A bill to require the Federal Trade Commission to issue rules regarding the disclosure of technological measures that restrict consumer flexibility to use and manipulate digital information and entertainment content.

Summary: Digital Consumer Right to Know Act - Directs the Federal Trade Commission (FTC) to issue rules to implement requirements that a producer or distributor of copyrighted digital content disclose the nature of restrictions that limit the practical ability of the content purchaser to play, copy, transmit, or transfer such content on, to, or between devices commonly used with respect to that type of content. Requires such disclosure in the case of limitations on: (1) the recording for later viewing or listening of certain audio or video programming; (2) the reasonable and noncommercial use of legally acquired audio or video content; (3) making backup copies of legally acquired content subject to accidental damage, erasure, or destruction; (4) using limited excerpts of legally acquired content; and (5) engaging in the secondhand transfer or sale of legally acquired content. Provides disclosure exceptions. Requires the FTC to annually review the effectiveness of such rules.Expresses the sense of Congress that: (1) competition among distribution outlets and methods generally benefits consumers; and (2) copyright holders selling digital content in electronic form for distribution over the Internet should offer to license such content to multiple unaffiliated distributors.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Digital Consumer Right to Know 
Act''.

SEC. 2. CONGRESSIONAL FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds the following:
            (1) Consumers have developed a number of legitimate 
        expectations concerning how they may use and manipulate legally 
        acquired information or entertainment content for reasonable, 
        personal, and noncommercial purposes. In addition, as digital 
        technology creates new ways to use and manipulate content, 
        consumers are likely to develop new expectations that reflect 
        the new technological possibilities.
            (2) Digital technologies also can facilitate unlawful 
        reproduction and distribution of information or entertainment 
        content subject to copyright protection. To combat this 
        problem, technology and content companies are developing and 
        deploying technologies to prevent or deter such unlawful 
        behavior.
            (3) Such technologies could help promote a competitive 
        digital marketplace in which consumers have a broad range of 
        choices and media businesses can pursue a variety of business 
        models. However, there are also significant risks.
            (4) There is a risk that technologies developed to prevent 
        unlawful reproduction and distribution of digital information 
        and entertainment content could have the side effect of 
        restricting consumers' flexibility to use and manipulate such 
        content for reasonable, personal, and noncommercial purposes.
            (5) There is a risk that such technologies could unfairly 
        surprise consumers by frustrating their expectations concerning 
        how they may use and manipulate digital content they have 
        legally acquired.
            (6) There is a risk that such technologies could result in 
        greater market power for the holders of exclusive rights and 
        reduce competition, by limiting the ability of unaffiliated 
        entities to engage in the lawful secondhand sale or 
        distribution of such content.
    (b) Purposes.--The purposes of this Act are--
            (1) to ensure that consumers of digital information and 
        entertainment content are informed in advance of technological 
        features that may restrict the uses and manipulation of such 
        content, so that--
                    (A) consumers may factor this information into 
                their purchasing decisions; and
                    (B) there will be a strong, market-based incentive 
                for the development of technologies that address the 
                problem of unlawful reproduction and distribution of 
                content in ways that still preserve the maximum 
                possible flexibility for consumers to use and 
                manipulate such content for lawful and reasonable 
                purposes; and
            (2) to express the sense of Congress concerning the 
        importance of retaining competition among distribution channels 
        for digital information and entertainment content.

SEC. 3. FAIR DISCLOSURE OF TECHNOLOGICAL USE RESTRICTIONS.

    (a) FTC Rulemaking.--Not later than 1 year after the date of 
enactment of this Act, the Federal Trade Commission shall issue rules 
to implement the disclosure requirements described in subsection (b).
    (b) Disclosure Requirements.--
            (1) In general.--If a producer or distributor of 
        copyrighted digital content sells such content or access to 
        such content subject to technological features that limit the 
        practical ability of the purchaser to play, copy, transmit, or 
        transfer such content on, to, or between devices or classes of 
        devices that consumers commonly use with respect to that type 
        of content, the producer or distributor shall disclose the 
        nature of such limitations to the purchaser in a clear and 
        conspicuous manner prior to such sale.
            (2) Manner of disclosure.--The Federal Trade Commission 
        shall prescribe the manner of disclosure required under this 
        subsection, which may include labels on packaging or such other 
        means as the Commission determines appropriate to achieve the 
        purposes of this section. The Commission may prescribe 
different manners of disclosure for different types of content and 
different distribution channels.
    (c) Disclosure of Certain Limitations on Reasonable Consumer 
Activities.--The following are examples of limitations which shall 
trigger the disclosure requirements of subsection (b):
            (1) Limitations on the recording for later viewing or 
        listening (popularly referred to as ``time shifting'') of audio 
        or video programming delivered--
                    (A) via free over-the-air broadcasting; or
                    (B) as part of a multichannel video or audio system 
                in which the consumer obtains the programming as part 
                of a subscription package, with no per view charges and 
                no ability to select the specific time at which 
                individual programs will be delivered.
            (2) Limitations on the reasonable and noncommercial use of 
        legally acquired audio or video content--
                    (A) in different physical locations of the 
                consumer's choice (popularly referred to as ``space 
                shifting''); or
                    (B) on the electronic platform or device of the 
                consumer's choice, including platforms or devices 
                requiring that the content be translated into a 
                comparable format before such use.
            (3) Limitations on making backup copies of legally acquired 
        content distributed in a form or medium that is subject to 
        accidental erasure, damage, or destruction in the ordinary 
        course of use, including through computer failure or computer 
        viruses, to be used only in the event that the original copies 
        are lost or damaged.
            (4) Limitations on using limited excerpts of legally 
        acquired content for purposes such as criticism, comment, news 
        reporting, teaching, scholarship, or research.
            (5) Limitations on engaging in the secondhand transfer or 
        sale of legally acquired content to another consumer, provided 
        that the transferor does not retain the content or any copy 
        thereof and that the transferee obtains only such rights to the 
        use and enjoyment of the content as the transferor possessed at 
        the time of transfer.
    (d) Exception to Disclosure Requirement.--The Federal Trade 
Commission shall not require disclosure under subsection (b) with 
respect to any limitation that applies only to uses--
            (1) that are sufficiently unusual or uncommon that the 
        burdens of prior disclosure would outweigh the utility to 
        consumers; or
            (2) that have no significant application for lawful 
        purposes.
    (e) Annual FTC Review.--On an annual basis, the Federal Trade 
Commission shall review the effectiveness of its rules implementing 
this section to determine whether revisions are warranted to serve the 
purposes of this section. In conducting this review, the Commission 
shall consider whether changes in technology or in consumer practices 
have led to new, legitimate consumer expectations concerning specific 
uses of digital information or entertainment content that would result 
in consumers suffering unfair surprise if a technology were to limit 
those uses without prior notice.

SEC. 4. EFFECT ON OTHER LAWS.

    (a) No Limiting Effect on Fair Use.--Nothing in this Act shall be 
interpreted to suggest that a consumer activity not referred to in 
section 3(c) or in the Federal Trade Commission's rules implementing 
this Act may not constitute a fair use within the meaning of section 
107 of title 17, United States Code.
    (b) Unlawful Reproduction or Distribution.--Nothing in this Act 
shall be interpreted to permit the otherwise unlawful reproduction or 
distribution of copyrighted content or to shield a person engaging in 
such activity from any type of legal action or judgment.

SEC. 5. COMPETITION IN DISTRIBUTION CHANNELS.

    It is the sense of Congress that--
            (1) competition among distribution outlets and methods 
        generally benefits consumers; and
            (2) just as copyright holders have sold content embodied in 
        tangible products such as audio cassettes, videotapes, and 
        compact discs to multiple competing retail distributors, 
        copyright holders selling digital content in electronic form 
        for distribution over the Internet should offer to license such 
        content to multiple unaffiliated distributors, to enable 
        competition among different distribution models and 
        technologies.