able, facilitate or conceal infringement, are eligible for an exemption from liability for violation of the CMI provisions of subsection (b) in certain, limited circumstances.

In the case of an analog transmission, paragraph (1) provides that an eligible person will not be held liable for violating provisions of subsection (b) if it is not "technically feasible" for that person to avoid the violation or if avoiding the violation would "create an undue financial hardship." Avoiding a violation of subsection (b) by transmitting credits that are of excessive duration in relation to standard practice in the relevant industries (for instance, the motion picture and television broadcast industries) is one example of an activity that may "create an undue financial hardship" under paragraph (1). As indicated above, this exemption applies only in the absence of an intent to induce, enable, facilitate or conceal infringement by engaging in such activity.

Paragraph (2) provides an exemption in the case of certain digital transmissions, and contemplates the creation of voluntary digital transmission standards for the placement of copyright management information. Separate standards are likely to be set for the location of copyright management information in different categories of works. For instance, the standard(s) for the location of the name of a copyright owner in a sound recording or musical work to be broadcast by radio stations may differ-and be set in a separate standard-setting process(es) from the standard for the location of such information in a motion picture or other audiovisual work to be broadcast by television stations.

Subparagraph (A) provides that if a digital transmission standard for the placement of copyright management information for a category of works is set in a voluntary, consensus standard-setting process involving a representative cross-section of the relevant copyright owners and relevant transmitting industry, including but not limited to representatives of radio or television broadcast stations, cable systems, and copyright owners of a category of works that are intended for public performance by such stations or systems, an eligible person will not be liable for a violation of subsection (b) if the copyright management information involved in the violation was not placed in a location specified by the standard for that information. The eligible person, however, cannot qualify for this limitation on liability if that person was responsible for the nonconforming placement, or had the intent to induce, enable, facilitate or conceal infringement.

Paragraph (2)(B)(i) provides that until such a standard is set for a category of works, an eligible person will not be liable for a violation of subsection (b) if the transmission of the copyright management information would cause a perceptible visual or aural degradation of the digital signal. Clause (ii) provides that during this time period before a standard is set, an eligible person also will not be liable if the digital transmission of the information would conflict with an applicable government regulation or industry standard relating to the transmission of information in a digital signal, such as the regulation requiring the placement of closed captioning in line 21 of the vertical blanking interval (47 C.F.R. 79.1, implementing 47 U.S.C. 613). For purposes of this clause, however, the applicable industry-wide standard must be of a type specified in sub

clauses II or II. The first type, defined in subclause (II), includes only those standards that were adopted by a voluntary, consensus standards body, such as the Advanced Television Systems Committee, before the effective date of section 1202. The other type, defined in subclause III, includes only those standards adopted in a voluntary, consensus standards-setting process open to participation by groups, including but not limited to, a representative cross-section of radio or television broadcast stations, cable systems, and copyright owners of a category of works that are intended for public performance by such stations or systems.

Section 1203. Civil Remedies

Section 1203 is divided into three paragraphs. Subsection (a) sets forth the general proposition that civil remedies are available for violations of sections 1201 and 1202. This paragraph establishes the jurisdiction for such civil actions as the "appropriate U.S. district court" and limits standing to bring a civil action to those persons injured by a violation of section 1201 or 1202.

Subsection (b) sets out the powers of the court that hears the case. Subsection (b) permits the court to (1) grant temporary and permanent injunctions; (2) order the impounding of any device or product that is in the custody or control of the alleged violator and that the court has reasonable cause to believe was involved in a violation; (3) award damages; (4) allow the recovery of costs by or against any party; (5) award reasonable attorney's fees to the prevailing party; and (6) 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.

Subsection (c) is divided into five sections, each of which addresses the awarding of damages to the prevailing party. Paragraph (1) establishes the general proposition that a person who violates section 1201 or 1202 is liable for either actual damages and any additional profits of the violator or statutory damages. Paragraphs (2) and (3) specify that the complaining party may finalize a choice between the two types of damage awards at any time until the final judgment is entered.

Paragraph (2) provides that, when the prevailing party opts for actual damages, the court shall award to that party the actual damages suffered by the party as a result of the violations, as well as any profits of the violator that are attributable to the violation and are not taken into account in computing the actual damages. Paragraph (3) provides different statutory award amounts depending upon whether the civil action involves a section 1201 or 1202 violation. When the violation is a section 1201 violation and the prevailing party opts to recover an award of statutory damages, the prevailing party will be awarded statutory damages of not less than $200 or more than $2,500 per act of circumvention, device, product, component, offer, or performance of service. When the violation is a section 1202 violation and the prevailing party opts to recover an award of statutory damages, the prevailing party will be awarded statutory damages of not less than $2,500 or more than $25,000 for each violation.

Paragraphs (4) and (5) set forth circumstances in which it would be appropriate to increase or decrease a damage award. Paragraph

(4) provides for an increased damage award when the violator is a repeat offender. Specifically, when the prevailing party establishes that a person violated section 1201 or 1202 within three years after a final judgment was entered against that person for another such violation, the award of damages may be increased to a sum of up to triple the amount that would otherwise be awarded. Paragraph (5)(A) provides that, when a violator of section 1201 or 1202 was not aware and had no reason to believe that its acts constituted a violation, the damage award may be reduced or remitted. Paragraph (5)(B) provides even greater protection for nonprofits. When a violator of section 1201 or 1202 is a nonprofit library, nonprofit archives, or nonprofit educational institution, and was not aware and had no reason to believe that its acts constituted a violation, the damage award shall be remitted entirely.

Section 1204: Criminal Penalties.

Subsection (a) provides for the availability of criminal penalties for violations of sections 1201 and 1202. The standard applicable under this section is identical to the standard used in section 506 of the Copyright Act to establish criminal violations. Subsection (a) also sets forth the penalties available for a criminal violations of sections 1201 and 1202 as "not more than $500,000 or imprisonment for not more than five years, or both." If the person who is found guilty of criminal violation of sections 1201 or 1202 is a repeat offender, section 1204 provides that penalties may be increased to "not more than $1,000,000 or imprisonment for not more than ten years, or both."

Subsection (b) exempts completely any nonprofit library, nonprofit archives and nonprofit educational institution from the criminal penalties contained in subsection (a).

Subsection (c) provides for a five-year statute of limitations for criminal offenses under chapter 12.

Section 1205: Savings Clause

Section 1205 deals with the relationship between this act and laws protecting privacy. It establishes that nothing in the new chapter 12 created under this title abrogates, diminishes, or weakens the provisions of any law that prevents the violation of individual privacy rights related to use of the Internet, nor does it provide any defense or element of mitigation in a criminal prosecution or civil action under law for the violation of those rights.

Subsection (b) of Section 103 of this title is a conforming amendment which amends the table of chapters to accommodate the addition of a new chapter 12.

Section 104: Development and Implementation of Technological Protection Measures

Subsections (a)-(c) of section 105 contain a sense of the Congress stating that the Congress anticipates the development and implementation of technological measures which protect access to copyrighted works that will be developed by a broad consensus in an open, fair, multi-industry process, that will be made available on reasonable and nondiscriminatory terms, and that will not impose substantial costs or burdens on either the copyright owners who

will use them or on the manufacturers of hardware or software which will be used in conjunction with them. Congress anticipates that, pursuant to this legislation, these technological measures will include, but not be limited to, those which help nonprofit libraries to continue to lend copies to library users as they do today and in digital formats which do not infringe copyright; those which effectively protect against copyright infringement; and those which promote market place solutions for making works available in digital formats to consumers and users.

Subsection (d) requires that the Under Secretary of Commerce for Intellectual Property Policy, the Register of Copyrights and the Assistant Secretary of Commerce for Communications and Information jointly submit a report and any suggestions for legislation to Congress every year for three years after the enactment of this title reviewing the impact of new section 1201 on individual access to copyrighted works in digital formats. The issues to be addressed in the report are described in paragraph (2).

Section 105: Evaluation of Impact of Copyright Law and Amendments on Electronic Commerce and Technological Development Section 105 requires that the Under Secretary of Commerce for Intellectual Property Policy, the Register of Copyrights and the Assistant Secretary of Commerce for Communications and Information jointly submit a report and any suggestions for legislation to Congress within one year after the enactment of this title, evaluating the impact of this title and the development of electronic commerce on the operation of sections 109 and 117 of title 17, and the relationship between existing and emerging technology on the operation of those provisions.

Section 109 of the Copyright Act is a codification of the judiciallydeveloped "first sale doctrine," which limits the exclusive right of a copyright owner to distribute copies of the work to the first sale or transfer of any particular lawfully made copy. Thus, the owner of a particular copy lawfully made under the Act may, without the authority of the copyright owner, sell or otherwise dispose of the possession of that copy. The first sale doctrine does not readily apply in the digital networked environment because the owner of a particular digital copy usually does not sell or otherwise dispose of the possession of that copy. Rather, "disposition" of a digital copy by its owner normally entails reproduction and transmission of that reproduction to another person. The original copy may then be retained or destroyed. The appropriate application of this doctrine to the digital environment merits further evaluation and this section therefore calls for such an evaluation and report.

Section 117 of the Copyright Act limits the exclusive rights of copyright owners by allowing the lawful owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that program if it is necessary as an essential step in the utilization of the program in conjunction with a machine or for archival purposes only. The amendments contained in Title III of this legislation further amend section 117 to allow for the unauthorized making of copies in certain specific circumstances during the repair or maintenance of a machine (see detailed legislative history in title III.) The impact of the use of encryption and other

technologies on these limitations also merits further evaluation and this section therefore calls for such an evaluation and report.

Section 106: Effective Date

This section establishes the general effective date of the proposed amendments in this bill as the date the bill is enacted into law. There are several exceptions to this effective date. These exceptions only apply to the technical amendments that are proposed in section 102 of the bill. The bill fixes the effective date of any provision in section 102 of the bill that specifically refers to the WIPO Copyright Treaty or the WIPO Performances and Phonograms Treaty as the date the respective Treaty enters into force.

These exceptions were necessary because, as of the drafting of this bill, the two treaties have not entered into force and will not do so until three months after 30 States deposit their instruments of ratification or accession with the Director General of WIPO. The exceptions ensure that the amendments that refer specifically to the two treaties do not become effective until the treaties themselves become effective. In addition, it was necessary to refer to each treaty separately in this section, because the two treaties may enter into force at different times, and the provisions relating specifically to one treaty should not become effective as soon as the other treaty enters into force. Finally, the phrase "with respect to the United States" was added to ensure that, if the Treaties enter into force before the United States deposits its instrument of accession, the United States does not extend benefits to Member States of these Treaties until the United States becomes party to the Treaties.

TITLE II-ONLINE COPYRIGHT INFRINGEMENT LIABILITY LIMITATION Section 201: Short Title

This section establishes that this title may be cited as the "Online Copyright Infringement Liability Limitation Act." Section 202: Limitations on Liability for Copyright Infringement

Summary

The "Online Copyright Infringement Liability Limitation Act" addresses concerns raised by a number of on-line service and Internet access providers regarding their potential liability when infringing material is transmitted on-line through their services. While several judicially created doctrines currently address the question of when liability is appropriate, providers have sought greater certainty through legislation as to how these doctrines will apply in the digital environment.

Title II of this bill codifies a liability system based on the core of current case law dealing with the liability of on-line service providers, while narrowing and clarifying the law in other respects. It offers the advantage of incorporating and building on those judicial applications of existing copyright law to the digital environment that have been widely accepted as fair and reasonable.

Subsection (a) of section 202 amends chapter 5 of the Copyright Act (17 U.S.C. 501, et seq.") to create a new section 512, entitled "Limitations on liability relating to material online."