[Congressional Record: October 8, 1998 (House)]
[Page H10048-H10074]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr08oc98-76]


    CONFERENCE REPORT ON H.R. 2281, DIGITAL MILLENNIUM COPYRIGHT ACT

  Mr. COBLE submitted the following conference report and statement on
the bill (H.R. 2281) to amend title 17, United States Code, to
implement the World Intellectual Property Organization Copyright Treaty
and Performances and Phonograms Treaty, and for other purposes:

                  Conference Report (H. Rept. 105-796)

       The committee of conference on the disagreeing votes of the
     two Houses on the amendment of the Senate to the bill (H.R.
     2281), to amend title 17, United States Code, to implement
     the World Intellectual Property Organization Copyright Treaty
     and Performances and Phonograms Treaty, and for other
     purposes, having met, after full and free conference, have
     agreed to recommend and do recommend to their respective
     Houses as follows:

[[Page H10049]]

       That the House recede from its disagreement to the
     amendment of the Senate and agree to the same with an
     amendment as follows:
       In lieu of the matter proposed to be inserted by the Senate
     amendment, insert the following:

     SECTION 1. SHORT TITLE.

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

     SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.
Sec. 2. Table of contents.

                 TITLE I--WIPO TREATIES IMPLEMENTATION

Sec. 101. Short title.
Sec. 102. Technical amendments.
Sec. 103. Copyright protection systems and copyright management
              information.
Sec. 104. Evaluation of impact of copyright law and amendments on
              electronic commerce and technological development.
Sec. 105. Effective date.

      TITLE II--ONLINE COPYRIGHT INFRINGEMENT LIABILITY LIMITATION

Sec. 201. Short title.
Sec. 202. Limitations on liability for copyright infringement.
Sec. 203. Effective date.

      TITLE III COMPUTER MAINTENANCE OR REPAIR COPYRIGHT EXEMPTION

Sec. 301. Short title.
Sec. 302. Limitations on exclusive rights; computer programs.

                   TITLE IV--MISCELLANEOUS PROVISIONS

Sec. 401. Provisions Relating to the Commissioner of Patents and
              Trademarks and the Register of Copyrights.
Sec. 402. Ephemeral recordings.
Sec. 403. Limitations on exclusive rights; distance education.
Sec. 404. Exemption for libraries and archives.
Sec. 405. Scope of exclusive rights in sound recordings; ephemeral
              recordings.
Sec. 406. Assumption of contractual obligations related to transfers of
              rights in motion pictures.
Sec. 407. Effective date.

            TITLE V--PROTECTION OF CERTAIN ORIGINAL DESIGNS

Sec. 501. Short title.
Sec. 502. Protection of certain original designs.
Sec. 503. Conforming amendments.
Sec. 504. Joint study of the effect of this title.
Sec. 505. Effective date.

                 TITLE I--WIPO TREATIES IMPLEMENTATION

     SEC. 101. SHORT TITLE.

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

     SEC. 102. TECHNICAL AMENDMENTS.

       (a) Definitions.--Section 101 of title 17, United States
     Code, is amended--
       (1) by striking the definition of ``Berne Convention
     work'';
       (2) in the definition of ``The `country of origin' of a
     Berne Convention work''--
       (A) by striking ``The `country of origin' of a Berne
     Convention work, for purposes of section 411, is the United
     States if'' and inserting ``For purposes of section 411, a
     work is a `United States work' only if'';
       (B) in paragraph (1)--
       (i) in subparagraph (B) by striking ``nation or nations
     adhering to the Berne Convention'' and inserting ``treaty
     party or parties'';
       (ii) in subparagraph (C) by striking ``does not adhere to
     the Berne Convention'' and inserting ``is not a treaty
     party''; and
       (iii) in subparagraph (D) by striking ``does not adhere to
     the Berne Convention'' and inserting ``is not a treaty
     party''; and
       (C) in the matter following paragraph (3) by striking ``For
     the purposes of section 411, the `country of origin' of any
     other Berne Convention work is not the United States.'';
       (3) by inserting after the definition of ``fixed'' the
     following:
       ``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.'';
       (4) by inserting after the definition of ``including'' the
     following:
       ``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.'';
       (5) by inserting after the definition of ``transmit'' the
     following:
       ``A `treaty party' is a country or intergovernmental
     organization other than the United States that is a party to
     an international agreement.'';
       (6) by inserting after the definition of ``widow'' the
     following:
       ``The `WIPO Copyright Treaty' is the WIPO Copyright Treaty
     concluded at Geneva, Switzerland, on December 20, 1996.'';
       (7) by inserting after the definition of ``The `WIPO
     Copyright Treaty' '' the following:
       ``The `WIPO Performances and Phonograms Treaty' is the WIPO
     Performances and Phonograms Treaty concluded at Geneva,
     Switzerland, on December 20, 1996.''; and
       (8) by inserting after the definition of ``work made for
     hire'' the following:
       ``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.''.
       (b) Subject Matter of Copyright; National Origin.--Section
     104 of title 17, United States Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (1) by striking ``foreign nation that is a
     party to a copyright treaty to which the United States is
     also a party'' and inserting ``treaty party'';
       (B) in paragraph (2) by striking ``party to the Universal
     Copyright Convention'' and inserting ``treaty party'';
       (C) by redesignating paragraph (5) as paragraph (6);
       (D) by redesignating paragraph (3) as paragraph (5) and
     inserting it after paragraph (4);
       (E) by inserting after paragraph (2) the following:
       ``(3) the work is a sound recording that was first fixed in
     a treaty party; or'';
       (F) in paragraph (4) by striking ``Berne Convention work''
     and inserting ``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''; and
       (G) by inserting after paragraph (6), as so redesignated,
     the following:

     ``For purposes of paragraph (2), a work that is published in
     the United States or a treaty party within 30 days after
     publication in a foreign nation that is not a treaty party
     shall be considered to be first published in the United
     States or such treaty party, as the case may be.''; and
       (2) by adding at the end the following new subsection:
       ``(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.''.
       (c) Copyright in Restored Works.--Section 104A(h) of title
     17, United States Code, is amended--
       (1) in paragraph (1), by striking subparagraphs (A) and (B)
     and inserting the following:
       ``(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).'';
       (2) by amending paragraph (3) to read as follows:
       ``(3) The term `eligible country' means a nation, other
     than the United States, that--
       ``(A) becomes a WTO member country after the date of the
     enactment of the Uruguay Round Agreements Act;
       ``(B) on such date of enactment is, or after such 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).'';
       (3) in paragraph (6)--
       (A) in subparagraph (C)(iii) by striking ``and'' after the
     semicolon;
       (B) at the end of subparagraph (D) by striking the period
     and inserting ``; and''; and
       (C) by adding after subparagraph (D) the following:
       ``(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.'';
       (4) in paragraph (8)(B)(i)--
       (A) by inserting ``of which'' before ``the majority''; and
       (B) by striking ``of eligible countries''; and
       (5) by striking paragraph (9).
       (d) Registration and Infringement Actions.--Section 411(a)
     of title 17, United States Code, is amended in the first
     sentence--
       (1) by striking ``actions for infringement of copyright in
     Berne Convention works whose country of origin is not the
     United States and''; and
       (2) by inserting ``United States'' after ``no action for
     infringement of the copyright in any''.
       (e) Statute of Limitations.--Section 507(a) of title 17,
     United State Code, is amended by striking ``No'' and
     inserting ``Except as expressly provided otherwise in this
     title, no''.

     SEC. 103. COPYRIGHT PROTECTION SYSTEMS AND COPYRIGHT
                   MANAGEMENT INFORMATION.

       (a) In General.--Title 17, United States Code is amended by
     adding at the end the following new chapter:

       ``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
     Measures.--(1)(A) No person shall circumvent a technological
     measure that effectively controls access to a work protected
     under this title. The prohibition contained in the preceding
     sentence shall take effect at the end of the 2-year period
     beginning on the date of the enactment of this chapter.

[[Page H10050]]

       ``(B) The prohibition contained in subparagraph (A) shall
     not apply to persons who are users of a copyrighted work
     which is in a particular class of works, if such persons are,
     or are likely to be in the succeeding 3-year period,
     adversely affected by virtue of such prohibition in their
     ability to make noninfringing uses of that particular
     class of works under this title, as determined under
     subparagraph (C).
       ``(C) During the 2-year period described in subparagraph
     (A), and during each succeeding 3-year period, the Librarian
     of Congress, upon the recommendation of the Register of
     Copyrights, who shall consult with the Assistant Secretary
     for Communications and Information of the Department of
     Commerce and report and comment on his or her views in making
     such recommendation, shall make the determination in a
     rulemaking proceeding on the record for purposes of
     subparagraph (B) of whether persons who are users of a
     copyrighted work are, or are likely to be in the succeeding
     3-year period, adversely affected by the prohibition under
     subparagraph (A) in their ability to make noninfringing uses
     under this title of a particular class of copyrighted works.
     In conducting such rulemaking, the Librarian shall examine--
       ``(i) the availability for use of copyrighted works;
       ``(ii) the availability for use of works for nonprofit
     archival, preservation, and educational purposes;
       ``(iii) the impact that the prohibition on the
     circumvention of technological measures applied to
     copyrighted works has on criticism, comment, news reporting,
     teaching, scholarship, or research;
       ``(iv) the effect of circumvention of technological
     measures on the market for or value of copyrighted works; and
       ``(v) such other factors as the Librarian considers
     appropriate.
       ``(D) The Librarian shall publish any class of copyrighted
     works for which the Librarian has determined, pursuant to the
     rulemaking conducted under subparagraph (C), that
     noninfringing uses by persons who are users of a copyrighted
     work are, or are likely to be, adversely affected, and the
     prohibition contained in subparagraph (A) shall not apply to
     such users with respect to such class of works for the
     ensuing 3-year period.
       ``(E) Neither the exception under subparagraph (B) from the
     applicability of the prohibition contained in subparagraph
     (A), nor any determination made in a rulemaking conducted
     under subparagraph (C), may be used as a defense in any
     action to enforce any provision of this title other than this
     paragraph.
       ``(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 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 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 measure that effectively
     controls access to a work protected under this title.
       ``(3) As used in this subsection--
       ``(A) to `circumvent a technological measure' means to
     descramble a scrambled work, to decrypt an encrypted work, or
     otherwise to avoid, bypass, remove, deactivate, or impair a
     technological measure, without the authority of the copyright
     owner; and
       ``(B) a technological 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 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 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
     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
     measure' means avoiding, bypassing, removing, deactivating,
     or otherwise impairing a technological measure; and
       ``(B) a technological 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) 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 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 subsection
     (a)(2) or (b)(1).
       ``(4) Nothing in this section shall enlarge or diminish any
     rights of free speech or the press for activities using
     consumer electronics, telecommunications, or computing
     products.
       ``(d) 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). 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 the civil 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, product,
     service, component, or part thereof, which circumvents a
     technological 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; or
       ``(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.
       ``(e) Law Enforcement, Intelligence, and Other Government
     Activities.--This section does not prohibit any lawfully
     authorized investigative, protective, information security,
     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 the
     United States, a State, or a political subdivision of a
     State. For purposes of this subsection, the term `information
     security' means activities carried out in order to identify
     and address the vulnerabilities of a government computer,
     computer system, or computer network.
       ``(f) Reverse Engineering.--(1) Notwithstanding the
     provisions of subsection (a)(1)(A), a person who has lawfully
     obtained the right to use a copy of a computer program may
     circumvent a technological 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.
       ``(2) Notwithstanding the provisions of subsections (a)(2)
     and (b), a person may develop and employ technological means
     to circumvent a technological measure, or to circumvent
     protection afforded by a technological measure, in order to
     enable the identification and analysis under paragraph (1),
     or for the purpose of enabling interoperability of an
     independently created computer program with other programs,
     if such means are necessary to achieve such interoperability,
     to the extent that doing so does not constitute infringement
     under this title.
       ``(3) The information acquired through the acts permitted
     under paragraph (1), and the means permitted under paragraph
     (2), may be made available to others if the person referred
     to in paragraph (1) or (2), as the case may be, provides such
     information or means solely for the purpose of enabling
     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 section.
       ``(4) For purposes of this subsection, the term
     `interoperability' means the ability of computer programs to
     exchange information, and of such programs mutually to use
     the information which has been exchanged.
       ``(g) Encryption Research.--
       ``(1) Definitions.--For purposes of this subsection--
       ``(A) the term `encryption research' means activities
     necessary to identify and analyze flaws and vulnerabilities
     of encryption technologies applied to copyrighted works, if
     these activities are conducted to advance the state
     of knowledge in the field of encryption technology or to
     assist in the development of encryption products; and
       ``(B) the term `encryption technology' means the scrambling
     and descrambling of information using mathematical formulas
     or algorithms.
       ``(2) Permissible acts of encryption research.--
     Notwithstanding the provisions of subsection (a)(1)(A), it is
     not a violation of that

[[Page H10051]]

     subsection for a person to circumvent a technological measure
     as applied to a copy, phonorecord, performance, or display of
     a published work in the course of an act of good faith
     encryption research if--
       ``(A) the person lawfully obtained the encrypted copy,
     phonorecord, performance, or display of the published work;
       ``(B) such act is necessary to conduct such encryption
     research;
       ``(C) the person made a good faith effort to obtain
     authorization before the circumvention; and
       ``(D) such act does not constitute infringement under this
     title or a violation of applicable law other than this
     section, including section 1030 of title 18 and those
     provisions of title 18 amended by the Computer Fraud and
     Abuse Act of 1986.
       ``(3) Factors in determining exemption.--In determining
     whether a person qualifies for the exemption under paragraph
     (2), the factors to be considered shall include--
       ``(A) whether the information derived from the encryption
     research was disseminated, and if so, whether it was
     disseminated in a manner reasonably calculated to advance the
     state of knowledge or development of encryption technology,
     versus whether it was disseminated in a manner that
     facilitates infringement under this title or a violation of
     applicable law other than this section, including a violation
     of privacy or breach of security;
       ``(B) whether the person is engaged in a legitimate course
     of study, is employed, or is appropriately trained or
     experienced, in the field of encryption technology; and
       ``(C) whether the person provides the copyright owner of
     the work to which the technological measure is applied with
     notice of the findings and documentation of the research, and
     the time when such notice is provided.
       ``(4) Use of technological means for research activities.--
     Notwithstanding the provisions of subsection (a)(2), it is
     not a violation of that subsection for a person to--
       ``(A) develop and employ technological means to circumvent
     a technological measure for the sole purpose of that person
     performing the acts of good faith encryption research
     described in paragraph (2); and
       ``(B) provide the technological means to another person
     with whom he or she is working collaboratively for the
     purpose of conducting the acts of good faith encryption
     research described in paragraph (2) or for the purpose of
     having that other person verify his or her acts of good faith
     encryption research described in paragraph (2).
       ``(5) Report to congress.--Not later than 1 year after the
     date of the enactment of this chapter, the Register of
     Copyrights and the Assistant Secretary for Communications and
     Information of the Department of Commerce shall jointly
     report to the Congress on the effect this subsection has had
     on--
       ``(A) encryption research and the development of encryption
     technology;
       ``(B) the adequacy and effectiveness of technological
     measures designed to protect copyrighted works; and
       ``(C) protection of copyright owners against the
     unauthorized access to their encrypted copyrighted works.

     The report shall include legislative recommendations, if any.
       ``(h) Exceptions Regarding Minors.--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--
       ``(1) does not itself violate the provisions of this title;
     and
       ``(2) has the sole purpose to prevent the access of minors
     to material on the Internet.
       ``(i) Protection of Personally Identifying Information.--
       (1) Circumvention permitted.--Notwithstanding the
     provisions of subsection (a)(1)(A), it is not a violation of
     that subsection for a person to circumvent a technological
     measure that effectively controls access to a work protected
     under this title, if--
       ``(A) the technological measure, or the work it protects,
     contains the capability of collecting or disseminating
     personally identifying information reflecting the online
     activities of a natural person who seeks to gain access to
     the work protected;
       ``(B) in the normal course of its operation, the
     technological measure, or the work it protects, collects or
     disseminates personally identifying information about the
     person who seeks to gain access to the work protected,
     without providing conspicuous notice of such collection or
     dissemination to such person, and without providing such
     person with the capability to prevent or restrict such
     collection or dissemination;
       ``(C) the act of circumvention has the sole effect of
     identifying and disabling the capability described in
     subparagraph (A), and has no other effect on the ability of
     any person to gain access to any work; and
       ``(D) the act of circumvention is carried out solely for
     the purpose of preventing the collection or dissemination of
     personally identifying information about a natural person who
     seeks to gain access to the work protected, and is not in
     violation of any other law.
       ``(2) Inapplicability to certain technological measures.--
     This subsection does not apply to a technological measure, or
     a work it protects, that does not collect or disseminate
     personally identifying information and that is disclosed to a
     user as not having or using such capability.
       ``(j) Security Testing.--
       ``(1) Definition.--For purposes of this subsection, the
     term `security testing' means accessing a computer, computer
     system, or computer network, solely for the purpose of good
     faith testing, investigating, or correcting, a security flaw
     or vulnerability, with the authorization of the owner or
     operator of such computer, computer system, or computer
     network.
       ``(2) Permissible acts of security testing.--
     Notwithstanding the provisions of subsection (a)(1)(A), it is
     not a violation of that subsection for a person to engage in
     an act of security testing, if such act does not constitute
     infringement under this title or a violation of applicable
     law other than this section, including section 1030 of title
     18 and those provisions of title 18 amended by the Computer
     Fraud and Abuse Act of 1986.
       ``(3) Factors in determining exemption.--In determining
     whether a person qualifies for the exemption under paragraph
     (2), the factors to be considered shall include--
       ``(A) whether the information derived from the security
     testing was used solely to promote the security of the owner
     or operator of such computer, computer system or computer
     network, or shared directly with the developer of such
     computer, computer system, or computer network; and
       ``(B) whether the information derived from the security
     testing was used or maintained in a manner that does not
     facilitate infringement under this title or a violation of
     applicable law other than this section, including a violation
     of privacy or breach of security.
       ``(4) Use of technological means for security testing.--
     Notwithstanding the provisions of subsection (a)(2), it is
     not a violation of that subsection for a person to develop,
     produce, distribute or employ technological means for the
     sole purpose of performing the acts of security testing
     described in subsection (2), provided such technological
     means does not otherwise violate section (a)(2).
       ``(k) Certain Analog Devices and Certain Technological
     Measures.--
       ``(1) Certain analog devices.--
       ``(A) Effective 18 months after the date of the enactment
     of this chapter, no person shall manufacture, import, offer
     to the public, provide or otherwise traffic in any--
       ``(i) VHS format analog video cassette recorder unless such
     recorder conforms to the automatic gain control copy control
     technology;
       ``(ii) 8mm format analog video cassette camcorder unless
     such camcorder conforms to the automatic gain control
     technology;
       ``(iii) Beta format analog video cassette recorder, unless
     such recorder conforms to the automatic gain control copy
     control technology, except that this requirement shall not
     apply until there are 1,000 Beta format analog video cassette
     recorders sold in the United States in any one calendar year
     after the date of the enactment of this chapter;
       ``(iv) 8mm format analog video cassette recorder that is
     not an analog video cassette camcorder, unless such recorder
     conforms to the automatic gain control copy control
     technology, except that this requirement shall not apply
     until there are 20,000 such recorders sold in the United
     States in any one calendar year after the date of the
     enactment of this chapter; or
       ``(v) analog video cassette recorder that records using an
     NTSC format video input and that is not otherwise covered
     under clauses (i) through (iv), unless such device conforms
     to the automatic gain control copy control technology.
       ``(B) Effective on the date of the enactment of this
     chapter, no person shall manufacture, import, offer to the
     public, provide or otherwise traffic in--
       ``(i) any VHS format analog video cassette recorder or any
     8mm format analog video cassette recorder if the design of
     the model of such recorder has been modified after such date
     of enactment so that a model of recorder that previously
     conformed to the automatic gain control copy control
     technology no longer conforms to such technology; or
       ``(ii) any VHS format analog video cassette recorder, or
     any 8mm format analog video cassette recorder that is not an
     8mm analog video cassette camcorder, if the design of the
     model of such recorder has been modified after such date of
     enactment so that a model of recorder that previously
     conformed to the four-line colorstripe copy control
     technology no longer conforms to such technology.

     Manufacturers that have not previously manufactured or sold a
     VHS format analog video cassette recorder, or an 8mm format
     analog cassette recorder, shall be required to conform to the
     four-line colorstripe copy control technology in the initial
     model of any such recorder manufactured after the date of the
     enactment of this chapter, and thereafter to continue
     conforming to the four-line colorstripe copy control
     technology. For purposes of this subparagraph, an analog
     video cassette recorder `conforms to' the four-line
     colorstripe copy control technology if it records a signal
     that, when played back by the playback function of that
     recorder in the normal viewing mode, exhibits, on a
     reference display device, a display containing distracting
     visible lines through portions of the viewable picture.
       ``(2) Certain encoding restrictions.--No person shall apply
     the automatic gain control copy control technology or
     colorstripe copy control technology to prevent or limit
     consumer copying except such copying--
       ``(A) of a single transmission, or specified group of
     transmissions, of live events or of audiovisual works for
     which a member of the public has exercised choice in
     selecting the transmissions, including the content of the
     transmissions or the time of receipt of such transmissions,
     or both, and as to which such member is charged a separate
     fee for each such transmission or specified group of
     transmissions;
       ``(B) from a copy of a transmission of a live event or an
     audiovisual work if such transmission is provided by a
     channel or service where payment is made by a member of the
     public for such channel or service in the form of a
     subscription fee that entitles the member of the public to
     receive all of the programming contained in such channel or
     service;

[[Page H10052]]

       ``(C) from a physical medium containing one or more
     prerecorded audiovisual works; or
       ``(D) from a copy of a transmission described in
     subparagraph (A) or from a copy made from a physical medium
     described in subparagraph (C).

     In the event that a transmission meets both the conditions
     set forth in subparagraph (A) and those set forth in
     subparagraph (B), the transmission shall be treated as a
     transmission described in subparagraph (A).
       ``(3) Inapplicability.--This subsection shall not--
       ``(A) require any analog video cassette camcorder to
     conform to the automatic gain control copy control technology
     with respect to any video signal received through a camera
     lens;
       ``(B) apply to the manufacture, importation, offer for
     sale, provision of, or other trafficking in, any professional
     analog video cassette recorder; or
       ``(C) apply to the offer for sale or provision of, or other
     trafficking in, any previously owned analog video cassette
     recorder, if such recorder was legally manufactured and sold
     when new and not subsequently modified in violation of
     paragraph (1)(B).
       ``(4) Definitions.--For purposes of this subsection:
       ``(A) An `analog video cassette recorder' means a device
     that records, or a device that includes a function that
     records, on electromagnetic tape in an analog format the
     electronic impulses produced by the video and audio portions
     of a television program, motion picture, or other form of
     audiovisual work.
       ``(B) An `analog video cassette camcorder' means an analog
     video cassette recorder that contains a recording function
     that operates through a camera lens and through a video input
     that may be connected with a television or other video
     playback device.
       ``(C) An analog video cassette recorder `conforms' to the
     automatic gain control copy control technology if it--
       ``(i) detects one or more of the elements of such
     technology and does not record the motion picture or
     transmission protected by such technology; or
       ``(ii) records a signal that, when played back, exhibits a
     meaningfully distorted or degraded display.
       ``(D) The term `professional analog video cassette
     recorder' means an analog video cassette recorder that is
     designed, manufactured, marketed, and intended for use by a
     person who regularly employs such a device for a lawful
     business or industrial use, including making, performing,
     displaying, distributing, or transmitting copies of motion
     pictures on a commercial scale.
       ``(E) The terms `VHS format,' `8mm format,' `Beta format,'
     `automatic gain control copy control technology,'
     `colorstripe copy control technology,' `four-line version of
     the colorstripe copy control technology,' and `NTSC' have the
     meanings that are commonly understood in the consumer
     electronics and motion picture industries as of the date of
     the enactment of this chapter.
       ``(5) Violations.--Any violation of paragraph (1) of this
     subsection shall be treated as a violation of subsection
     (b)(1) of this section. Any violation of paragraph (2) of
     this subsection shall be deemed an `act of circumvention' for
     the purposes of section 1203(c)(3)(A) of this chapter.

     ``Sec. 1202. Integrity of copyright management information

       ``(a) False Copyright Management Information.--No person
     shall knowingly and with the intent to induce, enable,
     facilitate, or conceal infringement--
       ``(1) provide copyright management information that is
     false, or
       ``(2) distribute or import for distribution copyright
     management information that is false.
       ``(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 section, the term
     `copyright management information' means any of the following
     information conveyed in connection with copies or
     phonorecords of a work or performances or displays of a work,
     including in digital form, except that such term does not
     include any personally identifying information about a user
     of a work or of a copy, phonorecord, performance, or display
     of a work:
       ``(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) Terms and conditions for use of the work.
       ``(7) Identifying numbers or symbols referring to such
     information or links to such information.
       ``(8) 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, Intelligence, and Other Government
     Activities.--This section does not prohibit any lawfully
     authorized investigative, protective, information security,
     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 the
     United States, a State, or a political subdivision of a
     State. For purposes of this subsection, the term `information
     security' means activities carried out in order to identify
     and address the vulnerabilities of a government computer,
     computer system, or computer network.
       ``(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 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 of a right under this title.
       ``(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 of 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 paragraph (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 of a right under this title.
       ``(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 paragraph (1) shall not be liable for a
     violation of subsection (b) with respect to such copyright
     management information, if the activity that constitutes such
     violation is not intended to induce, enable, facilitate, or
     conceal infringement of a right under this title, and 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 to
     transmission 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 chapter; 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
     broadcast stations or cable systems and copyright owners of a
     category of works that are intended for public performance by
     such stations or systems.

       ``(3) Definitions.--As used in this subsection--
       ``(A) the term `broadcast station' has the meaning given
     that term in section 3 of the Communications Act of 1934 (47
     U.S.C. 153)); and
       ``(B) the term `cable system' has the meaning given that
     term in section 602 of the Communications Act of 1934 (47
     U.S.C. 522)).

     ``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, but in no event shall impose a prior restraint on
     free speech or the press protected under the 1st amendment to
     the Constitution;
       ``(2) at any time while an action is pending, may order the
     impounding, on such terms as it deems reasonable, 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;
       ``(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

[[Page H10053]]

     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
     title, 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 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.--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 of
     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.''.
       (b) Conforming amendment.--The table of chapters for title
     17, United States Code, is amended by adding after the item
     relating to chapter 11 the following:

``12. Copyright Protection and Management Systems...........1201''.....

     SEC. 104. EVALUATION OF IMPACT OF COPYRIGHT LAW AND
                   AMENDMENTS ON ELECTRONIC COMMERCE AND
                   TECHNOLOGICAL DEVELOPMENT.

       (a) Evaluation by the Register of Copyrights and the
     Assistant Secretary for Communications and Information.--The
     Register of Copyrights and the Assistant Secretary for
     Communications and Information of the Department of Commerce
     shall jointly evaluate--
       (1) the effects of the amendments made by this title and
     the development of electronic commerce and associated
     technology on the operation of sections 109 and 117 of title
     17, United States Code; and
       (2) the relationship between existing and emergent
     technology and the operation of sections 109 and 117 of title
     17, United States Code.
       (b) Report to Congress.--The Register of Copyrights and the
     Assistant Secretary for Communications and Information of the
     Department of Commerce shall, not later than 24 months after
     the date of the enactment of this Act, submit to the Congress
     a joint report on the evaluation conducted under subsection
     (a), including any legislative recommendations the Register
     and the Assistant Secretary may have.

     SEC. 105. EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this
     title, this title and the amendments made by this title shall
     take effect on the date of the enactment of this Act.
       (b) Amendments Relating to Certain International
     Agreements.--(1) The following shall take effect upon the
     entry into force of the WIPO Copyright Treaty with respect to
     the United States:
       (A) Paragraph (5) of the definition of ``international
     agreement'' contained in section 101 of title 17, United
     States Code, as amended by section 102(a)(4) of this Act.
       (B) The amendment made by section 102(a)(6) of this Act.
       (C) Subparagraph (C) of section 104A(h)(1) of title 17,
     United States Code, as amended by section 102(c)(1) of this
     Act.
       (D) Subparagraph (C) of section 104A(h)(3) of title 17,
     United States Code, as amended by section 102(c)(2) of this
     Act.
       (2) The following shall take effect upon the entry into
     force of the WIPO Performances and Phonograms Treaty with
     respect to the United States:
       (A) Paragraph (6) of the definition of ``international
     agreement'' contained in section 101 of title 17, United
     States Code, as amended by section 102(a)(4) of this Act.
       (B) The amendment made by section 102(a)(7) of this Act.
       (C) The amendment made by section 102(b)(2) of this Act.
       (D) Subparagraph (D) of section 104A(h)(1) of title 17,
     United States Code, as amended by section 102(c)(1) of this
     Act.
       (E) Subparagraph (D) of section 104A(h)(3) of title 17,
     United States Code, as amended by section 102(c)(2) of this
     Act.
       (F) The amendments made by section 102(c)(3) of this Act.

      TITLE II--ONLINE COPYRIGHT INFRINGEMENT LIABILITY LIMITATION

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Online Copyright
     Infringement Liability Limitation Act''.

     SEC. 202. LIMITATIONS ON LIABILITY FOR COPYRIGHT
                   INFRINGEMENT.

       (a) In General.--Chapter 5 of title 17, United States Code,
     is amended by adding after section 511 the following new
     section:

     ``Sec. 512. Limitations on liability relating to material
       online

       ``(a) Transitory Digital Network Communications.--A service
     provider shall not be liable for monetary relief, or, except
     as provided in subsection (j), for injunctive or other
     equitable relief, for infringement of copyright by reason of
     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 by
     reason of the intermediate and transient storage of that
     material in the course of such transmitting, routing, or
     providing connections, if--
       ``(1) the transmission of the material was initiated by or
     at the direction of a person other than the service provider;
       ``(2) the transmission, routing, provision of connections,
     or storage 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 person;
       ``(4) no copy of the material made by the service provider
     in the course of such intermediate or transient storage 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 such anticipated recipients
     for a longer period than is reasonably necessary for the
     transmission, routing, or provision of connections; and
       ``(5) the material is transmitted through the system or
     network without modification of its content.
       ``(b) System Caching.--
       ``(1) Limitation on liability.--A service provider shall
     not be liable for monetary relief, or, except as provided in
     subsection (j), for injunctive or other equitable relief, for
     infringement of copyright by reason of the intermediate and
     temporary storage of material on a system or network
     controlled or operated by or for the service provider in a
     case in which--
       ``(A) the material is made available online by a person
     other than the service provider,
       ``(B) the material is transmitted from the person described
     in subparagraph (A) through the system or network to a person
     other than the person described in subparagraph (A) at the
     direction of that other person, and
       ``(C) the storage is carried out through an automatic
     technical process for the purpose of making the material
     available to users of the system or network who, after the
     material is transmitted as described in subparagraph (B),
     request access to the material from the person described in
     subparagraph (A),
     if the conditions set forth in paragraph (2) are met.
       (2) Conditions.--The conditions referred to in paragraph
     (1) are that--
       ``(A) the material described in paragraph (1) is
     transmitted to the subsequent users described in paragraph
     (1)(C) without modification to its content from the manner in
     which the material was transmitted from the person described
     in paragraph (1)(A);
       ``(B) the service provider described in paragraph (1)
     complies with rules concerning the refreshing, reloading, or
     other updating of the material when specified by the person
     making the material available online in accordance with a
     generally accepted industry standard data communications
     protocol for the system or network through which that person
     makes the material available, except that this subparagraph
     applies only if those rules are not used by the person
     described in paragraph (1)(A) to prevent or unreasonably
     impair the intermediate storage to which this subsection
     applies;
       ``(C) the service provider does not interfere with the
     ability of technology associated with the material to return
     to the person described in paragraph (1)(A) the information
     that would have been available to that person if the material
     had been obtained by the subsequent users described in
     paragraph (1)(C) directly from that person, except that
     this subparagraph applies only if that technology--

[[Page H10054]]

       ``(i) does not significantly interfere with the performance
     of the provider's system or network or with the intermediate
     storage of the material;
       ``(ii) is consistent with generally accepted industry
     standard communications protocols; and
       ``(iii) does not extract information from the provider's
     system or network other than the information that would have
     been available to the person described in paragraph (1)(A) if
     the subsequent users had gained access to the material
     directly from that person;
       ``(D) if the person described in paragraph (1)(A) has in
     effect a condition that a person must meet prior to having
     access to the material, such as a 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 met those conditions and only in accordance with those
     conditions; and
       ``(E) if the person described in paragraph (1)(A) makes
     that material available online without the authorization of
     the copyright owner of the material, the service provider
     responds expeditiously to remove, or disable access to, the
     material that is claimed to be infringing upon notification
     of claimed infringement as described in subsection (c)(3),
     except that this subparagraph applies only if--
       ``(i) the material has previously been removed from the
     originating site or access to it has been disabled, or a
     court has ordered that the material be removed from the
     originating site or that access to the material on the
     originating site be disabled; and
       ``(ii) the party giving the notification includes in the
     notification a statement confirming that the material has
     been removed from the originating site or access to it has
     been disabled or that a court has ordered that the material
     be removed from the originating site or that access to the
     material on the originating site be disabled.
       ``(c) Information Residing on Systems or Networks At
     Direction of Users.--
       ``(1) In general.--A service provider shall not be liable
     for monetary relief, or, except as provided in subsection
     (j), for injunctive or other equitable relief, for
     infringement of copyright by reason of 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 an activity using the material on the system or network 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) upon obtaining such knowledge or awareness, acts
     expeditiously to remove, or disable access to, the material;
       ``(B) does not receive a financial benefit directly
     attributable to the infringing activity, in a case in which
     the service provider has the right and ability to control
     such activity; and
       ``(C) upon 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 to a service provider
     only if the service provider has designated an agent to
     receive notifications of claimed infringement described in
     paragraph (3), by making available through its service,
     including on its website in a location accessible to the
     public, and by providing to the Copyright Office,
     substantially the following information:
       ``(A) the name, address, phone number, and electronic mail
     address of the agent.
       ``(B) other contact information which the Register of
     Copyrights may deem appropriate.
     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, and may require payment of a fee by service
     providers to cover the costs of maintaining the directory.
       ``(3) Elements of notification.--
       ``(A) To be effective under this subsection, a notification
     of claimed infringement must be a written communication
     provided to the designated agent of a service provider 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 copyrighted 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 and
     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, its
     agent, or the law.
       ``(vi) A statement that the information in the notification
     is accurate, and under penalty of perjury, that the
     complaining party is authorized to act on behalf of the owner
     of an exclusive right that is allegedly infringed.
       ``(B)(i) Subject to clause (ii), a notification from a
     copyright owner or from a person authorized to act on behalf
     of the copyright owner that fails to comply substantially
     with the provisions of subparagraph (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.
       ``(ii) In a case in which the notification that is provided
     to the service provider's designated agent fails to comply
     substantially with all the provisions of subparagraph (A) but
     substantially complies with clauses (ii), (iii), and (iv) of
     subparagraph (A), clause (i) of this subparagraph applies
     only if the service provider promptly attempts to contact the
     person making the notification or takes other reasonable
     steps to assist in the receipt of notification that
     substantially complies with all the provisions of
     subparagraph (A).
       ``(d) Information Location Tools.--A service provider shall
     not be liable for monetary relief, or, except as provided in
     subsection (j), for injunctive or other equitable relief, for
     infringement of copyright by reason of the provider referring
     or linking users to an online location containing infringing
     material or infringing activity, by using information
     location tools, including a directory, index, reference,
     pointer, or hypertext link, if the service provider--
       ``(1)(A) does not have actual knowledge that the material
     or activity is infringing;
       ``(B) in the absence of such actual knowledge, is not aware
     of facts or circumstances from which infringing activity is
     apparent; or
       ``(C) upon obtaining such knowledge or awareness, acts
     expeditiously to remove, or disable access to, the material;
       ``(2) does not receive a financial benefit directly
     attributable to the infringing activity, in a case in which
     the service provider has the right and ability to control
     such activity; and
       ``(3) upon notification of claimed infringement as
     described in subsection (c)(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,
     except that, for purposes of this paragraph, the information
     described 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 that
     reference or link.
       ``(e) Limitation on liability of nonprofit educational
     institutions.--(1) When a public or other nonprofit
     institution of higher education is a service provider, and
     when a faculty member or graduate student who is an employee
     of such institution is performing a teaching or research
     function, for the purposes of subsections (a) and (b) such
     faculty member or graduate student shall be considered to be
     a person other than the institution, and for the purposes of
     subsections (c) and (d) such faculty member's or graduate
     student's knowledge or awareness of his or her infringing
     activities shall not be attributed to the institution, if--
       ``(A) such faculty member's or graduate student's
     infringing activities do not involve the provision of online
     access to instructional materials that are or were required
     or recommended, within the preceding 3-year period, for a
     course taught at the institution by such faculty member or
     graduate student;
       ``(B) the institution has not, within the preceding 3-year
     period, received more than 2 notifications described in
     subsection (c)(3) of claimed infringement by such faculty
     member or graduate student, and such notifications of claimed
     infringement were not actionable under subsection (f); and
       ``(C) the institution provides to all users of its system
     or network informational materials that accurately describe,
     and promote compliance with, the laws of the United States
     relating to copyright.
       ``(2) Injunctions.--For the purposes of this subsection,
     the limitations on injunctive relief contained in subsections
     (j)(2) and (j)(3), but not those in (j)(1), shall apply.
       ``(f) 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 a 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.
       ``(g) Replacement of Removed or Disabled Material and
     Limitation on Other Liability.--
       ``(1) No liability for taking down generally.--Subject to
     paragraph (2), 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 of whether the material or activity is ultimately
     determined to be infringing.
       ``(2) Exception.--Paragraph (1) 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
     to which access is disabled by the service provider, pursuant
     to a notice 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 notification described in
     paragraph (3), promptly provides the

[[Page H10055]]

     person who provided the notification under subsection
     (c)(1)(C) with a copy of the counter notification, and
     informs that person that it will replace the removed material
     or cease disabling access to it in 10 business days; and
       ``(C) replaces the removed material and ceases disabling
     access to it not less than 10, nor more than 14, 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) Contents of counter notification.--To be effective
     under this subsection, a counter notification must be a
     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 the material appeared before it was removed or access
     to it 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 District 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 notification under subsection
     (c)(1)(C) or an agent of such person.
       ``(4) Limitation on other liability.--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).
       ``(h) Subpoena To Identify Infringer.--
       ``(1) Request.--A copyright owner or a person authorized to
     act on the owner's behalf may request the clerk of any United
     States district court to issue a subpoena to a service
     provider for identification of an alleged infringer in
     accordance with this subsection.
       ``(2) Contents of request.--The request may be made by
     filing with the clerk--
       ``(A) a copy of a notification described in subsection
     (c)(3)(A);
       ``(B) a proposed subpoena; and
       ``(C) a sworn declaration to the effect that the purpose
     for which the subpoena is sought is to obtain the identity of
     an alleged infringer and that such information will only be
     used for the purpose of protecting rights under this title.
       ``(3) Contents of subpoena.--The subpoena shall authorize
     and order the service provider receiving the notification and
     the subpoena to expeditiously disclose to the copyright owner
     or person authorized by the copyright owner information
     sufficient to identify the alleged infringer of the material
     described in the notification to the extent such information
     is available to the service provider.
       ``(4) Basis for granting subpoena.--If the notification
     filed satisfies the provisions of subsection (c)(3)(A), the
     proposed subpoena is in proper form, and the accompanying
     declaration is properly executed, the clerk shall
     expeditiously issue and sign the proposed subpoena and return
     it to the requester for delivery to the service provider.
       ``(5) Actions of service provider receiving subpoena.--Upon
     receipt of the issued subpoena, either accompanying or
     subsequent to the receipt of a notification described in
     subsection (c)(3)(A), the service provider shall
     expeditiously disclose to the copyright owner or person
     authorized by the copyright owner the information required by
     the subpoena, notwithstanding any other provision of law and
     regardless of whether the service provider responds to the
     notification.
       ``(6) Rules applicable to subpoena.--Unless otherwise
     provided by this section or by applicable rules of the court,
     the procedure for issuance and delivery of the subpoena, and
     the remedies for noncompliance with the subpoena, shall be
     governed to the greatest extent practicable by those
     provisions of the Federal Rules of Civil Procedure governing
     the issuance, service, and enforcement of a subpoena duces
     tecum.
       ``(i) Conditions for Eligibility.--
       ``(1) Accommodation of technology.--The limitations on
     liability established by this section shall apply to a
     service provider only if the service provider--
       ``(A) has adopted and reasonably implemented, and informs
     subscribers and account holders of the service provider's
     system or network of, a policy that provides for the
     termination in appropriate circumstances of subscribers and
     account holders of the service provider's system or network
     who are repeat infringers; and
       ``(B) accommodates and does not interfere with standard
     technical measures.
       ``(2) Definition.--As used in this subsection, the term
     `standard technical measures' means technical measures that
     are used by copyright owners to identify or protect
     copyrighted works and--
       ``(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.
       ``(j) 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 under this section:
       ``(1) Scope of relief.--(A) With respect to conduct other
     than that which qualifies for the limitation on remedies set
     forth in subsection (a), the court may grant injunctive
     relief with respect to a service provider only in one or more
     of the following forms:
       ``(i) An order restraining the service provider 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 the service provider from
     providing access to a subscriber or account holder of the
     service provider's system or network who is engaging in
     infringing activity and is identified in the order, by
     terminating the accounts of the subscriber or account holder
     that are specified in the order.
       ``(iii) Such other injunctive relief as the court may
     consider necessary to prevent or restrain infringement of
     copyrighted material specified in the order of the court at a
     particular online location, if such relief is the least
     burdensome to the service provider among the forms of relief
     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 the service provider from
     providing access to a subscriber or account holder of the
     service provider's system or network who is using the
     provider's service to engage in infringing activity and is
     identified in the order, by terminating the accounts of the
     subscriber or account holder that are specified in the order.
       ``(ii) An order restraining the service provider from
     providing access, by taking reasonable steps specified in the
     order to block access, to a specific, identified, online
     location outside the United States.
       ``(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 be available only after notice to the
     service provider and an opportunity for the service provider
     to appear are provided, 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.
       ``(k) Definitions.--
       ``(1) Service provider.--(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 this section, other than subsection (a),
     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 subparagraph
     (A).
       ``(2) Monetary relief.--As used in this section, the term
     `monetary relief' means damages, costs, attorneys' fees, and
     any other form of monetary payment.
       ``(l) 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.
       ``(m) 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 (i); or
       ``(2) a service provider gaining access to, removing, or
     disabling access to material in cases in which such conduct
     is prohibited by law.
       ``(n) Construction.--Subsections (a), (b), (c), and (d)
     describe separate and distinct functions for purposes of
     applying this section. Whether a service provider qualifies
     for the limitation on liability in any one of those
     subsections shall be based solely on the criteria in that
     subsection, and shall not affect a determination of whether
     that service provider qualifies for the limitations on
     liability under any other such subsection.''.
       (b) Conforming Amendment.--The table of sections for
     chapter 5 of title 17, United States Code, is amended by
     adding at the end the following:

``512. Limitations on liability relating to material online.''.

     SEC. 203. EFFECTIVE DATE.

       This title and the amendments made by this title shall take
     effect on the date of the enactment of this Act.

[[Page H10056]]

      TITLE III-COMPUTER MAINTENANCE OR REPAIR COPYRIGHT EXEMPTION

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``Computer Maintenance
     Competition Assurance Act''.

     SEC. 302. LIMITATIONS ON EXCLUSIVE RIGHTS; COMPUTER PROGRAMS.

       Section 117 of title 17, United States Code, is amended--
       (1) by striking ``Notwithstanding'' and inserting the
     following:
       ``(a) Making of Additional Copy or Adaptation by Owner of
     Copy.--Notwithstanding'';
       (2) by striking ``Any exact'' and inserting the following:
       ``(b) Lease, Sale, or Other Transfer of Additional Copy or
     Adaptation.--Any exact''; and
       (3) by adding at the end the following:
       ``(c) Machine Maintenance or Repair.--Notwithstanding the
     provisions of section 106, it is not an infringement for the
     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.''.

                   TITLE IV--MISCELLANEOUS PROVISIONS

     SEC. 401. PROVISIONS RELATING TO THE COMMISSIONER OF PATENTS
                   AND TRADEMARKS AND THE REGISTER OF COPYRIGHTS

       (a) Compensation.--(1) Section 3(d) of title 35, United
     States Code, is amended by striking ``prescribed by law for
     Assistant Secretaries of Commerce'' and inserting ``in effect
     for level III of the Executive Schedule under section 5314 of
     title 5, United States Code''.
       (2) Section 701(e) of title 17, United States Code, is
     amended--
       (A) by striking ``IV'' and inserting ``III''; and
       (B) by striking ``5315'' and inserting ``5314''.
       (3) Section 5314 of title 5, United States Code, is amended
     by adding at the end the following:
       ``Assistant Secretary of Commerce and Commissioner of
     Patents and Trademarks.
       ``Register of Copyrights.''.
       (b) Clarification of Authority of the Copyright Office.--
     Section 701 of title 17, United States Code, is amended--
       (1) by redesignating subsections (b) through (e) as
     subsections (c) through (f), respectively; and
       (2) by inserting after subsection (a) the following:
       ``(b) In addition to the functions and duties set out
     elsewhere in this chapter, the Register of Copyrights shall
     perform the following functions:
       ``(1) Advise Congress on national and international issues
     relating to copyright, other matters arising under this
     title, and related matters.
       ``(2) Provide information and assistance to Federal
     departments and agencies and the Judiciary on national and
     international issues relating to copyright, other matters
     arising under this title, and related matters.
       ``(3) Participate in meetings of international
     intergovernmental organizations and meetings with foreign
     government officials relating to copyright, other matters
     arising under this title, and related matters, including as a
     member of United States delegations as authorized by the
     appropriate Executive branch authority.
       ``(4) Conduct studies and programs regarding copyright,
     other matters arising under this title, and related matters,
     the administration of the Copyright Office, or any function
     vested in the Copyright Office by law, including educational
     programs conducted cooperatively with foreign intellectual
     property offices and international intergovernmental
     organizations.
       ``(5) Perform such other functions as Congress may direct,
     or as may be appropriate in furtherance of the functions and
     duties specifically set forth in this title.''

     SEC. 402. EPHEMERAL RECORDINGS.

       Section 112(a) of title 17, United States Code, is
     amended--
       (1) by redesignating paragraphs (1), (2), and (3) as
     subparagraphs (A), (B), and (C), respectively;
       (2) by inserting ``(1)'' after ``(a)'';
       (3) by inserting after ``under a license'' the following:
     ``, including a statutory license under section 114(f),'';
       (4) by inserting after ``114(a),'' the following: ``or for
     a transmitting organization that is a broadcast radio or
     television station licensed as such by the Federal
     Communications Commission and that makes a broadcast
     transmission of a performance of a sound recording in a
     digital format on a nonsubscription basis,''; and
       (5) by adding at the end the following:
       ``(2) In a case in which a transmitting organization
     entitled to make a copy or phonorecord under paragraph (1) in
     connection with the transmission to the public of a
     performance or display of a work is prevented from making
     such copy or phonorecord by reason of the application by the
     copyright owner of technical measures that prevent the
     reproduction of the work, the copyright owner shall make
     available to the transmitting organization the necessary
     means for permitting the making of such copy or phonorecord
     as permitted under that paragraph, if it is technologically
     feasible and economically reasonable for the copyright owner
     to do so. If the copyright owner fails to do so in a timely
     manner in light of the transmitting organization's 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 paragraph
     (1) of this subsection.''.

     SEC. 403. LIMITATIONS ON EXCLUSIVE RIGHTS; DISTANCE
                   EDUCATION.

       (a) Recommendations by Register of Copyrights.--Not later
     than 6 months after the date of the enactment of this Act,
     the Register of Copyrights, after consultation with
     representatives of copyright owners, nonprofit educational
     institutions, and nonprofit libraries and archives, shall
     submit to the Congress recommendations 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 of copyrighted works. Such
     recommendations shall include any legislation the Register of
     Copyrights considers appropriate to achieve the objective
     described in the preceding sentence.
       (b) Factors.--In formulating recommendations under
     subsection (a), the Register of Copyrights shall consider--
       (1) the need for an exemption from exclusive rights of
     copyright owners for distance education through digital
     networks;
       (2) the categories of works to be included under any
     distance education exemption;
       (3) the extent of appropriate quantitative limitations on
     the portions of works that may be used under any distance
     education exemption;
       (4) the parties who should be entitled to the benefits of
     any distance education exemption;
       (5) the parties who should be designated as eligible
     recipients of distance education materials under any distance
     education exemption;
       (6) whether and what types of technological measures can or
     should be employed to safeguard against unauthorized access
     to, and use or retention of, copyrighted materials as a
     condition of eligibility for any distance education
     exemption, including, in light of developing technological
     capabilities, the exemption set out in section 110(2) of
     title 17, United States Code;
       (7) the extent to which the availability of licenses for
     the use of copyrighted works in distance education through
     interactive digital networks should be considered in
     assessing eligibility for any distance education exemption;
     and
       (8) such other issues relating to distance education
     through interactive digital networks that the Register
     considers appropriate.

     SEC. 404. EXEMPTION FOR LIBRARIES AND ARCHIVES.

       Section 108 of title 17, United States Code, is amended--
       (1) in subsection (a)--
       (A) by striking ``Notwithstanding'' and inserting ``Except
     as otherwise provided in this title and notwithstanding'';
       (B) by inserting after ``no more than one copy or
     phonorecord of a work'' the following: ``, except as provided
     in subsections (b) and (c)''; and
       (C) in paragraph (3) by inserting after ``copyright'' the
     following: ``that appears on the copy or phonorecord that is
     reproduced under the provisions of this section, or includes
     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'';
       (2) in subsection (b)--
       (A) by striking ``a copy or phonorecord'' and inserting
     ``three copies or phonorecords'';
       (B) by striking ``in facsimile form''; and
       (C) by striking ``if the copy or phonorecord reproduced is
     currently in the collections of the library or archives.''
     and inserting ``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 in that format
     outside the premises of the library or archives.''; and
       (3) in subsection (c)--
       (A) by striking ``a copy or phonorecord'' and inserting
     ``three copies or phonorecords'';
       (B) by striking ``in facsimile form'';
       (C) by inserting ``or if the existing format in which the
     work is stored has become obsolete,'' after ``stolen,''; and
       (D) by striking ``if the library or archives has, after a
     reasonable effort, determined that an unused replacement
     cannot be obtained at a fair price.'' and inserting ``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 outside the premises of the library or archives in
     lawful possession of such copy.''; and
       (E) by adding at the end the following:

     ``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.''.

[[Page H10057]]

     SEC. 405. SCOPE OF EXCLUSIVE RIGHTS IN SOUND RECORDINGS;
                   EPHEMERAL RECORDINGS.

       (a) Scope of Exclusive Rights in Sound Recordings.--Section
     114 of title 17, United States Code, is amended as follows:
       (1) Subsection (d) is amended--
       (A) in paragraph (1) by striking subparagraph (A) and
     inserting the following:
       ``(A) a nonsubscription broadcast transmission;''; and
       (B) by amending paragraph (2) to read as follows:
       ``(2) Statutory Licensing of Certain Transmissions.--The
     performance of a sound recording publicly by means of a
     subscription digital audio transmission not exempt under
     paragraph (1), an eligible nonsubscription transmission, or a
     transmission not exempt under paragraph (1) that is made by a
     preexisting satellite digital audio radio service shall be
     subject to statutory licensing, in accordance with
     subsection (f) if--
       ``(A)(i) the transmission is not part of an interactive
     service;
       ``(ii) except in the case of a transmission to a business
     establishment, the transmitting entity does not automatically
     and intentionally cause any device receiving the transmission
     to switch from one program channel to another; and
       ``(iii) except as provided in section 1002(e), the
     transmission of the sound recording is accompanied, if
     technically feasible, by the information encoded in that
     sound recording, if any, by or under the authority of the
     copyright owner of that sound recording, that identifies the
     title of the sound recording, the featured recording artist
     who performs on the sound recording, and related information,
     including information concerning the underlying musical work
     and its writer;
       ``(B) in the case of a subscription transmission not exempt
     under paragraph (1) that is made by a preexisting
     subscription service in the same transmission medium used by
     such service on July 31, 1998, or in the case of a
     transmission not exempt under paragraph (1) that is made by a
     preexisting satellite digital audio radio service--
       ``(i) the transmission does not exceed the sound recording
     performance complement; and
       ``(ii) the transmitting entity does not cause to be
     published by means of an advance program schedule or prior
     announcement the titles of the specific sound recordings or
     phonorecords embodying such sound recordings to be
     transmitted; and
       ``(C) in the case of an eligible nonsubscription
     transmission or a subscription transmission not exempt under
     paragraph (1) that is made by a new subscription service or
     by a preexisting subscription service other than in the same
     transmission medium used by such service on July 31, 1998--
       ``(i) the transmission does not exceed the sound recording
     performance complement, except that this requirement shall
     not apply in the case of a retransmission of a broadcast
     transmission if the retransmission is made by a transmitting
     entity that does not have the right or ability to control the
     programming of the broadcast station making the broadcast
     transmission, unless--

       ``(I) the broadcast station makes broadcast transmissions--

       ``(aa) in digital format that regularly exceed the sound
     recording performance complement; or
       ``(bb) in analog format, a substantial portion of which, on
     a weekly basis, exceed the sound recording performance
     complement; and

       ``(II) the sound recording copyright owner or its
     representative has notified the transmitting entity in
     writing that broadcast transmissions of the copyright owner's
     sound recordings exceed the sound recording performance
     complement as provided in this clause;

       ``(ii) the transmitting entity does not cause to be
     published, or induce or facilitate the publication, by means
     of an advance program schedule or prior announcement, the
     titles of the specific sound recordings to be transmitted,
     the phonorecords embodying such sound recordings, or, other
     than for illustrative purposes, the names of the featured
     recording artists, except that this clause does not
     disqualify a transmitting entity that makes a prior
     announcement that a particular artist will be featured within
     an unspecified future time period, and in the case of a
     retransmission of a broadcast transmission by a transmitting
     entity that does not have the right or ability to control the
     programming of the broadcast transmission, the requirement of
     this clause shall not apply to a prior oral announcement by
     the broadcast station, or to an advance program schedule
     published, induced, or facilitated by the broadcast station,
     if the transmitting entity does not have actual knowledge and
     has not received written notice from the copyright owner or
     its representative that the broadcast station publishes or
     induces or facilitates the publication of such advance
     program schedule, or if such advance program schedule is a
     schedule of classical music programming published by the
     broadcast station in the same manner as published by that
     broadcast station on or before September 30, 1998;
       ``(iii) the transmission--

       ``(I) is not part of an archived program of less than 5
     hours duration;
       ``(II) is not part of an archived program of 5 hours or
     greater in duration that is made available for a period
     exceeding 2 weeks;
       ``(III) is not part of a continuous program which is of
     less than 3 hours duration; or
       ``(IV) is not part of an identifiable program in which
     performances of sound recordings are rendered in a
     predetermined order, other than an archived or continuous
     program, that is transmitted at--

       ``(aa) more than 3 times in any 2-week period that have
     been publicly announced in advance, in the case of a program
     of less than 1 hour in duration, or
       ``(bb) more than 4 times in any 2-week period that have
     been publicly announced in advance, in the case of a program
     of 1 hour or more in duration,

     except that the requirement of this subclause shall not apply
     in the case of a retransmission of a broadcast transmission
     by a transmitting entity that does not have the right or
     ability to control the programming of the broadcast
     transmission, unless the transmitting entity is given notice
     in writing by the copyright owner of the sound recording that
     the broadcast station makes broadcast transmissions that
     regularly violate such requirement;

       ``(iv) the transmitting entity does not knowingly perform
     the sound recording, as part of a service that offers
     transmissions of visual images contemporaneously with
     transmissions of sound recordings, in a manner that is likely
     to cause confusion, to cause mistake, or to deceive, as to
     the affiliation, connection, or association of the copyright
     owner or featured recording artist with the transmitting
     entity or a particular product or service advertised by the
     transmitting entity, or as to the origin, sponsorship, or
     approval by the copyright owner or featured recording artist
     of the activities of the transmitting entity other than the
     performance of the sound recording itself;
       ``(v) the transmitting entity cooperates to prevent, to the
     extent feasible without imposing substantial costs or
     burdens, a transmission recipient or any other person or
     entity from automatically scanning the transmitting entity's
     transmissions alone or together with transmissions by other
     transmitting entities in order to select a particular sound
     recording to be transmitted to the transmission recipient,
     except that the requirement of this clause shall not apply to
     a satellite digital audio service that is in operation, or
     that is licensed by the Federal Communications Commission,
     on or before July 31, 1998;
       ``(vi) the transmitting entity takes no affirmative steps
     to cause or induce the making of a phonorecord by the
     transmission recipient, and if the technology used by the
     transmitting entity enables the transmitting entity to limit
     the making by the transmission recipient of phonorecords of
     the transmission directly in a digital format, the
     transmitting entity sets such technology to limit such making
     of phonorecords to the extent permitted by such technology;
       ``(vii) phonorecords of the sound recording have been
     distributed to the public under the authority of the
     copyright owner or the copyright owner authorizes the
     transmitting entity to transmit the sound recording, and the
     transmitting entity makes the transmission from a phonorecord
     lawfully made under the authority of the copyright owner,
     except that the requirement of this clause shall not apply to
     a retransmission of a broadcast transmission by a
     transmitting entity that does not have the right or ability
     to control the programming of the broadcast transmission,
     unless the transmitting entity is given notice in writing by
     the copyright owner of the sound recording that the broadcast
     station makes broadcast transmissions that regularly violate
     such requirement;
       ``(viii) the transmitting entity accommodates and does not
     interfere with the transmission of technical measures that
     are widely used by sound recording copyright owners to
     identify or protect copyrighted works, and that are
     technically feasible of being transmitted by the transmitting
     entity without imposing substantial costs on the transmitting
     entity or resulting in perceptible aural or visual
     degradation of the digital signal, except that the
     requirement of this clause shall not apply to a satellite
     digital audio service that is in operation, or that is
     licensed under the authority of the Federal Communications
     Commission, on or before July 31, 1998, to the extent that
     such service has designed, developed, or made commitments to
     procure equipment or technology that is not compatible with
     such technical measures before such technical measures are
     widely adopted by sound recording copyright owners; and
       ``(ix) the transmitting entity identifies in textual data
     the sound recording during, but not before, the time it is
     performed, including the title of the sound recording, the
     title of the phonorecord embodying such sound recording, if
     any, and the featured recording artist, in a manner to permit
     it to be displayed to the transmission recipient by the
     device or technology intended for receiving the service
     provided by the transmitting entity, except that the
     obligation in this clause shall not take effect until 1 year
     after the date of the enactment of the Digital Millennium
     Copyright Act and shall not apply in the case of a
     retransmission of a broadcast transmission by a transmitting
     entity that does not have the right or ability to control the
     programming of the broadcast transmission, or in the case in
     which devices or technology intended for receiving the
     service provided by the transmitting entity that have the
     capability to display such textual data are not common in the
     marketplace.''.
       (2) Subsection (f) is amended--
       (A) in the subsection heading by striking ``Nonexempt
     Subscription'' and inserting ``Certain Nonexempt'';
       (B) in paragraph (1)--
       (i) in the first sentence--

       (I) by striking ``(1) No'' and inserting ``(1)(A) No'';
       (II) by striking ``the activities'' and inserting
     ``subscription transmissions by preexisting subscription
     services and transmissions by preexisting satellite digital
     audio radio services''; and

       (III) by striking ``2000'' and inserting ``2001''; and

       (ii) by amending the third sentence to read as follows:
     ``Any copyright owners of sound recordings, preexisting
     subscription services, or preexisting satellite digital audio
     radio services may submit to the Librarian of Congress
     licenses

[[Page H10058]]

     covering such subscription transmissions with respect to such
     sound recordings.''; and
       (C) by striking paragraphs (2), (3), (4), and (5) and
     inserting the following:
       ``(B) In the absence of license agreements negotiated under
     subparagraph (A), during the 60-day period commencing 6
     months after publication of the notice specified in
     subparagraph (A), and upon the filing of a petition in
     accordance with section 803(a)(1), the Librarian of Congress
     shall, pursuant to chapter 8, convene a copyright arbitration
     royalty panel to determine and publish in the Federal
     Register a schedule of rates and terms which, subject to
     paragraph (3), shall be binding on all copyright owners of
     sound recordings and entities performing sound recordings
     affected by this paragraph. In establishing rates and terms
     for preexisting subscription services and preexisting
     satellite digital audio radio services, in addition to the
     objectives set forth in section 801(b)(1), the copyright
     arbitration royalty panel may consider the rates and terms
     for comparable types of subscription digital audio
     transmission services and comparable circumstances under
     voluntary license agreements negotiated as provided in
     subparagraph (A).
       ``(C)(i) Publication of a notice of the initiation of
     voluntary negotiation proceedings as specified in
     subparagraph (A) shall be repeated, in accordance with
     regulations that the Librarian of Congress shall prescribe--
       ``(I) no later than 30 days after a petition is filed by
     any copyright owners of sound recordings, any preexisting
     subscription services, or any preexisting satellite digital
     audio radio services indicating that a new type of
     subscription digital audio transmission service on which
     sound recordings are performed is or is about to become
     operational; and
       ``(II) in the first week of January, 2001, and at 5-year
     intervals thereafter.
       ``(ii) The procedures specified in subparagraph (B) shall
     be repeated, in accordance with regulations that the
     Librarian of Congress shall prescribe, upon filing of a
     petition in accordance with section 803(a)(1) during a 60-day
     period commencing--
       ``(I) 6 months after publication of a notice of the
     initiation of voluntary negotiation proceedings under
     subparagraph (A) pursuant to a petition under clause (i)(I)
     of this subparagraph; or
       ``(II) on July 1, 2001, and at 5-year intervals thereafter.
       ``(iii) The procedures specified in subparagraph (B) shall
     be concluded in accordance with section 802.
       ``(2)(A) No later than 30 days after the date of the
     enactment of the Digital Millennium Copyright Act, the
     Librarian of Congress shall cause notice to be published in
     the Federal Register of the initiation of voluntary
     negotiation proceedings for the purpose of determining
     reasonable terms and rates of royalty payments for public
     performances of sound recordings by means of eligible
     nonsubscription transmissions and transmissions by new
     subscription services specified by subsection (d)(2) during
     the period beginning on the date of the enactment of such Act
     and ending on December 31, 2000, or such other date as the
     parties may agree. Such rates and terms shall distinguish
     among the different types of eligible nonsubscription
     transmission services and new subscription services then
     in operation and shall include a minimum fee for each such
     type of service. Any copyright owners of sound recordings
     or any entities performing sound recordings affected by
     this paragraph may submit to the Librarian of Congress
     licenses covering such eligible nonsubscription
     transmissions and new subscription services with respect
     to such sound recordings. The parties to each negotiation
     proceeding shall bear their own costs.
       ``(B) In the absence of license agreements negotiated under
     subparagraph (A), during the 60-day period commencing 6
     months after publication of the notice specified in
     subparagraph (A), and upon the filing of a petition in
     accordance with section 803(a)(1), the Librarian of Congress
     shall, pursuant to chapter 8, convene a copyright arbitration
     royalty panel to determine and publish in the Federal
     Register a schedule of rates and terms which, subject to
     paragraph (3), shall be binding on all copyright owners of
     sound recordings and entities performing sound recordings
     affected by this paragraph during the period beginning on the
     date of the enactment of the Digital Millennium Copyright Act
     and ending on December 31, 2000, or such other date as the
     parties may agree. Such rates and terms shall distinguish
     among the different types of eligible nonsubscription
     transmission services then in operation and shall include a
     minimum fee for each such type of service, such differences
     to be based on criteria including, but not limited to, the
     quantity and nature of the use of sound recordings and the
     degree to which use of the service may substitute for or may
     promote the purchase of phonorecords by consumers. In
     establishing rates and terms for transmissions by eligible
     nonsubscription services and new subscription services, the
     copyright arbitration royalty panel shall establish rates and
     terms that most clearly represent the rates and terms that
     would have been negotiated in the marketplace between a
     willing buyer and a willing seller. In determining such rates
     and terms, the copyright arbitration royalty panel shall base
     its decision on economic, competitive and programming
     information presented by the parties, including--
       ``(i) whether use of the service may substitute for or may
     promote the sales of phonorecords or otherwise may interfere
     with or may enhance the sound recording copyright owner's
     other streams of revenue from its sound recordings; and
       ``(ii) the relative roles of the copyright owner and the
     transmitting entity in the copyrighted work and the service
     made available to the public with respect to relative
     creative contribution, technological contribution, capital
     investment, cost, and risk.

     In establishing such rates and terms, the copyright
     arbitration royalty panel may consider the rates and terms
     for comparable types of digital audio transmission services
     and comparable circumstances under voluntary license
     agreements negotiated under subparagraph (A).
       ``(C)(i) Publication of a notice of the initiation of
     voluntary negotiation proceedings as specified in
     subparagraph (A) shall be repeated in accordance with
     regulations that the Librarian of Congress shall prescribe--
       ``(I) no later than 30 days after a petition is filed by
     any copyright owners of sound recordings or any eligible
     nonsubscription service or new subscription service
     indicating that a new type of eligible nonsubscription
     service or new subscription service on which sound recordings
     are performed is or is about to become operational; and
       ``(II) in the first week of January 2000, and at 2-year
     intervals thereafter, except to the extent that different
     years for the repeating of such proceedings may be determined
     in accordance with subparagraph (A).
       ``(ii) The procedures specified in subparagraph (B) shall
     be repeated, in accordance with regulations that the
     Librarian of Congress shall prescribe, upon filing of a
     petition in accordance with section 803(a)(1) during a 60-day
     period commencing--
       ``(I) 6 months after publication of a notice of the
     initiation of voluntary negotiation proceedings under
     subparagraph (A) pursuant to a petition under clause (i)(I);
     or
       ``(II) on July 1, 2000, and at 2-year intervals thereafter,
     except to the extent that different years for the repeating
     of such proceedings may be determined in accordance with
     subparagraph (A).
       ``(iii) The procedures specified in subparagraph (B) shall
     be concluded in accordance with section 802.
       ``(3) License agreements voluntarily negotiated at any time
     between 1 or more copyright owners of sound recordings and 1
     or more entities performing sound recordings shall be given
     effect in lieu of any determination by a copyright
     arbitration royalty panel or decision by the Librarian of
     Congress.
       ``(4)(A) The Librarian of Congress shall also establish
     requirements by which copyright owners may receive reasonable
     notice of the use of their sound recordings under this
     section, and under which records of such use shall be kept
     and made available by entities performing sound recordings.
       ``(B) Any person who wishes to perform a sound recording
     publicly by means of a transmission eligible for statutory
     licensing under this subsection may do so without infringing
     the exclusive right of the copyright owner of the sound
     recording--
       ``(i) by complying with such notice requirements as the
     Librarian of Congress shall prescribe by regulation and by
     paying royalty fees in accordance with this subsection; or
       ``(ii) if such royalty fees have not been set, by agreeing
     to pay such royalty fees as shall be determined in accordance
     with this subsection.
       ``(C) Any royalty payments in arrears shall be made on or
     before the twentieth day of the month next succeeding the
     month in which the royalty fees are set.''.
       (3) Subsection (g) is amended--
       (A) in the subsection heading by striking ``Subscription'';
       (B) in paragraph (1) in the matter preceding subparagraph
     (A), by striking ``subscription transmission licensed'' and
     inserting ``transmission licensed under a statutory
     license'';
       (C) in subparagraphs (A) and (B) by striking
     ``subscription''; and
       (D) in paragraph (2) by striking ``subscription''.
       (4) Subsection (j) is amended--
       (A) by striking paragraphs (4) and (9) and redesignating
     paragraphs (2), (3), (5), (6), (7), and (8) as paragraphs
     (3), (5), (9), (12), (13), and (14), respectively;
       (B) by inserting after paragraph (1) the following:
       ``(2) An `archived program' is a predetermined program that
     is available repeatedly on the demand of the transmission
     recipient and that is performed in the same order from the
     beginning, except that an archived program shall not include
     a recorded event or broadcast transmission that makes no more
     than an incidental use of sound recordings, as long as such
     recorded event or broadcast transmission does not contain an
     entire sound recording or feature a particular sound
     recording.'';
       (C) by inserting after paragraph (3), as so redesignated,
     the following:
       ``(4) A `continuous program' is a predetermined program
     that is continuously performed in the same order and that is
     accessed at a point in the program that is beyond the control
     of the transmission recipient.'';
       (D) by inserting after paragraph (5), as so redesignated,
     the following:
       ``(6) An `eligible nonsubscription transmission' is a
     noninteractive nonsubscription digital audio transmission not
     exempt under subsection (d)(1) that is made as part of a
     service that provides audio programming consisting, in whole
     or in part, of performances of sound recordings, including
     retransmissions of broadcast transmissions, if the primary
     purpose of the service is to provide to the public such audio
     or other entertainment programming, and the primary purpose
     of the service is not to sell, advertise, or promote
     particular products or services other than sound
     recordings, live concerts, or other music-related events.
       ``(7) An `interactive service' is one that enables a member
     of the public to receive a transmission of a program
     specially created for the recipient, or on request, a
     transmission of a particular sound recording, whether or not
     as part

[[Page H10059]]

     of a program, which is selected by or on behalf of the
     recipient. The ability of individuals to request that
     particular sound recordings be performed for reception by the
     public at large, or in the case of a subscription service, by
     all subscribers of the service, does not make a service
     interactive, if the programming on each channel of the
     service does not substantially consist of sound recordings
     that are performed within 1 hour of the request or at a time
     designated by either the transmitting entity or the
     individual making such request. If an entity offers both
     interactive and noninteractive services (either concurrently
     or at different times), the noninteractive component shall
     not be treated as part of an interactive service.
       ``(8) A `new subscription service' is a service that
     performs sound recordings by means of noninteractive
     subscription digital audio transmissions and that is not a
     preexisting subscription service or a preexisting satellite
     digital audio radio service.'';
       (E) by inserting after paragraph (9), as so redesignated,
     the following:
       ``(10) A `preexisting satellite digital audio radio
     service' is a subscription satellite digital audio radio
     service provided pursuant to a satellite digital audio radio
     service license issued by the Federal Communications
     Commission on or before July 31, 1998, and any renewal of
     such license to the extent of the scope of the original
     license, and may include a limited number of sample channels
     representative of the subscription service that are made
     available on a nonsubscription basis in order to promote the
     subscription service.
       ``(11) A `preexisting subscription service' is a service
     that performs sound recordings by means of noninteractive
     audio-only subscription digital audio transmissions, which
     was in existence and was making such transmissions to the
     public for a fee on or before July 31, 1998, and may include
     a limited number of sample channels representative of the
     subscription service that are made available on a
     nonsubscription basis in order to promote the subscription
     service.''; and
       (F) by adding at the end the following:
       ``(15) A `transmission' is either an initial transmission
     or a retransmission.''.
       (5) The amendment made by paragraph (2)(B)(i)(III) of this
     subsection shall be deemed to have been enacted as part of
     the Digital Performance Right in Sound Recordings Act of
     1995, and the publication of notice of proceedings under
     section 114(f)(1) of title 17, United States Code, as in
     effect upon the effective date of that Act, for the
     determination of royalty payments shall be deemed to have
     been made for the period beginning on the effective date of
     that Act and ending on December 1, 2001.
       (6) The amendments made by this subsection do not annul,
     limit, or otherwise impair the rights that are preserved by
     section 114 of title 17, United States Code, including the
     rights preserved by subsections (c), (d)(4), and (i) of such
     section.
       (b) Ephemeral Recordings.--Section 112 of title 17, United
     States Code, is amended--
       (1) by redesignating subsection (e) as subsection (f); and
       (2) by inserting after subsection (d) the following:
       ``(e) Statutory License.--(1) A transmitting organization
     entitled to transmit to the public a performance of a sound
     recording under the limitation on exclusive rights specified
     by section 114(d)(1)(C)(iv) or under a statutory license in
     accordance with section 114(f) is entitled to a statutory
     license, under the conditions specified by this subsection,
     to make no more than 1 phonorecord of the sound recording
     (unless the terms and conditions of the statutory license
     allow for more), if the following conditions are satisfied:
       ``(A) The phonorecord is retained and used solely by the
     transmitting organization that made it, and no further
     phonorecords are reproduced from it.
       ``(B) The phonorecord is used solely for the transmitting
     organization's own transmissions originating in the United
     States under a statutory license in accordance with section
     114(f) or the limitation on exclusive rights specified by
     section 114(d)(1)(C)(iv).
       ``(C) Unless preserved exclusively for purposes of archival
     preservation, the phonorecord is destroyed within 6 months
     from the date the sound recording was first transmitted to
     the public using the phonorecord.
       ``(D) Phonorecords of the sound recording have been
     distributed to the public under the authority of the
     copyright owner or the copyright owner authorizes the
     transmitting entity to transmit the sound recording, and the
     transmitting entity makes the phonorecord under this
     subsection from a phonorecord lawfully made and acquired
     under the authority of the copyright owner.
       ``(3) Notwithstanding any provision of the antitrust laws,
     any copyright owners of sound recordings and any transmitting
     organizations entitled to a statutory license under this
     subsection may negotiate and agree upon royalty rates and
     license terms and conditions for making phonorecords of such
     sound recordings under this section and the proportionate
     division of fees paid among copyright owners, and may
     designate common agents to negotiate, agree to, pay, or
     receive such royalty payments.
       ``(4) No later than 30 days after the date of the enactment
     of the Digital Millennium Copyright Act, the Librarian of
     Congress shall cause notice to be published in the Federal
     Register of the initiation of voluntary negotiation
     proceedings for the purpose of determining reasonable terms
     and rates of royalty payments for the activities specified by
     paragraph (2) of this subsection during the period beginning
     on the date of the enactment of such Act and ending on
     December 31, 2000, or such other date as the parties may
     agree. Such rates shall include a minimum fee for each type
     of service offered by transmitting organizations. Any
     copyright owners of sound recordings or any transmitting
     organizations entitled to a statutory license under this
     subsection may submit to the Librarian of Congress licenses
     covering such activities with respect to such sound
     recordings. The parties to each negotiation proceeding shall
     bear their own costs.
       ``(5) In the absence of license agreements negotiated under
     paragraph (3), during the 60-day period commencing 6 months
     after publication of the notice specified in paragraph (4),
     and upon the filing of a petition in accordance with section
     803(a)(1), the Librarian of Congress shall, pursuant to
     chapter 8, convene a copyright arbitration royalty panel to
     determine and publish in the Federal Register a schedule of
     reasonable rates and terms which, subject to paragraph (6),
     shall be binding on all copyright owners of sound recordings
     and transmitting organizations entitled to a statutory
     license under this subsection during the period beginning on
     the date of the enactment of the Digital Millennium Copyright
     Act and ending on December 31, 2000, or such other date as
     the parties may agree. Such rates shall include a minimum fee
     for each type of service offered by transmitting
     organizations. The copyright arbitration royalty panel
     shall establish rates that most clearly represent the fees
     that would have been negotiated in the marketplace between
     a willing buyer and a willing seller. In determining such
     rates and terms, the copyright arbitration royalty panel
     shall base its decision on economic, competitive, and
     programming information presented by the parties,
     including--
       ``(A) whether use of the service may substitute for or may
     promote the sales of phonorecords or otherwise interferes
     with or enhances the copyright owner's traditional streams of
     revenue; and
       ``(B) the relative roles of the copyright owner and the
     transmitting organization in the copyrighted work and the
     service made available to the public with respect to relative
     creative contribution, technological contribution, capital
     investment, cost, and risk.

     In establishing such rates and terms, the copyright
     arbitration royalty panel may consider the rates and terms
     under voluntary license agreements negotiated as provided in
     paragraphs (3) and (4). The Librarian of Congress shall also
     establish requirements by which copyright owners may receive
     reasonable notice of the use of their sound recordings under
     this section, and under which records of such use shall be
     kept and made available by transmitting organizations
     entitled to obtain a statutory license under this subsection.
       ``(6) License agreements voluntarily negotiated at any time
     between 1 or more copyright owners of sound recordings and 1
     or more transmitting organizations entitled to obtain a
     statutory license under this subsection shall be given effect
     in lieu of any determination by a copyright arbitration
     royalty panel or decision by the Librarian of Congress.
       ``(7) Publication of a notice of the initiation of
     voluntary negotiation proceedings as specified in paragraph
     (4) shall be repeated, in accordance with regulations that
     the Librarian of Congress shall prescribe, in the first week
     of January 2000, and at 2-year intervals thereafter, except
     to the extent that different years for the repeating of such
     proceedings may be determined in accordance with paragraph
     (4). The procedures specified in paragraph (5) shall be
     repeated, in accordance with regulations that the Librarian
     of Congress shall prescribe, upon filing of a petition in
     accordance with section 803(a)(1), during a 60-day period
     commencing on July 1, 2000, and at 2-year intervals
     thereafter, except to the extent that different years for the
     repeating of such proceedings may be determined in accordance
     with paragraph (4). The procedures specified in paragraph (5)
     shall be concluded in accordance with section 802.
       ``(8)(A) Any person who wishes to make a phonorecord of a
     sound recording under a statutory license in accordance with
     this subsection may do so without infringing the exclusive
     right of the copyright owner of the sound recording under
     section 106(1)--
       ``(i) by complying with such notice requirements as the
     Librarian of Congress shall prescribe by regulation and by
     paying royalty fees in accordance with this subsection; or
       ``(ii) if such royalty fees have not been set, by agreeing
     to pay such royalty fees as shall be determined in accordance
     with this subsection.
       ``(B) Any royalty payments in arrears shall be made on or
     before the 20th day of the month next succeeding the month in
     which the royalty fees are set.
       ``(9) If a transmitting organization entitled to make a
     phonorecord under this subsection is prevented from making
     such phonorecord by reason of the application by the
     copyright owner of technical measures that prevent the
     reproduction of the sound recording, the copyright owner
     shall make available to the transmitting organization the
     necessary means for permitting the making of such phonorecord
     as permitted under this subsection, if it is technologically
     feasible and economically reasonable for the copyright owner
     to do so. If the copyright owner fails to do so in a timely
     manner in light of the transmitting organization's 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 phonorecords as permitted under this subsection.
       ``(10) Nothing in this subsection annuls, limits, impairs,
     or otherwise affects in any way the existence or value of any
     of the exclusive rights of the copyright owners in a sound
     recording, except as otherwise provided in this subsection,
     or in a musical work, including the exclusive rights to
     reproduce and distribute a sound recording or musical work,
     including by means of

[[Page H10060]]

     a digital phonorecord delivery, under section 106(1), 106(3),
     and 115, and the right to perform publicly a sound recording
     or musical work, including by means of a digital audio
     transmission, under sections 106(4) and 106(6).''.
       (c) Scope of Section 112(a) of Title 17 Not Affected.--
     Nothing in this section or the amendments made by this
     section shall affect the scope of section 112(a) of title 17,
     United States Code, or the entitlement of any person to an
     exemption thereunder.
       (d) Procedural Amendments to Chapter 8.--Section 802 of
     title 17, United States Code, is amended--
       (1) in subsection (f)--
       (A) in the first sentence by striking ``60'' and inserting
     ``90''; and
       (B) in the third sentence by striking ``that 60-day
     period'' and inserting ``an additional 30-day period''; and
       (2) in subsection (g) by inserting after the second
     sentence the following: ``When this title provides that the
     royalty rates or terms that were previously in effect are to
     expire on a specified date, any adjustment by the Librarian
     of those rates or terms shall be effective as of the day
     following the date of expiration of the rates or terms that
     were previously in effect, even if the Librarian's decision
     is rendered on a later date.''.
       (e) Conforming Amendments.--(1) Section 801(b)(1) of title
     17, United States Code, is amended in the second sentence by
     striking ``sections 114, 115, and 116'' and inserting
     ``sections 114(f)(1)(B), 115, and 116''.
       (2) Section 802(c) of title 17, United States Code, is
     amended by striking ``section 111, 114, 116, or 119, any
     person entitled to a compulsory license'' and inserting
     ``section 111, 112, 114, 116, or 119, any transmitting
     organization entitled to a statutory license under section
     112(f), any person entitled to a statutory license''.
       (3) Section 802(g) of title 17, United States Code, is
     amended by striking ``sections 111, 114'' and inserting
     ``sections 111, 112, 114''.
       (4) Section 802(h)(2) of title 17, United States Code, is
     amended by striking ``section 111, 114'' and inserting
     ``section 111, 112, 114''.
       (5) Section 803(a)(1) of title 17, United States Code, is
     amended by striking ``sections 114, 115'' and inserting
     ``sections 112, 114, 115''.
       (6) Section 803(a)(5) of title 17, United States Code, is
     amended--
       (A) by striking ``section 114'' and inserting ``section 112
     or 114''; and
       (B) by striking ``that section'' and inserting ``those
     sections''.

     SEC. 406. ASSUMPTION OF CONTRACTUAL OBLIGATIONS RELATED TO
                   TRANSFERS OF RIGHTS IN MOTION PICTURES.

       (a) In General.--Part VI of title 28, United States Code,
     is amended by adding at the end the following new chapter:

      ``CHAPTER 180--ASSUMPTION OF CERTAIN CONTRACTUAL OBLIGATIONS

``Sec. 4001. Assumption of contractual obligations related to transfers
              of rights in motion pictures.

     ``Sec. 4001. Assumption of contractual obligations related to
       transfers of rights in motion pictures

       ``(a) Assumption of Obligations.--(1) In the case of a
     transfer of copyright ownership under United States law in a
     motion picture (as the terms `transfer of copyright
     ownership' and `motion picture' are defined in section 101 of
     title 17) that is produced subject to 1 or more collective
     bargaining agreements negotiated under the laws of the United
     States, if the transfer is executed on or after the effective
     date of this chapter and is not limited to public performance
     rights, the transfer instrument shall be deemed to
     incorporate the assumption agreements applicable to the
     copyright ownership being transferred that are required by
     the applicable collective bargaining agreement, and the
     transferee shall be subject to the obligations under each
     such assumption agreement to make residual payments and
     provide related notices, accruing after the effective date of
     the transfer and applicable to the exploitation of the rights
     transferred, and any remedies under each such assumption
     agreement for breach of those obligations, as those
     obligations and remedies are set forth in the applicable
     collective bargaining agreement, if--
       ``(A) the transferee knows or has reason to know at the
     time of the transfer that such collective bargaining
     agreement was or will be applicable to the motion picture; or
       ``(B) in the event of a court order confirming an
     arbitration award against the transferor under the collective
     bargaining agreement, the transferor does not have the
     financial ability to satisfy the award within 90 days after
     the order is issued.
       ``(2) For purposes of paragraph (1)(A), `knows or has
     reason to know' means any of the following:
       ``(A) Actual knowledge that the collective bargaining
     agreement was or will be applicable to the motion picture.
       ``(B)(i) Constructive knowledge that the collective
     bargaining agreement was or will be applicable to the motion
     picture, arising from recordation of a document pertaining to
     copyright in the motion picture under section 205 of title 17
     or from publication, at a site available to the public on-
     line that is operated by the relevant union, of information
     that identifies the motion picture as subject to a collective
     bargaining agreement with that union, if the site permits
     commercially reasonable verification of the date on which the
     information was available for access.
       ``(ii) Clause (i) applies only if the transfer referred to
     in subsection (a)(1) occurs--
       ``(i) after the motion picture is completed, or
       ``(ii) before the motion picture is completed and--
       ``(I) within 18 months before the filing of an application
     for copyright registration for the motion picture under
     section 408 of title 17, or
       ``(II) if no such application is filed, within 18 months
     before the first publication of the motion picture in the
     United States.
       ``(C) Awareness of other facts and circumstances pertaining
     to a particular transfer from which it is apparent that the
     collective bargaining agreement was or will be applicable to
     the motion picture.
       ``(b) Scope of Exclusion of Transfers of Public Performance
     Rights.--For purposes of this section, the exclusion under
     subsection (a) of transfers of copyright ownership in a
     motion picture that are limited to public performance
     rights includes transfers to a terrestrial broadcast
     station, cable system, or programmer to the extent that
     the station, system, or programmer is functioning as an
     exhibitor of the motion picture, either by exhibiting the
     motion picture on its own network, system, service, or
     station, or by initiating the transmission of an
     exhibition that is carried on another network, system,
     service, or station. When a terrestrial broadcast station,
     cable system, or programmer, or other transferee, is also
     functioning otherwise as a distributor or as a producer of
     the motion picture, the public performance exclusion does
     not affect any obligations imposed on the transferee to
     the extent that it is engaging in such functions.
       ``(c) Exclusion for Grants of Security Interests.--
     Subsection (a) shall not apply to--
       ``(1) a transfer of copyright ownership consisting solely
     of a mortgage, hypothecation, or other security interest; or
       ``(2) a subsequent transfer of the copyright ownership
     secured by the security interest described in paragraph (1)
     by or under the authority of the secured party, including a
     transfer through the exercise of the secured party's rights
     or remedies as a secured party, or by a subsequent
     transferee.

     The exclusion under this subsection shall not affect any
     rights or remedies under law or contract.
       ``(d) Deferral Pending Resolution of Bona Fide Dispute.--A
     transferee on which obligations are imposed under subsection
     (a) by virtue of paragraph (1) of that subsection may elect
     to defer performance of such obligations that are subject to
     a bona fide dispute between a union and a prior transferor
     until that dispute is resolved, except that such deferral
     shall not stay accrual of any union claims due under an
     applicable collective bargaining agreement.
       ``(e) Scope of Obligations Determined by Private
     Agreement.--Nothing in this section shall expand or diminish
     the rights, obligations, or remedies of any person under the
     collective bargaining agreements or assumption agreements
     referred to in this section.
       ``(f) Failure To Notify.--If the transferor under
     subsection (a) fails to notify the transferee under
     subsection (a) of applicable collective bargaining
     obligations before the execution of the transfer instrument,
     and subsection (a) is made applicable to the transferee
     solely by virtue of subsection (a)(1)(B), the transferor
     shall be liable to the transferee for any damages suffered by
     the transferee as a result of the failure to notify.
       ``(g) Determination of Disputes and Claims.--Any dispute
     concerning the application of subsections (a) through (f)
     shall be determined by an action in United States district
     court, and the court in its discretion may allow the recovery
     of full costs by or against any party and may also award a
     reasonable attorney's fee to the prevailing party as part of
     the costs.
       ``(h) Study.--The Comptroller General, in consultation with
     the Register of Copyrights, shall conduct a study of the
     conditions in the motion picture industry that gave rise to
     this section, and the impact of this section on the motion
     picture industry. The Comptroller General shall report the
     findings of the study to the Congress within 2 years after
     the effective date of this chapter.''.
       (b) Conforming Amendment.--The table of chapters for part
     VI of title 28, United States Code, is amended by adding at
     the end the following:

``180. Assumption of Certain Contractual Obligations........4001''.....

     SEC. 407. EFFECTIVE DATE.

       Except as otherwise provided in this title, this title and
     the amendments made by this title shall take effect on the
     date of the enactment of this Act.

            TITLE V--PROTECTION OF CERTAIN ORIGINAL DESIGNS

     SEC. 501. SHORT TITLE.

       This Act may be referred to as the ``Vessel Hull Design
     Protection Act''.

     SEC. 502. PROTECTION OF CERTAIN ORIGINAL DESIGNS.

       Title 17, United States Code, is amended by adding at the
     end the following new chapter:

              ``CHAPTER 13--PROTECTION OF ORIGINAL DESIGNS

``Sec.
``1301. Designs protected.
``1302. Designs not subject to protection.
``1303. Revisions, adaptations, and rearrangements.
``1304. Commencement of protection.
``1305. Term of protection.
``1306. Design notice.
``1307. Effect of omission of notice.
``1308. Exclusive rights.
``1309. Infringement.
``1310. Application for registration.
``1311. Benefit of earlier filing date in foreign country.
``1312. Oaths and acknowledgments.
``1313. Examination of application and issue or refusal of
              registration.

[[Page H10061]]

``1314. Certification of registration.
``1315. Publication of announcements and indexes.
``1316. Fees.
``1317. Regulations.
``1318. Copies of records.
``1319. Correction of errors in certificates.
``1320. Ownership and transfer.
``1321. Remedy for infringement.
``1322. Injunctions.
``1323. Recovery for infringement.
``1324. Power of court over registration.
``1325. Liability for action on registration fraudulently obtained.
``1326. Penalty for false marking.
``1327. Penalty for false representation.
``1328. Enforcement by Treasury and Postal Service .
``1329. Relation to design patent law.
``1330. Common law and other rights unaffected.
``1331. Administrator; Office of the Administrator.
``1332. No retroactive effect.

     ``Sec. 1301. Designs protected

       ``(a) Designs Protected.--
       ``(1) In general.--The designer or other owner of an
     original design of a useful article which makes the article
     attractive or distinctive in appearance to the purchasing or
     using public may secure the protection provided by this
     chapter upon complying with and subject to this chapter.
       ``(2) Vessel hulls.--The design of a vessel hull, including
     a plug or mold, is subject to protection under this chapter,
     notwithstanding section 1302(4).
       ``(b) Definitions.--For the purpose of this chapter, the
     following terms have the following meanings:
       ``(1) A design is `original' if it is the result of the
     designer's creative endeavor that provides a distinguishable
     variation over prior work pertaining to similar articles
     which is more than merely trivial and has not been copied
     from another source.
       ``(2) A `useful article' is a vessel hull, including a plug
     or mold, which in normal use has an intrinsic utilitarian
     function that is not merely to portray the appearance of the
     article or to convey information. An article which normally
     is part of a useful article shall be deemed to be a useful
     article.
       ``(3) A `vessel' is a craft, especially one larger than a
     rowboat, designed to navigate on water, but does not include
     any such craft that exceeds 200 feet in length.
       ``(4) A `hull' is the frame or body of a vessel, including
     the deck of a vessel, exclusive of masts, sails, yards, and
     rigging.
       ``(5) A `plug' means a device or model used to make a mold
     for the purpose of exact duplication, regardless of whether
     the device or model has an intrinsic utilitarian function
     that is not only to portray the appearance of the product or
     to convey information.
       ``(6) A `mold' means a matrix or form in which a substance
     for material is used, regardless of whether the matrix or
     form has an intrinsic utilitarian function that is not only
     to portray the appearance of the product or to convey
     information.

     ``Sec. 1302. Designs not subject to protection

       ``Protection under this chapter shall not be available for
     a design that is--
       ``(1) not original;
       ``(2) staple or commonplace, such as a standard geometric
     figure, a familiar symbol, an emblem, or a motif, or another
     shape, pattern, or configuration which has become standard,
     common, prevalent, or ordinary;
       ``(3) different from a design excluded by paragraph (2)
     only in insignificant details or in elements which are
     variants commonly used in the relevant trades;
       ``(4) dictated solely by a utilitarian function of the
     article that embodies it; or
       ``(5) embodied in a useful article that was made public by
     the designer or owner in the United States or a foreign
     country more than 1 year before the date of the application
     for registration under this chapter.

     ``Sec. 1303. Revisions, adaptations, and rearrangements

       ``Protection for a design under this chapter shall be
     available notwithstanding the employment in the design of
     subject matter excluded from protection under section 1302 if
     the design is a substantial revision, adaptation, or
     rearrangement of such subject matter. Such protection shall
     be independent of any subsisting protection in subject matter
     employed in the design, and shall not be construed as
     securing any right to subject matter excluded from protection
     under this chapter or as extending any subsisting protection
     under this chapter.

     ``Sec. 1304. Commencement of protection

       ``The protection provided for a design under this chapter
     shall commence upon the earlier of the date of publication of
     the registration under section 1313(a) or the date the design
     is first made public as defined by section 1310(b).

     ``Sec. 1305. Term of protection

       ``(a) In General.--Subject to subsection (b), the
     protection provided under this chapter for a design shall
     continue for a term of 10 years beginning on the date of the
     commencement of protection under section 1304.
       ``(b) Expiration.--All terms of protection provided in this
     section shall run to the end of the calendar year in which
     they would otherwise expire.
       ``(c) Termination of Rights.--Upon expiration or
     termination of protection in a particular design under this
     chapter, all rights under this chapter in the design shall
     terminate, regardless of the number of different articles in
     which the design may have been used during the term of its
     protection.

     ``Sec. 1306. Design notice

       ``(a) Contents of Design Notice.--(1) Whenever any design
     for which protection is sought under this chapter is made
     public under section 1310(b), the owner of the design shall,
     subject to the provisions of section 1307, mark it or have it
     marked legibly with a design notice consisting of--
       ``(A) the words `Protected Design', the abbreviation
     `Prot'd Des.', or the letter `D' with a circle, or the symbol
     *D*;
       ``(B) the year of the date on which protection for the
     design commenced; and
       ``(C) the name of the owner, an abbreviation by which the
     name can be recognized, or a generally accepted alternative
     designation of the owner.
     Any distinctive identification of the owner may be used for
     purposes of subparagraph (C) if it has been recorded by the
     Administrator before the design marked with such
     identification is registered.
       ``(2) After registration, the registration number may be
     used instead of the elements specified in subparagraphs (B)
     and (C) of paragraph (1).
       ``(b) Location of Notice.--The design notice shall be so
     located and applied as to give reasonable notice of design
     protection while the useful article embodying the design is
     passing through its normal channels of commerce.
       ``(c) Subsequent Removal of Notice.--When the owner of a
     design has complied with the provisions of this section,
     protection under this chapter shall not be affected by the
     removal, destruction, or obliteration by others of the design
     notice on an article.

     ``Sec. 1307. Effect of omission of notice

       ``(a) Actions With Notice.--Except as provided in
     subsection (b), the omission of the notice prescribed in
     section 1306 shall not cause loss of the protection under
     this chapter or prevent recovery for infringement under this
     chapter against any person who, after receiving written
     notice of the design protection, begins an undertaking
     leading to infringement under this chapter.
       ``(b) Actions Without Notice.--The omission of the notice
     prescribed in section 1306 shall prevent any recovery under
     section 1323 against a person who began an undertaking
     leading to infringement under this chapter before receiving
     written notice of the design protection. No injunction shall
     be issued under this chapter with respect to such undertaking
     unless the owner of the design reimburses that person for any
     reasonable expenditure or contractual obligation in
     connection with such undertaking that was incurred before
     receiving written notice of the design protection, as the
     court in its discretion directs. The burden of providing
     written notice of design protection shall be on the owner of
     the design.

     ``Sec. 1308. Exclusive rights

       ``The owner of a design protected under this chapter has
     the exclusive right to--
       ``(1) make, have made, or import, for sale or for use in
     trade, any useful article embodying that design; and
       ``(2) sell or distribute for sale or for use in trade any
     useful article embodying that design.

     ``Sec. 1309. Infringement

       ``(a) Acts of Infringement.--Except as provided in
     subjection (b), it shall be infringement of the exclusive
     rights in a design protected under this chapter for any
     person, without the consent of the owner of the design,
     within the United States and during the term of such
     protection, to--
       ``(1) make, have made, or import, for sale or for use in
     trade, any infringing article as defined in subsection (e);
     or
       ``(2) sell or distribute for sale or for use in trade any
     such infringing article.
       ``(b) Acts of Sellers and Distributors.--A seller or
     distributor of an infringing article who did not make or
     import the article shall be deemed to have infringed on a
     design protected under this chapter only if that person--
       ``(1) induced or acted in collusion with a manufacturer to
     make, or an importer to import such article, except that
     merely purchasing or giving an order to purchase such article
     in the ordinary course of business shall not of itself
     constitute such inducement or collusion; or
       ``(2) refused or failed, upon the request of the owner of
     the design, to make a prompt and full disclosure of that
     person's source of such article, and that person orders or
     reorders such article after receiving notice by registered or
     certified mail of the protection subsisting in the design.
       ``(c) Acts Without Knowledge.--It shall not be infringement
     under this section to make, have made, import, sell, or
     distribute, any article embodying a design which was created
     without knowledge that a design was protected under this
     chapter and was copied from such protected design.
       ``(d) Acts in Ordinary Course of Business.--A person who
     incorporates into that person's product of manufacture an
     infringing article acquired from others in the ordinary
     course of business, or who, without knowledge of the
     protected design embodied in an infringing article, makes or
     processes the infringing article for the account of another
     person in the ordinary course of business, shall not be
     deemed to have infringed the rights in that design under this
     chapter except under a condition contained in paragraph (1)
     or (2) of subsection (b). Accepting an order or reorder from
     the source of the infringing article shall be deemed ordering
     or reordering within the meaning of subsection (b)(2).
       ``(e) Infringing Article Defined.--As used in this section,
     an `infringing article' is any article the design of which
     has been copied from a design protected under this chapter,
     without the consent of the owner of the protected design. An
     infringing article is not an illustration or picture of a
     protected design in an advertisement,

[[Page H10062]]

     book, periodical, newspaper, photograph, broadcast, motion
     picture, or similar medium. A design shall not be deemed to
     have been copied from a protected design if it is original
     and not substantially similar in appearance to a protected
     design.
       ``(f) Establishing Originality.--The party to any action or
     proceeding under this chapter who alleges rights under this
     chapter in a design shall have the burden of establishing the
     design's originality whenever the opposing party introduces
     an earlier work which is identical to such design, or so
     similar as to make prima facie showing that such design was
     copied from such work.
       ``(g) Reproduction for Teaching or Analysis.--It is not an
     infringement of the exclusive rights of a design owner for a
     person to reproduce the design in a useful article or in any
     other form solely for the purpose of teaching, analyzing, or
     evaluating the appearance, concepts, or techniques embodied
     in the design, or the function of the useful article
     embodying the design.

     ``Sec. 1310. Application for registration

       ``(a) Time Limit for Application for Registration.--
     Protection under this chapter shall be lost if application
     for registration of the design is not made within two years
     after the date on which the design is first made public.
       ``(b) When Design Is Made Public.--A design is made public
     when an existing useful article embodying the design is
     anywhere publicly exhibited, publicly distributed, or offered
     for sale or sold to the public by the owner of the design or
     with the owner's consent.
       ``(c) Application by Owner of Design.--Application for
     registration may be made by the owner of the design.
       ``(d) Contents of Application.--The application for
     registration shall be made to the Administrator and shall
     state--
       ``(1) the name and address of the designer or designers of
     the design;
       ``(2) the name and address of the owner if different from
     the designer;
       ``(3) the specific name of the useful article embodying the
     design;
       ``(4) the date, if any, that the design was first made
     public, if such date was earlier than the date of the
     application;
       ``(5) affirmation that the design has been fixed in a
     useful article; and
       ``(6) such other information as may be required by the
     Administrator.
     The application for registration may include a description
     setting forth the salient features of the design, but the
     absence of such a description shall not prevent registration
     under this chapter.
       ``(e) Sworn Statement.--The application for registration
     shall be accompanied by a statement under oath by the
     applicant or the applicant's duly authorized agent or
     representative, setting forth, to the best of the applicant's
     knowledge and belief--
       ``(1) that the design is original and was created by the
     designer or designers named in the application;
       ``(2) that the design has not previously been registered on
     behalf of the applicant or the applicant's predecessor in
     title; and
       ``(3) that the applicant is the person entitled to
     protection and to registration under this chapter.
     If the design has been made public with the design notice
     prescribed in section 1306, the statement shall also describe
     the exact form and position of the design notice.
       ``(f) Effect of Errors.--(1) Error in any statement or
     assertion as to the utility of the useful article named in
     the application under this section, the design of which is
     sought to be registered, shall not affect the protection
     secured under this chapter.
       ``(2) Errors in omitting a joint designer or in naming an
     alleged joint designer shall not affect the validity of the
     registration, or the actual ownership or the protection of
     the design, unless it is shown that the error occurred with
     deceptive intent.
       ``(g) Design Made in Scope of Employment.--In a case in
     which the design was made within the regular scope of the
     designer's employment and individual authorship of the design
     is difficult or impossible to ascribe and the application so
     states, the name and address of the employer for whom the
     design was made may be stated instead of that of the
     individual designer.
       ``(h) Pictorial Representation of Design.--The application
     for registration shall be accompanied by two copies of a
     drawing or other pictorial representation of the useful
     article embodying the design, having one or more views,
     adequate to show the design, in a form and style suitable for
     reproduction, which shall be deemed a part of the
     application.
       ``(i) Design in More Than One Useful Article.--If the
     distinguishing elements of a design are in substantially the
     same form in different useful articles, the design shall be
     protected as to all such useful articles when protected as to
     one of them, but not more than one registration shall be
     required for the design.
       ``(j) Application for More Than One Design.--More than one
     design may be included in the same application under such
     conditions as may be prescribed by the Administrator. For
     each design included in an application the fee prescribed for
     a single design shall be paid.

     ``Sec. 1311. Benefit of earlier filing date in foreign
       country

       ``An application for registration of a design filed in the
     United States by any person who has, or whose legal
     representative or predecessor or successor in title has,
     previously filed an application for registration of the same
     design in a foreign country which extends to designs of
     owners who are citizens of the United States, or to
     applications filed under this chapter, similar protection to
     that provided under this chapter shall have that same effect
     as if filed in the United States on the date on which the
     application was first filed in such foreign country, if the
     application in the United States is filed within 6 months
     after the earliest date on which any such foreign application
     was filed.

     ``Sec. 1312. Oaths and acknowledgments

       ``(a) In General.--Oaths and acknowledgments required by
     this chapter--
       ``(1) may be made--
       ``(A) before any person in the United States authorized by
     law to administer oaths; or
       ``(B) when made in a foreign country, before any diplomatic
     or consular officer of the United States authorized to
     administer oaths, or before any official authorized to
     administer oaths in the foreign country concerned, whose
     authority shall be proved by a certificate of a diplomatic or
     consular officer of the United States; and
       ``(2) shall be valid if they comply with the laws of the
     State or country where made.
       ``(b) Written Declaration in Lieu of Oath.--(1) The
     Administrator may by rule prescribe that any document which
     is to be filed under this chapter in the Office of the
     Administrator and which is required by any law, rule, or
     other regulation to be under oath, may be subscribed to by a
     written declaration in such form as the Administrator may
     prescribe, and such declaration shall be in lieu of the oath
     otherwise required.
       ``(2) Whenever a written declaration under paragraph (1) is
     used, the document containing the declaration shall state
     that willful false statements are punishable by fine or
     imprisonment, or both, pursuant to section 1001 of title 18,
     and may jeopardize the validity of the application or
     document or a registration resulting therefrom.

     ``Sec. 1313. Examination of application and issue or refusal
       of registration

       ``(a) Determination of Registrability of Design;
     Registration.--Upon the filing of an application for
     registration in proper form under section 1310, and upon
     payment of the fee prescribed under section 1316, the
     Administrator shall determine whether or not the application
     relates to a design which on its face appears to be subject
     to protection under this chapter, and, if so, the Register
     shall register the design. Registration under this subsection
     shall be announced by publication. The date of registration
     shall be the date of publication.
       ``(b) Refusal To Register; Reconsideration.--If, in the
     judgment of the Administrator, the application for
     registration relates to a design which on its face is not
     subject to protection under this chapter, the Administrator
     shall send to the applicant a notice of refusal to register
     and the grounds for the refusal. Within 3 months after the
     date on which the notice of refusal is sent, the applicant
     may, by written request, seek reconsideration of the
     application. After consideration of such a request, the
     Administrator shall either register the design or send to the
     applicant a notice of final refusal to register.
       ``(c) Application To Cancel Registration.--Any person who
     believes he or she is or will be damaged by a registration
     under this chapter may, upon payment of the prescribed fee,
     apply to the Administrator at any time to cancel the
     registration on the ground that the design is not subject to
     protection under this chapter, stating the reasons for the
     request. Upon receipt of an application for cancellation, the
     Administrator shall send to the owner of the design, as shown
     in the records of the Office of the Administrator, a notice
     of the application, and the owner shall have a period of 3
     months after the date on which such notice is mailed in which
     to present arguments to the Administrator for support of the
     validity of the registration. The Administrator shall also
     have the authority to establish, by regulation, conditions
     under which the opposing parties may appear and be heard
     in support of their arguments. If, after the periods
     provided for the presentation of arguments have expired,
     the Administrator determines that the applicant for
     cancellation has established that the design is not
     subject to protection under this chapter, the
     Administrator shall order the registration stricken from
     the record. Cancellation under this subsection shall be
     announced by publication, and notice of the
     Administrator's final determination with respect to any
     application for cancellation shall be sent to the
     applicant and to the owner of record.

     ``Sec. 1314. Certification of registration

       ``Certificates of registration shall be issued in the name
     of the United States under the seal of the Office of the
     Administrator and shall be recorded in the official records
     of the Office. The certificate shall state the name of the
     useful article, the date of filing of the application, the
     date of registration, and the date the design was made
     public, if earlier than the date of filing of the
     application, and shall contain a reproduction of the drawing
     or other pictorial representation of the design. If a
     description of the salient features of the design appears in
     the application, the description shall also appear in the
     certificate. A certificate of registration shall be admitted
     in any court as prima facie evidence of the facts stated in
     the certificate.

     ``Sec. 1315. Publication of announcements and indexes

       ``(a) Publications of the Administrator.--The Administrator
     shall publish lists and indexes of registered designs and
     cancellations of designs and may also publish the drawings or
     other pictorial representations of registered designs for
     sale or other distribution.
       ``(b) File of Representatives of Registered Designs.--The
     Administrator shall establish and maintain a file of the
     drawings or other pictorial representations of registered
     designs. The file shall be available for use by the public
     under such conditions as the Administrator may prescribe.

[[Page H10063]]

     ``Sec. 1316. Fees

       ``The Administrator shall by regulation set reasonable fees
     for the filing of applications to register designs under this
     chapter and for other services relating to the administration
     of this chapter, taking into consideration the cost of
     providing these services and the benefit of a public record.

     ``Sec. 1317. Regulations

       ``The Administrator may establish regulations for the
     administration of this chapter.

     ``Sec. 1318. Copies of records

       ``Upon payment of the prescribed fee, any person may obtain
     a certified copy of any official record of the Office of the
     Administrator that relates to this chapter. That copy shall
     be admissible in evidence with the same effect as the
     original.

     ``Sec. 1319. Correction of errors in certificates

       ``The Administrator may, by a certificate of correction
     under seal, correct any error in a registration incurred
     through the fault of the Office, or, upon payment of the
     required fee, any error of a clerical or typographical nature
     occurring in good faith but not through the fault of the
     Office. Such registration, together with the certificate,
     shall thereafter have the same effect as if it had been
     originally issued in such corrected form.

     ``Sec. 1320. Ownership and transfer

       ``(a) Property Right in Design.--The property right in a
     design subject to protection under this chapter shall vest in
     the designer, the legal representatives of a deceased
     designer or of one under legal incapacity, the employer for
     whom the designer created the design in the case of a design
     made within the regular scope of the designer's employment,
     or a person to whom the rights of the designer or of such
     employer have been transferred. The person in whom the
     property right is vested shall be considered the owner of the
     design.
       ``(b) Transfer of Property Right.--The property right in a
     registered design, or a design for which an application for
     registration has been or may be filed, may be assigned,
     granted, conveyed, or mortgaged by an instrument in writing,
     signed by the owner, or may be bequeathed by will.
       ``(c) Oath or Acknowledgement of Transfer.--An oath or
     acknowledgment under section 1312 shall be prima facie
     evidence of the execution of an assignment, grant,
     conveyance, or mortgage under subsection (b).
       ``(d) Recordation of Transfer.--An assignment, grant,
     conveyance, or mortgage under subsection (b) shall be void as
     against any subsequent purchaser or mortgagee for a valuable
     consideration, unless it is recorded in the Office of the
     Administrator within 3 months after its date of execution or
     before the date of such subsequent purchase or mortgage.

     ``Sec. 1321. Remedy for infringement

       ``(a) In General.--The owner of a design is entitled, after
     issuance of a certificate of registration of the design under
     this chapter, to institute an action for any infringement
     of the design.
       ``(b) Review of Refusal To Register.--(1) Subject to
     paragraph (2), the owner of a design may seek judicial review
     of a final refusal of the Administrator to register the
     design under this chapter by bringing a civil action, and may
     in the same action, if the court adjudges the design subject
     to protection under this chapter, enforce the rights in that
     design under this chapter.
       ``(2) The owner of a design may seek judicial review under
     this section if--
       ``(A) the owner has previously duly filed and prosecuted to
     final refusal an application in proper form for registration
     of the design;
       ``(B) the owner causes a copy of the complaint in the
     action to be delivered to the Administrator within 10 days
     after the commencement of the action; and
       ``(C) the defendant has committed acts in respect to the
     design which would constitute infringement with respect to a
     design protected under this chapter.
       ``(c) Administrator as Party to Action.--The Administrator
     may, at the Administrator's option, become a party to the
     action with respect to the issue of registrability of the
     design claim by entering an appearance within 60 days after
     being served with the complaint, but the failure of the
     Administrator to become a party shall not deprive the court
     of jurisdiction to determine that issue.
       ``(d) Use of Arbitration To Resolve Dispute.--The parties
     to an infringement dispute under this chapter, within such
     time as may be specified by the Administrator by regulation,
     may determine the dispute, or any aspect of the dispute, by
     arbitration. Arbitration shall be governed by title 9. The
     parties shall give notice of any arbitration award to the
     Administrator, and such award shall, as between the parties
     to the arbitration, be dispositive of the issues to which it
     relates. The arbitration award shall be unenforceable until
     such notice is given. Nothing in this subsection shall
     preclude the Administrator from determining whether a design
     is subject to registration in a cancellation proceeding under
     section 1313(c).

     Sec. 1322. Injunctions

       ``(a) In General.--A court having jurisdiction over actions
     under this chapter may grant injunctions in accordance with
     the principles of equity to prevent infringement of a design
     under this chapter, including, in its discretion, prompt
     relief by temporary restraining orders and preliminary
     injunctions.
       ``(b) Damages for Injunctive Relief Wrongfully Obtained.--A
     seller or distributor who suffers damage by reason of
     injunctive relief wrongfully obtained under this section has
     a cause of action against the applicant for such injunctive
     relief and may recover such relief as may be appropriate,
     including damages for lost profits, cost of materials, loss
     of good will, and punitive damages in instances where the
     injunctive relief was sought in bad faith, and, unless the
     court finds extenuating circumstances, reasonable attorney's
     fees.

     ``Sec. 1323. Recovery for infringement

       ``(a) Damages.--Upon a finding for the claimant in an
     action for infringement under this chapter, the court shall
     award the claimant damages adequate to compensate for the
     infringement. In addition, the court may increase the damages
     to such amount, not exceeding $50,000 or $1 per copy,
     whichever is greater, as the court determines to be just. The
     damages awarded shall constitute compensation and not a
     penalty. The court may receive expert testimony as an aid to
     the determination of damages.
       ``(b) Infringer's Profits.--As an alternative to the
     remedies provided in subsection (a), the court may award the
     claimant the infringer's profits resulting from the sale of
     the copies if the court finds that the infringer's sales are
     reasonably related to the use of the claimant's design. In
     such a case, the claimant shall be required to prove only the
     amount of the infringer's sales and the infringer shall be
     required to prove its expenses against such sales.
       ``(c) Statute of Limitations.--No recovery under subsection
     (a) or (b) shall be had for any infringement committed more
     than 3 years before the date on which the complaint is filed.
       ``(d) Attorney's Fees.--In an action for infringement under
     this chapter, the court may award reasonable attorney's fees
     to the prevailing party.
       ``(e) Disposition of Infringing and Other Articles.--The
     court may order that all infringing articles, and any plates,
     molds, patterns, models, or other means specifically adapted
     for making the articles, be delivered up for destruction or
     other disposition as the court may direct.

     ``Sec. 1324. Power of court over registration

       ``In any action involving the protection of a design under
     this chapter, the court, when appropriate, may order
     registration of a design under this chapter or the
     cancellation of such a registration. Any such order shall be
     certified by the court to the Administrator, who shall make
     an appropriate entry upon the record.

     ``Sec. 1325. Liability for action on registration
       fraudulently obtained

       ``Any person who brings an action for infringement knowing
     that registration of the design was obtained by a false or
     fraudulent representation materially affecting the rights
     under this chapter, shall be liable in the sum of $10,000, or
     such part of that amount as the court may determine. That
     amount shall be to compensate the defendant and shall be
     charged against the plaintiff and paid to the defendant, in
     addition to such costs and attorney's fees of the defendant
     as may be assessed by the court.

     ``Sec. 1326. Penalty for false marking

       ``(a) In General.--Whoever, for the purpose of deceiving
     the public, marks upon, applies to, or uses in advertising in
     connection with an article made, used, distributed, or sold,
     a design which is not protected under this chapter, a design
     notice specified in section 1306, or any other words or
     symbols importing that the design is protected under this
     chapter, knowing that the design is not so protected, shall
     pay a civil fine of not more than $500 for each such offense.
       ``(b) Suit by Private Persons.--Any person may sue for the
     penalty established by subsection (a), in which event one-
     half of the penalty shall be awarded to the person suing and
     the remainder shall be awarded to the United States.

     ``Sec. 1327. Penalty for false representation

       ``Whoever knowingly makes a false representation materially
     affecting the rights obtainable under this chapter for the
     purpose of obtaining registration of a design under this
     chapter shall pay a penalty of not less than $500 and not
     more than $1,000, and any rights or privileges that
     individual may have in the design under this chapter shall be
     forfeited.

     ``Sec. 1328. Enforcement by Treasury and Postal Service

       ``(a) Regulations.--The Secretary of the Treasury and the
     United States Postal Service shall separately or jointly
     issue regulations for the enforcement of the rights set forth
     in section 1308 with respect to importation. Such regulations
     may require, as a condition for the exclusion of articles
     from the United States, that the person seeking exclusion
     take any one or more of the following actions:
       ``(1) Obtain a court order enjoining, or an order of the
     International Trade Commission under section 337 of the
     Tariff Act of 1930 excluding, importation of the articles.
       ``(2) Furnish proof that the design involved is protected
     under this chapter and that the importation of the articles
     would infringe the rights in the design under this chapter.
       ``(3) Post a surety bond for any injury that may result if
     the detention or exclusion of the articles proves to be
     unjustified.
       ``(b) Seizure and Forfeiture.--Articles imported in
     violation of the rights set forth in section 1308 are subject
     to seizure and forfeiture in the same manner as property
     imported in violation of the customs laws. Any such forfeited
     articles shall be destroyed as directed by the Secretary of
     the Treasury or the court, as the case may be, except that
     the articles may be returned to the country of export
     whenever it is shown to the satisfaction of the Secretary of
     the Treasury that the importer had no reasonable grounds for
     believing that his or her acts constituted a violation of the
     law.

[[Page H10064]]

     ``Sec. 1329. Relation to design patent law

       ``The issuance of a design patent under title 35 for an
     original design for an article of manufacture shall terminate
     any protection of the original design under this chapter.

     ``Sec. 1330. Common law and other rights unaffected

       ``Nothing in this chapter shall annul or limit--
       ``(1) common law or other rights or remedies, if any,
     available to or held by any person with respect to a design
     which has not been registered under this chapter; or
       ``(2) any right under the trademark laws or any right
     protected against unfair competition.

     ``Sec. 1331. Administrator; Office of the Administrator

       ``In this chapter, the `Administrator' is the Register of
     Copyrights, and the `Office of the Administrator' and the
     `Office' refer to the Copyright Office of the Library of
     Congress.

     ``Sec. 1332. No retroactive effect

       ``Protection under this chapter shall not be available for
     any design that has been made public under section 1310(b)
     before the effective date of this chapter.''.

     SEC. 503. CONFORMING AMENDMENTS.

       (a) Table of Chapters.--The table of chapters for title 17,
     United States Code, is amended by adding at the end the
     following:

``13. Protection of Original Designs........................1301''.....

       (b) Jurisdiction of District Courts Over Design Actions.--
     (1) Section 1338(c) of title 28, United States Code, is
     amended by inserting ``, and to exclusive rights in designs
     under chapter 13 of title 17,'' after ``title 17''.
       (2)(A) The section heading for section 1338 of title 28,
     United States Code, is amended by inserting ``designs,''
     after ``mask works,''.
       (B) The item relating to section 1338 in the table of
     sections at the beginning of chapter 85 of title 28, United
     States Code, is amended by inserting ``designs,'' after
     ``mask works,''.
       (c) Place for Bringing Design Actions.--(1) Section 1400(a)
     of title 28, United States Code, is amended by inserting ``or
     designs'' after ``mask works''.
       (2) The section heading for section 1400 of title 28,
     United States Code is amended to read as follows:

     ``Sec. Patents and copyrights, mask works, and designs''.

       (3) The item relating to section 1400 in the table of
     sections at the beginning of chapter 87 of title 28, United
     States Code, is amended to read as follows:

``1400.  Patents and copyrights, mask works, and designs.''.

       (d) Actions Against the United States.--Section 1498(e) of
     title 28, United States Code, is amended by inserting ``, and
     to exclusive rights in designs under chapter 13 of title
     17,'' after ``title 17''.

     SEC. 504. JOINT STUDY OF THE EFFECT OF THIS TITLE.

       (a) In general.--Not later than 1 year after the date of
     the enactment of this Act, and not later than 2 years after
     such date of enactment, the Register of Copyrights and the
     Commissioner of Patents and Trademarks shall submit to the
     Committees on the Judiciary of the Senate and the House of
     Representatives a joint report evaluating the effect of the
     amendments made by this title.
       (b) Elements For Consideration.--In carrying out subsection
     (a), the Register of Copyrights and the Commissioner of
     Patents and Trademarks shall consider--
       (1) the extent to which the amendments made by this title
     has been effective in suppressing infringement of the design
     of vessel hulls;
       (2) the extent to which the registration provided for in
     chapter 13 of title 17, United States Code, as added by this
     title, has been utilized;
       (3) the extent to which the creation of new designs of
     vessel hulls have been encouraged by the amendments made by
     this title;
       (4) the effect, if any, of the amendments made by this
     title on the price of vessels with hulls protected under such
     amendments; and
       (5) such other considerations as the Register and the
     Commissioner may deem relevant to accomplish the purposes of
     the evaluation conducted under subsection (a).

     SEC. 505. EFFECTIVE DATE.

       The amendments made by sections 502 and 503 shall take
     effect on the date of the enactment of this Act and shall
     remain in effect until the end of the 2-year period beginning
     on such date of enactment. No cause of action based on
     chapter 13 of title 17, United States Code, as added by this
     title, may be filed after the end of that 2-year period.

       Amend the title so as to read: ``A bill to amend title 17,
     United States Code, to implement the World Intellectual
     Property Organization Copyright Treaty and Performances and
     Phonograms Treaty, and for other purposes.''.
       And the Senate agree to the same.

     From the Committee on Commerce, for consideration of the
     House bill, and the Senate amendment, and modifications
     committed to conference:
     Tom Bliley,
     Billy Tauzin,
     John D. Dingell,
     From the Committee on the Judiciary, for consideration of the
     House bill, and the Senate amendment, and modifications
     committed to conference:
     Henry J. Hyde,
     Howard Coble,
     Bob Goodlatte,
     John Conyers, Jr.,
     Howard L. Berman,
                                Managers on the Part of the House.

     Orrin G. Hatch,
     Strom Thurmond,
     Patrick J. Leahy,
                               Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

       The managers on the part of the House and the Senate at the
     conference on the disagreeing votes of the two Houses on the
     amendment of the Senate to the bill (H.R. 2281) to amend
     title 17, United States Code, to implement the World
     Intellectual Property Organization Copyright Treaty and
     Performances and Phonograms Treaty, and for other purposes,
     submit the following joint statement to the House and the
     Senate in explanation of the effect of the action agreed upon
     by the managers and recommended in the accompanying
     conference report:
       The Senate amendment struck all of the House bill after the
     enacting clause and inserted a substitute text.
       The House recedes from its disagreement to the amendment of
     the Senate with an amendment that is a substitute for the
     House bill and the Senate amendment. The differences between
     the House bill, the Senate amendment, and the substitute
     agreed to in conference are noted below, except for clerical
     corrections, conforming changes made necessary by agreements
     reached by the conferees, and minor drafting and clerical
     changes.

                 Title I--WIPO Treaties Implementation

       This title implements two new intellectual property
     treaties, the WIPO Copyright Treaty and the WIPO Performances
     and Phonograms Treaty, signed in Geneva, Switzerland in
     December 1996.

                        section 101. short title

       The House recedes to the Senate section 101. This section
     sets forth the short title of the Act. As between the short
     titles in the House bill and the Senate amendment, it is
     believed that the title in Section 101 of the Senate
     amendment more accurately reflects the effect of the Act.

                   section 102. technical amendments

       The Senate recedes to House section 102. This section makes
     technical and conforming amendments to the U.S. Copyright Act
     in order to comply with the obligations of the two WIPO
     treaties.

  section 103. copyright protection systems and copyright management
                              information

       The Senate recedes to House section 103 with modification.
     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, both the House bill and the
     Senate amendment, in section 103, would add 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 measures
     of protection; (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. The House bill and the
     Senate amendment differ in several respects, primarily
     related to the scope and availability of exemptions from
     the prohibitions under section 1201.
       Section 1201(a)(1)--Rulemaking by the Librarian of
     Congress. Section 1201(a)(1)(C) provides that the
     determination of affected classes of works described in
     subparagraph (A) shall be made by the Librarian of Congress
     ``upon the recommendation of the Register of Copyrights, who
     shall consult with the Assistant Secretary for Communications
     and Information of the Department of Commerce and report and
     comment on his or her views in making such recommendation.''
     The determination will be made in a rulemaking proceeding on
     the record. It is the intention of the conferees that, as is
     typical with other rulemaking under title 17, and in
     recognition of the expertise of the Copyright Office, the
     Register of Copyrights will conduct the rulemaking, including
     providing notice of the rulemaking, seeking comments from the
     public, consulting with the Assistant Secretary for
     Communications and Information

[[Page H10065]]

     of the Department of Commerce and any other agencies that are
     deemed appropriate, and recommending final regulations in the
     report to the Librarian.
       Section 1201(a) and 1202--technological measures. It is the
     understanding of the conferees that technological measures
     will most often be developed through consultative, private
     sector efforts by content owners, and makers of computers,
     consumer electronics and telecommunications devices. The
     conferees expect this consultative approach to continue as a
     constructive and positive method. One of the benefits of such
     consultation is to allow testing of proposed technologies to
     determine whether there are adverse effects on the ordinary
     performance of playback and display equipment in the
     marketplace, and to take steps to eliminate or substantially
     mitigate those effects before technologies are introduced.
     The public interest is well-served by such activities.
       Persons may also choose to implement a technological
     measure without vetting it through an inter-industry
     consultative process, or without regard to the input of
     affected parties. Under such circumstances, such a
     technological measure may materially degrade or otherwise
     cause recurring appreciable adverse effects on the authorized
     performance or display of works. Steps taken by the makers or
     servicers of consumer electronics, telecommunications or
     computing products used for such authorized performances or
     displays solely to mitigate these adverse effects on product
     performance (whether or not taken in combination with other
     lawful product modifications) shall not be deemed a violation
     of sections 1201(a) or (b).
       However, this construction is not meant to afford
     manufacturers or servicers an opportunity to give persons
     unauthorized access to protected content, or to exercise the
     rights under the Copyright Act of copyright owners in such
     works, under the guise of ``correcting'' a performance
     problem that results from the implementation of a particular
     technological measure. Thus, it would violate sections
     1201(a) or (b) for a manufacturer or servicer to take
     remedial measures if they are held out for or undertaken
     with, or result in equipment with only limited commercially
     significant use other than, the prohibited purpose of
     allowing users to gain unauthorized access to protected
     content or to exercise the rights under the Copyright Act of
     copyright owners in such works.
       With regard to section 1202, product adjustments made to
     eliminate recurring appreciable adverse effects on the
     authorized performance or display of works caused by
     copyright management information will not be deemed a
     violation of section 1202 unless such steps are held out for
     or undertaken with a prohibited purpose, or the requisite
     knowledge, of inducing, enabling, facilitating or concealing
     infringement of rights of copyright owners under the
     Copyright Act.
       Section 1201(e) and 1202(d)--Law enforcement, intelligence,
     and other government activities. Sections 1201(e) and 1202(d)
     create and exception to the prohibitions of sections 1201 and
     1202 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. The anticircumvention provisions of this
     legislation might be read to prohibit some aspects of the
     information security testing that is critical to preventing
     cyber attacks against government computers, computer systems,
     and computer networks. The conferees have added language to
     sections 1201(e) and 1202(d) to make it clear that the
     anticircumvention prohibition does not apply to lawfully
     authorized information security activities of the federal
     government, the states, political subdivisions of states, or
     persons acting within the scope of their government
     information security contract. In this way, the bill will
     permit the continuation of information security activities
     that protect the country against one of the greatest threats
     to our national security as well as to our economic security.
       At the same time, this change is narrowly drafted so that
     it does not open the door to the very piracy the treaties are
     designed to prevent. For example, the term ``information
     security'' activities is intended to include presidential
     directives and executive orders concerning the
     vulnerabilities of a computer, computer system, or computer
     network. By this, the conferees intent to include the
     recently-issued Presidential Decision Directive 63 on
     Critical Infrastructure Protection. PDD-63 contains a number
     of initiatives to ensure that the United States takes all
     necessary measures to swiftly eliminate any significant
     vulnerability to both physical and cyber attacks on the
     nation's critical infrastructures, including especially our
     cyber systems.
       The Term ``computer system'' has the same definition for
     purposes of this section as that term is defined in the
     Computer Security Act, 15 U.S.C. Sec. 278g-3(d)(1).
       Subsection 1201(g)--Encryption Research. Subsection (g)
     permits the circumvention of access control technologies in
     certain circumstances for the purpose of good faith
     encryption research. The conferees note that section
     1201(g)(3)(A) does not imply that the results of encryption
     research must be disseminated. There is no requirement that
     legitimate encryption researchers disseminate their findings
     in order to quality for the encryption research exemption in
     section 1201(g). Rather, the subsection describes
     circumstances in which dissemination, if any, would be
     weighed in determining eligibility.
       Section 1201(j)--Security Testing. Subsection (j) clarifies
     the intended effect of the bill with respect to information
     security. The conferees understand this act to prohibit
     unauthorized circumvention of technological measures applied
     to works protected under title 17. The conferees recognize
     that technological measures may also be used to protect the
     integrity and security of computers, computer systems or
     computer networks. It is not the intent of this act to
     prevent persons utilizing technological measures in respect
     of computers, computer systems or networks from testing the
     security value and effectiveness of the technological
     measures they employ, or from contracting with companies that
     specialize in such security testing.
       Thus, in addition to the exception for good faith
     encryption research contained in Section 1201(g), the
     conferees have adopted Section 1201(j) to resolve additional
     issues related to the effect of the anti-circumvention
     provision on legitimate information security activities.
     First, the conferees were concerned that Section 1201(g)'s
     exclusive focus on encryption-related research does not
     encompass the entire range of legitimate information
     security activities. Not every technological means that is
     used to provide security relies on encryption technology,
     or does so to the exclusion of other methods. Moreover, an
     individual who is legitimately testing a security
     technology may be doing so not to advance the state of
     encryption research or to develop encryption products, but
     rather to ascertain the effectiveness of that particular
     security technology.
       The conferees were also concerned that the anti-
     circumvention provision of Section 1201(a) could be construed
     to inhibit legitimate forms of security testing. It is not
     unlawful to test the effectiveness of a security measure
     before it is implemented to protect the work covered under
     title 17. Not it is unlawful for a person who has implemented
     a security measure to test its effectiveness. In this
     respect, the scope of permissible security testing under the
     Act should be the same as permissible testing of a simple
     door lock; a prospective buyer may test the lock at the store
     with the store's consent, or may purchase the lock and test
     it at home in any manner that he or she sees fit--for
     example, by installing the lock on the front door and seeing
     if it can be picked. What that person may not do, however, it
     test the lock once it has been installed on someone's else's
     door, without the consent of the person whose property is
     protected by the lock.
       In order to resolve these concerns, Section 1201(j) creates
     a exception of ``security testing.'' Section 1201(j)(1)
     defines ``security testing'' as obtaining access to a
     computer, computer system, or computer network for the sole
     purpose of testing, investigating, or correcting a security
     flaw or vulnerability, provided that the person engaging in
     such testing is doing so with the consent of the owner or
     operator of the computer, computer system, or computer
     network. Section 102(j)(2) provides that, notwithstanding the
     provisions of Section 1201(a), a person may engage in such
     testing, provided that the act does not constitute
     infringement or violate any other applicable law. Section
     1201(j)(3) provides a non-exclusive list of factors that a
     court shall consider in determining whether a person benefits
     from this exception.
       Section 1201(j)(4) permits an individual, notwithstanding
     the prohibition contained in Section 1201(a)(2), to develop,
     produce, distribute, or employ technological means for the
     sole purpose of performing acts of good faith security
     testing under Section 1201(j)(2), provided that technological
     means do not otherwise violate section 1201(a)(2). It it
     Congress' intent for this subsection to have application only
     with respect to good faith security testing. The intent is to
     ensure that parties engaged in good faith security testing
     have the tools available to them to complete such acts. The
     conferees understand that such tools may be coupled with
     additional tools that serve purposes wholly unrelated to the
     purposes of this Act. Eligibility for this exemption should
     not be precluded because these tools are coupled in such a
     way. The exemption would not be available, however, when such
     tools are coupled with a product or technology that violates
     section 1201(a)(2),
       Section 1201(k)--Certain Analog Devices and Certain
     Technological Measures.--The conferees included a provision
     in the final legislation to require that analog video
     cassette recorders must conform to the two forms of copy
     control technology that are in wide use in the market today--
     the automatic gain control copy control technology and the
     colorstripe copy control technology. Neither are currently
     required elements of any format of video recorder, and the
     ability of each technology to work as intended depends on the
     consistency of design of video recorders or on incorporation
     of specific response elements in video recorders.
     Moreover, they do not employ encryption or scrambling of
     the content being protected.
       As a consequence, these analog copy control technologies
     may be rendered ineffective either by redesign of video
     recorders or by intervention of ``black box'' devices or
     software ``hacks''. The conferees believe, and specifically
     intend, that the general circumvention prohibition in Section
     1201(b)(2) will prohibit the manufacture and sale of ``black
     box'' devices that defeat these technologies. Moreover, the
     conferees believe and intend that the term ``technology''
     should be read to include the software ``hacks'' of this

[[Page H10066]]

     type, and that such ``hacks'' are equally prohibited by the
     general circumvention provision. Devices have been marketed
     that claim to ``fix'' television picture disruptions
     allegedly caused by these technologies. However, as described
     in more detail below, there is no justification for the
     existence of any intervention device to ``fix'' such problems
     allegedly caused by these technologies, including ``fixes''
     allegedly related to stabilization or clean up of the picture
     quality. Such devices should be seen for what they are--
     circumvention devices prohibited by this legislation.
       The conferees emphasize that this particular provision is
     being included in this bill in order to deal with a very
     specific situation involving the protection of analog
     television programming and prerecorded movies and other
     audiovisual works in relation to recording capabilities of
     ordinary consumer analog video cassette recorders. The
     conferees also acknowledge that numerous other activities are
     underway in the private sector to develop, test, and apply
     copy control technologies, particularly in the digital
     environment. Subject to the other requirements of this
     section, circumvention of these technologies may be
     prohibited under this Act. Moreover, in some cases, these
     technologies are subject to licensing arrangements that
     provide legally enforceable obligations. The conferees
     applaud these undertakings and encourage their continuation,
     including the inter-industry meetings and working groups that
     are essential to their success. If, as a result of such
     activities, the participants request further Congressional
     action, the conferees expect that the Congress, and the
     committees involved in this Conference specifically, will
     consider whether additional statutory requirements are
     necessary and appropriate.
       Before agreeing to include this requirement in the final
     legislation, the conferees assured themselves in relation to
     two critical issues--that these analog copy control
     technologies do not create ``playability'' problems on normal
     consumer electronics products and that the intellectual
     property necessary for the operation of these technologies
     will be available on reasonable and non-discriminatory terms.
       In relation to the playability issue, the conferees have
     received authoritative assurances that playability issues
     have already been resolved in relation to the current
     specifications for these technologies and that an inter-
     industry forum will be established to resolve any playability
     issues that may arise in the future in relation to either
     revisions to the copy control specifications or development
     of new consumer technologies and products.
       As further explanation on the playability issue, the
     conferees understand that the existing technologies were the
     subject of extensive testing that included all or virtually
     all of the major consumer electronics manufacturers and that
     this testing resulted in modification of the specifications
     to assure that the technologies do not produce noticeable
     adverse effects on the normal display of content that is
     protected utilizing these technologies. Currently,
     all manufacturers are effectively ``on notice'' of the
     existence of these technologies and their specifications
     and should be able to design their products to avoid any
     adverse effects.
       In relation to the intellectual property licensing issues,
     the owner of the analog copy control intellectual property--
     Macrovision Corporation--has written a letter to the Chairman
     of the Conference Committee to provide the following
     assurances in relation to the licenses for intellectual
     property necessary to implement these analog copy control
     technologies: (1) that its intellectual property is generally
     available on reasonable and non-discriminatory terms, as that
     phrase is used in normal industry parlance; (2) that
     manufacturers of the analog video cassette recorders that are
     required by this legislation to conform to the technologies
     will be provided royalty-free licenses for the use of its
     relevant intellectual property in any device that plays back
     packaged, prerecorded content, or that reads and responds to
     or generates or carries forward the elements of these
     technologies associated with such content; (3) in the same
     circumstances as described in (2), other manufacturers of
     devices that generate, carry forward, or read and respond to
     these technologies will be provided licenses carrying only
     modest fees (in the range of $25,000--in current dollars--
     initial payment and lesser amounts as recurring annual fees);
     (4) that manufacturers of other products, including set-top-
     boxes and devices that perform similar functions (including
     integrated devices containing such functionality), will
     receive licenses on reasonable and non-discriminatory terms,
     including royalty terms and other considerations; and (5)
     that playability issues will not be the subject of license
     requirements but rather will be handled through an inter-
     industry forum that is being established for this purpose.
     The conferees emphasize the need for the technology's
     proprietor to adhere to these assurances in all future
     licensing.
       With regard to the specific elements of this provision:
       First, these technologies operate within the general NTSC
     television signal environment, and the conferees understand
     that this means that they work in relation to television
     signals that are of the 525/60 interlaced type, i.e., the
     standard definition television signal that has been used in
     the United States. The S-video and Hi-8 versions of covered
     devises are, of course, included with the coverage. Further,
     the new format analog video cassette recorders that are
     covered by paragraph (1)(A)(v) are those that receive the
     525/60 interlaced type of input.
       Second, it is the conferees understanding that not all
     analog video signals will utilize this technology, and,
     obviously, a device that receives a signal that does not
     contain these technologies need not read and respond to what
     might have been there if the signal had utilized the
     technology.
       Third, a violation of paragraph (1) is a form of
     circumvention under Section 1201(b)(1). Accordingly, the
     enforcement of this provision is through the penalty
     provisions applicable to Section 1201 generally. A violation
     of paragraph (2) is also a violation of Section 1201 and
     hence subject to those penalty provisions. The inclusion of
     paragraph (5) with regard to enforcement of paragraph (2) is
     intended merely to allow the particular statutory damage
     provisions of Section 1203 to apply to violations of this
     subsection.
       Fourth, the conferees understand that minor modifications
     may be necessary in the specifications for these technologies
     and intend that any such modifications (and related new
     ``revised specifications'') should not negate in any way the
     requirements imposed by this subsection. The modifications
     should, however, be sufficiently minor that manufacturers of
     analog video cassette recorders should be free to continue to
     design products to conform to these technologies on the basis
     of the specifications existing, or actually implemented by
     manufacturers, as of the date of enactment of this Act.
       Fifth, the provisions of paragraph (2) are intended to
     operate to allow copyright owners to use these technologies
     to prevent the making of a viewable copy of a pay-per-view,
     near video on demand, or video on demand transmission or
     prerecorded tape or disc containing one or more motion
     pictures or other audiovisual works, at the same time as
     consumers are afforded their customary ability to make analog
     copies of programming offered through other channels or
     services. Copyright owners may utilize these technologies to
     prevent the making of a ``second generation'' copy where the
     original transmission was through a pay television service
     (such as HBO, Showtime, or the like). The basic and extended
     basic tiers of programming services, whether provided through
     cable or other wireline, satellite, or future over the air
     terrestrial systems, may not be encoded with these
     technologies at all. The inclusion of paragraph (2)(D) is not
     intended to be read to authorize the making of a copy by
     consumers or others in relation to pay-per-view, near video
     on demand or video-on-demand transmissions or prerecorded
     media.
       Sixth, the exclusion of professional analog video cassette
     recorders is necessary in order to allow the motion picture,
     broadcasting, and other legitimate industries and individual
     businesses to obtain and use equipment that is essential to
     their normal, lawful business operations. As a further
     explanation of the types of equipment that are to be subject
     to this exception, the following factors should be used in
     evaluating whether a specific product is a ``professional''
     product:
       (1) whether, in the preceding year, only a small number of
     the devices that are of the same kind, nature, and
     description were sold to consumers other than professionals
     employing such devices in a lawful business or industrial
     use;
       (2) whether the device has special features designed for
     use by professionals employing the device in a lawful
     business or industrial use;
       (3) whether the advertising, promotional and descriptive
     literature or other materials used to market the device were
     directed at professionals employing such devices in a lawful
     business or industrial use;
       (4) whether the distribution channels and retail outlets
     through which the device is distributed and sold are ones
     used primarily to make sales to professionals employing such
     devices in a lawful business or industrial use; and
       (5) whether the uses to which the device is most commonly
     put are those associated with the work of professionals
     employing the device in a lawful business or industrial use.
       Seventh, paragraph (1)(B) contains a number of points
     worthy of explanation. In general, the requirement in
     paragraph (1)(B) is that manufacturers not materially reduce
     the responsiveness of their existing products and is also
     intended to be carried forward in the introduction of new
     models. This is particularly important in relation to the
     four-line colorstripe copy control technology, where the
     basic requirement in the statute is that a model of a
     recorder not be modified to eliminate conformance with the
     four-line colorstripe technology and where the standard for
     ``conformance'' is simply that the lines be visible and
     distracting in the display of a copy of material that was
     protected with the technology when the copy is played back,
     in normal viewing mode, by the recorder that made the copy
     and displayed on a reference display device. Specific
     elements of that requirement include:
       (1) ``Normal viewing mode'' is intended to mean the viewing
     of a program in its natural sequence at the regular speed for
     playback and is not intended to allow ``AGC-stripping viewing
     modes'' to be developed. It is intended to exclude still
     frame or slow motion viewing from this definition.
       (2) The ``reference display device'' concept is used in the
     legislation to acknowledge that manufacturers of analog video
     cassette

[[Page H10067]]

     recorders may use a specific display device to test their
     responsiveness to the colorstripe technology and then may use
     the level of such responsiveness as their baseline to achieve
     compliance. The reference display device for manufacturers
     that make televisions is intended to be a television set also
     made by that manufacturer. Where an analog video cassette
     recorder manufacturer does not make display devices, that
     manufacturer may choose a display device made by another
     manufacturer to serve as a reference. In general, a reference
     display device should be one that is generally representative
     of display devices in the U.S. market at the time of the
     testing.
       (3) The conferees intend that the word ``model'' should be
     interpreted broadly and is not to be determined exclusively
     by alphabetic, numeric, name, or other label. Courts should
     look with suspicion at ``new models'' that reduce or
     eliminate conformance with this technology, as compared with
     that manufacturer's ``previous models.'' Further, a
     manufacturer should not replace a previous model that showed
     intense lines with a model that shows weak lines in the
     played back picture.
       For any new entrant into the VHS format analog video
     cassette recorder manufacturing business, the legislation
     provides that such a manufacturer will build its initial
     devices so as to be in conformance with the four-line
     colorstripe copy control technology based on the playback on
     a reference display device and thereafter not modify the
     design so that its products no longer conform to this
     technology.
       Finally, the proprietor of the colorstripe copy control
     technology has supplied the Committee with a description of
     how the technology should work so as to provide the desired
     copy protection benefits. That description is as follows: the
     colorstripe copy control technology works as intended if a
     recorder records a signal that, when played back by the
     playback function of that recorder in the normal viewing
     mode, exhibits on a reference display device a significant
     distortion of color on the lines which begin with a
     colorstripe colorburst, or a complete or intermittent loss of
     color throughout at least 50% of the visible image. While the
     conferees realize that there may be variations among
     recorders in relation to this technology, the conferees
     expect the affected manufacturers to work with the proprietor
     of the technology to ensure that the basic goal of content
     protection through this technology is achieved. The conferees
     understand that content protection through this technology is
     to the manufacturers' benefit, as well, since it encourages
     content providers to release more valuable content than they
     might otherwise release without such protection. The
     conferees further intend that manufacturers should seek to
     respond to the colorstripe technology at the highest feasible
     level and should not modify their recorder designs, or
     substitute weaker responding recorders for stronger
     responding recorders in order to avoid the requirements of
     this subsection.
       Eighth, the type of colorstrip copy control technology to
     which the legislation requires conformance is the four-line
     ``half burst'' type version of this technology. The content
     provider may shift, in an adaptive fashion, from no
     colorstripe encoding to the two-line version to the four-line
     version, in order to balance the copy control features of
     the technology against the possible playback distortion
     that the four-line technology occasionally creates. This
     legislation requires conformance only to the four-line
     version, but prohibits any effort to eliminate or reduce
     materially the effectiveness of the two-line version in
     relation to any particular analog video cassette recorder
     that, in fact, provides a response to the two-line
     version. The legislation also applies the ``encoding
     rules'' in paragraph (2) to either the two-line or four-
     line versions of this technology.

 Section 104. Evaluation of Impact of Copyright Law and Amendments on
           Electronic Commerce and Technological Development

       The Senate recedes to House section 105 with modification.

                      Section 105. Effective Date

       The Senate recedes to House section 106. This section sets
     forth the effective date of the amendments made by this
     title. The corresponding sections of the House bill and the
     Senate amendment are substantively identical.

      Title II--Online Copyright Infringement Liability Limitation

       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.

                        Section 201. Short Title

       The Senate recedes to House section 201. This section sets
     forth the short title of the Act. The Senate accepts the
     House formulation.

    Section 202. Limitations on Liability for Copyright Infringement

       The Senate recedes to House section 202 with modification.
     This section amends chapter 5 of the Copyright Act (17 U.S.C.
     501, et. seq.) to create a new section 512, titled
     ``Limitations on liability relating to material online.'' New
     Section 512 contains limitations on service providers'
     liability for five general categories of activity set forth
     in subsections (a) through (d) and subsection (g). As
     provided in subsection (l), 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. This
     legislation is not intended to discourage the service
     provider from monitoring its service for infringing material.
     Courts should not conclude that the service provider loses
     eligibility for limitations on liability under section 512
     solely because it engaged in a monitoring program.
       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 (k)(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 (j). To qualify for these
     protections, service providers must meet the conditions set
     forth in subsection (i), and service providers' activities at
     issue must involve a function described in subsection (a),
     (b), (c), (d) or (g), 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.
       Subsection (b) provides for a limitation on liability with
     respect to certain acts of ``system caching''. Paragraphs (5)
     and (6) of this subsection refer to industry standard
     communications protocols and technologies that are only now
     in the initial stages of development and deployment. The
     conferees expect that the Internet industry standards setting
     organizations, such as the Internet Engineering Task Force
     and the World Wide Web Consortium, will act promptly and
     without delay to establish these protocols so that subsection
     (b) can operate as intended.
       Subsection (e) is included by the conferees in order to
     clarify the provisions of the bill with respect to the
     liability of nonprofit institutions of higher learning that
     act as service providers. This provision serves as a
     substitute for section 512(c)(2) of the House bill and for
     the study proposed by section 204 of the Senate amendment.
       In general, Title II provides that a university or other
     public or nonprofit institution of higher education which is
     also a ``service provider'' (as that term is defined in title
     II) is eligible for the limitations on liability provided in
     title II to the same extent as any other service provider.
       However, the conferees recognize that the university
     environment is unique. Ordinarily, a service provider may
     fail to qualify for the liability limitations in Title II
     simply because the knowledge or actions of one of its
     employees may be imputed to it under basic principles of
     respondeat superior and agency law. The special relationship
     which exists between universities and their faculty members
     (and their graduate student employees) when they are engaged
     in teaching or research is different from the ordinary
     employer-employee relationship. Since independence--freedom
     of thought, word and action--is at the core of academic
     freedom, the actions of university faculty and graduate
     student teachers and researchers warrant special
     consideration in the context of this legislation. This
     special consideration is embodied in new subsection (e),
     which provides special rules for determining whether
     universities, in their capacity as a service provider, may or
     may not be liable for acts of copyright infringement by
     faculty members or graduate students in certain
     circumstances.
       Subsection (e)(1) provides that the online infringing
     actions of faculty members or graduate student employees,
     which occur when they are ``performing a teaching or research
     function,'' will not be attributed to an institution of
     higher education in its capacity as their employer for
     purposes of section 512, if certain conditions are met. For
     the purposes of subsections (a) and (b) of section 512, such
     faculty member or graduate student shall be considered to be
     a person other than the institution, and for the purposes of
     subsections (c) and (d) of section 512 the faculty member's
     or graduate student's knowledge or awareness of his or her
     infringing activities will not be attributed to the
     institution, when they are performing a teaching or research
     function and the conditions in paragraphs (A)-(C) are met.
       When the faculty member or the graduate student employee is
     performing a function other than teaching or research, this
     subsection provides no protection against liability for the
     institution if infringement occurs. For example, a faculty
     member or graduate student is performing a function other
     than teaching or research when the faculty member or graduate
     student is exercising institutional administrative
     responsibilities, or is carrying out operational
     responsibilities that relate to the institution's function as
     a service provider. Further, for the exemption to apply on
     the basis of research activity, the research must be a
     genuine academic exercise--i.e. a legitimate scholarly or
     scientific investigation or inquiry--rather than an
     activity which is claimed to be research

[[Page H10068]]

     but is undertaken as a pretext for engaging in infringing
     activity.
       In addition to the ``teaching or research function'' test,
     the additional liability protections contained in subsection
     (e)(1) do not apply unless the conditions in paragraphs (A)
     through (C) are satisfied. First, paragraph (A) requires that
     the infringing activities must not involve providing online
     access to instructional materials that are ``required or
     recommended'' for a course taught by the infringing faculty
     member and/or the infringing graduate student within the last
     three years. The reference to ``providing online access'' to
     instructional materials includes the use of e-mail for that
     purpose. The phrase ``required or recommended'' is intended
     to refer to instructional materials that have been formally
     and specifically identified in a list of course materials
     that is provided to all students enrolled in the course for
     credit; it is not intended, however, to refer to the other
     materials which, from time to time, the faculty member or
     graduate student may incidentally and informally bring to the
     attention of students for their consideration during the
     course of instruction.
       Second, under paragraph (B) the institution must not have
     received more than two notifications of claimed infringement
     with respect to the particular faculty member or particular
     graduate student within the last three years. If more than
     two such notifications have been received, the institution
     may be considered to be on notice of a pattern of infringing
     conduct by the faculty member or graduate student, and the
     limitation of subsection (e) does not apply with respect to
     the subsequent infringing actions of that faculty member or
     that graduate student. Where more than two notifications have
     previously been received with regard to a particular faculty
     member or graduate student, the institution will only become
     potentially liable for the infringing actions of that faculty
     member or that graduate student. Any notification of
     infringement that gives rise to a cause of action for
     misrepresentation under subsection (f) does not count for
     purposes of paragraph (B).
       Third, paragraph (C) states that the institution must
     provide to the users of its system or network--whether they
     are administrative employees, faculty, or students--materials
     that accurately describe and promote compliance with
     copyright law. The legislation allows, but does not require,
     the institutions to use relevant informational materials
     published by the U.S. Copyright Office in satisfying the
     condition imposed by paragraph (C).
       Subsection (e)(2) defines the terms and conditions under
     which an injunction may be issued against an institution of
     higher education that is a service provider in cases to which
     subsection (e)(1) applies. First, all the factors and
     considerations taken into account by a court under 17 U.S.C.
     Sec. 502 will apply in the case of any application for an
     injunction in cases covered by this subsection. In addition,
     the court is also required to consider the factors of
     particular significance in the digital environment listed in
     subsection (j)(2). Finally, the provisions contained in
     (j)(3), concerning notice to the service provider and the
     opportunity to appear, are also applicable in cases to which
     subsection (e)(1) applies.
       The conferees also want to emphasize that nothing contained
     in subsection (e) should be interpreted to establish new
     liability for institutions of higher education, including
     under the doctrines of respondeat superior, or of
     contributory liability, where liability does not now exist.
     Further, subsection (e) does not alter any of the existing
     limitations on the rights of copyright owners that are
     already contained in the Copyright Act. So, for example,
     subsection (e) has no impact on the fair use (section 107)
     doctrine or the availability of fair use in a university
     setting; similarly, section 110 of the Copyright Act
     dealing with classroom performance and distance learning
     is not changed by subsection (e). In this regard,
     subsection (e) is fully consistent with the rest of
     section 512, which neither creates any new liabilities for
     service providers, nor affects any defense to infringement
     available to a service provider. Finally, subsection (e)
     has no applicability to any case asserting that a
     university is liable for copyright infringement in any
     capacity other than as a service provider.

                      Section 203. Effective Date

       The Senate recedes to House section 203. This section sets
     forth the effective date of the amendments made by this
     title. The corresponding sections of the House bill and the
     Senate amendment are substantively identical.

     Title III--Computer Maintenance or Repair Copyright Exemption

                            Sections 301-302

       The Senate recedes to the House sections 301-302. These
     sections effect a minor, yet important clarification in
     section 117 of the Copyright Act 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),\1\ 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 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. The corresponding sections of
     the House bill and the Senate amendment are substantively
     identical.
---------------------------------------------------------------------------
     \1\ See MAI Sys. Corp. v. Peak Computer, 991 F. 2d 511 (9th
     Cir. 1993), cert. denied, 114 S. Ct. 671 (1994).
---------------------------------------------------------------------------

                   Title IV--Miscellaneous Provisions

   Sec. 401. Provisions Relating to the Commissioner of Patents and
               Trademarks and the Register of Copyrights

       The Senate recedes to the House sections 401-402 with
     modification. This section provides parity in compensation
     between the Register of Copyrights and the Commissioner of
     Patent and Trademarks and clarifies the duties and functions
     of the Register of Copyrights.
       The new subsection to be added to 17 U.S.C. Sec. 701 sets
     forth in express statutory language the functions presently
     performed by the Register of Copyrights under her
     general administrative authority under subsection 701(a).
     Like the Library of Congress, its parent agency, the
     Copyright Office is a hybrid entity that historically has
     performed both legislative and executive or administrative
     functions. Eltra Corp. v. Ringer, 579 F.2d 294 (4th Cir.
     1978). Existing subsection 701(a) addresses some of the
     latter functions. New subsection 701(b) is intended to
     codify the other traditional roles of the Copyright Office
     and to confirm the Register's existing areas of
     jurisdiction.
       Paragraph (1) of new subsection 701(b) reflects the
     Copyright Office's longstanding role as advisor to Congress
     on matters within its competence. This includes copyright and
     all matters within the scope of title 17 of the U.S. Code.
     Such advice, which often takes the form of testimony of
     pending legislation, is separate from testimony or other
     recommendations by the Administration pursuant to the
     President's concurrent constitutional power to make
     recommendations to Congress.
       Paragraph (2) reflects the Copyright Office's longstanding
     role in advising federal agencies on matters within its
     competence. For example, the Copyright Office advises the
     U.S. Trade Representative and the State Department on an
     ongoing basis on the adequacy of foreign copyright laws, and
     serves as a technical consultant to those agencies in
     bilateral, regional and multilateral consultations or
     negotiations with other countries on copyright-related
     issues.
       Paragraph (3) reflects the Copyright Office's longstanding
     role as a key participant in international meetings of
     various kinds, including as part of U.S. delegations as
     authorized by the Executive Branch, serving as substantive
     experts on matters within the Copyright Office's competence.
     Recent examples of the Copyright Office acting in the
     capacity include its central role on the U.S. delegation that
     negotiated the two new WIPO treaties at the 1996 Diplomatic
     Conference in Geneva, and its ongoing contributions of
     technical assistance in the TRIPS Council of the World Trade
     Organization and the Register's role as a featured speaker at
     numerous WIPO conferences.
       Paragraph (4) describes the studies and programs that the
     Copyright Office has long carried out as the agency
     responsible for administering the copyright law and other
     chapters of title 17. Among the most important of these
     studies historically was a series of comprehensive reports on
     various issues produced in the 1960's as the foundation of
     the last general revision of U.S. copyright law, enacted as
     the 1976 Copyright Act. Most recently the Copyright Office
     has completed reports on the cable and satellite compulsory
     licenses, legal protection for databases, and the economic
     and policy implications of term extension. Consistent with
     the Copyright Office's role as a legislative branch agency,
     these studies have often included specific policy
     recommendations to Congress. The reference to ``programs''
     includes such projects as the conferences the Copyright
     Office cosponsored in 1996-97 on the subject of technology-
     based intellectual property management, and the International
     Copyright Institutes that the Copyright Office has conducted
     for foreign government officials at least annually over the
     past decade, often in cooperation with WIPO.
       Paragraph (5) makes clear that the functions and duties set
     forth in this subsection are illustrative, not exhaustive.
     The Register of Copyrights would continue to be able to carry
     out other functions under her general authority under
     subsection 701(a), or as Congress may direct. The latter may
     include specific requests by Committees for studies and
     recommendations on subjects within the Copyright Office's
     area of competence. It may also include, when appropriate or
     required for constitutional reasons, directions to the Office
     in separate legislation.

                     sec. 402. ephemeral recordings

       The Senate recedes to House section 411 with modification.
     This section amends section 112 of the Copyright Act (17
     U.S.C. 112)

[[Page H10069]]

     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.
     Sec. Sec. 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
     House bill and the Senate amendment propose changing 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 House bill and the Senate amendment propose
     adding 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).
       House section 411 is modified in two respects. First, the
     House provision is modified by adding a new paragraph (3) to
     include specific reference to section 114(f) in section
     112(a) of the Copyright Act. The addition to section 112(a)
     of a reference to section 114(f) is intended to make clear
     that subscription music services, webcasters, satellite
     digital audio radio services and others with statutory
     licenses for the performance of sound recordings under
     section 114(f) are entitled to the benefits of section 112(a)
     with repsect to the sound recordings they transmit.
       Second, the House provision is modified in paragraph (4).
     This amendment to section 112(a) is intended to clarify the
     application of section 112(a) to FCC-licensed broadcasters
     with respect to digital nonsubscription broadcast
     transmissions. Notwithstanding this clarification, neither
     the amendment in paragraph (4) of section 411 nor the
     creation of a statutory license in section 112(e) is in any
     manner intended to narrow the scope of section 112(a) or the
     entitlement of any transmitting entity to the exemption
     provided thereunder with respect to copies made for other
     transmissions.

    Section 403. Limitations on Exclusive Rights; Distance Education

       The Senate recedes to House section 412. The corresponding
     sections of the House bill and the Senate amendment are
     substantively identical.

           Section 404. Exemption for Libraries and Archives

       The Senate recedes to House section 413. The corresponding
     sections of the House bill and the Senate amendment are
     substantively identical.

 Section 405. Scope of Exclusive Rights in Sound Recordings; Ephemeral
                               Recordings

       The Senate recedes to section 415 of the House bill with
     modification.
       The amendments to sections 112 and 114 of the Copyright Act
     that are contained in this section of the bill are intended
     to achieve two purposes: first, to further a stated objective
     of Congress when it passed the Digital Performance Right in
     Sound Recordings Act of 1995 (``DPRA'') to ensure that
     recording artists and record companies will be protected as
     new technologies affect the ways in which their creative
     works are used; and second, to create fair and efficient
     licensing mechanisms that address the complex issues facing
     copyright owners and copyright users as a result of the rapid
     growth of digital audio services. This section contains
     amendments to sections 112 and 114 of Title 17 as follows:
       Section 114(d)(1). Exempt Transmissions and
     Retransmissions. Section 114(d)(1)(A) is amended to delete
     two exemptions that were either the cause of confusion as to
     the application of the DPRA to certain nonsubscription
     services (especially webcaster) or which overlapped with
     other exemptions (such as the exemption in subsection
     (A)(iii) for nonsubscription broadcast transmissions). The
     deletion of these two exemptions is not intended to affect
     the exemption for nonsubscription broadcast transmissions.
       Section 114(d)(2). Statutory Licensing of Certain
     Transmissions. The amendment to subsection (d)(2) extends the
     availability of a statutory license for subscription
     transmissions to cover certain eligible nonsubscription
     transmissions. ``Eligible nonsubscription transmissions'' are
     defined in subsection (j)(6). The amendment subdivides
     subsection (d)(2) into three subparagraphs ((A), (B), and
     (C)), each of which contains conditions of a statutory
     license for certain nonexempt subscription and eligible
     nonsubscription transmissions.
       The conferees note that if a sound recording copyright
     owner authorizes a transmitting entity to take an action with
     respect to that copyright owner's sound recordings that is
     inconsistent with the requirements set forth in section
     114(d)(2), the conferees do not intend that the transmitting
     entity be disqualified from obtaining a statutory license by
     virtue of such authorized actions.
       The conferees intend that counts considering claims of
     infringement involving violation of the requirements set
     forth in section 114(d)(2) should judiciously apply the
     doctrine of de minimis non curat lex. A transmitting entity's
     statutory license should not be lost, and it becomes subject
     to infringement damages for transmissions that have been made
     as part of its service, merely because, through error, it has
     committed nonmaterial violations of these conditions that,
     once recognized, are not repeated. Similarly, if a service
     has multiple channels, the transmitting entity's statutory
     license should not be lost, and it become subject to
     infringement damages for transmissions that have been made
     on other channels, merely because of a violation in
     connection with one channel. Conversely, courts should not
     apply such doctrine in cases in which repeated or
     intentional violations occur.
       Subparagraph (A) sets forth three conditions of a statutory
     license applicable to all nonexempt subscription and eligible
     nonsubscription transmissions. These three conditions are
     taken from previous subsection (d)(2).
       Subparagraphs (B) and (C) are alternatives: a service is
     subject to the conditions in one or the other in addition to
     those in subparagraph (A). Subparagraph (B) contains
     conditions applicable only to nonexempt subscription
     transmissions made by a preexisting subscription service in
     the same transmission medium as was used by the service on
     July 31, 1998 or a preexisting satellite digital audio radio
     service. A preexisting subscription service is defined in
     subsection (j)(11); a preexisting satellite digital audio
     radio service is defined in (j)(10). The purpose of
     distinguishing preexisting subscription services making
     transmissions in the same medium as on July 31, 1998, was to
     prevent disruption of the existing operations by such
     services. There was only three such services that exist: DMX
     (operated by TCI Music), Music Choice (operated by Digital
     Cable Radio Associates), and the DiSH Network (operated by
     Muzak). As of July 31, 1998, DMX and Music Choice made
     transmissions via both cable and satellite media; the DiSH
     Network was available only via satellite. The purpose of
     distinguishing the preexisting satellite digital audio radio
     services is similar. The two preexisting satellite digital
     audio radio services, CD Radio and American Mobile Radio
     Corporation, have purchased licenses at auction from the FCC
     and have begun developing their satellite systems.
       The two conditions contained in subparagraph (B) are taken
     directly from previous subsection (d)(2). Thus, preexisting
     satellite digital audio radio services and the historical
     operations of preexisting subscription services are subject
     to the same five conditions for eligibility for a statutory
     license, as set forth in subparagraphs (A) and (B), as have
     applied previously to these services.
       Subparagraph (C) sets forth additional conditions for a
     statutory license applicable to all transmissions not subject
     to subparagraph (B), namely all eligible nonsubscription
     transmissions, subscription transmissions made by a new
     subscription service, and subscription transmissions made by
     a preexisting subscription service other than those made in
     the same transmission medium. Subparagraph (C) contains nine
     conditions.
       Subparagraph (C)(i) requires that transmissions subject to
     a statutory license cannot exceed the sound recording
     performance complement defined in subsection (j)(13), which
     is unchanged by this amendment. Subparagraph (C)(i)
     eliminates this requirement for retransmissions of over-the-
     air broadcast transmissions by a transmitting entity that
     does not have the right or ability to control the programming
     of the broadcast station making the initial broadcast
     transmission, subject to two limitations.
       First, the retransmissions are not eligible for statutory
     licensing if the retransmitted

[[Page H10070]]

     broadcast transmissions are in digital format and regularly
     exceed the sound recording performance complement. Second,
     the retransmissions are not eligible for statutory licensing
     if the retransmitted broadcast transmissions are in analog
     format and a substantial portion of the transmissions,
     measured on a weekly basis, violate the sound recording
     performance complement. In both cases, however, the
     retransmitter is disqualified from making its
     transmissions under a statutory license only if the sound
     recording copyright owner or its representative notifies
     the retransmitter in writing that the broadcast
     transmissions exceed the sound recording performance
     complement. Once notification is received, the
     transmitting entity making the retransmissions must cease
     retransmitting those broadcast transmissions that exceed
     the sound recording performance complement.
       Subparagraph (C)(ii) imposes limitations on the types of
     prior announcements, in text, video or audio, that may be
     made by a service under the statutory license. Services may
     not publish advance program schedules or make prior
     announcements of the titles of specific sound recordings or
     the featured artists to be performed on the service.
     Moreover, services may not induce or facilitate the advance
     publication of schedules or the making of prior
     announcements, such as by providing a third party the list of
     songs or artists to be performed by the transmitting entity
     for publication or announcement by the third party. The
     conferees do not intend that the term ``prior announcement''
     preclude a transmitting entity from identifying specific
     sound recordings immediately before they are performed.
       However, services may generally use the names of several
     featured recording artists to illustrate the type of music
     being performed on a particular channel. Subparagraph
     (C)(iii) addresses limitations for archived programs and
     continuous programs, which are defined in subsections (j)(2)
     and (j)(4), respectively. Subparts (I) and (II) address
     archived programs. Archived programs often are available to
     listeners indefinitely or for a substantial period of time,
     thus permitting listeners to hear the same songs on demand
     any time the visitor wishes. Transmissions that are part of
     archived programs that are less than five hours long are
     ineligible for a statutory license. Transmissions that are
     part of archived programs more than five hours long are
     eligible only if the archived program is available on the
     webcaster's site or a related site for two weeks or less. The
     two-week limitation is to be applied in a reasonable manner
     to achieve the objectives of this subparagraph, so that, for
     example, archived programs that have been made available for
     two weeks are not removed from a site for a short period of
     time and then made available again. Furthermore, altering an
     archived program only in insignificant respects, such as by
     replacing or reordering only a small number of the songs
     comprising the program, does not render the program eligible
     for statutory licensing.
       Subparagraph (C)(iii) also limits eligibility for a
     statutory license to transmissions that are not part of a
     continuous program of less than three hours duration
     (subparagraph (C)(iii)(III)). A listener to a continous
     program hears that portion of the program that is being
     transmitted to all listeners at the particular time that the
     listener accesses the program, much like a person who tunes
     in to an over-the-air broadcast radio station.
       Finally, subparagraph (C)(iii)(IV) limits eligibility for a
     statutory license to transmissions that are not part of an
     identifiable program in which performances of sound
     recordings are rendered in a predetermined order that is
     transmitted at (a) more than three times in any two week
     period, which times have been publicly announced in advance,
     if the program is of less than one hour duration, or (b) more
     than four times in any two week period, which times have been
     publicly announced in advance, if the program is one hour or
     more. It is the conferee's intention that the two-week
     limitation in subclause (IV) be applied in a reasonable
     manner consistent with its purpose so that, for example, a
     transmitting entity does not regularly make all of the
     permitted repeat performances within several days.
       Subparagraph (C)(iv) states that the transmitting entity
     may not avail itself of a statutory license if it knowingly
     performs a sound recording, as part of a service that offers
     transmissions of visual images contemporaneous with
     transmissions of sound recordings, in a manner that is likely
     to cause a listener to believe that there is an affiliation
     or association between the sound recording copyright owner or
     featured artist and a particular product or service
     advertised by the transmitting entity. This would cover, for
     example, transmitting an advertisement for a particular
     product or service every time a particular sound recording or
     artist is transmitted; it would not cover more general
     practices such as targeting advertisements of particular
     products or services to specific channels of the service
     according to user demographics. If, for example,
     advertisements are transmitted randomly while sound
     recordings are performed, this subparagraph would be
     satisfied.
       Subparagraph (C)(v) provides that, in order to qualify for
     a statutory license, a transmitting entity must cooperate
     with sound recording copyright owners to prevent a
     transmission recipient from scanning the transmitting
     entity's transmissions to select particular sound recordings.
     In the future, a device or software may be developed that
     would enable its user to scan one or more digital
     transmissions to select particular sound recordings or
     artists requested by its user. Such devices or software would
     be the equivalent of an on demand service that would not be
     eligible for the statutory license. Technology may be
     developed to defeat such scanning, and transmitting entities
     taking a statutory license are required to cooperate with
     sound recording copyright owners to prevent such scanning,
     provided that such cooperation does not impose substantial
     costs or burdens on the transmitting entity. This requirement
     does not apply to a satellite digital audio service,
     including a preexisting satellite digital audio radio
     service, that is in operation, or that is licensed by the
     FCC, on or before July 31, 1998.
       Subparagraph (C)(vi) requires that if the technology used
     by the transmitting entity enables the transmitting entity to
     limit the making by the transmission recipient of
     phonorecords in a digital format directly of the
     transmission, the transmitting entity sets such technology to
     limit such making of phonorecords to the extent permitted by
     such technology. The conferees note that some software used
     to ``stream'' transmissions of sound recordings enables the
     transmitting entity to disable such direct digital copying of
     the transmitted data by transmission recipients. In such
     circumstances the transmitting entity must disable that
     direct copying function. Likewise, a transmitting entity may
     not take affirmative steps to cause or induce the making of
     any copies by a transmission recipient. For example, a
     transmitting entity may not encourage a transmission
     recipient to make either digital or analog copies of the
     transmission such as by suggesting that recipients should
     record copyrighted programming transmitted by the entity.
       Subparagraph (C)(vii) requires that each sound recording
     transmitted by the transmitting entity must have been
     distributed to the public under authority of the copyright
     owner or provided to the transmitting entity with
     authorization that the transmitting entity may perform such
     sound recording. The conferees recognize that a disturbing
     trend on the Internet is the unauthorized performance of
     sound recordings not yet released for broadcast or sale to
     the public. The transmission of such pre-released sound
     recordings is not covered by the statutory license unless the
     sound recording copyright owner has given explicit
     authorization to the transmitting entity. This subparagraph
     also requires that the transmission be made from a
     phonorecord lawfully made under the authority of the
     copyright owner. A phonorecord provided by the copyright
     owner or an authorized phonorecord purchased through
     commercial distribution channels would qualify. However,
     the transmission of bootleg sound recordings (e.g., the
     recording of a live musical performance without the
     authority of the performer, as prohibited by Chapter 11)
     is ineligible for a statutory license.
       Subparagraph (C)(viii) conditions a statutory license on
     whether a transmitting entity has accommodated and does not
     interfere with technical measures widely used by sound
     recording copyright owners to identify or protect their
     copyrighted works. Thus, the transmitting entity must ensure
     that widely used forms of identifying information, embedded
     codes, encryption or the like are not removed during the
     transmission process, provided that accommodating such
     measures is technologically feasible, does not impose
     substantial costs or burdens on the transmitting entity, and
     does not result in perceptible degradation of the digital
     audio or video signals being transmitted. This requirement
     shall not apply to a satellite digital audio service,
     including a preexisting satellite digital audio radio
     service, that is in operation, or that is licensed under the
     authority of the Federal communications Commission, on or
     before July 31, 1998, to the extent that such service has
     designed, developed or made commitments to procure equipment
     or technology that is not compatible with such technical
     measures before such technical measures are widely adopted by
     sound recording copyright owners.
       Subparagraph (C)(ix) requires transmitting entities
     eligible for the statutory license to identify in textual
     data the title of the sound recording, the title of the album
     on which the sound recording appears (if any), and the name
     of the featured recording artist. These titles and names must
     be made during, but not before, the performance of the sound
     recording. A transmitting entity must ensure that the
     identifying information can easily be seen by the
     transmission recipient in visual form. For example, the
     information might be displayed by the software player used on
     a listener's computer to decode and play the sound recordings
     that are transmitted. Many webcasters already provide such
     information, but in order to give those who do not an
     adequate opportunity to do so this obligation does not take
     effect until one year after the effective date of the
     amendment. This requirement does not apply to the
     retransmission of broadcast transmissions by a transmitting
     entity that does not have the right or ability to control the
     programming of the broadcast station making the broadcast
     transmission, or where devices or technology intended for
     receiving the service that have the capability to display the
     identifying information are not common in the marketplace.
       Section 114(f). Licenses for Certain Nonexempt
     Transmissions. Section 114(f) is amended to

[[Page H10071]]

     set forth procedures for determining reasonable rates and
     terms for those transmissions that qualify for statutory
     licensing under section 114(d)(2). Section 114(f) is divided
     into two parts: one applying to transmissions by preexisting
     subscription services and preexisting satellite digital audio
     radio services (subsection (f)(1)), and the other applying to
     transmissions by new subscription services (including
     subscription transmissions made by a preexisting subscription
     service other than those that qualify under subsection
     (f)(1)) as well as eligible nonsubscription transmissions
     (subsection (f)(2)).
       Subsection (f)(1) provides for procedures applicable to
     subscription transmission by preexisting subscription
     services and preexisting satellite digital audio radio
     services. The conferees note that this subsection applies
     only to the three services considered
     preexisting subscription services, DMX, Music Choice and
     the DiSH Network, and the two services considered
     preexisting satellite digital audio radio services, CD
     Radio and American Mobile Radio Corporation. The
     procedures in this subsection remain the same as those
     applicable before the amendment, except that the rate
     currently in effect under prior section 114(f) is extended
     from December 31, 2000 until December 31, 2001. That rate
     currently applies to the three preexisting subscription
     services, and the Conferees take no position on its
     applicability to the two preexisting satellite digital
     audio radio services. Likewise, the initiation of the next
     voluntary negotiation period shall take place in the first
     week of January 2001 instead of January 2000 (subsection
     (f)(1)(C)(i)). These extensions are made purely to
     facilitate the scheduling of proceedings.
       Subsection (f)(1)(B), which sets forth procedures for
     arbitration in the absence of negotiated license agreement,
     continues to provide that a copyright arbitration royalty
     panel should consider the objectives set forth in section
     801(b)(1) as well as rates and terms for comparable types of
     subscription services.
       Subsection (f)(2) addresses procedures applicable to
     eligible nonsubscription transmissions and subscription
     transmissions by new subscription services. The first such
     voluntary negotiation proceeding is to commence within 30
     days after the enactment of this amendment upon publication
     by the Librarian of Congress of a notice in the Federal
     Register. The terms and rates established will cover
     qualified transmissions made between the effective date of
     this amendment and December 31, 2000, or such other date as
     the parties agree.
       Subsection (f)(2) directs that rates and terms must
     distinguish between the different types of eligible
     nonsubscription transmission services and new subscription
     services then in operation. The conferees recognize that the
     nature of qualified transmissions may differ significantly
     based on a variety of factors. The conferees intend that
     criteria including, but not limited to, the quantity and
     nature of the use of sound recordings, and the degree to
     which use of the services substitutes for or promotes the
     purchase of phonorecords by consumers may account for
     differences in rates and terms between different types of
     transmissions.
       Subsection (f)(2) also directs that a minimum fee should be
     established for each type of service. A minimum fee should
     ensure that copyright owners are fairly compensated in the
     event that other methodologies for setting rates might deny
     copyright owners an adequate royalty. For example, a
     copyright arbitration royalty panel should set a minimum fee
     that guarantees that a reasonable royalty rate is not
     diminished by different types of marketing practices or
     contractual relationships. For example, if the base royalty
     for a service were a percentage of revenues, the minimum fee
     might be a flat rate per year (or a flat rate per subscriber
     per year for a new subscription service).
       Also, although subsection (f)(1) remains silent on the
     setting of a minimum fee for preexisting subscription
     services and preexisting satellite digital audio radio
     services, the Conferees do not intend that silence to mean
     that a minimum fee may or may not be established in
     appropriate circumstances when setting rates under subsection
     (f)(1) for preexisting subscription services and preexisting
     satellite digital audio radio services. Likewise, the absence
     of criteria that should be taken into account for
     distinguishing rates and terms for different services in
     subsection (f)(1) does not mean that evidence relating to
     such criteria may not be considered when adjusting rates and
     terms for preexisting subscription services and preexisting
     satellite digital audio radio services in the future.
       Subsection (f)(2)(B) sets forth procedures in the absence
     of a negotiated license agreement for rates and terms for
     qualifying transmissions under this subsection. Consistent
     with existing law, a copyright arbitration proceeding should
     be empaneled to determine reasonable rates and terms. The
     test applicable to establishing rates and terms is what a
     willing buyer and willing seller would have arrived at in
     marketplace negotiations. In making that determination, the
     copyright arbitration royalty panel shall consider economic,
     competitive and programming information presented by the
     parties including, but not limited to, the factors set forth
     in clauses (i) and (ii).
       Subsection (f)(2)(C) specifies that rates and terms for new
     subscription and eligible nonsubscription transmissions
     should be adjusted every two years, unless the parties agree
     as to another schedule. These two-year intervals are based
     upon the conferees' recognition that the types of
     transmission services in existence and the media in which
     they are delivered can change significantly in a short period
     of time.
       Subsection (j)(2)--``archived program.'' A program is
     considered an ``archived program'' if it is prerecorded or
     preprogrammed, available repeatedly on demand to the public
     and is performed in virtually the same order from the
     beginning.
       The exception to the definition of ``archived program'' for
     a recorded event or broadcast transmission is intended to
     allow webcasters to make available on demand transmissions of
     recorded events or broadcast shows that do not include
     performances of entire sound recordings or feature
     performances of sound recordings (such as a commercially
     released sound recording used as a theme song), but that
     instead use sound recordings only in an incidental manner
     (such as in the case of brief musical transitions in and out
     of commercials and music played in the background at sporting
     events). Some broadcast shows may be part of series that do
     not regularly feature performances of sound recordings but
     that occasionally prominently include a sound recording (such
     as a performance of a sound recording in connection with an
     appearance on the show by the recording artist). The recorded
     broadcast transmission of the show should not be considered
     an ``archived program'' merely because of such a prominent
     performance in a show that is part of a series that does not
     regularly feature performances of sound recordings. The
     inclusion of this exception to the definition of ``archived
     program'' is not intended to impose any new license
     requirement where the broadcast programmer or syndicator
     grants the webcaster the right to transmit a sound recording,
     such as may be the case where the sound recording has been
     specially created for use in a broadcast show.
       Subsection 114(j)(4)--``continuous program.'' A
     ``continuous program'' is one that is continuously performed
     in the same predetermined order. Such a program generally
     takes the form of a loop whereby the same set of sound
     recordings is performed repeatedly; rather than stopping at
     the end of the set, the program automatically restarts
     generally without interruption. In contrast to an archived
     program (which always is accessed from the beginning of the
     program), a transmission recipient typically accesses a
     continuous program in the middle of the program. Minor
     alterations in the program should not render a program
     outside the definition of ``continuous program.''
       Subsection 114(j)(6)--``eligible nonsubscription
     transmission''. An ``eligible nonsubscription transmission''
     is one that meets the following criteria. First, the
     transmission must be noninteractive and nonsubscription in
     nature. Second, the transmission must be made as part of a
     service that provides audio programming consisting in whole
     or in part of performances of sound recordings. Third, the
     purpose of the transmission service must be to provide
     audio or entertainment programming, not to sell, advertise
     or promote particular goods or services. Thus, for
     example, an ordinary commercial Web site that was
     primarily oriented to the promotion of a particular
     company or to goods or services that are unrelated to the
     sound recordings or entertainment programming, but that
     provides background music would not qualify as a service
     that makes eligible nonsubscription transmissions. The
     site's background music transmissions would need to be
     licensed through voluntary negotiations with the copyright
     owners. However, the sale or promotion of sound
     recordings, live concerts or other musical events does not
     disqualify a service making a nonsubscription
     transmission. Furthermore, the mere fact that a
     transmission service is advertiser-based or may promote
     itself or an affiliated entertainment service does not
     disqualify it from being considered an eligible
     nonsubscription transmission service.
       Subsection 114(j)(7)--``interactive service.'' The
     definition of ``interactive service'' is amended in several
     respects. First, personalized tranmissions--those that are
     specially created for a particular individual--are to be
     considered interactive. The recipient of the transmission
     need not select the particular recordings in the program for
     it to be considered personalized, for example, the recipient
     might identify certain artists that become the basis of the
     personal program. The conferees intend that the phrase
     ``program specially created for the recipient'' be
     interpreted reasonably in light of the remainder of the
     definition of ``interactive service.'' For example, a service
     would be interactive if it allowed a small number of
     individuals to request that sound recordings be performed in
     a program specially created for that group and not available
     to any individuals outside of that group. In contrast, a
     service would not be interactive if it merely transmitted to
     a large number of recipients of the service's transmissions a
     program consisting of sound recordings requested by a small
     number of those listeners.
       Second, a transmission of a particular sound recording on
     request is considered interactive ``whether or not [the sound
     recording is] part of a program.'' This language clarifies
     that if a transmission recipient is permitted to select
     particular sound recordings in a prerecorded or predetermined
     program, the transmission is considered interactive. For
     example, if a transmission recipient has the ability to move
     forward and

[[Page H10072]]

     backward between songs in a program, the transmission is
     interactive. It is not necessary that the transmission
     recipient be able to select the actual songs that comprise
     the program. Additionally, a program consisting only of one
     sound recording would be considered interactive.
       Third, the definition of ``interactive service'' is amended
     to clarify that certain channels or programs are not
     considered interactive provided that they do not
     substantially consist of requested sound recordings that are
     performed within one hour of the request or at a designated
     time. Thus, a service that engaged in the typical broadcast
     programming practice of including selections requested by
     listeners would not be considered interactive, so long as the
     programming did not substantially consist of requests
     regularly performed within an hour of the request, or at a
     time that the transmitting entity informs the recipient it
     will be performed.
       The last sentence of the definition is intended to make
     clear that if a transmitting entity offers both interactive
     and noninteractive services then the noninteractive
     components are not to be treated as part of an interactive
     service, and thus are eligible for statutory licensing
     (assuming the other requirements of the statutory license are
     met). For example, if a Web site offered certain programming
     that was transmitted to all listeners who chose to receive it
     at the same time and also offered certain sound recordings
     that were transmitted to particular listeners on request,
     the fact that the latter are interactive transmissions
     would not preclude statutory licensing of the former.
       Subsection 114(j)(8)--``new subscription service.'' A ``new
     subscription service'' is any service that is not a
     preexisting subscription service as defined in subsection
     (j)(11) or a preexisting satellite digital audio radio
     service as defined in subsection (j)(10).
       Subsection 114(j)(10)--``preexisting satellite digital
     audio radio service.'' A ``preexisting satellite digital
     audio service'' is a subscription digital audio radio service
     provided pursuant to a satellite digital audio radio service
     license issued by the Federal Communications Commission on or
     before July 31, 1998. Subscription services offered by these
     licensed entities do not qualify as ``preexisting
     subscription services'' under section 114(j)(11) because they
     had not commenced making transmissions to the public for a
     fee on or before July 31, 1998. Only two entities received
     these licenses: CD Radio and American Mobile Radio
     Corporation.
       A ``preexisting satellite digital audio radio service'' and
     ``preexisting subscription service'' may both include a
     limited number of sample channels representative of the
     subscription service that are made available on a
     nonsubscription basis in order to promote the subscription
     service. Such sample channels are to be treated as part of
     the subscription service and should be considered in
     determining the royalty rate for such subscription service.
     The conferees do not intend that the ability to offer such
     sample channels be used as a means to offer a nonsubscription
     service under the provisions of section 114 applicable to
     subscription services. The term ``limited number'' should be
     evaluated in the context of the overall service. For example,
     a service consisting of 100 channels should have no more than
     a small percentage of its channels as sample channels.
       Subsection 114(j)(11)--``preexisting subscription
     service.'' A ``preexisting subscription service'' is a
     noninteractive subscription service that was in existence and
     was making transmissions to the public on or before July 31,
     1998, and which is making transmissions similar in character
     to such transmissions made on or before July 31, 1998. Only
     three services qualify as a preexisting subscription
     service--DMX, Music Choice and the DiSH Network. As of July
     31, 1998, DMX and Music Choice made transmissions via both
     cable and satellite media; the DiSH Network was available
     only via satellite.
       In grandfathering these services, the conferee's objective
     was to limit the grandfather to their existing services in
     the same transmission medium and to any new services in a new
     transmission medium where only transmissions similar to their
     existing service are provided. Thus, if a cable subscription
     music service making transmissions on July 31, 1998, were to
     offer the same music service through the Internet, then such
     Internet service would be considered part of a preexisting
     subscription service.
       If, however, a subscription service making transmissions on
     July 31, 1998, were to offer a new service either in the same
     or new transmission medium by taking advantages of the
     capabilities of that medium, such new service would not
     qualify as a preexisting subscription service. For example, a
     service that offers video programming, such as advertising or
     other content, would not qualify as a preexisting service,
     provided that the video programming is not merely information
     about the service itself, the sound recordings being
     transmitted, the featured artists, composers or songwriters,
     or an advertisement to purchase the sound recording
     transmitted.
       Section 114 in General. These amendments are fully subject
     to all the existing provisions of section 114. Specifically,
     these amendments and the statutory licenses they create are
     all fully subject to the safeguards for copyright owners of
     sound recordings and musical works contained in sections
     114(c), 114(d)(4) and 114(i), as well as the other provisions
     of section 114. In addition, the conferees do not intend to
     affect any of the rights in section 115 that were clarified
     and confirmed in the DPRA.
       Section 112(e)--Statutory License. Section 112(e) creates a
     statutory license for the making of an ``ephemeral
     recording'' of a sound recording by certain transmitting
     organizations. The new statutory license in section 112(e) is
     intended primarily for the benefit of entities that transmit
     performances of sound recordings to business establishments
     pursuant to the limitation on exclusive rights set forth in
     section 114(d)(1)(C)(iv). However, the new section 112(e)
     statutory license also is available to a transmitting entity
     with a statutory license under section 114(f) that chooses to
     avail itself of the section 112(e) statutory license to make
     more than the one phonorecord it is entitled to make under
     section 112(a). For example, the conferees understand that a
     webcaster might wish to reproduce multiple copies of a sound
     recording to use on different servers or to make
     transmissions at different transmission rates or using
     different transmission software. Under section 112(a), as
     amended by this bill, a webcaster with a section 114(f)
     statutory license is entitled to make only a single copy of
     the sound recording. Thus, the webcaster might choose to
     obtain a statutory license under section 112(e) to allow it
     to make such multiple copies. The conferees intend that the
     royalty rate payable under the statutory license may reflect
     the number of phonorecords of a sound recording made under a
     statutory license for use in connection with each type of
     service.
       Ephemeral recordings of sound recordings made by certain
     transmitting organizations under section 112(e) may embody
     copyrighted musical compositions. The making of an ephemeral
     recording by such a transmitting organization of each
     copyrighted musical composition embodied in a sound recording
     it transmits is governed by existing section 112(a) (or
     section 112(a)(1) as revised by the Digital Millennium
     Copyright Act), and, pursuant to that section, authorization
     for the making of an ephemeral recording is conditioned in
     part on the transmitting organization being entitled to
     transmit to the public the performance of a musical
     composition under a license or transfer of the copyright.
       The conditions listed in section 112(e)(1), most of which
     are also found in section 112(a), must be met before a
     transmitting organization is eligible for statutory licensing
     in accordance with section 112(e). First, paragraph (1)(A)
     provides that the transmitting organization may reproduce and
     retain only one phonorecord, solely for its own use (unless
     the terms and conditions of the statutory license allow for
     more). Thus, trafficking in ephemeral recordings, such as by
     preparing prerecorded transmission programs for use by third
     parties, is not permitted. This paragraph provides that the
     transmitting organization may reproduce and retain more than
     one ephemeral recording, in the manner permitted under the
     terms and conditions as negotiated or arbitrated under the
     statutory license. This provision is intended to facilitate
     efficient transmission technologies, such as the use of
     phonorecords encoded for optimal performance at different
     transmission rates or use of different software programs to
     receive the transmissions.
       Second, paragraph (1)(B) requires that the phonorecord be
     used only for the transmitting organization's own
     transmissions originating in the United States, and such
     transmissions must be made under statutory license pursuant
     to section 114(f) or the exemption in section
     114(d)(1)(C)(iv). Third, paragraph (1)(C) mandates that,
     unless preserved exclusively for archival purposes, the
     phonorecord be destroyed within six months from the time
     that the sound recording was first performed publicly by
     the transmitting organization. Fourth, paragraph (1)(D)
     limits the statutory license to reproductions of sound
     recordings that have been distributed to the public and
     that are made from a phonorecord lawfully made and
     acquired under the authority of the copyright owner.
       Subsection (e)(3) clarifies the applicability of the
     antitrust laws to the use of common agents in negotiations
     and agreements relating to statutory licenses and other
     licenses. Under this subsection, the copyright owners of
     sound recordings and transmitting organizations entitled to
     obtain the statutory license in this section may negotiate
     collectively regarding rates and terms for the statutory
     license or other licenses. This subsection provides that such
     copyright owners and transmitting organizations may designate
     common agents to represent their interests to negotiate or
     administer such license agreements. This subsection closely
     follows the language of existing antitrust exemptions in
     copyright law, including the exemption found in the statutory
     licenses for transmitting sound recordings by digital audio
     transmission found in section 114(f).
       Subsections (e)(4) and (5) address the procedures for
     determining rates and terms for the statutory license
     provided for in this section. These procedures are parallel
     to the procedures found in section 114(f)(2) for public
     performances of sound recordings by digital audio
     transmission by new subscription services and services making
     eligible Nonsubscription transmissions.
       Subsection (e)(4) provides that the Librarian of Congress
     should publish notice of voluntary negotiation proceedings 30
     days after enactment of this amendment. Such voluntary
     negotiation proceedings should address rates and terms for
     the making of ephemeral recordings under the conditions of

[[Page H10073]]

     this section for the period beginning on the date of
     enactment and ending on December 31, 2000. This subsection
     requires that a minimum fee be established as part of the
     rates and terms.
       In the event that interested parties do not arrive at
     negotiated rates and terms during the voluntary negotiation
     proceedings, subsection (e)(5) provides for the convening of
     a copyright arbitration royalty panel to determine reasonable
     rates and terms for the making of ephemeral recordings under
     this subsection. This paragraph requires the copyright
     arbitration royalty panel to establish rates that reflect the
     fees that a willing buyer and seller would have agreed to in
     marketplace negotiations. In so doing, the copyright
     arbitration royalty panel should base its decision on
     economic, competitive and programming information presented
     by the parties, including, but not limited to, such evidence
     as described in subparagraphs (A) and (B).
       Subseciton (e)(7) states that rates and terms either
     negotiated or established pursuant to arbitration shall be
     effective for two-year periods, and the procedures set forth
     in subsections (e)(4) and (5) shall be repeated every two
     years unless otherwise agreed to by the parties.
       The conferees intend that the amendments regarding the
     statutory licenses in sections 112 and 114 contained in
     section 415 of this bill apply only to those statutory
     licenses.

section 406. assumption of contractual obligations related to transfers
                      of rights in motion pictures

       The Senate recedes to House section 416 with modification.
       Paragraph (a)--Assumption of obligations. The conferees
     have added to paragraph (a) language that defines more
     specifically the meaning of the ``knows or has reason to
     know'' standard in subsection (a)(1). There are three ways to
     satisfy this standard. The first is actual knowledge that a
     motion picture is or will be covered by a collective
     bargaining agreement. Subparagraph (ii) provides for
     constructive knowledge, established through two
     alternative mechanisms: recordation with the Copyright
     Office or identification of the motion picture on an
     online web site maintained by the relevant Guild, where
     the site makes it possible for users to verify their
     access date in a commercially reasonable way. In order to
     ensure that the transferee has a reasonable opportunity to
     obtain the relevant information, these mechanisms for
     providing constructive notice apply with respect to
     transfers that take place after the motion picture is
     completed. They also apply to transfer that take place
     before the motion picture is completed, but only if the
     transfer is within eighteen months prior to the filing of
     an application for copyright registration for the motion
     picture or, if there is no application for registration,
     within eighteen months of its first publication in the
     United States.
       The constructive notice established by recordation for
     purposes of application of this section is entirely separate
     and independent from the constructive notice established by
     recordation under section 205(c) of the Copyright Act. This
     section does not condition constructive notice on prior
     registration of the motion picture with the Copyright Office,
     and does not have any hearing on the issue of priority
     between conflicting transfers as described in section 205(d)
     of the Copyright Act.
       Subparagraph (iii) provides a more general standard for
     circumstances where the transferee does not have actual
     knowledge or constructive knowledge through one of the two
     mechanisms set out in subparagraph (ii), but is aware of
     facts and circumstances about the transfer that make it
     apparent that the motion picture is subject to a collective
     bargaining agreement. Such facts and information might
     include, for example, budget, location of principal
     photography, the identity of the talent associated with a
     project, or the existence of a personal service contract that
     references terms or conditions of collective bargaining
     agreements.
       Paragraph (b)--Scope of exclusion of transfer of public
     performance rights.--New paragraph (b) clarifies that the
     ``public performance'' exclusion from the operation of
     paragraph (a) is intended to include performances described
     in paragraph (b) that reach viewers through transmission or
     retransmission of programming or program services via
     satellite, MMDS, cable, and other means of carriage. This
     paragraph does not expand or restrict in any way what
     constitutes a ``public performance'' for any other purpose.
     The public performance exclusion would not be rendered
     inoperable simply because a transfer of public performance
     rights is accompanied by a transfer of limited, incidental
     other rights necessary to implement or facilitate the
     exercise of the performance rights.
       Paragraph (c)--Exclusion for grants of security
     interests.--The purpose of this paragraph is to ensure that
     banks and others providing financing for motion pictures will
     not be made subject to the assumption of obligations required
     by this section merely because they obtain a security
     interest in the motion picture. Because the term ``transfer
     of copyright ownership'' is defined in section 101 of the
     Copyright Act to include a ``mortgage . . . or
     hypothecation'' of any exclusive copyright right, this could
     be the unintended result of the statutory language. Under
     this exclusion, a bank or other party would not be subject to
     the application of paragraph (a) based solely on the acts of
     taking a security interest in a motion picture, foreclosing
     on that interest or otherwise exercising its rights as a
     secured party, or transferring or authorizing transfer of
     copyright ownership rights secured by its security interest
     to a third party. Neither would any subsequent transferee
     downstream from the initial secured party be subject
     to paragraph (a). The exclusion would apply irreespective
     of the form or language used to grant or create the
     security interest.
       It should be clear that the only agreements whose terms are
     enforced by this section are collective bargaining agreements
     and assumption agreements. In the course of financing a
     motion picture, a lender, other financier or completion
     guarantor may execute an inter-creditor or subordination
     agreement with a union including obligations with respect to
     the payment of residuals or the obtaining of assumption
     agreements. Such agreements are not within the scope of this
     section, and nothing in this section obligates lenders, other
     financiers or completion guarantors to enter into these
     agreements, enforces any terms thereof or diminishes any
     rights that the parties may have under these agreements.
       Paragraph (d)--Deferral pending resolution of bona fide
     dispute. Paragraph (d) allows a remote transferee obligated
     under paragraph (a)(1) to stay enforcement of this section
     while there exists a bona fide dispute between the applicable
     union and a prior transferor regarding obligations under this
     section. It contemplates that union claims not subject to
     bona fide dispute will be payable when due under the
     applicable collective bargaining agreement or through
     application of this section. Such disputes may be manifested
     through grievance or arbitration claims, litigation, or other
     claims resolution procedures in effect between the applicable
     parties.
       Paragraph (e)--Scope of obligations determined by private
     agreement. Paragraph (e) states explicitly the basic
     principle of operation of this section. It makes clear that
     the section simply provides an enforcement mechanism for
     obligations that have already been agreed to in a collective
     bargaining agreement. It is not intended to affect in any way
     the scope or interpretation of the provisions of, or the acts
     required by, any collective bargaining agreement. The rights
     and obligations themselves, as well as the remedies for
     breach, are those that have been agreed to among the parties.
     Accordingly, they can be changed at any time by agreement.
       The collective bargaining agreements contemplate that
     producers will obtain assumption agreements from distributors
     in certain circumstances. The statute states that where a
     producer does not comply with the obligation and obtain an
     assumption agreement where required, the law will act as
     though the producer has in fact done so. Thus, it removes the
     possibility of noncompliance with the obligation to obtain an
     assumption agreement. It does not require assumption
     agreements to be obtained in circumstances where the
     collective bargaining agreement would not require it. If
     there is a dispute over the meaning and applicabiity of
     provisions in the collective bargaining agreement, for
     example over the question of which distributors must be
     required to execute an assumption agreement, the statue does
     not resolve the dispute. It only requires whatever the
     collective bargaining agreement would require, and relegates
     the parties to the dispute mechanisms set out in that
     agreement.
       This section does not expand or diminish rights or
     obligations under other laws that might regulate contractual
     obligations beyond the purpose of enforcing assumption
     agreements required by applicable collective bargaining
     agreements. Nor does this section prevent a person or entity
     that is subject to obligations under an assumption agreement
     (whether through application of this section or otherwise)
     from transferring any such obligations to a subsequent
     transferee of the applicable copyright rights, and thereby
     being relieved of its own obligations under the assumption
     agreement, to the extent permitted by, and under the
     conditions established in, the applicable assumption
     agreements.

            Title V--Protection of Certain Original Designs

       Sections 501-505. The Senate recedes to House sections 601-
     602 with modification.

     From the Committee on Commerce for consideration of the House
     bill, and the Senate amendment, and modifications committed
     to conference:
     Tom Bliley,
     Billy Tauzin,
     John D. Dingell,
     From the Committee on Judiciary for consideration of the
     House bill, and the Senate amendment, and modifications
     committed to conference:
     Henry J. Hyde,
     Howard Coble,
     Bob Goodlatte,
     John Conyers, Jr.,
     Howard L. Berman,
                                Managers on the Part of the House.

     Orrin G. Hatch,
     Strom Thurmond,
     Patrick J. Leahy,
                               Managers on the Part of the Senate.

[[Page H10074]]

                              {time}  0140
                              ADJOURNMENT

  Mr. LEACH. Mr. Speaker, I move that the House do now adjourn.
  The motion was agreed to; accordingly (at 1 o'clock and 40 minutes
a.m.), the House adjourned until 9 a.m. today.

                          ____________________
