Paragraph (1) shall be implemented not later than 3 months 
after the later of--
            ``(A) the first day occurring after May 20, 1999, or
            ``(B) the first day after the date of the enactment of this 
        paragraph,
on which sufficient members of the Sentencing Commission have been 
confirmed to constitute a quorum.
    ``(4) The Commission shall promulgate the guidelines or amendments 
provided for under this section in accordance with the procedures set 
forth in section 21(a) of the Sentencing Act of 1987, as though the 
authority under that Act had not expired.''.

                          Purpose and Summary

    The purpose of H.R. 1761 is to provide more stringent 
deterrents to copyright infringement and stronger enforcement 
of the laws enacted to protect intellectual property rights. 
H.R. 1761 accomplishes this by increasing the statutory 
penalties in the Copyright Act for copyright infringement, 
creating a new statutory penalty for situations where 
infringement is part of a ``repeated pattern or practice'' of 
infringement, and clarifying Congress' intent that the United 
States Sentencing Commission ensure that the sentencing 
guideline for intellectual property offenses provide for 
consideration of the retail price of the legitimate infringed-
upon item and the quantity of infringing items in order to make 
the guideline sufficiently stringent to deter such crime.

                Background and Need for the Legislation

    Section 106 of the Copyright Act (Title 17 of the U.S. 
Code) gives the owner of a copyright the `` . . . exclusive 
rights . . . to reproduce . . . [and] distribute copies of . . 
. the copyrighted work. . . . '' An individual who violates any 
of these exclusive rights is an infringer, and may be subject 
to civil and criminal penalties set forth in Chapter 5 of the 
Act and section 2319 of Title 18.
    Notwithstanding these penalties, copyright piracy of 
intellectual property flourishes, assisted in large part by 
today's world of advanced technologies. For example, industry 
groups estimate that counterfeiting and piracy of computer 
software cost the affected copyright holders more than $11 
billion last year (others believe the figure is closer to $20 
billion). In some countries, software piracy rates are as high 
as 97% of all sales. The U.S. rate is far lower (25%), but the 
dollar losses ($2.9 billion) are the highest worldwide. The 
effect of this volume of theft is substantial: lost U.S. jobs, 
lost wages, lower tax revenue, and higher prices for honest 
purchasers of copyrighted software.
    Unfortunately, the potential for this problem to worsen is 
great. By the turn of the century the Internet is projected to 
have more than 200 million users, and the development of new 
technology will create additional incentive for copyright 
thieves to steal protected works. The advent of digital video 
discs, for example, will enable individuals to store far more 
material than on conventional discs and, at the same time, 
produce perfect secondhand copies. As long as the relevant 
technology evolves in this way, more piracy will ensue. Many 
computer users are either ignorant that copyright laws apply to 
Internet activity, or they simply believe that they will not be 
caught or prosecuted for their conduct. Also, many infringers 
do not consider the current copyright infringement penalties a 
real threat and continue infringing, even after a copyright 
owner puts them on notice that their actions constitute 
infringement and that they should stop the activity or face 
legal action. In light of this disturbing trend, it is manifest 
that Congress respond appropriately with updated penalties to 
dissuade such conduct. H.R. 1761 increases copyright penalties 
to have a significant deterrent effect on copyright 
infringement.
    Notwithstanding the statutory penalties for copyright 
infringement, enforcement of those penalties has been minimal. 
During the first session of the 105th Congress, H.R. 2265, the 
``No Electronic Theft Act'' (NET Act) was enacted into law.\1\ 
The NET Act reversed the practical consequences of United 
States v. LaMacchia, 871 F. Supp. 535 (D. Mass. 1994), by 
criminalizing computer theft of copyrighted works, whether or 
not the defendant derives a direct financial benefit from the 
act(s) of misappropriation. However, since the enactment of the 
NET Act in December 1997, there have been no prosecutions 
brought by the Department of Justice under the Act. This is 
important because in order to be successful in the battle 
against Internet piracy not only must Congress enact 
legislation giving legal recourse to copyright owners but those 
laws must be implemented by the appropriate law enforcement 
agencies.
---------------------------------------------------------------------------
    \1\ Pub. L. No. 105-47 (December 16, 1997.)
---------------------------------------------------------------------------
    In May 1999, during hearings on enforcement of the NET Act, 
representatives of the Department of Justice and the copyright 
industries testified that the current sentencing guideline--
because it is based solely on the value of the infringing 
items--significantly underrepresents the degree of economic 
harm inflicted by copyright and trademark crimes.
    Sentences for the offenses of criminal copyright 
infringement and trademark counterfeiting are governed by a 
sentencing guideline designated as Sec. 2B5.3 of the United 
States Sentencing Commission Guidelines Manual. This guideline 
sets a Base Offense Level of 6, the same as for fraud or theft 
offenses involving a loss between $1,000 and $2,000. The 
guideline also establishes, as the sole aggravating ``Specific 
Offense Characteristic,'' that if ``the retail value of the 
infringing items exceeded $2,000,'' then the base level is to 
be increased by the corresponding number of levels from the 
monetary loss table in the sentencing guideline for fraud 
offenses.
    The witnesses from the Department of Justice and the 
copyright industries testified that the sentences imposed under 
this guideline are too low to deter individuals from trademark 
counterfeiting and copyright piracy; indeed, according to the 
Sentencing Commission, approximately 45 percent of intellectual 
property offenders receive a sentence of probation without any 
requirement of confinement. Department of Justice officials 
reported that these low sentences operate as a disincentive for 
the federal government to commit resources to investigating and 
prosecuting intellectual property cases, and that few 
prosecutions and low sentences for those cases that are 
prosecuted have contributed to the perception of intellectual 
property crime as a high profit, low risk venture.
    In a further attempt to resolve this problem, H.R. 1761 
clarifies how Congress intends for the Sentencing Commission to 
implement the NET Act to provide sufficiently stringent 
sentencing guidelines to deter intellectual property crime. It 
is vital that the United States recognizes intellectual 
property rights and provides strong protection and enforcement 
against violations of those rights. Federal law enforcement 
must be armed with effective tools with which to combat this 
problem. By doing that, the United States will protect its 
valuable intellectual property and encourage other countries to 
enact and enforce strong copyright protection laws.

                                Hearings

    The Committee's Subcommittee on Courts and Intellectual 
Property held a hearing on H.R. 1761 on May 12, 1999. Testimony 
was received from Kevin V. DiGregory, Deputy Assistant Attorney 
General, Computer Crimes Division, U.S. Department of Justice; 
Timothy B. McGrath, Interim Staff Director, U.S. Sentencing 
Commission; Batur Oktay, Corporate Counsel, Adobe Systems, 
Inc., on behalf of the Business Software Alliance (BSA); Tim 
Starback, Emigre, Inc., on behalf of the Software and 
Information Industry Association (SIIA); and Tod Cohen, Vice 
President and Counsel, New Technology, Motion Picture 
Association of America (MPAA).

                        Committee Consideration

    On May 20, 1999, the Subcommittee on Courts and 
Intellectual Property met in open session and ordered favorably 
reported the bill H.R. 1761, as amended, by a voice vote, a 
quorum being present. On May 26, 1999, the Committee met in 
open session and ordered favorably reported the bill H.R. 1761 
with an amendment in the nature of a substitute by voice vote, 
a quorum being present.

                Committee on Government Reform Findings

    No findings or recommendations of the Committee on 
Government Reform were received as referred to in clause 
3(c)(4) of Rule XIII of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budget authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of Rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 1761, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 403 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 7, 1999.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1761, the 
Copyright Damages Improvement Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark Hadley, 
who can be reached at 226-2860.
            Sincerely,
                                  Dan L. Crippen, Director.
H.R. 1761--Copyright Damages Improvement Act of 1999.
    CBO estimates that enacting this bill would have no 
significant impact on the federal budget. H.R. 1761 would not 
affect direct spending or receipts; therefore, pay-as-you-go 
procedures would not apply. The bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act and would not affect the budgets 
of state, local, or tribal governments.
    Under current law, a copyright owner may choose to recover 
statutory damages for infringement rather than actual damages 
and lost profits. H.R. 1761 would increase statutory damages 
and establish new damages for cases in which the copyright 
owner demonstrates that the infringement was part of a repeated 
pattern or practice of infringement. Damages for copyright 
infringement are paid by one private party to another and thus 
do not affect the federal budget.
    Under the No Electronic Theft Act (Public Law 105-147), 
when the United States Sentencing Commission establishes 
sentencing guidelines for cases of copyright infringement, the 
commission must consider the retail value and the quantity of 
the items. H.R. 1761 would clarify that in most cases the 
commission must consider the retail value of the legitimate 
items rather than the value of the infringing items. If the 
commission elects to enhance prison sentences for copyright 
infringement, federal costs would rise, subject to the 
availability of appropriations, to accommodate more prisoners. 
CBO expects that any increase in discretionary spending over 
the next five years is likely to be very small.
    The CBO staff contact is Mark Hadley, who can be reached at 
226-2860. This estimate was approved by Paul N. Van de Water, 
Assistant Director for Budget Analysis.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of the Rule XIII of the Rules of 
the House of Representatives, the Committee finds the authority 
for this legislation in Article I, section 8, clause 8 of the 
Constitution.

                      Section-by-Section Analysis

Sec. 1. Short Title.
    This section states that H.R. 1761 may be cited as the 
``Copyright Damages Improvement Act of 1999''.
Sec. 2. Statutory Damages Enhancement.
    Section 2 makes a number of changes to existing statutory 
damage awards in section 504 of title 17, United States Code. 
The general purpose of the amendments is to strengthen the 
deterrent effect of statutory damages on copyright 
infringement. Copyrighted works are some of the United States' 
most valuable products. In a world of increasing global 
utilization and distribution of intellectual property, the 
United States must take the lead in establishing a legal regime 
that provides sufficient protection for copyrighted works and 
encourages other countries to follow suit. Current statutory 
damage levels were last adjusted in 1988 and do not take into 
account inflation in the intervening years, increased 
utilization of certain types of intellectual property, or 
current trends in global distribution and electronic commerce. 
Courts and juries must be able to render awards that deter 
others from infringing intellectual property rights. It is 
important that the cost of infringement substantially exceed 
the costs of compliance, so that persons who use or distribute 
intellectual property have a strong incentive to abide by the 
copyright laws.
    The section makes a number of changes to section 504 of 
title 17, United States Code. First, section 504(c)(1) is 
amended to adjust the minimum statutory damage amount for 
``non-willful'' infringement from $500 to $750. This change 
adjusts the minimum amount upward to reflect inflation over the 
past eleven years and to otherwise preserve the deterrent 
effect of the statutory damage penalties.
    Second, section 504(c)(1) is amended to adjust the maximum 
statutory damage amount for ``non-willful'' infringement from 
$20,000 to $30,000. This change as well adjusts the maximum 
amount upward to reflect inflation over the past eleven years 
and to otherwise preserve the deterrent effect of the statutory 
damage penalties.
    Third, section 504(c)(2) is amended by redesignating the 
first two sentences as subparagraph ``(A)'' and by increasing 
the maximum damage amount for willful infringement from 
$100,000 to $300,000. This substantial increase reflects not 
only intervening inflation but also the determination that 
increased global utilization and distribution of intellectual 
property and electronic commerce warrant enhanced deterrence in 
order to prevent copyright infringement. This higher damage 
amount is fully consistent with other intellectual property 
precedents. For example, maximum copyright statutory damages 
for certain violations of the ``satellite compulsory license'' 
are $250,000,\2\ and the maximum penalty for willful 
infringement of a trademark is $1 million.\3\ It should be 
noted that the minimum damage amount for a person or entity 
that shows that it was an ``innocent infringer'' has not been 
changed. Thus, in a case where the infringer sustains the 
burden of proving, and the court finds that such infringer was 
not aware and had no reason to believe that his or her acts 
constituted an infringement of copyright, the court in its 
discretion may continue to reduce the award of statutory 
damages to a sum of not less than $200.
---------------------------------------------------------------------------
    \2\ 17 U.S.C. Sec. 119(a)(5)(B).
    \3\ 15 U.S.C. Sec. 1117(c)(2).
---------------------------------------------------------------------------
    Fourth, a new subparagraph (B) is added to section 
504(c)(2) establishing a maximum statutory damage amount of 
$250,000 for situations where the infringement was part of a 
``repeated pattern or practice'' of infringement. This 
provision conforms the statutory damage categories available 
for infringement of all rights protected by the Copyright Act 
to the ``pattern or practice'' infringement damages of up to 
$250,000 for violations of the public performance right in the 
context of the section 119 ``satellite compulsory license.''
    In creating a new category of statutory damages for 
``repeated pattern or practice'' infringement, the Committee is 
acting to address situations in which the infringing activity 
constitutes a course of conduct, not an isolated occurrence. A 
repeated pattern or practice of infringement is inherently more 
harmful to the rights of copyright holders and to the interests 
the copyright laws are designed to protect. Such a pattern or 
practice should therefore subject the infringer to a higher 
range of statutory damages than in the case of a single act of 
infringement. In some instances, persons who are determined to 
infringe are insufficiently deterred by a first brush with the 
copyright laws to cease their infringing activity. In other 
cases, persons engage in infringing activity over a period of 
time without being detected by the copyright owner. It is 
intended that these higher damage awards be made available in 
these and other circumstances where an infringer's activities 
arise to a ``pattern or practice,'' in order to bring greater 
deterrence to bear and to promote respect for the law and for 
the rights of creators and copyright owners.
    Finally, a technical and conforming amendment is made to 
section 504(c)(2) by establishing a new subparagraph (C).
Sec. 3. Sentencing Commission Guidelines.
    Section 3 amends section 2(g)(2) of the ``No Electronic 
Theft Act'' (NET Act), Pub. L. No. 105-147 (December 16, 1997). 
Section 2(g)(1) is a Directive to the Sentencing Commission. 
The Directive instructs the Commission to ensure that the 
applicable guideline range for intellectual property crimes be 
sufficiently stringent to deter such crimes. Section (2)(g)(2) 
instructs the Commission that in implementing paragraph (g)(1), 
the Commission must ensure that the guidelines provide for 
consideration of the retail value and quantity of the items 
with respect to which the crime against intellectual property 
was committed. Section 3 of H.R. 1761 amends paragraph (g)(2) 
to state: ``In implementing paragraph (1), the Sentencing 
Commission shall amend the guideline applicable to criminal 
infringement of a copyright or trademark to provide an 
enhancement based upon the retail price of the legitimate items 
that are infringed upon and the quantity of the infringing 
items. To the extent the conduct involves a violation of 
section 2319A of title 18, United States Code, the enhancement 
shall be based upon the retail price of the infringing items.''
    H.R. 1761 makes no changes in paragraph (g)(1) of the NET 
Act Directive. The Committee's clear intent is that sentences 
for intellectual property crimes should be increased 
significantly from their present level. The amendment to 
paragraph (g)(2) reinforces the Committee's intent that the 
current guideline, with its reliance only on the value of the 
infringing item, should be replaced with a guideline based on 
the retail price of the infringed upon (legitimate) items and 
the quantity of the infringing items in cases arising under 18 
U.S.C. 2318, 2319, and 2320.\4\ The Committee believes that the 
retail price of the legitimate items that are infringed upon 
(multiplied by the quantity of the infringing items) is a more 
accurate measure of the economic harm caused by these offenses 
than the measure used by the current guideline.
---------------------------------------------------------------------------
    \4\ In Sec. 2319A cases, the enhancement must be based on the 
retail value of the infringing item because there is no commercially-
available, genuine counterpart for the types of unauthorized recordings 
of live musical performances which this section prohibits. If the 
criminal conduct did not occur for commercial purpose or private 
financial gain, the ``retail price'' should be determined from the 
price of comparable items.
---------------------------------------------------------------------------
    There may be cases in which multiplying the retail price of 
the legitimate item by the quantity of infringing items may 
overstate the economic harm. For example, a defendant selling a 
counterfeit watch on a street corner for a small fraction of 
its normal selling price may not warrant a sentence based 
purely on multiplying the number of sales by the retail price 
of the legitimate watch. This Directive is not intended to 
preclude the Commission from developing a guideline that 
permits reasonable adjustments to the monetary calculation in 
this type of case, or that provides other appropriate 
adjustments, aggravating or mitigating, to sufficiently deter 
copyright and trademark offenses and to meet the other purposes 
of sentencing as set forth in section 3553(a) of title 18, 
United States Code.\5\ This does not change the fact that the 
Commission must abide by the Directive, and adopt a guideline 
that, overall, has the effect of increasing the sentences for 
violations of intellectual property crimes, whether involving 
copyrights or trademarks.
---------------------------------------------------------------------------
    \5\ The Committee amended H.R. 1761 to take a broader approach than 
the version of the bill reported by the Subcommittee on Courts and 
Intellectual Property, which directed the Commission to use ``the 
retail price of the infringed-upon goods and quantity of the items as 
the exclusive basis for determining the total retail value of those 
items.'' (Emphasis added).
---------------------------------------------------------------------------
    Section 3 of H.R. 1761 also grants the Commission emergency 
amendment authority necessary to amend guideline Sec. 2B5.3, 
regardless of established amendment cycles. Section 3 also 
imposes a deadline on the Commission to implement paragraph 
(2)(g) of ``not later than 3 months after the later of (A) the 
first day occurring after May 20, 1999, or (B) the first day 
after the date of the enactment of this paragraph, on which 
sufficient members of the Sentencing Commission have been 
confirmed to constitute a quorum.'' The Committee believes that 
expeditious action is necessary given the magnitude of the 
growing problem of crimes against intellectual property.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

              SECTION 504 OF TITLE 17, UNITED STATES CODE

Sec. 504. Remedies for infringement: Damages and profits

    (a)  * * *

           *       *       *       *       *       *       *

    (c) Statutory Damages.--
            (1) Except as provided by clause (2) of this 
        subsection, the copyright owner may elect, at any time 
        before final judgment is rendered, to recover, instead 
        of actual damages and profits, an award of statutory 
        damages for all infringements involved in the action, 
        with respect to any one work, for which any one 
        infringer is liable individually, or for which any two 
        or more infringers are liable jointly and severally, in 
        a sum of not less than [$500] $750 or more than 
        [$20,000] $30,000 as the court considers just. For the 
        purposes of this subsection, all the parts of a 
        compilation or derivative work constitute one work.
            (2)(A) In a case where the copyright owner sustains 
        the burden of proving, and the court finds, that 
        infringement was committed willfully, the court in its 
        discretion may increase the award of statutory damages 
        to a sum of not more than [$100,000] $300,000. In a 
        case where the infringer sustains the burden of 
        proving, and the court finds, that such infringer was 
        not aware and had no reason to believe that his or her 
        acts constituted an infringement of copyright, the 
        court in its discretion may reduce the award of 
        statutory damages to a sum of not less than $200. (B) 
        In a case where the copyright owner demonstrates that 
        the infringement was part of a repeated pattern or 
        practice of infringement, the court may increase the 
        award of statutory damages to a sum of not more than 
        $250,000 per work. [The court shall remit statutory 
        damages] (C) The court shall remit statutory damages in 
        any case where an infringer believed and had reasonable 
        grounds for believing that his or her use of the 
        copyrighted work was a fair use under section 107, if 
        the infringer was: (i) an employee or agent of a 
        nonprofit educational institution, library, or archives 
        acting within the scope of his or her employment who, 
        or such institution, library, or archives itself, which 
        infringed by reproducing the work in copies or 
        phonorecords; or (ii) a public broadcasting entity 
        which or a person who, as a regular part of the 
        nonprofit activities of a public broadcasting entity 
        (as defined in subsection (g) of section 118) infringed 
        by performing a published nondramatic literary work or 
        by reproducing a transmission program embodying a 
        performance of such a work.
                              ----------                              


                SECTION 2 OF THE NO ELECTRONIC THEFT ACT

SEC. 2. CRIMINAL INFRINGEMENT OF COPYRIGHTS.

    (a)  * * *

           *       *       *       *       *       *       *

    (g) Directive to Sentencing Commission.--(1)  * * *
    [(2) In implementing paragraph (1), the Sentencing 
Commission shall ensure that the guidelines provide for 
consideration of the retail value and quantity of the items 
with respect to which the crime against intellectual property 
was committed.]
    (2) In implementing paragraph (1), the Sentencing 
Commission shall amend the guideline applicable to criminal 
infringement of a copyright or trademark to provide an 
enhancement based upon the retail price of the legitimate items 
that are infringed upon and the quantity of the infringing 
items. To the extent the conduct involves a violation of 
section 2319A of title 18, United States Code, the enhancement 
shall be based upon the retail price of the infringing items 
and the quantity of the infringing items.
    (3) Paragraph (1) shall be implemented not later than 3 
months after the later of--
            (A) the first day occurring after May 20, 1999, or
            (B) the first day after the date of the enactment 
        of this paragraph,
on which sufficient members of the Sentencing Commission have 
been confirmed to constitute a quorum.
    (4) The Commission shall promulgate the guidelines or 
amendments provided for under this section in accordance with 
the procedures set forth in section 21(a) of the Sentencing Act 
of 1987, as though the authority under that Act had not 
expired.

                                  
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