[DOCID: f:sr190.105]
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                                                       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 <SUP>1</SUP> to the
introduction of the VCR in the 1980's.<SUP>2</SUP> 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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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).<SUP>3</SUP> 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. <SUP>4</SUP>
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.<SUP>5</SUP>
Following the Working Group's review of the public comments and
analysis of the issues, it released a ``Green Paper'' on July
7, 1994.<SUP>6</SUP> 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. <SUP>7</SUP>
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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.<SUP>8</SUP>
CONFU issued an Interim Report in December, 1996, and a report
in September, 1997, that concluded the first phase of
CONFU.<SUP>9</SUP> The 1997 report addressed the issues of
digital images, distance learning, educational multimedia,
electronic reserve systems, and use of computer software in
libraries.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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.<SUP>10</SUP>
---------------------------------------------------------------------------
    \10\ See, supra note 3, at 5 (1995).
---------------------------------------------------------------------------
    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. <SUP>11</SUP> 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.
---------------------------------------------------------------------------
    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.<SUP>12</SUP>
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).
---------------------------------------------------------------------------
    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.<SUP>13</SUP> 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.'' <SUP>14</SUP> 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).
---------------------------------------------------------------------------
    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.<SUP>15</SUP> S. 1121 later became the
basis for Title I of the Digital Millennium Copyright Act in
the Senate Judiciary Committee.
---------------------------------------------------------------------------
    \15\ Representatives Hyde, Conyers, Frank, Bono, McCullum, and
Berman cosponsored the bill.
---------------------------------------------------------------------------
    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''; <SUP>16</SUP> (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; <SUP>17</SUP> and (6) an
obligation to provide ``adequate and effective legal remedies''
to preserve the integrity of ``rights management information.''
<SUP>18</SUP> 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.
---------------------------------------------------------------------------
    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.<SUP>19</SUP> 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.<SUP>20</SUP> 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),<SUP>21</SUP> 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.<SUP>22</SUP> 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