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30 July 1998
Source: House Report 105-551 Part II: http://jya.com/hr105-551p2.txt

Selected provisions on encryption; see full report and HR 2281 for all citations.

Compare to WIPO-Crypto: http://jya.com/wipo-crypto.htm

      (g) Encryption Research.--
              (1) Definitions.--For purposes of this subsection--
                      (A) the term ``encryption research'' means activities
                    necessary to identify and analyze flaws and
                    vulnerabilities of encryption technologies applied to
                    copyrighted works, if these activities are conducted to
                    advance the state of knowledge in the field of
                    encryption technology or to assist in the development
                    of encryption products; and
                      (B) the term ``encryption technology'' means the
                    scrambling and descrambling of information using
                    mathematical formulas or algorithms.
              (2) Permissible acts of encryption research.--Notwithstanding
            the provisions of subsection (a)(1)(A), it is not a violation
            of the regulations issued under that subsection for a person to
            circumvent a technological protection 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
                    title 17, United States Code, or a violation of
                    applicable law other than this section, including
                    section 1030 of title 18, United States Code, and those
                    provisions of title 18, United States Code, 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 title 17, United States Code, 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 protection
                    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 protection measure for the
                    sole purpose of 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 Act, the Assistant Secretary of
            Commerce for Communications and Information shall 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
                    protection for copyrighted works; and
                      (C) protection of copyright owners against the
                    unauthorized access to their encrypted copyrighted
                    works.
            The Assistant Secretary shall include in such report
            recommendations, if any, on proposed amendments to this Act.

                         Promoting Encryption Research

        H.R. 2281, as reported by the Committee on the Judiciary,
    provided no exception for the field of encryption research to
    the bill's broad prohibition against the circumvention of
    technological protection measures. Recognizing the importance
    of the field of encryption research to electronic commerce, the
    Committee on Commerce crafted a provision that provides for an
    exception to the bill's anti-circumvention provisions.
        The effectiveness of technological protection measures to
    prevent theft of works depends, in large part, on the rapid and
    dynamic development of better technologies, including
    encryption-based technological protection measures. The
    development of encryption sciences requires, in part, ongoing
    research and testing activities by scientists of existing
    encryption methods, in order to build on those advances, thus
    promoting and advancing encryption technology generally. This
    testing could involve attempts to circumvent or defeat
    encryption systems for the purpose of detecting flaws and
    learning how to develop more impregnable systems. The goals of
    this legislation would be poorly served if these provisions had
    the undesirable and unintended consequence of chilling
    legitimate research activities in the area of encryption.
        In many cases, flaws in cryptography occur when an
    encryption system is actually applied. Research of such
    programs as applied is important both for the advancement of
    the field of encryption and for consumer protection. Electronic
    commerce will flourish only if legitimate encryption
    researchers discover, and correct, the flaws in encryption
    systems before illegitimate hackers discover and exploit these
    flaws. Accordingly, the Committee has fashioned an affirmative
    defense to permit legitimate encryption research.

                (g) Encryption research
        As previously discussed in the background section to this
    report, the Committee views encryption research as critical to
    the growth and vibrancy of electronic commerce. Section 102(g)
    therefore provides statutory clarification for the field of
    encryption research, in light of the prohibitions otherwise
    contained in Section 102. Section 102(g)(1) defines
    ``encryption research'' and ``encryption technology.'' Section
    102(g)(2) identifies permissible encryption research
    activities, notwithstanding the provisions of Section
    102(a)(1)(A), including: whether the person lawfully obtained
    the encrypted copy; the necessity of the research; whether the
    person made a good faith effort to obtain authorization before
    circumventing; and whether the research constitutes
    infringement or a violation of other applicable law.
        The Committee recognizes that courts may be unfamiliar with
    encryption research and technology, and may have difficulty
    distinguishing between a legitimate encryption research and a
    so-called ``hacker'' who seeks to cloak his activities with
    this defense. Section 102(g)(3) therefore contains a non-
    exhaustive list of factors a court shall consider in
    determining whether a person properly qualifies for the
    encryption research defense.
        Section 102(g)(4) is concerned with the development and
    distribution of tools--typically software--which are needed to
    conduct permissible encryption research. In particular,
    subparagraph (A) provides that it is not a violation of Section
    102(a)(2) to develop and employ technological means to
    circumvent for the sole purpose of performing acts of good
    faith encryption research permitted under Section 102(g)(2).
    Subparagraph (B) permits a person to provide such technological
    means to another person with whom the first person is
    collaborating in good faith encryption research permitted under
    Section 102(g)(2). Additionally, a person may provide the
    technological means to another person for the purpose of having
    the second person verify the results of the first person's good
    faith encryption research.
        The Committee is aware of additional concerns that Section
    102 might inadvertently restrict a systems operator's ability
    to perform certain functions critical to the management of
    sophisticated computer networks. For example, many independent
    programmers have created utilities designed to assist in the
    recovery of passwords or password-protected works when system
    users have forgotten their passwords. Because Section 102
    prohibits circumvention without the authorization of the
    copyright owner, circumvention to gain access to one's own
    work, as a matter of logic, does not violate Section 102.
        The law would also not prohibit certain kinds of commercial
    ``key-cracker'' products, e.g., a computer program optimized to
    crack certain ``40-bit'' encryption keys. Such machines are
    often rented to commercial customers for the purpose of quick
    data recovery of encrypted data. Again, if these products do
    not meet any of the three criteria under Section 102(a)(2)
    because these products facilitate a person's access to his or
    her own works, they would not be prohibited by Section 102.
        In addition, network and web site management programs
    increasingly contain components that test systems security and
    identify common vulnerabilities. These programs are valuable
    tools for systems administrators and web site operators to use
    in the course of their regular testing of their systems'
    security. The testing of such ``firewalls'' does not violate
    Section 102 because in most cases the firewalls are protecting
    computer and communications systems and not necessarily the
    specific works stored therein. Accordingly, it is the view of
    the Committee that no special exception is needed for these
    types of legitimate products.
        Finally, Section 102(g)(5) requires the Assistant Secretary
    of Commerce for Communications and Information to report to
    Congress, within one year of enactment, on the effect Section
    102(g) has had on the field of encryption research, the
    adequacy of technological protection for copyrighted works, and
    protection of copyright owners against unauthorized access.