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

Section 1203--Civil remedies

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

Section 1204--Criminal offenses and penalties

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

Section 104. Conforming amendment

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

Section 105. Effective date

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

          Title II--Internet Copyright Infringement Liability

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

Section 201. Short title

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

Section 202. Limitations on liability for Internet copyright
        infringement

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

Section 203. Conforming amendment

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

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

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

               title III--computer maintenance or repair

Section 301. Limitation on exclusive rights; computer programs

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

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

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

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

Section 401. Ephemeral recordings

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

Section 402. Limitation on exclusive rights; distance education

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

Section 403. Exemption for libraries and archives

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

                           VI. COST ESTIMATE

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

               Congressional Budget Office Cost Estimate

           s. 2037--digital millennium copyright act of 1998

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

                    VII. REGULATORY IMPACT STATEMENT

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

                  VIII. ADDITIONAL VIEWS OF MR. LEAHY

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

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

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

                      IX. CHANGES IN EXISTING LAW

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

UNITED STATES CODE

           *       *       *       *       *       *       *

                          TITLE 17--COPYRIGHTS

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

CHAPTER 1--SUBJECT MATTER AND SCOPE OF COPYRIGHT

           *       *       *       *       *       *       *

Sec. 101. Definitions

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

Sec. 104. Subject matter of copyright: National origin

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

           *       *       *       *       *       *       *

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

Sec. 104A. Copyright in restored works

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

Sec. 112. Limitations on exclusive rights: Ephemeral recordings

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

           *       *       *       *       *       *       *

Sec. 117. Limitations on exclusive rights: Computer programs

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

CHAPTER 4--COPYRIGHT NOTICE, DEPOSIT, AND REGISTRATION

           *       *       *       *       *       *       *

Sec. 411. Registration and infringement actions

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

           *       *       *       *       *       *       *

             CHAPTER 5--COPYRIGHT INFRINGEMENT AND REMEDIES

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

Sec. 507. Limitations on actions

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

           *       *       *       *       *       *       *

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

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

           *       *       *       *       *       *       *

        CHAPTER 12--COPYRIGHT PROTECTION AND MANAGEMENT SYSTEMS

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

Sec. 1201. Circumvention of copyright protection systems

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

Sec. 1202. Integrity of copyright management information

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

Sec. 1203. Civil remedies

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

Sec. 1204. Criminal offenses and penalties

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

Sec. 1205. Savings Clause

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

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