May 1997 CPTWG forms a Data Hiding subgroup to define and discuss technologies that can carry invisible information (such as a "watermark”) in video content to indicate that copy protection is to be applied by recording and playback devices. Co-chairs are named from motion picture, consumer electronics, and computer industries.

September 1997 The Data Hiding subgroup receives 11 technology proposals. Over the next few months, the group establishes plans to subject the technologies to testing for invisibility, reliability in operation, and robustness against intentional hacking and unintentional removal or obfuscation during typical consumer video uses. Further development for licensing groups came from amalgamation of proposals by IBM, NEC, Sony, Hitachi, and Pioneer; and Philips, Macrovision and Digimarc. A later Toshiba proposal submitted to the license group was also first presented at CPTWG.

November 1997 The Digital Transmission subgroup issues a report analyzing the nine (9) submitted technologies against the list of requirements.

February 1998 Five companies (Intel, Hitachi, Matsushita, Sony and Toshiba) present a proposal to CPTWG uniting elements of their proposals to the Digital Transmission group into a technology known as "Digital Transmission Content Protection" or "DTCP.” Within a few months, the companies, commonly referred to as the "5C," submit draft licenses to motion picture and technology companies, and obtain export approval for DTCP.

May 1998 The Data Hiding subgroup issues its Interim Report analyzing the submitted technology proposals.

September 1998 The 5C issue the first licenses to manufacture devices using DTCP,

December 1998 The 4C Entity, LLC (“4C", a group founded by IBM, Intel, Matsushita, and Toshiba) issues a request for proposals to evaluate and select a watermark technology for use in an audio copy protection system. Six technologies are solicited, and five participate in the intensive testing and analysis project over the next several months.

February 1999 4C presents to the CPTWG technical proposals for two protection technologies: "Content Protection for Prerecorded Media” or “CPPM,” which is an encryption technology for use on DVD Audio discs and "Content Protection for Recordable Media” or “CPRM,” which is an encryption technology for use on recordable media of many types (including several types of DVD recordable media and various forms of "flash memory” media).

Spring 1999 DTCP-enabled semiconductors come to market.

July 1999 DVD CCA issues an Instruction to Bidders outlining a request for proposals for video watermaking technology, building on the Data Hiding subgroup analyses, and for licensing terms and conditions for use of such technology to supplement the CSS technology for DVD video discs.

August 1999 4C selects the Verance watermark technology for use as part of its content protection for audio (both CPPM for DVD Audio and other prerecorded audio content, and the audio version of CPRM). The multi-industry group, the Secure Digital Music Initiative, also selects Verance's technology for use in relation to its Phase I Portable Device Specification.

September 1999 DVD CCA presents report findings of its watermark testing project to the advisory committee. Concerns are raised that selection of either technology may be impeded by claims that elements of each proposed watermark technology may infringe patents held by other companies.

October 1999 Intel presents at CPTWG its High-bandwidth Digital Content Protection system ("HDCP") to protect uncompressed digital video content transmitted from personal computers or set-top boxes to video monitors.

January 2000 Due to the difficulties in resolving the patent issues, DVD CCA temporarily postpones further efforts to select a watermark for video content.

Fall 2000

· D-VHS high definition digital tape recorders come to market, with a proprietary encrypted recording system, and digital outputs protected by the 5C DTCP technology.

Prerecorded DVD Audio discs and players with CPPM come to market.

December 13, 2000

5C, Warner Bros. and Sony Pictures execute a Memorandum of Understanding reflecting essential terms of a license agreement to use the DTCP technology to protect those studios' motion pictures.

Motion picture companies state a request that 5C technology be extended to provide protection against up-loading digital terrrestrial broadcast content to the Internet.

December 15, 2000 CableLabs issues its POD-Host Interface License Agreement, requiring the use of DTCP on digital outputs of Open Cable set-top boxes.

Early 2001 DVD recorders with CPRM and DTCP come to market.

March 2001 DVD CCA announces at CPTWG that it is instituting a new process to obtain bids for watermark technology that can be used to indicate that protection against unauthorized copying or playback should be applied to content that has been protected using CSS. Expressions of interest are solicited from any interested technology provider, initiating a multi-step process.

July 2001 5C, Warner Bros. and Sony Pictures execute the first licenses for motion picture studios to protect their content using DTCP. In addition, first HDCP enabled displays come to market.

Fall 2001 High definition digital television receivers using DTCP come to market.

November 2001 DVD CCA receives bids and technical proposals from two parties interested in having their watermark technologies selected for use on CSS-encrypted discs.

November 2001 Intel, Hitachi, Matsushita, Sony and Toshiba present at CPTWG a technical proposal (based on concepts from Fox News Corp.) making reference to a "Broadcast Flag," developed by ATSC, to signal the desire to protect unencrypted digital terrestrial broadcasts against unauthorized redistribution outside the home or personal network (e.g., against uploading to the Internet). A Broadcast Protection Discussion Group is formed to evaluate the suitability of this technology, with participants from the consumer electronics, information technology, motion picture, broadcast, cable and satellite industries.

January - March 2002 The Broadcast Protection Discussion Group, now a CPTWG subgroup, convenes in person and by telephone conference, with the goal of completing its evaluation of the technical elements of the Broadcast Flag proposal by the end of March 2002. Co-chairs for the group are named from the consumer electronics, information technology and motion picture industries. A drafting committee proposes a "strawman" draft compliance and robustness requirements for devices that implement the Broadcast Flag. Alternative proposals are received. Separately, representatives from the relevant industries begin discussions of possible means by which to require implementation of technical proposals for broadcast protection.

December 2001-April 2002 DVD CCA testing and analysis process related to watermarking technologies submitted by the two bidding groups. Final action to select a technology expected by end of April, with action to be taken by the DVD CCA Board of Directors (consisting of 2 members each from motion picture, consumer electronics, and computer companies) based on advice from a multi-industry Content Protection Advisory Council (25 companies from the motion picture, consumer electronics, and computer industries).

If You Cannot Protect What You Own,
You Don't Own Anything!

A brief report concerning
the dark underside of Internet piracy
as well as the possibility of a
cleansing redemption to benefit
the American consumer

Presented to the

Senate Committee on the Judiciary

On behalf of the member companies of THE MOTION PICTURE ASSOCIATION

OF AMERICA

by

Jack Valenti

President and Chief Executive Officer

March 14, 2002
Washington, D.C.

This statement represents the collective views of Buena Vista Pictures Distribution, Inc. (Disney); Sony Pictures Entertainment Inc.; Metro-Goldwyn-Mayer Inc.; Paramount Pictures Corporation; Twentieth Century Fox Film Corporation; Universal City Studios, Inc.; and Warner Bros

-2

This document sets forth the goals that the American movie industry urges the Congress to seriously examine. The future of these unique creative story-telling works is in danger of being shrunk and squandered by an increasing thievery on the Internet. We cannot stand mute and observe the slow undoing of a formidable American economic and creative asset.

The Economic Worth

of the Copyright Industries

What kind of asset is at stake here and what does it mean to this country? The facts are these: The Copyright Industries (movies, TV programs, home video music, books and computer software) are America's greatest trade export prize. They are responsible for some five percent of the GDP of the nation. They gather in more international revenues than automobiles and auto parts, more than aircraft, more than agriculture. They are creating NEW jobs at three times the rate of the rest of the national economy. The movie industry alone has a SURPLUS balance of trade with every single country in the world. No other American enterprise can make that statement. And all this at a time when the country is bleeding from a $400 Billion trade DEFICIT.

Which is why we come to you with a clear statement of what is needed to preserve this extraordinary economic/creative engine of growth in a broadband world.

Broadband (high speed, large pipe entry to the Internet)

is an OPPORTUNITY to make available to consumers