[House Report 112-312]
[From the U.S. Government Publishing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    112-312

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

 
TO AMEND SECTION 2710 OF TITLE 18, UNITED STATES CODE, TO CLARIFY THAT 
A VIDEO TAPE SERVICE PROVIDER MAY OBTAIN A CONSUMER'S INFORMED, WRITTEN 
 CONSENT ON AN ONGOING BASIS AND THAT CONSENT MAY BE OBTAINED THROUGH 
                              THE INTERNET

                                _______
                                

December 2, 2011.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Smith of Texas, from the Committee on the Judiciary, submitted the 
                               following,

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 2471]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 2471) to amend section 2710 of title 18, United 
States Code, to clarify that a video tape service provider may 
obtain a consumer's informed, written consent on an ongoing 
basis and that consent may be obtained through the Internet, 
having considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
New Budget Authority and Tax Expenditures........................     5
Congressional Budget Office Cost Estimate........................     5
Performance Goals and Objectives.................................     6
Advisory on Earmarks.............................................     6
Section-by-Section Analysis......................................     6
Changes in Existing Law Made by the Bill, as Reported............     6
Additional Views.................................................     7

                             The Amendment

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. AMENDMENT.

  Section 2710(b)(2) of title 18, United States Code, is amended by 
striking subparagraph (B) and inserting the following:
          ``(B) to any person with the informed, written consent 
        (including through an electronic means using the Internet) in a 
        form distinct and separate from any form setting forth other 
        legal or financial obligations of the consumer given at one or 
        both of the following times--
                  ``(i) the time the disclosure is sought; and
                  ``(ii) in advance for a set period of time or until 
                consent is withdrawn by such consumer;''.

                          Purpose and Summary

    H.R. 2471 amends section 2710 of title 18, United States 
Code, to clarify that a video tape service provider may obtain 
a consumer's informed, written consent on an ongoing basis and 
that consent may be obtained through the Internet.

                Background and Need for the Legislation

    In 1988, Congress enacted the Video Privacy Protection Act 
to prohibit video service providers from disclosing personally 
identifiable information except in certain, limited 
circumstances. As a general rule, personally identifiable 
information may only be disclosed with the prior written 
consent of the consumer.
    The impetus for this legislation occurred when a weekly 
newspaper in Washington published a profile of Judge Robert H. 
Bork based on the titles of 146 films his family had rented 
from a video store.\1\ At the time, the Senate Judiciary 
Committee was engaged in hearings on Judge Bork's nomination to 
the Supreme Court. Members of the Judiciary Committee denounced 
the disclosure.
---------------------------------------------------------------------------
    \1\The Bork Tapes, City Paper, Sept. 25-Oct. 1, 1987, at 1.
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    The law prohibits video stores from disclosing ``personally 
identifiable information'' that links the customer or patron to 
particular materials or services. In the event of an 
unauthorized disclosure, an individual may bring a civil action 
for damages.\2\
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    \2\18 U.S.C. Sec. 2710.
---------------------------------------------------------------------------
    The law permits the disclosure of personally identifiable 
information under certain limited circumstances. For example, 
information may be disclosed in response to a court order, and 
companies may sell mailing lists that do not disclose the 
actual selections of their customers. The law also allows 
disclosure with the prior, written consent of the customer and 
preserves the rights of customers and patrons under state and 
local law.\3\
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    \3\Id.
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    When this law was originally enacted in 1988, consumers 
rented movies from brick-and-mortar videos stars such as 
Blockbuster. Today, not only are VHS tapes obsolete, so too are 
traditional video rental stores. The Internet has 
revolutionized how consumers rent and watch movies and 
television programs. Video stores have been replaced with ``on-
demand'' cable services or Internet streaming services that 
allow a customer to watch a movie or TV show from their laptop 
or even their cell phone.
    The Internet has also revolutionized how we share 
information about ourselves with others. In the 1980's, when 
one wished to recommend a movie to friends, they would likely 
call them on the telephone. In the 1990's, they would send an 
email. Today, they post their opinions on their social 
networking page.
    Since 1988, Federal law has authorized video tape service 
providers to share customer information with the ``informed, 
written consent of the consumer at the time the disclosure is 
sought.''\4\ This consent must be obtained each time the 
provider wishes to disclose. No similar restriction exists for 
disclosure of consumer information relating to book or music 
preferences. Requiring consumers to consent to disclosure every 
time it is sought prevents consumers from sharing information 
about their movie preferences through social media sites on an 
ongoing basis.
---------------------------------------------------------------------------
    \4\18 U.S.C. Sec. 2710(b)(2(B).
---------------------------------------------------------------------------
    H.R. 2471 remedies this restriction by amending 18 U.S.C. 
Sec. 2710 to allow consumers to provide their informed, written 
consent once so they can--if they so choose--to continuously 
share their movie or TV show preferences through their social 
media sites. The legislation does not eliminate the requirement 
that consumers ``opt-in'' to this information sharing and it 
maintains the requirement of informed written consent. The bill 
simply allows for a one-time ``opt-in'' with the option for the 
consumer to ``opt-out'' of this sharing agreement at any time.
    This legislation does not change the scope of who is 
covered by the Act, the definition of ``personally identifiable 
information,'' or the privacy standard adopted by Congress when 
the Act was first enacted. Specifically, it preserves the 
requirement that the user affirmatively provide informed, 
written consent.
    The Committee does not intend for this clarification to 
negate in any way existing laws, regulations and practices 
designed to protect the privacy of children on the Internet. As 
always, however, the first line of defense to protecting a 
child's privacy while online is the parents. Social networking 
websites allow users to share personal information about 
themselves with their friends. But used inappropriately, 
personal information can be shared beyond a user's friends. 
Just as parents are responsible for teaching their children not 
to talk to strangers, the Committee expects parents to play an 
act active role in ensuring their children's' proper use of 
social networking or any other websites on the Internet.
    Website operators also share in the responsibility to 
protect consumer privacy, particularly the privacy of children. 
To facilitate this goal, Congress enacted the Children's Online 
Privacy Protection Act\5\, effective April 21, 2000, which 
applies to the online collection of personal information from 
children under 13. Compliance with the Act is overseen by the 
Federal Trade Commission (FTC), which enacted rules governing 
web site operator compliance, including a privacy policy, when 
and how to seek verifiable consent from a parent, and what 
responsibilities an operator has to protect children's privacy 
and safety online.\6\
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    \5\Pub. L. No. 105-277, 112 Stat. 2581-728, codified at 15 U.S.C. 
Sec. Sec. 6501-6506, Oct. 21, 1998.
    \6\How to Comply with the Children's Online Privacy Protection 
Rule, Bureau of Consumer Protection Business Center, Federal Trade 
Commission, Dec. 2006, available at http://business.ftc.gov/documents/
bus45-how-comply-childrens-online-privacy-protection-rule.
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    An operator of commercial website or online service 
directed to children under 13 that collects personal 
information from children or operator of a general website with 
actual knowledge that it is collecting personal information 
from children must comply with the Act.\7\
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    \7\Id.
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    To determine whether a website is directed to children, the 
FTC considers several factors, including the subject matter, 
visual or audio content, the age of models on the site, 
language, whether advertising on the website is directed to 
children, information regarding the age of the actual or 
intended audience, and whether a site uses animated characters 
or other child-oriented features.\8\
---------------------------------------------------------------------------
    \8\Id.
---------------------------------------------------------------------------
    To determine whether an entity is an ``operator'' with 
respect to information collected at a site, the FTC will 
consider who owns and controls the information, who pays for 
the collection and maintenance of the information, what the 
pre-existing contractual relationships are in connection with 
the information, and what role the Web site plays in collecting 
or maintaining the information.\9\
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    \9\Id.
---------------------------------------------------------------------------
    The Act and its regulations apply to individually 
identifiable information about a child that is collected 
online, such as full name, home address, email address, 
telephone number or any other information that would allow 
someone to identify or contact the child. The Act and Rule also 
cover other types of information--for example, hobbies, 
interests and information collected through cookies or other 
types of tracking mechanisms--when they are tied to 
individually identifiable information.\10\
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    \10\Id.
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                                Hearings

    The Committee on the Judiciary held no hearings on H.R. 
2471.

                        Committee Consideration

    On October 13, 2011, the Committee met in open session and 
ordered the bill H.R. 2471 favorably reported, with an 
amendment, by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 2471.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary 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. 2471, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 25, 2011.
Hon. Lamar Smith, 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. 2471, a bill to 
amend section 2710 of title 18, United States Code, to clarify 
that a video tape service provider may obtain a consumer's 
informed, written consent on an ongoing basis and that consent 
may be obtained through the Internet.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark 
Grabowicz (for Federal costs), who can be reached at 226-2860, 
and Paige Piper/Bach (for the impact on the private sector), 
who can be reached at 226-2940.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 2471--A bill to amend section 2710 of title 18, United States 
        Code, to clarify that a video tape service provider may obtain 
        a consumer's informed, written consent on an ongoing basis and 
        that consent may be obtained through the Internet.



As ordered reported by the House Committee on the Judiciary on 
                        October 13, 2011




    Current law permits businesses that rent, sell, or deliver 
audio visual materials to disclose personal information about 
customers to other persons if the customer grants written 
consent. H.R. 2471 would clarify that such consent may be given 
beforehand through the use of the Internet. CBO estimates that 
implementing the bill would have no significant cost to the 
Federal Government. Enacting the bill would not affect direct 
spending or revenues; therefore, pay-as-you-go procedures do 
not apply.
    H.R. 2471 contains no intergovernmental mandates as defined 
in the Unfunded Mandated Reform Act (UMRA) and would not affect 
the budgets of State, local, or tribal governments.
    H.R. 2471 would impose a private-sector mandate, as defined 
in the UMRA, by requiring providers of video tape services and 
other entities to use ``distinct and separate'' forms when 
obtaining consent to disclose a consumer's personally 
identifiable information. At the same time the bill would 
benefit providers and other entities by allowing them to obtain 
consent via the Internet, in advance, and only once until 
consent is withdrawn. Current law requires written consent each 
time discloser of a consumer's information is sought. Based on 
information from industry sources, CBO estimates that there 
would be no significant net costs to comply with the mandate; 
thus any costs would fall well below the annual threshold 
established in UMRA for private-sector mandates ($142 million 
in 2011, adjusted annually for inflation).
    The CBO staff contacts for this estimate are Mark Grabowicz 
(for Federal costs) and Paige Piper/Bach (for the impact on the 
private sector). The estimate was approved by Theresa Gullo, 
Deputy Assistant Director for Budget Analysis.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
2471, clarifies that a video tape service provider may obtain a 
consumer's informed, written consent on an ongoing basis and 
that consent may be obtained through the Internet.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 2471 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
Sec. 1: Amendment.
    Section 1 amends section 2710(b)(2) of title 18 to 
authorize consumers, in a form distinct and separate from any 
form setting forth other legal or financial obligations, to 
provide informed, written consent for the sharing of personally 
identifiable information related to movie rentals either (1) at 
the time the disclosure is sought, or (2) in advance of the 
disclosure for a set period of time or until consent is 
withdrawn by the consumer.

         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):

                      TITLE 18, UNITED STATES CODE



           *       *       *       *       *       *       *
PART I--CRIMES

           *       *       *       *       *       *       *


      CHAPTER 121--STORED WIRE AND ELECTRONIC COMMUNICATIONS AND 
TRANSACTIONAL RECORDS ACCESS

           *       *       *       *       *       *       *


Sec. 2710. Wrongful disclosure of video tape rental or sale records

  (a) * * *
  (b) Video Tape Rental and Sale Records.--(1) * * *
  (2) A video tape service provider may disclose personally 
identifiable information concerning any consumer--
          (A) * * *
          [(B) to any person with the informed, written consent 
        of the consumer given at the time the disclosure is 
        sought;]
          (B) to any person with the informed, written consent 
        (including through an electronic means using the 
        Internet) in a form distinct and separate from any form 
        setting forth other legal or financial obligations of 
        the consumer given at one or both of the following 
        times--
                  (i) the time the disclosure is sought; and
                  (ii) in advance for a set period of time or 
                until consent is withdrawn by such consumer;

           *       *       *       *       *       *       *


                            Additional Views

          There is no denying that the computer age has 
        revolutionized our world. Over the past 20 years we 
        have seen remarkable changes in the way each one of us 
        goes about our lives. Our children learn through 
        computers. We bank by machine. We watch movies in our 
        living rooms. These technological innovations are 
        exciting and as a Nation we should be proud of the 
        accomplishments we have made.
          Yet as we continue to move ahead, we must protect 
        time honored values that are so central to this 
        society, particularly our right to privacy. The advent 
        of the computer means not only that we can be more 
        efficient than ever before, but that we have the 
        ability to be more intrusive than ever before. Every 
        day Americans are forced to provide businesses and 
        others personal information without having control over 
        where that information goes . . . These records are a 
        window into our loves, likes, and dislikes.\1\
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    \1\Statement of Senator Paul Simon, 134 Cong. Rec. S 5401 (May 10, 
1988) (quoted in S. Rep. No. 100-599 (1988), The Video Privacy 
Protection Act of 1988, at 6-7)

    Because I believe these words, spoken by Senator Paul Simon 
during debate on the Video Privacy Protection Act (VPPA),\2\ 
are equally applicable today I cannot support H.R. 2471 in its 
current form. The VPPA was passed in 1988 following bipartisan 
outrage over the disclosure and publication of Supreme Court 
nominee Judge Robert Bork's video rental records. Proponents of 
the bill argue that the VPPA is outdated and that changes in 
the commercial video distribution landscape beg for 
modernization. Although the commercial distribution landscape 
has changed the underlying concerns that inspired passage of 
the VPPA are timeless. Indeed, as reflected in the opening 
quote, Congress carefully weighed the interests in furthering 
technological advancement and consumer privacy at the time the 
Act was passed. Privacy and liberty go hand-in-hand and, 
through considered action, may be advanced by technology.
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    \2\18 U.S.C. Sec. 2710.
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    Though well-intentioned, in my opinion H.R. 2471, falls 
short of preserving the time-honored right to privacy embodied 
by the VPPA by surrendering to technological expediency without 
carefully weighing and evaluating the potential consequences of 
the bill's provisions. First, the debate on H.R. 2471 
myopically focused on the online experience of consumers with 
social media like Facebook, neglecting that (a) the bill will 
apply both in the physical and online environments and (b) 
disclosures will be authorized ``to any person,'' not only 
``friends'' on Facebook. Second, there was no evidence 
presented to support the assertion that the public hungers for 
the ``service'' the bill seeks to provide. Third, despite 
claims that the VPPA is outdated, only a single provision was 
``updated,'' leaving more consumer oriented provisions 
untouched. Fourth, no consideration was given to the effect of 
the changes to the VPPA on state laws that afford similar 
protections to consumers. Fifth, I believe that there are 
collateral yet important intellectual property enforcement 
issues under the surface of this debate. Finally, because this 
bill was brought to markup without the benefit of a hearing, I 
believe it is premature to move forward without further 
consideration of these issues. Each of these concerns is 
discussed in greater detail below.

  I. H.R. 2471 WILL APPLY TO ALL ``VIDEO TAPE SERVICE PROVIDERS'' AS 
  DEFINED BY VPPA AND DISCLOSURES WILL BE AUTHORIZED TO ``ANY PERSON''

    During the discussion on H.R. 2471, much emphasis was 
placed on allowing technology to provide a seamless process to 
share video viewing habits on social media in the same manner 
currently in use for music, books and news articles.\3\ But the 
bill, by its own terms, would apply to new and old distribution 
methods alike. Therefore, the consumer could unwittingly become 
the victim of the very scenario that prompted passage of the 
VPPA in the first place. There is nothing in the bill that 
would prevent a newspaper reporter from obtaining the rental or 
viewing history of a consumer who has opted-in to an enduring, 
universal consent to have their viewing records disclosed ``to 
any person.'' Admittedly, a consumer may have the presence of 
mind to reject such an expansive disclosure at her local brick-
and-mortar video store, but her privacy may nonetheless be 
compromised should she grant such permission online. In other 
words, nothing in the bill mandates that the disclosure be 
limited to social media integration. The bill gives carte 
blanche to the video tape service provider, whether online or 
not, to determine who the ``any person'' may be so long as they 
obtain the ``informed'' consent in a conspicuous manner.
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    \3\Much has been made about the presumed disparity in treatment of 
video history as opposed to a consumer's reading lists or musical 
consumption habits. At the time the VPPA was enacted there were no 
comparable commercial music or book rental entities. The Committee 
Report did note, however, that the Senate subcommittee considered and 
``reported a restriction on the disclosure of library borrower records 
. . . [but] was unable to resolve questions regarding the application 
of such a provision for law enforcement.'' S. Rep. No. 100-599 (1988), 
at 8.
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    My concerns are not assuaged, and indeed are exacerbated, 
when consent is sought in the online environment. At a time 
when the broader privacy debate is trending towards 
establishing some baseline privacy protections for consumers 
online\4\, this bill moves in the opposite direction. Although 
there is an opt-out provision in the bill, I do not believe 
that it will adequately address the realities of privacy in 
this age of instant and widespread information dissemination 
and consumption.
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    \4\A Preliminary Federal Trade Commission Staff Report on 
Protecting Consumer Privacy in an Era of Rapid Change: A Proposed 
Framework for Businesses and Policymakers (Dec. 1, 2010), available at 
http://www.ftc.gov/os/2010/12/101201privacyreport.pdf
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    Facebook--the largest social media network -boasts 800 
million users, with the average user having 120 ``friends.'' 
But because Facebook, and most social mediums, are dynamic with 
a user's roster of friends constantly in flux, a consumer's 
consent today to allow ongoing access to their viewing history 
is clearly not informed by who will be their ``friend'' 
tomorrow. Today when online bullying of teen and young adults 
can lead to depression or even suicide, where online predators 
can learn otherwise confidential, private information about 
their prey, I believe we should employ a more deliberative 
process. ``[M]ovie and rating data contains information of a 
more highly personal and sensitive nature. The member's movie 
data exposes a . . . member's personal interest and/or 
struggles with various highly personal issues, including 
sexuality, mental illness, recovery from alcoholism, and 
victimization from incest, physical abuse, domestic violence, 
adultery, and rape.''\5\ We should not cavalierly grant access, 
even if the public demands it.
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    \5\Ryan Singed, ``Netflix Spilled Your Brokeback Mountain Secret, 
Lawsuit Claims,'' Wired, December 17, 2009, available at: http://
www.wired.com/threatlevel/2009/12/netflix-privacy-lawsuit.
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 II. THERE IS NO EVIDENCE THAT THERE IS BROAD PUBLIC SUPPORT FOR THESE 
                     LIMITED AMENDMENTS TO THE VPPA

    Although it is not my practice to publicly name specific 
stakeholders that support or oppose a particular piece of 
legislation, one company has placed itself squarely in the 
center of this debate and its business model, its aspirations 
to integrate with Facebook, and its online history with some of 
the issues at the core of the privacy concerns require specific 
reference. That company is Netflix. I will say at the outset 
that Netflix is a legitimate and reputable company that 
provides a valuable service to its customers. Founded in 1997, 
Netflix is the world's leading Internet subscription service. 
It provides movies and television shows through mail order DVD 
and online streaming services. With 900 employees, Netflix has 
25 million subscribers worldwide.\6\
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    \6\Netflix Company Facts, https://account.netflix.com/MediaCenter/
Facts last visited Nov. 29, 2011).
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    In September 2011, Netflix launched a public campaign in 
support of H.R. 2471, urging its members to contact Congress to 
help bring Facebook sharing to Netflix USA.\7\ Chairman 
Goodlatte suggested during the markup that if I ``go online and 
read the blog posts and so on that exist, the gentleman will 
find that there is a lot of popular public support for this 
because they don't understand why their freedom to do this for 
music and books and a whole host of other types of information 
that they share online is restricted in this case.''\8\ I did. 
And far from the overwhelming outcry for Netflix-Facebook 
integration, I found skepticism and outright rejection of the 
proposed innovation. Three representative comments follow:
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    \7\Netflix has integrated user accounts in Canada and Latin America 
with Facebook, but advised its American customers that the VPPA 
``creates some confusion over our ability to let U.S. members 
automatically share the television shows and movies they watch with 
their friends on Facebook.'' Posting of Michael Drobac to The Netflix 
Blog, ``Help us Bring Facebook Sharing to Netflix USA,'' (Sept. 22, 
2011), http://blog.netflix.com/2011/09/help-us-bring-facebook-sharing-
to.html.
    \8\Transcript of Full Committee Markup Report of H.R. 2471, et 
seq., at 16 (Oct. 13, 2011), available at http://judiciary.house.gov/
hearings/pdf/10%2013%2011%20HR%202471.pdf

        Blogger #1: ``How about we have Congress deal with more 
        important matters than whether I can share what I'm 
        watching on Netflix through Facebook.''\9\
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    \9\The Netflix Blog, supra note 7.

        Blogger #2: ``I agree, who cares! I am not going to 
        watch movies on my [Facebook]. FB has lots of security 
        issues don't need the head aches. [sic] . . . ''\10\
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    \10\Id.

        Blogger # 3: ``Dislike. Facebook already weasels too 
        much information from people without asking permission 
        and without giving the option to say no. I want NOTHING 
        about me and my online video watching behaviors shared 
        with anyone, especially Facebook of all places.''\11\
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    \11\Posting of T. Willerer, The Netflix Blog, ``Watch this now: 
Netflix & Facebook,'' (Sept. 22, 2011), http://blog.netflix.com/2011/
09/watch-this-now-netflix-facebook.html.

    These comments should have come as no surprise to Netflix. 
Several years ago the company introduced a ``Friends'' feature 
on its site which allowed Netflix users to connect with other 
Netflix members accounts in order to share viewer lists and 
recommend movies to one another. The feature ultimately proved 
unpopular and was discontinued in 2010 after 6 years with only 
2% of subscribers participating.\12\ Even during its pendency, 
the feature was met with opposition from Netflix account 
holders causing a member of the Netflix technological team to 
concede on the Netflix blog:
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    \12\Posting of Todd Yellin, The Netflix Blog, ``Friends Update,'' 
(March 17, 2010), http://blog.netflix.com/2010/03/friends-update.html.

        ``I'm with y'all. I watch a lot of movies, and I love 
        the Friends features, but I'll admit that there are 
        titles i [sic] watch that i'm [sic]--how you say--less 
        than thrilled to announce are in my Queue. At Netflix 
        we try to have this deep honesty policy: we generally 
        say whatever we're thinking to whoever needs to hear 
        it. And this pervasive attitude has crept into Friends, 
        such that the thinking was ``if you're REALLY friends, 
        then you should be okay showing them what you're really 
        watching.'' But you (and I) know this is lousy. I'm 
        happy to reveal pretty much anything about myself, but 
        there is a level of scrutiny that makes even an open 
        guy like me pretty uncomfortable. Once in awhile you 
        just need to hide a movie from your friends, or parents 
        . . .''\13\
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    \13\Posting of Rubin, The Netflix Blog, ``Hiding Movies,'' (June 
28, 2007); see also Posting of Rubin, The Netflix Blog, ``Movie Privacy 
(the sequel to ``Hiding Movies''), (July 7, 2007) (acknowledging 
members ``overwhelming response'' and desire to keep ``Friends from 
seeing those pesky embarrassing titles'').

Additionally, Netflix attempted a second route into the social 
networking scene: a Facebook program that allowed users to rate 
movies and television shows, and share the ratings with 
``friends'' on Facebook. The program was unsuccessful and 
unceremoniously discontinued earlier this year. \14\
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    \14\Posting by Tom Willerer, The Netflix Blog, ``Connecting with 
your Friends on Netflix'' (Jan. 11, 2011), http://blog.netflix.com/
2011/01/connecting-with-your-friends-on-netflix.html (``Two years ago 
we launched a program for Netflix members to share their ratings on 
Facebook. Very few of you have signed on for this so we're pulling it 
back today to regroup . . .'').
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  Apple Inc. also tried its own foray into social networking, meeting 
with equal disappointment. See, Posting by Jared Newman, ``In Sign of 
Ping Flop, Apple Pleas for Users,'' Technologizer (Nov. 5, 2010), 
http://technologizer.com/2010/11/05/apple-ping-flop
  ``I've got a few guesses why social efforts from Apple and Netflix's 
don't work: . . . and watching a movie or listening to music is often a 
personal thing, and only folks who are really confident in their tastes 
will care to share.'' [Posting by Jared Newman, ``Netflix Quits Social 
Networking--Again,'' Technologizer (Jan. 13, 2011), http://
technologizer.com/2011/01/13/netflix-quits-social-networking-again/]
    While public support alone should not dictate whether 
Congress passes a piece of legislation, the total lack of 
evidence that the American people need or desire a new law 
certainly relieves any pressure to rush this bill towards 
enactment.

      III. ONLY A SINGLE PROVISION OF THE VPPA IS ``UPDATED'' BY 

     h.r. 2471, leaving more consumer oriented provisions untouched
    In the inexplicable rush to bring this bill before the 
Committee, I believe important consumer protection issues were 
overlooked. The VPPA was enacted to protect consumer interest, 
specifically, to prevent wrongful disclosures of personally 
identifiable records containing an individual's video rentals. 
Yet, H.R. 2471 singularly focuses on facilitating disclosure, 
not preventing or limiting it. The bill's exclusive aim is to 
provide a safe haven for wide-scale disclosures made possible 
by technological innovation. The goal of insulating personal 
information from unwanted disclosure is practically forgotten, 
and none of the additional consumer oriented provisions of the 
underlying Act are given the slightest consideration. For 
example, the VPPA requires destruction of records ``as soon as 
practicable, but no later than 1 year from the date the 
information is no longer necessary for the purpose for which it 
was collected.''
    Record retention and destruction plans reinforce policies 
designed to deter the abuse or misuse of personally 
identifiable material. They generally provide guidelines to 
those with access to an individuals' personal information that 
prohibit saving documents beyond their usefulness or discarding 
them prematurely. The rationale embodied in the provision in 
the VPPA that requires the destruction of video records no 
later than a year after the record was established is clearly 
driven by the desire to prevent stockpiling of old and outdated 
data on any person. True modernization of the VPPA would have 
considered the applicability of that provision in the online 
environment.
    Many Internet companies have been found to track, retain, 
market and mine information on their customers at an alarmingly 
high rate.\15\ Conventional wisdom teaches that once 
information is posted on or over the Internet, it remains 
stored there forever. Thus, while record destruction in the 
physical world is easily effected and verifiable, the same is 
not the case in the virtual world. The question arises then 
whether different requirements should be fashioned in this bill 
to make sure that the policy objectives of the destruction of 
old records requirement in the VPPA are met in the online 
environment.\16\
---------------------------------------------------------------------------
    \15\See, ``The Web's New Gold Mine: Your Secrets,'' WSJ Julia 
Angwin (July 30, 2010).
    \16\Netflix is currently in class action litigation over claims 
that the company's practice of keeping the rental history and ratings 
``long after subscribers cancel their Netflix subscription,'' violates 
the VPPA. http://www.huntonprivacyblog.com/2011/03/articles/netflix-
sued-for-allegedly-violating-movie-renters-privacy/
---------------------------------------------------------------------------
    Finally, while easing the restrictions on video service 
providers disclosing consumers' video histories, the bill does 
nothing to ``update'' the damages provision for consumers 
harmed by violations of the VPPA. In 1988 when the VPPA was 
passed, Congress determined that a minimum of $2,500 in actual 
damages was an adequate deterrent to discourage violations of 
the Act. Certainly that figure, although a floor is outdated 
today where revenues earned by companies online can reach the 
billions.

IV. NO CONSIDERATION WAS GIVEN TO THE EFFECT OF THE CHANGES TO THE VPPA 
       ON STATE LAWS THAT AFFORD SIMILAR PROTECTIONS TO CONSUMERS

    According to the Electronic Privacy Information Center 
(EPIC), many states have laws that extend greater protections 
to consumers and their video records than does the VPPA. Among 
the states that have adopted comparable or stronger measures 
are: Connecticut, Maryland, California, Delaware, Iowa, 
Louisiana, New York, Rhode Island and Michigan. Michigan's law 
actually applies to book purchases, rental and borrowing 
records, as well as to video records. What practical impact 
H.R. 2471 would have on those states laws is unknown. The VPPA 
expressly preserves state law that establishes more robust 
safeguards for consumers in their relationships with video 
rental services. The Act, however, preempts state law that 
requires the disclosures banned by the VPPA.

               V. SIGNIFICANT INTELLECTUAL PROPERTY (IP) 
                        ENFORCEMENT ISSUES EXIST

    As noted above, Netflix's business model consists of a dual 
delivery method for movies and television. The company provides 
a mail order service for physical copies of DVDs, and a 
streaming service to watch movies directly over the Internet. 
Application of the amendments to the VPPA provided in H.R. 2471 
make no distinction, however, as to which viewing history is 
covered. There is little doubt that Netflix's DVD by mail 
service is considered a videotape service provider under the 
statute. But no Internet streaming service has ever been 
determined to be covered by the statute. The only court that 
has considered the issue rejected the argument that an online 
streaming service was prohibited (in an action alleging 
copyright infringement against the service), from producing its 
video history in discovery to enable the rights holder to 
determine whether the content was infringing.\17\ Left 
unresolved and confusing by H.R. 2471 is whether dual service 
companies like Netflix should be considered a video tape 
service provider covered by the VPPA for social networking 
purposes but fall beyond the statutes' reach for IP enforcement 
purposes.
---------------------------------------------------------------------------
    \17\Viacom International, Inc. v. YouTube, Inc., No. 07 Civ. 2103 
(S.D.N.Y., June 23, 2010).
---------------------------------------------------------------------------
  vi. because the bill was brought to markup without the benefit of a 
 hearing, it is premature to move forward without further consideration
    During markup, I offered two amendments, both designed to 
give Internet businesses the necessary flexibility to obtain 
electronic consent from consumers, while simultaneously 
safeguarding privacy rights. While there may be other more 
precise and effective means to balance these objectives, I 
believe that the above discussion makes clear that H.R. 2471 is 
not that alternative. Far from providing a commonsense solution 
to an ill-defined problem, H.R. 2471 raises a mountain of 
issues of its own. For the reasons discussed above, I cannot 
support H.R. 2471 in its current form and urge its proponents 
to seek regular order to provide ample opportunity find a 
constructive resolution.

                                   Melvin L. Watt.

                                  
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