[DOCID: f:hr796.105]
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105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     105-796
_______________________________________________________________________


                    DIGITAL MILLENNIUM COPYRIGHT ACT

                                _______


                October 8, 1998.--Ordered to be printed

_______________________________________________________________________

  Mr. Coble, from the committee of conference, submitted the following

                           CONFERENCE REPORT

                        [To accompany H.R. 2281]

      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:
      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.
    ``(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 intheir 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 ofknowledge 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 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 thoseprovisions
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;
                    ``(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 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 usersdescribed in paragraph
(1)(C) directly from that person, except that this subparagraph applies
only if that technology--
                            ``(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 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 whosubmitted 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.

     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.''.

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
radioservice 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 therequirement
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 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 suchother 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 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
mayagree. 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 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 ofcopyright 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.
``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, 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 tothe 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.

``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 thedesign 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.

``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 theCommissioner 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 amendmentdiffer 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 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 consul- tative 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 an 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 intend 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, theconferees
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.
Nor is it 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, is test the lock
once it has been installed on someone 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 an exception for ``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 the technological means do not
otherwise violate section 1201(a)(2). It is 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 videorecorders 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 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, allmanufacturers 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 these 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 devices
are, of course, included within 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 thesetechnologies 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 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 colorstripe 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 thefour-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 serviceprovider,'' 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 theexemption 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 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 copyrightowners 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
generaladministrative 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) 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 respect 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 webcasters) 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 transmission'' 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 courts 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 become 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 broadcast transmissions are in
digital format and regularly exceed the sound recording
performance complement. Second, the retransmissions are not
eligible for statutory licensing ifthe 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 thetransmitting 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 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 preexistingsubscription 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
performancesof 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
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 timeand 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 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 actualknowledge 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
toparagraph (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 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.

                                <greek-d>

