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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.