29–006

108TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 2d Session 108–700

PIRACY DETERRENCE AND EDUCATION ACT OF 2004

SEPTEMBER 24, 2004.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. SENSENBRENNER, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 4077] 

[Including cost estimate of the Congressional Budget Office]

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 4077) to enhance criminal enforcement of the copyright laws, 

to educate the public about the application of copyright law to the 

Internet, and for other purposes, having considered the same, reports favorably thereon with an amendment and recommends that 

the bill as amended do pass.

CONTENTS 

Page 

The Amendment ...................................................................................................... 2

Purpose and Summary ............................................................................................ 7

Background and Need for the Legislation ............................................................. 8

Hearings ................................................................................................................... 19

Committee Consideration ........................................................................................ 19

Vote of the Committee ............................................................................................. 20

Committee Oversight Findings ............................................................................... 20

New Budget Authority and Tax Expenditures ...................................................... 20

Congressional Budget Office Cost Estimate .......................................................... 20

Performance Goals and Objectives ......................................................................... 23

Constitutional Authority Statement ...................................................................... 23

Section-by-Section Analysis and Discussion .......................................................... 23

Changes in Existing Law Made by the Bill, as Reported ..................................... 26

Markup Transcript .................................................................................................. 32

Minority Views ......................................................................................................... 109

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THE AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Piracy Deterrence and Education Act of 2004’’. 

SEC. 2. FINDINGS. 

The Congress finds as follows: 

(1) The Internet, while changing the way our society communicates, has 

also changed the nature of many crimes, including the theft of intellectual property. 

(2) Trafficking in infringing copyrighted works through increasingly sophisticated electronic means, including peer-to-peer file trading networks, Internet 

chat rooms, and news groups, threatens lost jobs, lost income for creators, lower 

tax revenue, and higher prices for honest purchasers. 

(3) The most popular peer-to-peer file trading software programs have been 

downloaded by computer users over 200,000,000 times. At any one time there 

are over 3,000,000 users simultaneously using just one of these services. Each 

month, on average, over 2,300,000,000 digital-media files are transferred among 

users of peer-to-peer systems. 

(4) Many computer users simply believe that they will not be caught or 

prosecuted for their conduct. 

(5) The security and privacy threats posed by certain peer-to-peer networks 

extend beyond users inadvertently enabling a hacker to access files. Millions of 

copies of one of the most popular peer-to-peer networks contain software that 

could allow an independent company to take over portions of users’ computers 

and Internet connections and has the capacity to keep track of users’ online 

habits. 

(6) In light of these considerations, Federal law enforcement agencies 

should actively pursue criminals who steal the copyrighted works of others, and 

prevent such activity through enforcement and awareness. The public should be 

educated about the security and privacy risks associated with being connected 

to certain peer-to-peer networks. 

SEC. 3. VOLUNTARY PROGRAM OF DEPARTMENT OF JUSTICE. 

(a) VOLUNTARY PROGRAM.—The Attorney General is authorized to establish a 

program under which the Department of Justice, in cases where persons who are 

subscribers of Internet service providers appear to be engaging in copyright infringing conduct in the course of using that Internet service, would send to the Internet 

Service providers notices that warn such persons of the penalties for such copyright 

infringement. The Internet service providers may forward the notices to such persons. (b) LIMITATIONS ON PROGRAM.— (1) EXTENT AND LENGTH OF PROGRAM.—The program under subsection (a) 

shall terminate at the end of the 18-month period beginning on the date of the 

enactment of this Act and shall be limited to not more than 10,000 notices. 

(2) PRIVACY PROTECTIONS.—No Internet service provider that receives a notice from the Department of Justice under subsection (a) may disclose to the Department any identifying information about the subscriber that is the subject 

of the notice except pursuant to court order or other applicable legal process 

that requires such disclosure. 

(c) REIMBURSEMENT OF INTERNET SERVICE PROVIDERS.—The Department of Justice shall reimburse Internet Service providers for all reasonable costs incurred by 

such service providers in forwarding notices under subsection (a). 

(d) REPORTS TO CONGRESS.—The Attorney General shall submit to the Congress 

a report on the program established under subsection (a) both at the time the program is initiated and at the conclusion of the program. 

SEC. 4. DESIGNATION AND TRAINING OF AGENTS IN COMPUTER HACKING AND INTELLECTUAL PROPERTY UNITS. 

(a) DESIGNATION OF AGENTS IN CHIPS UNITS.—The Attorney General shall ensure that any unit in the Department of Justice responsible for investigating computer hacking or responsible for investigating intellectual property crimes is assigned at least one agent to support such unit for the purpose of investigating 

crimes relating to the theft of intellectual property. 

(b) TRAINING.—The Attorney General shall ensure that each agent assigned 

under subsection (a) has received training in the investigation and enforcement of 

intellectual property crimes. 

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SEC. 5. EDUCATION PROGRAM. 

(a) ESTABLISHMENT.—There shall be established within the Office of the Associate Attorney General of the United States an Internet Use Education Program. 

(b) PURPOSE.—The purpose of the Internet Use Education Program shall be to—

(1) educate the general public concerning the value of copyrighted works 

and the effects of the theft of such works on those who create them; and 

(2) educate the general public concerning the privacy, security, and other 

risks of using the Internet to obtain illegal copies of copyrighted works. 

(c) SECTOR SPECIFIC MATERIALS.—The Internet Use Educational Program shall, 

to the extent appropriate, develop materials appropriate to Internet users in different sectors of the general public where criminal copyright infringement is a concern. The Attorney General shall consult with appropriate interested parties in developing such sector-specific materials. 

(d) CONSULTATIONS.—The Attorney General shall consult with the Register of 

Copyrights and the Secretary of Commerce in developing the Internet Use Education Program under this section. 

(e) PROHIBITION ON USE OF CERTAIN FUNDS.—The program created under this 

section shall not use funds or resources of the Department of Justice allocated for 

criminal investigation or prosecution. 

(f) ADDITIONAL PROHIBITION ON THE USE OF FUNDS.—The program created 

under this section shall not use any funds or resources of the Department of Justice 

allocated for the Civil Rights Division of the Department, including any funds allocated for the enforcement of civil rights or the Voting Rights Act of 1965. 

SEC. 6. ACTIONS BY THE GOVERNMENT OF THE UNITED STATES. 

Section 411(a) of title 17, United States Code, is amended in the first sentence 

by striking ‘‘Except for’’ and inserting ‘‘Except for an action brought by the Government of the United States or by any agency or instrumentality thereof, or’’ . 

SEC. 7. AUTHORIZED APPROPRIATIONS. 

There are authorized to be appropriated to the Department of Justice for fiscal 

year 2005 not less than $15,000,000 for the investigation and prosecution of violations of title 17, United States Code. 

SEC. 8. CRIMINAL PENALTIES FOR UNAUTHORIZED RECORDING OF MOTION PICTURES IN A 

MOTION PICTURE EXHIBITION FACILITY. 

(a) IN GENERAL.—Chapter 113 of title 18, United States Code, is amended by 

adding after section 2319A the following new section: 

‘‘§ 2319B. Unauthorized recording of motion pictures in a motion picture exhibition facility 

‘‘(a) OFFENSE.—Any person who, without the authorization of the copyright 

owner, knowingly uses or attempts to use an audiovisual recording device to transmit or make a copy of a motion picture or other audiovisual work protected under 

title 17, or any part thereof, from a performance of such work in a motion picture 

exhibition facility, shall—

‘‘(1) be imprisoned for not more than 3 years, fined under this title, or both; 

or 

‘‘(2) if the offense is a second or subsequent offense, be imprisoned for no 

more than 6 years, fined under this title, or both. 

The possession by a person of an audiovisual recording device in a motion picture 

exhibition facility may be considered as evidence in any proceeding to determine 

whether that person committed an offense under this subsection, but shall not, by 

itself, be sufficient to support a conviction of that person for such offense. 

‘‘(b) FORFEITURE AND DESTRUCTION.—When a person is convicted of an offense 

under subsection (a), the court in its judgment of conviction shall, in addition to any 

penalty provided, order the forfeiture and destruction or other disposition of all unauthorized copies of motion pictures or other audiovisual works protected under title 

17, or parts thereof, and any audiovisual recording devices or other equipment used 

in connection with the offense. 

‘‘(c) AUTHORIZED ACTIVITIES.—This section does not prevent any lawfully authorized investigative, protective, or intelligence activity by an officer, agent, or employee of the United States, a State, or a political subdivision of a State, or by a 

person acting under a contract with the United States, a State, or a political subdivision of a State. 

‘‘(d) IMMUNITY FOR THEATERS AND AUTHORIZED PERSONS.—With reasonable 

cause, the owner or lessee of a motion picture facility where a motion picture is 

being exhibited, the authorized agent or employee of such owner or lessee, the licensor of the motion picture being exhibited, or the agent or employee of such licensor—

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‘‘(1) may detain, in a reasonable manner and for a reasonable time, any person suspected of committing an offense under this section for the purpose of 

questioning that person or summoning a law enforcement officer; and 

‘‘(2) shall not be held liable in any civil or criminal action by reason of a 

detention under paragraph (1). 

‘‘(e) VICTIM IMPACT STATEMENT.—

‘‘(1) IN GENERAL.—During the preparation of the presentence report under 

rule 32(c) of the Federal Rules of Criminal Procedure, victims of an offense 

under this section shall be permitted to submit to the probation officer a victim 

impact statement that identifies the victim of the offense and the extent and 

scope of the injury and loss suffered by the victim, including the estimated economic impact of the offense on that victim. 

‘‘(2) CONTENTS.—A victim impact statement submitted under this subsection shall include—

‘‘(A) producers and sellers of legitimate works affected by conduct involved in the offense; 

‘‘(B) holders of intellectual property rights in the works described in 

subparagraph (A); and 

‘‘(C) the legal representatives of such producers, sellers, and holders. 

‘‘(f) DEFINITIONS.—In this section: 

‘‘(1) AUDIOVISUAL WORK, COPY, ETC.—The terms ‘audiovisual work’, ‘copy’, 

‘copyright owner’, ‘motion picture’, and ‘transmit’ have, respectively, the meanings given those terms in section 101 of title 17. 

‘‘(2) AUDIOVISUAL RECORDING DEVICE.—The term ‘audiovisual recording device’ means a digital or analog photographic or video camera, or any other technology or device capable of enabling the recording or transmission of a copyrighted motion picture or other audiovisual work, or any part thereof, regardless of whether audiovisual recording is the sole or primary purpose of the device. 

‘‘(3) MOTION PICTURE EXHIBITION FACILITY.—The term ‘motion picture exhibition facility’ means a movie theater, screening room, or other venue that is 

being used primarily for the exhibition of a copyrighted motion picture, if such 

exhibition is open to the public or is made to an assembled group of viewers 

outside of a normal circle of a family and its social acquaintances. 

‘‘(g) STATE LAW NOT PREEMPTED.—Nothing in this section may be construed to 

annul or limit any rights or remedies under the laws of any State.’’. 

(b) CLERICAL AMENDMENT.—The table of sections at the beginning of chapter 

113 of title 18, United States Code, is amended by inserting after the item relating 

to section 2319A the following:

‘‘2319B. Unauthorized recording of motion pictures in a motion picture exhibition facility.’’.

SEC. 9. SENSE OF THE CONGRESS ON NEED TO TAKE STEPS TO PREVENT ILLEGAL ACTIVITY 

ON PEER-TO-PEER SERVICES. 

(a) FINDINGS.—The Congress finds as follows: 

(1) The most popular publicly accessible peer-to-peer file sharing software 

programs combined have been downloaded worldwide over 600,000,000 times. 

(2) The vast majority of software products, including peer-to-peer technology, do not pose an inherent risk. Responsible persons making software products should be encouraged and commended for the due diligence and reasonable 

care they take including by providing instructions, relevant information in the 

documentation, disseminating patches, updates, and other appropriate modifications to the software. 

(3) Massive volumes of illegal activity, including the distribution of child 

pornography, viruses, and confidential personal information, and copyright infringement occur on publicly accessible peer-to-peer file sharing services every 

day. Some publicly accessible peer-to-peer file sharing services expose consumers, particularly children, to serious risks, including legal liability, loss of 

privacy, threats to computer security, and exposure to illegal and inappropriate 

material. 

(4) Several studies and reports demonstrate that pornography, including 

child pornography, is prevalent on publicly available peer-to-peer file sharing 

services, and children are regularly exposed to pornography when using such 

peer-to-peer file sharing services. 

(5) The full potential of peer-to-peer technology to benefit consumers has 

yet to be realized and will not be achieved until these problems are adequately 

addressed. 

(6) To date, the businesses that run publicly accessible file-sharing services 

have refused or failed to voluntarily and sufficiently address these problems. 

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(7) Many users of publicly available peer-to-peer file-sharing services are 

drawn to these systems by the lure of obtaining ‘‘free’’ music and movies. 

(8) While some users use parental controls to protect children from pornography available on the Internet and search engines, not all such controls work 

on publicly accessible peer-to-peer networks. 

(9) Businesses that run publicly accessible peer-to-peer file sharing services 

have openly acknowledged, and numerous studies and reports have established, 

that these services facilitate and profit from massive amounts of copyright infringement, causing enormous damage to the economic well-being of the copyright industries whose works are being illegally ‘‘shared’’ and downloaded. 

(10) The legitimate digital music marketplace offers consumers a wide and 

growing array of choices for obtaining music legally, without exposure to the 

risks posed by publicly accessible peer-to-peer file sharing services. 

(11) The Federal Trade Commission issued a Consumer Alert in July of 

2003 warning consumers that some file-sharing services contain damaging viruses and worms and, without the computer user’s knowledge or consent, install 

spyware to monitor a user’s browsing habits and send data to third parties or 

automatically open network connections. 

(12) Publicly available peer-to-peer file-sharing services can and should 

adopt reasonable business practices and use technology in the marketplace to 

address the existing risks posed to consumers by their services and facilitate 

the legitimate use of peer-to-peer file sharing technology and software. 

(b) SENSE OF CONGRESS.—It is the sense of the Congress that—

(1) responsible software developers should be commended, recognized, and 

encouraged for their efforts to protect consumers; 

(2) currently the level of ongoing and persistent illegal and dangerous activity on publicly accessible peer-to-peer file sharing services is harmful to consumers, minors, and the economy; and 

(3) therefore, the Congress and the executive branch should consider all appropriate measures to protect consumers and children, and prevent such illegal 

activity. 

SEC. 10. ENHANCEMENT OF CRIMINAL COPYRIGHT INFRINGEMENT. 

(a) CRIMINAL INFRINGEMENT.—Section 506 of title 17, United States Code, is 

amended—

(1) by amending subsection (a) to read as follows: 

‘‘(a) CRIMINAL INFRINGEMENT.—Any person who—

‘‘(1) infringes a copyright willfully and for purposes of commercial advantage or private financial gain, 

‘‘(2) infringes a copyright willfully by the reproduction or distribution, including by the offering for distribution to the public by electronic means, during 

any 180-day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000, or 

‘‘(3) infringes a copyright by the knowing distribution, including by the offering for distribution to the public by electronic means, with reckless disregard 

of the risk of further infringement, during any 180-day period, of—

‘‘(A) 1,000 or more copies or phonorecords of 1 or more copyrighted 

works, 

‘‘(B) 1 or more copies or phonorecords of 1 or more copyrighted works 

with a total retail value of more than $10,000, or 

‘‘(C) 1 or more copies or phonorecords of 1 or more copyrighted pre-release works, 

shall be punished as provided under section 2319 of title 18. For purposes of this 

subsection, evidence of reproduction or distribution of a copyrighted work, by itself, 

shall not be sufficient to establish the necessary level of intent under this subsection.’’; and 

(2) by adding at the end the following: 

‘‘(g) LIMITATION ON LIABILITY OF SERVICE PROVIDERS.—No legal entity shall be 

liable for a violation of subsection (a)(3) by reason of performing any function described in subsection (a), (b), (c), or (d) of section 512 if such legal entity would not 

be liable for monetary relief under section 512 by reason of performing such function. Except for purposes of determining whether an entity qualifies for the limitation on liability under subsection (a)(3) of this section, the legal conclusion of whether an entity qualifies for a limitation on liability under section 512 shall not be considered in a judicial determination of whether the entity violates subsection (a) of 

this section. 

‘‘(h) DEFINITIONS.—In this section: 

‘‘(1) PRE-RELEASE WORK.—The term ‘pre-release work’ refers to a work protected under this title which has a commercial and economic value and which, 

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at the time of the act of infringement that is the basis for the offense under 

subsection (a)(3), the defendant knew or should have known had not yet been 

made available by the copyright owner to individual members of the general 

public in copies or phonorecords for sale, license, or rental. 

‘‘(2) RETAIL VALUE.— The ‘retail value’ of a copyrighted work is the retail 

price of that work in the market in which it is sold. In the case of an infringement of a copyright by distribution, if the retail price does not adequately reflect the economic value of the infringement, then the retail value may be determined using other factors, including but not limited to suggested retail price, 

wholesale price, replacement cost of the item, licensing, or distribution-related 

fees.’’. 

(b) PENALTIES.—Section 2319 of title 18, United States Code, is amended—

(1) by redesignating subsections (d) and (e) as subsections (e) and (f), respectively; 

(2) by inserting after subsection (c) the following: 

‘‘(d) Any person who commits an offense under section 506(a)(3) of title 17—

‘‘(1) shall be imprisoned not more than 3 years, or fined in the amount set 

forth in this title, or both, or, if the offense was committed for purposes of commercial advantage or private financial gain, imprisoned for not more than 5 

years, or fined in the amount set forth in this title, or both; and 

‘‘(2) shall, if the offense is a second or subsequent offense under paragraph 

(1), be imprisoned not more than 6 years, or fined in the amount set forth in 

this title, or both, or, if the offense was committed for purposes of commercial 

advantage or private financial gain, imprisoned for not more than 10 years, or 

fined in the amount set forth in this title, or both.’’; and 

(3) in subsection (f), as so redesignated—

(A) in paragraph (1), by striking ‘‘and’’ after the semicolon; 

(B) in paragraph (2), by striking the period and inserting ‘‘; and’’; and 

(C) by adding at the end the following: 

‘‘(3) the term ‘financial gain’ has the meaning given that term in section 101 

(relating to definitions) of title 17.’’. 

(c) CIVIL REMEDIES FOR INFRINGEMENT OF A COMMERCIAL PRE-RELEASE COPYRIGHTED WORK.—Section 504(b) of title 17, United States Code, is amended—

(1) by striking ‘‘The copyright owner’’ and inserting the following: 

‘‘(1) IN GENERAL.—The copyright owner’’; and 

(2) by adding at the end the following: 

‘‘(2) DAMAGES FOR PRE-RELEASE INFRINGEMENT.—

‘‘(A) IN GENERAL.—In the case of any pre-release work, actual damages 

shall be presumed conclusively to be no less than $10,000 per infringement, 

if a person—

‘‘(i) distributes such work by making it available on a computer 

network accessible to members of the public; and 

‘‘(ii) knew or should have known that the work was intended for 

commercial distribution. 

‘‘(B) DEFINITION.—For purposes of this subsection, the term ‘pre-release 

work’ has the meaning given that term in section 506(h). ’’. 

SEC. 11. AMENDMENT OF FEDERAL SENTENCING GUIDELINES REGARDING THE INFRINGEMENT OF COPYRIGHTED WORKS AND RELATED CRIMES. 

(a) AMENDMENT TO THE SENTENCING GUIDELINES.—Pursuant to its authority 

under section 994 of title 28, United States Code, and in accordance with this section, the United States Sentencing Commission shall review and, if appropriate, 

amend the sentencing guidelines and policy statements applicable to persons convicted of intellectual property rights crimes, including sections 2318, 2319, 2319A, 

2319B, 2320 of title 18, United States Code, and sections 506, 1201, and 1202 of 

title 17, United States Code. 

(b) FACTORS.—In carrying out this section, the Sentencing Commission shall—

(1) take all appropriate measures to ensure that the sentencing guidelines 

and policy statements applicable to the offenses described in subsection (a) are 

sufficiently stringent to deter and adequately reflect the nature of such offenses; 

(2) consider whether to provide a sentencing enhancement for those convicted of the offenses described in subsection (a) when the conduct involves the 

display, performance, publication, reproduction, or distribution of a copyrighted 

work before the time when the copyright owner has authorized the display, performance, publication, reproduction, or distribution of the original work, whether in the media format used by the infringing good or in any other media format; 

(3) consider whether the definition of ‘‘uploading’’ contained in Application 

Note 3 to Guideline 2B5.3 is adequate to address the loss attributable to people 

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broadly distributing copyrighted works over the Internet without authorization; 

and 

(4) consider whether the sentencing guidelines and policy statements applicable to the offenses described in subsection (a) adequately reflect any harm to 

victims from infringement in circumstances where law enforcement cannot determine how many times copyrighted material is reproduced or distributed. 

(c) PROMULGATION.—The Commission may promulgate the guidelines or amendments under this section in accordance with the procedures set forth in section 21(a) 

of the Sentencing Act of 1987, as though the authority under that Act had not expired. 

SEC. 12. EXEMPTION FROM INFRINGEMENT FOR SKIPPING AUDIO CONTENT IN MOTION PICTURES. 

(a) SHORT TITLE.—This section may be cited as the ‘‘Family Movie Act of 2004’’. 

(b) EXEMPTION FROM COPYRIGHT AND TRADEMARK INFRINGEMENT FOR SKIPPING

OF AUDIO OR VIDEO CONTENT OF MOTION PICTURES.—Section 110 of title 17, United 

States Code, is amended—

(1) in paragraph (9), by striking ‘‘and’’ after the semicolon at the end; 

(2) in paragraph (10), by striking the period at the end and inserting ‘‘; 

and’’; and 

(3) by inserting after paragraph (10) the following: 

‘‘(11)(A) the making of limited portions of audio or video content of a motion 

picture imperceptible by or for the owner or other lawful possessor of an authorized copy of that motion picture in the course of viewing of that work for private 

use in a household, by means of consumer equipment or services that—

‘‘(i) are operated by an individual in that household; 

‘‘(ii) serve only such household; and 

‘‘(iii) do not create a fixed copy of the altered version; and 

‘‘(B) the use of technology to make such audio or video content imperceptible, that does not create a fixed copy of the altered version.’’. 

(c) EXEMPTION FROM TRADEMARK INFRINGEMENT.—Section 32 of the Trademark 

Act of 1946 (15 U.S.C. 1114) is amended by adding at the end the following: 

‘‘(3)(A) Any person who engages in the conduct described in paragraph (11) of 

section 110 of title 17, United States Code, and who complies with the requirements 

set forth in that paragraph is not liable on account of such conduct for a violation 

of any right under this Act. 

‘‘(B) A manufacturer, licensee, or licensor of technology that enables the making 

of limited portions of audio or video content of a motion picture imperceptible that 

is authorized under subparagraph (A) is not liable on account of such manufacture 

or license for a violation of any right under this Act, if such manufacturer, licensee, 

or licensor ensures that the technology provides a clear and conspicuous notice that 

the performance of the motion picture is altered from the performance intended by 

the director or copyright holder of the motion picture. 

‘‘(C) Any manufacturer, licensee, or licensor of technology described in subparagraph (B) who fails to comply with the requirement under subparagraph (B) to provide notice with respect to a motion picture shall be liable in a civil action brought 

by the copyright owner of the motion picture that is modified by the technology in 

an amount not to exceed $1,000 for each such motion picture. 

‘‘(D) The requirement under subparagraph (B) to provide notice, and the provisions of subparagraph (C), shall apply only with respect to technology manufactured 

after the end of the 180-day period beginning on the date of the enactment of the 

Family Movie Act of 2004.’’. 

(d) DEFINITION.—In this section, the term ‘‘Trademark Act of 1946’’ means the 

Act entitled ‘‘An Act to provide for the registration and protection of trademarks 

used in commerce, to carry out the provisions of certain international conventions, 

and for other purposes’’, approved July 5, 1946 (15 U.S.C. 1051 et seq.).

PURPOSE AND SUMMARY

H.R. 4077 will educate the public about intellectual property law, 

create an alternative to litigation through a voluntary warning program, increase cooperation among Federal agencies and intellectual 

property owners concerning piracy, assist the Department of Justice in its efforts to prosecute intellectual property theft, and clarify 

the legal status of certain services and technologies that enable individuals to skip and mute content on certain works in the privacy 

of their own home. 

8

1Pub. L. No. 105–147. 

BACKGROUND AND NEED FOR THE LEGISLATION

Both Congressional testimony and recently issued Federal court 

rulings have noted that piracy continues to increase, particularly 

on certain, newly developed, peer-to-peer networks. The Copyright 

Act already provides civil and criminal remedies for traditional online intellectual property infringement. Federal law enforcement 

agencies have begun to pursue more cases of traditional online infringement, but they have been slower to bring cases involving 

peer-to-peer networks. Insufficient funding, ambiguity in the law, 

and untrained staff are the primary explanations offered for the 

lack of greater investigative and prosecutorial activity. H.R. 4077 

will address these problems in an effort to increase the ability of 

agencies to investigate and prosecute intellectual property crimes. 

The Committee is increasingly concerned with the development 

of new digital business models that promote online infringement. 

This Committee has long recognized the illegality of distributing 

stolen property to others, whether it occurs in the real or digital 

world. The Committee has previously updated the laws addressing 

online infringement when new methods of piracy appeared. The 

passage of the No Electronic Theft Act 1 in 1997 was a response to 

the then developing practice of individuals giving away stolen intellectual property without remuneration. In this bill, the Committee 

is acting once again to address a new form of intellectual property 

theft. Portions of this legislation are targeted directly and indirectly at the online infringement occurring on certain peer-to-peer 

networks. The Committee has seen significant evidence that the 

amount of infringement occurring on such networks has grown significantly in the past few years as these networks continue to expand. The Committee is not concerned with the spread or use of 

peer-to-peer technology in general since this technology appears to 

represent the future of computing. Nevertheless, the legal uses of 

peer-to-peer technology are being ignored as it is used to spread infringing material. 

Section 3 of the legislation creates a voluntary warning program 

administered by the Department of Justice. The Committee hopes 

that this provision represents a litigation alternative that will reduce online piracy levels by making online users aware of the penalties for copyright infringement. This program is designed to enable the Department to warn Internet users who appear to be engaging in illegal activity. Although the program may be used to 

combat other forms of piracy, the Committee anticipates that the 

majority of such warnings will be sent to those who apparently engage in infringing activity via peer-to-peer networks. 

Recent news stories indicate that minor children are indulging in 

illegal activity (e.g., copyright infringement) without the knowledge 

of their parents by using a account paid for by a parent. Inevitably, 

illegal activity ceases once discovered by a parent. A warning letter 

from the Department of Justice should get the attention of the parent who pays for an online account used for potentially illegal activity as well as that of the few adults that may not be aware of 

the illegal nature of their activity. For corporate accounts, businesses may also be unaware of the activities of an individual employee who is using employer resources to engage in potentially ilVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00008 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700
9

legal activity. A similar warning letter from the Department of Justice should serve to educate the company and its employees about 

the penalties for copyright infringement. 

The Committee therefore endorses a pilot warning system administered by the Department of Justice that would issue up to 

10,000 warning letters in an 18-month period to those who appear 

to be engaging in online infringement. Following a public comment 

period in which interested parties can comment on the process by 

which the program will operate, the Department should distribute 

warning letters to participating Internet Service Providers (‘‘ISPs’’) 

that would then forward them to those subscribers who appear to 

be engaging in illegal activity. These letters would contain some 

identification of the potentially illegal activity, such as the file 

name available at specific Internet Protocol (‘‘IP’’) addresses. Such 

letters would not issue in the absence of independent investigation 

conducted by the Department. Simply forwarding allegations made 

by private parties would not suffice. Warning letters would also 

contain more information about the potential civil and criminal 

penalties related to online infringement. The Department should 

include contact information for recipients of such warning letters to 

call in case the recipients wish to verify the authenticity of the 

warning along with a clear statement that the information that led 

to a letter being mailed was gathered without the assistance of 

their ISP. 

This program is designed to be voluntary; ISPs may opt out before or during the duration of the pilot program. ISPs can also opt 

back in at any point if they initially opted out. The Committee has 

noted the repeated expressions of interest by the ISP community 

in working with content owners to develop an alternative to litigation against those who appear to be undertaking online infringement. The willingness of ISPs to participate in this program would 

be an indication of their sincerity. 

In addition, the Committee does not believe that the receipt and 

forwarding of such warning letters by an ISP impacts the repeat 

infringer provisions of § 512(i)(1)(A) since the warning letters only 

reflect what appears to the Department to be potential infringement. 

To receive the reimbursement of costs authorized under § 3(c), 

the Department shall establish a system to receive from each participating ISP listings of the number of, and actual costs associated 

with, letters that the ISP spent in forwarding warning letters. The 

Department must reimburse the ISPs promptly. The costs of forwarding such warning letters is anticipated to include the direct 

costs of matching IP addresses to subscriber addresses as well as 

to the actual mailing costs. Unless the Department feels otherwise, 

the Committee does not anticipate that the Department should pay 

for indirect costs such as the pro-rata costs of electricity for running a computer to look up an IP address or the pro-rata costs of 

rent for the building in which the employee who conducts the 

search is employed. The Department shall maintain records for review by Congress of these costs and include summaries in the reports required under § 3(d). A request for reimbursement by an ISP 

shall only be made after it has made a good faith effort to identify 

the subscriber in question and forward the warning letter to him 

or her. The ISP is not responsible for ensuring that the warning 

10

letter is received by their subscriber, is read, or ameliorates the 

problem. If the forwarded warning letter is returned to the ISP due 

to a bad address and the ISP is unable to contact the subscriber 

to update the address, the ISP may consider this in deciding 

whether the customer is using its networks for illegal activity in 

general, and not just for potential infringement. 

Responding to potential objections to the program, the Committee stipulates that its operation will not result in the transmission of personal subscriber information back to the Department 

of Justice. If the Department wishes to learn the identity of an online user, it can use existing legal authority to do so. Section 3 does 

not expand or restrict such authority. To ensure that the ISP does 

not learn of any new customer information that it is not already 

aware of from the routine operation of its networks, the Department shall ensure that the warning letters are sealed and marked 

in such a way that anyone other than the ISP subscriber is on notice that only the subscriber should open it. The Department shall 

provide a cover letter for the ISP to read that contains a description of this program and the IP address and date and time when 

the potentially infringing activity occurred that led to the decision 

of the Department to send a warning letter. This will allow the ISP 

to match the IP address on that date and time with a subscriber. 

Other information that the Department feels is necessary for this 

program to be successfully operated may also be included for the 

ISP to review. 

The ISP would then voluntarily forward the unopened warning 

letter without reviewing its contents, to the subscriber whose IP 

address matched. If there are general situations in which the ISP 

knows in advance that it cannot match a subscriber’s identity to an 

IP address, such as IP logs that are maintained for only 30 days, 

the Committee hopes that ISPs are forthcoming about this information to ensure that the Department does not waste its resources 

sending warning letters to ISPs that cannot or will not be forwarded to subscribers. 

The legislation authorizes a specific number of warning letters—

10,000. To count towards this limit, a warning letter must actually 

be forwarded to an ISP subscriber. Warning letters that cannot or 

will not be sent by an ISP to one of its subscribers do not count 

against the total number limit. To keep track of the overall number 

of warning letters meeting this limitation, the Department shall 

count the number of reimbursement requests that it has received 

from ISPs. 

Section 4 recognizes the benefits of having a dedicated agent in 

each of the computer hacking and intellectual property sections 

(‘‘CHIPs’’) and other similar units to support intellectual property 

theft investigations. CHIPs units have succeeded in increasing the 

number of intellectual property investigations. Recent announcements by the Department of the creation of new units will lead to 

even further prosecutions. The agents authorized by this program 

will be capable of assisting with the notice program authorized in 

§ 3. 

Section 5 creates an education program that the Committee feels 

is overdue. Consumer education is an important part of combating 

illegal activity. The government has long used public education 

campaigns to modify consumer behavior, such as boosting the use 

11

of seat belts and reducing the underpayment of Federal income 

taxes. A similar campaign to educate the public about the value of 

copyrighted works and the risks of using the Internet to obtain illegal copies of them will have similar positive impacts on reducing 

illegal activity on the Internet. Recipients of § 3 notices who also 

see the education campaigns authorized by § 5 will be even less 

likely to engage in illegal activity. To ensure that funding from 

other priority programs within the Department is not used to subsidize this activity, a prohibition on criminal investigation and civil 

rights funding earmarked for § 5 programs is included. Instead, the 

Committee expects funding for this program will primarily, if not 

entirely, come from resources used to fund other educational campaigns run by the Department. The Department is directed to consult with the Register of Copyrights in developing this program. 

Section 6 expressly authorizes the undertaking of actions by the 

United States government for infringements of copyright before 

registration has been made. The Committee has learned of situations in which intellectual property infringement occurs so quickly 

after a new work is released that pursuing those responsible for 

the infringement is prevented by existing law. The Committee is 

also aware of situations in the motion picture, music, publishing, 

games, and software industries, among others, in which stolen prerelease versions of works are made available for distribution. The 

pursuit of those responsible for the illegal activity is similarly hindered since pre-release versions of works are not typically registered with the Copyright Office at any point. 

Section 8 creates a new § 2319B in Title 18 prohibiting the act 

of using or attempting to use an audiovisual recording device to 

transmit or make a copy of a motion picture or other audiovisual 

work in a motion picture exhibition facility. The new section is 

modeled after the existing ‘‘anti-bootlegging’’ statute found in 

§ 2319A of Title 18, which prohibits the unauthorized recording of 

and trafficking in sound recordings and music videos from live musical performances. 

This new provision deals with the very specific problem of illicit 

‘‘camcording’’ of motion pictures. Typically, an offender attends a 

pre-opening ‘‘screenings’’ or a first-weekend theatrical release, and 

uses sophisticated digital equipment to record the movie. This 

camcorded version is then sold to a local production factory or to 

an overseas producer where it is converted into DVDs or similar 

products and sold on the street for a few dollars per copy. This misuse of camcorders is a significant factor in the estimated $3.5 billion per year of losses the movie industry suffers because of hard 

goods piracy. 

Even worse, these camcorded versions are posted on the Internet 

through certain peer-to-peer networks and made available for millions of users to download. According to studies by the Motion Picture Association of America (‘‘MPAA’’), camcorded versions of movies in theatrical release account for more than 90 percent of the 

first copies of motion pictures illegally distributed on the Internet. 

One goal of H.R. 4077 is to provide a potent weapon in the arsenal 

of prosecutors to stem the piracy of commercially valuable motion 

pictures at its source. 

The Act would not, and is not intended to, reach the conduct of 

a person who uses a camera, picture phone, or other photographic 

12

2 17 U.S.C. § 101. 

device to capture a still photo from an exhibition of a motion picture. It would reach the conduct of a person who uses an audiovisual recording device to capture or transmit a ‘‘series of related 

images that are intrinsically intended to be shown by the use of 

machines or devices such as projectors, viewers, or electronic equipment, together with accompanying sounds, if any.’’ 2

This does not, of course, suggest that taking photographs in a 

movie theater is in any way sanctioned by this bill. Engaging in 

such conduct could still subject a person to civil or criminal liability 

under the Copyright Act. But the provision is drafted narrowly to 

address the specific and pernicious problem of ‘‘camcording’’ of 

copyrighted motion pictures. 

In addition, the bill makes clear that ‘‘possession of an audiovisual device in a motion picture exhibition facility may be considered as evidence in any proceeding involving this offense, but shall 

not, by itself, constitute sufficient evidence to support a conviction 

of this offense.’’ The Committee recognizes that the fact that someone has brought an audiovisual device may be critical evidence in 

a case against that person under this section. For example, smuggling into a movie theater a high-quality miniature camera and recording equipment may be highly probative of the intent to 

camcord. The Committee is concerned, however, that the ‘‘attempt’’ 

language is not used to convict, for example, a tourist who ends a 

day of sightseeing by bringing his camcorder to a motion picture 

theater but does not attempt to use it to record or transmit a motion picture. This language is intended to guard against such an injustice occurring. 

Further, the bill is not intended to permit a prosecution of, for 

instance, a salesperson at a store who uses a camcorder to record 

some part of a movie playing to demonstrate the capabilities of a 

widescreen television. The offense is only applicable to transmitting 

or copying a movie in a motion picture exhibition facility, which 

has to be a movie theater or similar venue ‘‘that is being used primarily for the exhibition of a copyrighted motion picture.’’ In the 

example of the salesperson, the store is being used primarily to sell 

electronic equipment, not to exhibit motion pictures. (For the same 

reason, the statute would not cover a university student who 

records a short segment of a film being shown in film class, as the 

venue is being used primarily as a classroom, and not as a motion 

picture exhibition facility.) 

Moreover, H.R. 4077 is not intended to permit prosecution of individuals making camcorded copies of movies off their television 

screens. The definition of a motion picture exhibition facility includes the concept that the exhibition must be ‘‘open to the public 

or is made to an assembled group of viewers outside of a normal 

circle of a family and its social acquaintances.’’ This definition 

makes clear that someone recording from a television in his home 

does not meet that definition. 

It is important to emphasize that the clause ‘‘open to the public’’ 

applies specifically to the exhibition, not to the facility. An exhibition in a place open to the public that is itself not made to the 

public is not the subject of this bill. Thus, for example, a university 

film lab may be ‘‘open to the public.’’ However, a student who is 

13

watching a film in that lab for his or her own study or research 

would not be engaging in an exhibition that is ‘‘open to the public.’’ 

Thus, if that student copied an excerpt from such an exhibition, he 

or she would not be subject to liability under this section. 

The Committee trusts the Department to exercise appropriate 

prosecutorial discretion when using H.R. 4077. While ‘‘fair use’’ is 

not a defense against a § 2319(B) violation, Federal prosecutors 

should use their discretion not to bring criminal prosecutions 

against activities within movie theaters that would constitute fair 

use under the copyright laws. Additionally, prosecutors should consider whether a potential defendant was on notice that camcording 

violated the law. The Committee appreciates the commitment by 

the National Association of Theatre Owners (‘‘NATO’’) and MPAA 

to make available to every motion picture theater in the United 

States a conspicuous sign informing patrons that camcording in the 

theater is punishable by criminal law. The Committee fully expects 

that NATO and the MPAA will abide by that commitment. Prosecutors should consider whether the theater from which the 

camcording took place had posted such a sign as an important factor in determining whether a prosecution under this statute would 

be appropriate. 

An immunity provision has been included for good faith efforts 

by theater owners and other associated individuals to detain in a 

reasonable manner those they suspect of camcordering. This provision and the reasonableness test should be viewed as a companion 

to shopkeeper privilege statutes found in all States. This section 

does not pre-empt any State laws. 

Section 9 reflects the view of Congress concerning the imperative 

to prevent illegal activity on peer-to-peer networks. The growth in 

peer-to-peer piracy continues and is a function of the activities of 

certain peer-to-peer network operators to design their systems in a 

way to shift all liability for infringement that occurs on their networks to their users. 

Section 10 reflects the need by the Department of Justice to have 

clearer authority to criminally pursue those who make available 

significant numbers of files for others to download. This section 

sets this threshold at either:

1) 1,000 or more works, or

2) 1 or more works having a total retail value of $10,000 or 

more, or

3) 1 or more pre-release works.

The Committee believes that these thresholds will allow the Department to pursue criminal charges against those who knowingly 

distribute, with reckless disregard of the risk of further infringement, works in number equal to or higher than one of the three 

thresholds. In a real world comparison, the Committee views the 

activity made criminal under this provision as equivalent to someone who knowingly, without permission of the those who have a 

right of access to a house, distributes 1,000 keys or more to the 

front door with reckless disregard that at least one of the key holders will enter the house without permission. Such activity is wrong 

in both the physical and digital worlds. The Committee notes the 

sentiment of those who feel that no economic harm has occurred as 

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14

vided with significant testimony and evidence to refute such statements from songwriters, record labels, and online music stores that 

are being forced to compete with sites and networks offering piratical versions for free, the point is not relevant. Someone who enters 

a house without the owner’s permission using a key gained from 

a third party is criminally liable whether or not they chose to steal 

a physical compact disc containing music or a digital video disc 

containing a motion picture. The same is true for someone who 

uses a car without the permission of the owner and then replaces 

the gas and oil used during the unauthorized trip. 

Some have argued that § 10 criminalizes wireless networks operated by individuals in their home or business that they use to access files or the Internet for their own benefit. In such cases, a typical user does not knowingly offer files for distribution to others except for himself and in a business setting, for employees. Those 

who access the network without permission to download files do 

not trigger the knowing test of § 506(a)(3). Someone who deliberately makes known to others by advertising or other overt acts 

the presence of files available for download could fall under this 

Act if they meet one of the three threshold citeria. 

The Committee has set a lower threshold for pre-release works 

since the economic harm of pirated works is higher when the work 

has not been made available to the public for sale. The harm is 

even higher when the work has never been publicly performed. 

This issue is the same for all forms of copyrighted works—why pay 

for something that you can get for free? Although some Americans 

pay for bottled water, many more do not and get their water for 

near-free prices from their local water company. Some consumers 

may still pay to see or hear the public performance of a work that 

is available elsewhere for little or no cost; the majority will not. 

Since the Department of Justice is unlikely to have the resources 

to pursue every instance of pre-release works, the Committee has 

included a provision to allow for civil suits to recover damages. It 

is expected that more civil suits will be brought than criminal 

suits. 

In developing this provision, the Committee heard from several 

Internet companies and providers that they should not face liability 

under the new § 506(a)(3) when they did not participate in the illegal conduct in the first place. The newly created § 506(g) preempts 

any liability under the new § 506(a)(3) for entities that would qualify for a limitation on monetary damages for civil copyright infringement with respect to a claimed infringement under 17 U.S.C. 

§ 512. 

The Committee believes that a service provider that performs the 

functions described in §§ 512(a) through (d) in a manner that complies with the conditions set out in § 512 should not be subject to 

criminal liability under § 506(a)(3). Therefore, if an entity would 

not be liable for damages for civil copyright infringement when it 

undertakes one or more of the functions described in §§ 512(a) 

through 512(d), § 506(g) ensures that it would not be subject to 

criminal sanctions under § 506(a)(3). The obverse is not necessarily 

true, as the government is always required to prove beyond a reasonable doubt each of the elements of a criminal statute against 

any defendant, irrespective of the defendant’s liability for civil 

damages for copyright infringement under the Copyright Act. 

15

3Pub. L. No. 105–304. 

There are several key points to this provision. First, the limitation on liability affects only potential criminal liability under subsection (a)(3). It is not meant to limit or expand in any way the 

ability of law enforcement to bring an action under subsection 

(a)(1) against a service provider that acts willfully and for purposes 

of commercial advantage or private financial gain, or to bring an 

action under subsection (a)(2) against a service provider that acts 

willfully and meets the corresponding numerical and retail value 

thresholds set forth in (a)(2). 

This does not mean that the facts and circumstances of a service 

provider’s conduct and whether it was in accordance with the strictures of § 512 are irrelevant to an action brought under § 506(a)(1) 

or (a)(2). Rather, it means only that the legal conclusion that a 

service provider’s conduct was exempt from prosecution under 

(a)(3) should not be considered in determining ‘‘willfulness’’ for purposes of subsections (a)(1) or (a)(2). Similarly, the fact that a service provider might fail to qualify for a limitation of liability under 

this subsection should not bear adversely upon a defense that the 

service provider’s conduct is not infringing under this title, that it 

has not acted with reckless disregard for the risk of further infringement, or any other defense. 

In addition, the limitation applies only to a ‘‘legal entity’’—a 

firm, corporation, union or other organization which is organized 

under the laws of the United States; the laws of a State, district, 

commonwealth, territory, or possession of the United States; or the 

laws of a foreign country and which is capable of suing and being 

sued in a Federal District court of law. This provision is not intended to allow a natural person who might otherwise be subject 

to prosecution to claim that he or she performs the functions described in § 512, and therefore cannot be prosecuted. Efforts by individuals to establish a ‘‘legal entity’’ simply to take advantage of 

this carve-out should be ignored by prosecutors and the courts. 

Finally, this provision is intended to address a narrow issue 

raised by the intersection of the limitation on liability contained in 

§ 512, the creation of a new and more objective intent standard 

from that which currently exists in § 506, and the stated concern 

by service providers that, without this protection, their businesses 

could be subjected to prosecution in circumstances that would be 

unjust. Although the Committee is unaware of any criminal prosecutions of service providers under existing law and anticipates 

few, if any, such ISP prosecutions under § 506(a)(3), this provision 

clarifies that engaging in behavior that meets the requirements set 

out in the Digital Millennium Copyright Act 3 to avoid damages for 

monetary relief for civil copyright infringement is also sufficient to 

avoid criminal liability under § 506(a)(3). 

Section 11 of the legislation is a companion to § 10 which directs 

the United States Sentencing Commission to review and, if appropriate, amend several sentencing guidelines applicable to persons 

convicted of several sections of Titles 17 and 18 of the U.S. Code. 

The Committee has given the Commission flexibility in making the 

determination for these sections. However, in the Committee’s 

view, all of these sections need to be updated for the factors identified in this Section. 

16

4See H.R. Rept. No. 108–670. 

The Committee has included the text of H.R. 4586, the ‘‘Family 

Movie Act of 2004,’’ as a new § 12 of the legislation. During the 

markup of H.R. 4077, Committee Members commented on the need 

to invigorate copyright enforcement while clarifying that copyright 

law cannot be used to limit a parent’s right to control what their 

children watch in the privacy of their own home. H.R. 4586 was reported by the Committee on the Judiciary prior to the markup of 

H.R. 4077.4 The legislative language earlier reported by the Committee is included in § 12, and a full description of that language 

may be found in the Committee’s report on H.R. 4586. 

H.R. 4077, as reported, omitted several provisions that had been 

included in earlier versions due to commitments the Committee received from several Federal departments and agencies. As originally drafted in H.R. 2517, the predecessor to H.R. 4077, this bill 

would have amended §§ 411, 602 and 603 of Title 17 to provide that 

neither registration with the Copyright Office, nor recordation 

with, the Bureau of Customs and Border Protection of the Department of Homeland Security (hereinafter referred to as ‘‘CBP’’) was 

a prerequisite for the exclusion of piratical goods by CBP. Since 

then, representatives from this Committee have met with the 

Copyright Office and with CBP to discuss how such changes might 

impact their operations. Specifically, the Copyright Office expressed concern that the amendments could have the unintended 

consequences of reducing incentives to register copyrights and of 

imposing on CBP the duplicative burden of determining issues of 

copyrightability—without having the expertise of the Copyright Office to rely upon. 

Upon further consideration, and based on certain commitments 

made by CBP, the Committee has deleted the provisions of this bill 

that would have amended §§ 411, 602 and 603 relating to border 

enforcement because we are persuaded that these provisions are 

not necessary. In particular, we cite the CBP’s draft amendments 

to its regulations that would provide a more flexible approach for 

certain categories of works where copyrightability is rarely at issue 

(e.g. sound recordings and audio-visual works), as well as for nonUnited States works. In those cases, pursuant to the draft amendments, CBP would permit the recordation with it of applications for 

registration, pending issuance of the certificate of copyright registration, or, in the case of non-United States works, the recordation of an affidavit of ownership. The Memorandum of Understanding reached between CBP and the Recording Industry Association of America reflects this flexibility inherent in present laws 

to fashion modifications to certain procedures in order to effect better protection at the US border against the importation of piratical 

articles. We are satisfied that CBP has reached general agreement 

with industry on a regulatory framework that addresses the industry’s, as well as this Committee’s, concerns about preventing the 

importation of infringing materials into this country, and does so 

in an operationally sound manner. The Committee understands 

that issues relating to the Capitol Records v. Naxos decision in the 

Southern District of New York may remain unresolved for some interested parties. CBP is directed to consult with the Copyright Office on the merits of such concerns. 

17

5 Committee on the Judiciary Serial No. 9, March 13, 2003. 

Among law enforcement agencies, CBP is in a unique position to 

provide meaningful border protection for our copyright-based industries. Unless we increase the probability (and reality) of exclusion, 

our industries will lose the U.S. market so critical to their continued existence. Moreover, as established in hearings in our Committee and other Committees, copyright piracy’s high profits and 

low risk have made it an appealing complement to narcotics and 

arms trafficking. Confirmed links between intellectual property 

crime, especially with respect to global trade in pirated CDs, and 

organized crime make the case that CBP must continue to take intellectual property violations seriously.5

The Committee has withdrawn the border enforcement related 

sections of this bill based on its understanding that CBP will 

promptly issue new interim regulations that will direct officers to 

detain articles embodying sound recordings suspected of infringement under Title 17, or that violate 18 U.S.C. § 2319A, regardless 

of whether such articles are recorded with CBP or registered with 

the Copyright Office at the time of detention, and will work with 

copyright owners to secure the recordation of information that will 

subject such infringing goods to seizure and forfeiture. The Committee is particularly concerned about the need to improve and 

streamline procedures in certain areas—namely with respect to foreign works, and with respect to sound recordings and audio-visual 

works in which the absolute number of works (in the case of the 

recording industry) or the need to enter information in the CBP 

database quickly (in the case of both record and film industries) necessitated flexibility in how CBP would accept recordations. 

Some parties have raised concerns with the Committee that because the detention and/or seizure of pre-1972 sound recordings 

takes place in the absence of a copyright registration, that CBP 

might take actions which could result in the improper detention 

and/or seizure of materials that are not subject to protection. It is 

the opinion of the Committee that CBP should ensure that it adopt 

and implement practices that will fully address such concerns. 

We are pleased that under this new framework, CBP has established procedures that will allow it to pursue an aggressive enforcement campaign against the importation of piratical sound recordings, audio-visual works and bootlegs. Central to this are the following elements:

1. Making the detention, seizure and forfeiture of infringing 

articles, including sound recordings, audio-visual works, and 

fixations of live performances a priority.

2. Providing a streamlined and more efficient process for the 

recordation of certain categories of works where 

‘‘copyrightability’’ is rarely an issue—namely sound recordings and audio visual works—so that CBP recordation can 

be effected by the submission by the copyright owner of a 

copy of the application for copyright registration filed with 

the Copyright Office.

3. Directing field officers to detain articles suspected of infringing sound recording copyrights, or suspected of being 

unauthorized fixations of live musical performances.

18

4. Requiring sound recording copyright owners to furnish sufficient proof of ownership and proof of infringement within 30 

days of the detention of such articles.

5. Providing for the seizure and destruction of all phonorecords 

or other copies of sound recordings or live musical performances included in shipments containing copies of sound recordings or live musical performances that CPB has determined to be infringing—unless the importer can demonstrate the non-infringing nature of such other articles.

6. Ensuring that copyright owners are provided with specific 

information related to the importation of infringing articles, 

including the identity of the parties and other relevant information.

In addition to the discussions summarized above, representatives 

from this Committee, the CBP, the Copyright Office and the affected industries also met to discuss the amount and kind of information that Port Directors disclose to owners of intellectual property and their representatives when they seize infringing goods. 

The information currently disclosed is set forth in 19 C.F.R., 

§ 133.42(d). The Committee considered legislation to increase the 

amount and kind of information that Port Directors would disclose, 

but determined that such legislation was unnecessary upon the 

CBP’s commitment to expand their disclosure authority through 

the issuance of interim regulations amending § 133.42(d). 

Specifically, the CBP has agreed that it will promptly promulgate 

a proposed amendment to 19 C.F.R. § 133.42 (Infringing Copies or 

phonorecords) that:

1. Extends the list of information, if available, to be disclosed 

by the port director to the owner of the copyright under 

§ 133.42(d), to the extent legally permissible, to include the 

following:

(a) Information from available shipping documents 

(such as manifests, airbills, and bills of lading), including mode or method of shipping (such as airline 

carrier and flight number) and the intended final 

destination of the merchandise.

(b) The name and address of the broker involved in the 

transaction.

(c) Information relating to previous completed seizures 

of imported infringing copies or phonorecords involving the same importer, manufacturer, exporter or 

broker, provided that obtaining such information is 

not unduly burdensome.

2. Directs the port directors, when providing disclosure to the 

owner of the copyright under 19 C.F.R. § 133.42(d), to provide such information as expeditiously as possible in order 

to allow the owner of the copyright to pursue avenues for 

relief and deterrence beyond the seizure and forfeiture of infringing materials, such as by seeking criminal investigations at the local, state, Federal or international level.

In light of this commitment, the Committee has determined that 

no additional legislation in this area is necessary at this time. 

19

Finally, the Committee is aware of cooperative efforts between 

intellectual property owners and CBP to enable CBP to release information on seized devices which violate the anti-circumvention 

provisions of the Digital Millennium Copyright Act. The information would be comparable to that released under 19 C.F.R. 

§ 133.42(d). While the devices themselves may not contain infringing copyrighted material, they provide the capability for a user to 

remove technological protection measures from copyrighted works 

such as entertainment software. Since they allow a user to circumvent technological protection measures, they represent a critical step in enabling a user to make unauthorized copies of software titles which can then be uploaded to the Internet for free 

downloading across the globe. 

CBP has not released such information to copyright owners who 

may be harmed by such devices because the devices themselves do 

not contain infringing copyrighted material. The copyright owner 

thus has no means to learn important information solely within 

CBP’s knowledge, such as the identity of the importer, even though 

CBP itself has determined that the devices violate the Digital Millennium Copyright Act. The copyright owner is then restricted from 

pursuing private or criminal enforcement actions in this country or 

work with foreign authorities to identify and shut down the manufacturing source of the devices. 

The Committee believes this gap in disclosure serves only to protect those who import illegal devices. The Committee recommends 

CBP close this loophole and provide information about illegal circumvention devices to copyright owners. 

HEARINGS

The Subcommittee on Courts, the Internet, and Intellectual Property conducted a hearing on related legislation, H.R. 2517, on July 

17, 2003, with testimony received from four witnesses representing 

three organizations and one government agency. 

The Committee’s Subcommittee on Courts, the Internet, and Intellectual Property held an oversight hearing on the issue involved 

in § 12 of the legislation on May 20, 2004, with testimony received 

from five witnesses representing five organizations. The Subcommittee subsequently held a hearing on H.R. 4586 which is incorporated as Section 12 on June 17, 2004. Testimony was received 

from four witnesses representing four organizations. 

COMMITTEE CONSIDERATION

On March 31, 2004, the Subcommittee on Courts, the Internet, 

and Intellectual Property met in open session and ordered favorably the bill H.R. 4077 as amended by a voice vote, a quorum being 

present. On September 8, 2004, the full Committee met in open 

session and ordered favorably reported the bill H.R. 4077 with an 

amendment by a voice vote. 

As noted above, the Committee adopted an amendment to H.R. 

4077 that consisted of the text of H.R. 4586 as reported by the 

Committee. On July 8, 2004, the Subcommittee on Courts, the 

Internet, and Intellectual Property met in open session and ordered 

favorably reported the bill H.R. 4586, as amended, by a vote of 11 

to 5, a quorum being present. On July 21, 2004, the Committee met 

20

in open session and ordered favorably reported the bill H.R. 4586 

with an amendment by a vote of 18 to 9, a quorum being present. 

VOTE OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee notes that there were no 

recorded votes during the committee consideration of H.R. 4077. 

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee reports that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

NEW BUDGET AUTHORITY AND TAX EXPENDITURES

Clause 3(c)(2) of rule XIII of the Rules of the House of Representatives is inapplicable because this legislation does not provide new 

budgetary authority or increased tax expenditures. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 4077, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974:

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, September 24, 2004. 

Hon. F. JAMES SENSENBRENNER, Jr., Chairman, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4077, the ‘‘Piracy Deterrence and Education Act of 2004.’’

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Mark Grabowicz, who 

can be reached at 226–2860. 

Sincerely, 

DOUGLAS HOLTZ-EAKIN.

Enclosure

cc: Honorable John Conyers, Jr. 

Ranking Member 

H.R. 4077—Piracy Deterrence and Education Act of 2004. 

SUMMARY

H.R. 4077 would authorize the appropriation of $15 million for 

fiscal year 2005 for the Attorney General to enforce copyright laws. 

The bill would direct the Attorney General to establish the Internet 

Use Education Program to increase awareness of copyright inVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00020 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700
21

fringement issues. H.R. 4077 also would specify that technology 

used to filter certain material out of movies for private viewing 

would not constitute a violation of copyright or trademark law. Finally, the bill would establish new federal crimes for the unauthorized recording of motion pictures in movie theaters or other venues 

and would provide for increased penalties for other acts relating to 

copyright infringement. 

Assuming appropriation of the necessary amounts, CBO esti- mates that implementing H.R. 4077 would cost $15 million over the 

2005–2009 period. This legislation could affect direct spending and 

receipts, but we estimate that any such effects would be less than 

$500,000 annually. 

H.R. 4077 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would not affect 

the budgets of State, local, or tribal governments. 

H.R. 4077 would impose private-sector mandates as defined in 

UMRA. CBO estimates that the direct cost of the mandates would 

fall well below the annual threshold established by UMRA for private-sector mandates ($120 million in 2004, adjusted annually for 

inflation). 

ESTIMATED COST TO THE FEDERAL GOVERNMENT

The estimated budgetary impact of H.R. 4077 is shown in the following table. The costs of this legislation fall within budget function 750 (administration of justice).

By Fiscal Year, in Millions of Dollars 

2005 2006 2007 2008 2009

CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level 15 0 0 0 0

Estimated Outlays 13 2 0 0 0

BASIS OF ESTIMATE

For this estimate, CBO assumes that the bill will be enacted 

near the start of fiscal year 2005. CBO assumes that the amount 

authorized for enforcement of copyright laws will be appropriated 

near the beginning of fiscal year 2005 and that outlays will follow 

the historical rate of spending for this activity. Based on information from the Department of Justice, CBO estimates that it would 

cost less than $500,000 annually to establish and operate the Internet Use Education Program. 

Section 12 of the bill would provide that technology used to filter 

certain material out of movies for private viewing would not constitute a violation of copyright or trademark law. CBO estimates 

that implementing section 12 would have no effect on federal 

spending. 

Because those prosecuted and convicted under H.R. 4077 could 

be subject to criminal fines, the federal government might collect 

additional fines if the legislation is enacted. Collections of such 

fines are recorded in the budget as revenues (i.e., governmental receipts), which are deposited in the Crime Victims Fund and later 

spent. CBO expects that any additional revenues and direct spending would be less than $500,000 annually because of the relatively 

small number of cases likely to be affected. 

22

ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

H.R. 4077 contains no intergovernmental mandates as defined in 

UMRA and would not affect the budgets of State, local, or tribal 

governments. 

ESTIMATED IMPACT ON THE PRIVATE SECTOR

H.R. 4077 would impose two private-sector mandates as defined 

in UMRA. CBO estimates that the direct cost of the mandates 

would fall well below the annual threshold established by UMRA 

for private-sector mandates ($120 million in 2004, adjusted annually for inflation). 

First, the bill would impose a private-sector mandate on copyright owners. Section 12 would limit the right of copyright owners 

to collect compensation under copyright law from persons using or 

manufacturing a technology that enables making limited changes 

to a motion picture for a private home viewing. According to testimony from the Patent and Trademark Office and other sources, no 

such compensation is currently received by copyright owners. 

Therefore, CBO estimates that the direct cost of the mandate, 

measured as net income forgone, would be small or zero. 

Second, section 12 also would impose a private-sector mandate 

on manufacturers, licensees, and licensors of technology that enables the making of limited portions of audio or video content of a 

motion picture imperceptible. Such manufacturers, licensees, or 

licensors would be required to ensure that the technology provides 

a clear and conspicuous notice that the performance of the motion 

picture is altered from the performance intended by the director or 

copyright holder of the motion picture. Complying with the mandate would exempt such manufacturers, licensees, or licensors from 

liability under section 32 of the Trademark Act of 1946. The direct 

cost of the mandate on those private-sector entities would be the 

total cost of providing the notice less the direct savings achieved 

by limiting their liability. CBO has no basis for determining the direct savings for the exemption from trademark liability. However, 

according to government and other sources, the technology to provide the required notice is readily available and is currently used 

by some manufacturers. Thus, CBO expects that the direct cost to 

comply with the mandate, if any, would be minimal. 

PREVIOUS CBO ESTIMATES

On May 18, 2004, CBO transmitted a cost estimate for S. 1932, 

the Artists’ Rights and Theft Prevention Act of 2004, as reported 

by the Senate Committee on the Judiciary on April 29, 2004. In addition, on May 28, 2004, we transmitted a cost estimate for S. 

1933, the Enhancing Federal Obscenity Reporting and Copyright 

Enforcement Act of 2004, as reported by the Senate Committee on 

the Judiciary on May 20, 2004. Both those bills would authorize 

the appropriation of $5 million for each of fiscal years 2005 through 

2009 for the investigation and prosecution of intellectual property 

offenses, and we estimated that implementing each bill would cost 

$23 million over the 2005–2009 period, assuming appropriation of 

the necessary amounts. 

On August 17, 2004, CBO transmitted a cost estimate for H.R. 

4586, the Family Movie Act of 2004, as ordered reported by the 

23

House Committee on the Judiciary on July 21, 2004. Section 12 of 

H.R. 4077 and H.R. 4586 are identical, as are the cost estimates. 

The private-sector mandates contained in section 12 of H.R. 4077 

are identical to the mandates in H.R. 4586 with direct costs well 

below UMRA’s annual threshold for private-sector mandates. 

ESTIMATE PREPARED BY: 

Federal Costs: Mark Grabowicz (226–2860) 

Impact on State, Local, and Tribal Governments: Melissa Merrell 

(225–3220) 

Impact on the Private Sector: Paige Piper/Bach (226–2940) 

ESTIMATE APPROVED BY: 

Peter H. Fontaine 

Deputy Assistant Director for Budget Analysis 

PERFORMANCE GOALS AND OBJECTIVES

The Committee states that pursuant to clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, H.R. 4077 will educate the public about intellectual property law, create an alternative to litigation through a voluntary warning program, increase 

cooperation among Federal agencies and intellectual property owners concerning piracy, assist the Department of Justice in its efforts to prosecute intellectual property theft, and clarify the legal 

status of certain services and technologies that enable individuals 

to skip and mute content on certain works in the privacy of their 

own home. In general, this will lead to an increased number of 

criminal prosecutions brought by the Department of Justice and diminished of digital copyright theft. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds the authority for this legislation in Article I, § 8, of the Constitution. 

SECTION-BY-SECTION ANALYSIS AND DISCUSSION

The following discussion describes the bill as reported by the 

Committee.

Section 1. Short Title. This section states that the Act may be cited 

as the ‘‘Piracy Deterrence and Education Act of 2004.’’

Section 2. Findings. This section makes several findings regarding 

the nature of the Internet and online piracy.

Section 3. Voluntary Program of the Department of Justice. This 

section creates a voluntary program in which the Department of 

Justice would be authorized to send up to 10,000 warning letters 

in an 18-month period to those suspected of engaging in infringement. ISPs would voluntarily help to forward these notices to their 

subscribers while protecting the privacy of their customers and 

having their costs reimbursed.

Section 4. Designation and Training of Agents in Computer Hacking and Intellectual Property Units. This section requires each 

24

6See, e.g., Ariz. Rev. Stat. 13–3723(a); Cal. Penal Code 653z (a). Other states have added the 

copyright owner to the permission chain. See, e.g., Ohio Rev. Code Ann. 2913.07(A)(1) (requiring 

consent of the licensor). 

Computer Hacking and Intellectual Property Unit established by 

the Department of Justice to include not less than one agent per 

unit dedicated to investigating crimes related to intellectual property theft.

Section 5. Education Program. This section establishes within the 

Office of the Associate Attorney General of the United States an 

Internet Use Education Program. Funds from criminal investigations and prosecutions and from the Civil Rights Division may not 

be used to fund such programs. Authorization for such funding has 

already become law in other legislation. The Department is directed to consult with the Register of Copyrights in developing this 

program.

Section 6. Actions by the Government of the United States. This section authorizes the filing of actions by the United States against 

persons for their infringement of works before the work is registered with the Copyright Office. Currently, only the author of the 

work has the authority to do so. This section ensures that criminal 

charges can be brought by the United States Government against 

those who steal a pre-release version of a work and then distribute 

it to others.

Section 7. Authorization of Appropriations. This section authorizes 

$15 million in annual appropriations for investigations and prosecutions of violations of Title 17.

Section 8. Prevention of Surreptitious Recording in Motion Picture 

Theaters. This section creates a new felony penalty for the 

camcording of movies in a movie theater subject to several conditions. 

Subsection (a) of the new § 2319B created by § 8 sets forth the 

substantive elements of the offense. Under this subsection, a person violates the statute when he or she, without the authorization 

of the copyright owner, knowingly uses or attempts to use an 

audiovisual recording device in a motion picture exhibition facility 

to transmit or make a copy of a motion picture or other audiovisual 

work protected under Title 17 or any part thereof. The legislation 

creates a new definition for the term ‘‘motion picture exhibition facility.’’ Other terms used in the legislation are defined in § 101 of 

Title 17. 

Subsection (d) creates an immunity from liability for theater 

owners and associated individuals for their good faith efforts to 

reasonably detain someone they suspect of violating this in their 

theater(s). This provision is modeled upon numerous shopkeeper 

privilege statutes that exist in state and local laws. 

Subsection (g) clarifies that States may regulate the use of audiovisual recording devices in specific locations through the use of 

their police powers without impermissibly interfering with Federal 

copyright policy. The Committee is aware that several states have 

enacted legislation with proscriptions similar to those in the Federal law against using or attempting to use the recording functions 

of a camcorder or similar device without the express consent of a 

theater owner.6

25

Preemption of State criminal statutes may occur under either 

§ 301 of Title 17 where the gravamen of the state cause of action 

contains an element in addition to an allegation of wrongful copying or under the doctrine of conflict preemption. The Committee believes that statutes such as those above are qualitatively different 

for purposes of the ‘‘extra element’’ statutory preemption test under 

§ 301 of the Copyright Act. They contain the extra elements of operation or attempted operation of a device, which does not involve 

copying at all and, perhaps more importantly, the entry onto property to perform an act that is both unauthorized by the real property owner and harmful to the lawful use of that property. Nonetheless, the purpose of this section is to make it unequivocally clear 

that neither § 301 nor the non-statutory doctrine of conflict preemption precludes the enforcement of such statutes on the basis that 

they interfere with the express or implicit policies of the Copyright 

Act.

Section 9. Sense of Congress. Section 9 contains sense-of-the-Congress language that details the harms caused by peer-to-peer piracy and the difficulty in prosecuting crimes that occur on such 

networks.

Section 10. Enhancement of Criminal Copyright Infringement. DOJ 

has stated that existing law makes it difficult, if not impossible, to 

bring actions against peer-to-peer file sharers for sharing pirated 

materials. Section 10 creates a new 17 U.S.C. § 506(a)(3) to criminalize conduct in which a person ‘‘infringes a copyright by the 

knowing distribution, including by the offering for distribution by 

the public by electronic means, with reckless disregard of the risk 

of further infringement, during any 180-day period 1,000 or more 

works, or works that have a retail value of $10,000, or 1 or more 

pre-release works. ‘‘Pre-release works’’ and ‘‘retail value’’ are defined. A limitation on liability is created for legal entities that meet 

face no civil liability under § 512 as listed civil and criminal penalties are created for the violation of the newly created 17 U.S.C. 

§ 506(a)(3).

Section 11. Amendment of Federal Sentencing Guidelines Regarding 

the Infringement of Copyrighted Works and Related Crimes. Section 

11 amends the authority of the United States Sentencing Commission to review and update the sentencing guidelines and policy 

statements surrounding several intellectual property rights crimes.

Section 12. Exemption from Infringement for Skipping Audio or 

Video Content in Motion Pictures. Subsection 12(b) of the legislation creates a new subsection § 110 (11) of Title 17. This new subsection ensures that U.S. copyright law sanctions the use of any filtering service or technology that mutes or skips content, provided 

the service or technology—

1. is confined to private, in-home use,

2. for the household of the purchasing consumer only; and

3. does not create a fixed copy of the alternate version.

The Committee is aware of services and companies that create 

fixed derivative copies of motion pictures and believes that such 

practices are illegal under the Copyright Act. 

26

Subsection 12(c) of the legislation clarifies existing U.S. trademark law to ensure that it cannot be interpreted to proscribe the 

operation of services identified in § 12(b) so long as they display a 

clear and conspicuous notice that the altered version is not the performance intended by the director or copyright holder of the motion 

picture. 

The Committee believes that an on-screen disclaimer in large 

font at the beginning of a performance of a particular work that is 

displayed for a length of time suitable for the average viewer to 

read the notice is sufficient. Such notice would be similar to the 

FBI anti-piracy warnings shown at the beginning of most major 

motion pictures. This requirement begins 180 days after the legislation becomes law. Since the manufacturer of a physical device 

complying with the requirements maintains control over the device 

before the retail purchase point, these requirements should not 

burden consumer electronics manufacturers. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, 

existing law in which no change is proposed is shown in roman):

TITLE 17, UNITED STATES CODE

* * * * * * *

CHAPTER 1—SUBJECT MATTER AND SCOPE OF 

COPYRIGHT 

* * * * * * *

§ 110. Limitations on exclusive rights: Exemption of certain 

performances and displays 

Notwithstanding the provisions of section 106, the following 

are not infringements of copyright: 

(1) * * *

* * * * * * *

(9) performance on a single occasion of a dramatic literary 

work published at least ten years before the date of the performance, by or in the course of a transmission specifically designed for and primarily directed to blind or other handicapped 

persons who are unable to read normal printed material as a 

result of their handicap, if the performance is made without 

any purpose of direct or indirect commercial advantage and its 

transmission is made through the facilities of a radio subcarrier authorization referred to in clause (8)(iii), Provided, That 

the provisions of this clause shall not be applicable to more 

than one performance of the same work by the same performers or under the auspices of the same organization; øand¿

(10) notwithstanding paragraph (4), the following is not an 

infringement of copyright: performance of a nondramatic litVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00026 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700
27

erary or musical work in the course of a social function which 

is organized and promoted by a nonprofit veterans’ organization or a nonprofit fraternal organization to which the general 

public is not invited, but not including the invitees of the organizations, if the proceeds from the performance, after deducting the reasonable costs of producing the performance, are 

used exclusively for charitable purposes and not for financial 

gain. For purposes of this section the social functions of any 

college or university fraternity or sorority shall not be included 

unless the social function is held solely to raise funds for a specific charitable purposeø.¿; and

(11)(A) the making of limited portions of audio or video 

content of a motion picture imperceptible by or for the owner or 

other lawful possessor of an authorized copy of that motion picture in the course of viewing of that work for private use in a 

household, by means of consumer equipment or services that—

(i) are operated by an individual in that household; 

(ii) serve only such household; and 

(iii) do not create a fixed copy of the altered version; 

and 

(B) the use of technology to make such audio or video content imperceptible, that does not create a fixed copy of the altered version.

* * * * * * *

CHAPTER 4—COPYRIGHT NOTICE, DEPOSIT, AND 

REGISTRATION 

* * * * * * *

§ 411. Registration and infringement actions 

(a) øExcept for¿ Except for an action brought by the Government of the United States or by any agency or instrumentality thereof, or an action brought for a violation of the rights of the author 

under section 106A(a), and subject to the provisions of subsection 

(b), no action for infringement of the copyright in any United 

States work shall be instituted until registration of the copyright 

claim has been made in accordance with this title. In any case, 

however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form 

and registration has been refused, the applicant is entitled to institute an action for infringement if notice thereof, with a copy of the 

complaint, is served on the Register of Copyrights. The Register 

may, at his or her option, become a party to the action with respect 

to the issue of registrability of the copyright claim by entering an 

appearance within sixty days after such service, but the Register’s 

failure to become a party shall not deprive the court of jurisdiction 

to determine that issue. 

* * * * * * *

CHAPTER 5—COPYRIGHT INFRINGEMENT AND 

REMEDIES 

* * * * * * *

28

§ 504. Remedies for infringement: Damages and profits 

(a) * * *

(b) ACTUAL DAMAGES AND PROFITS.—øThe copyright owner¿

(1) IN GENERAL.—The copyright owner is entitled to recover 

the actual damages suffered by him or her as a result of the 

infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in 

computing the actual damages. In establishing the infringer’s 

profits, the copyright owner is required to present proof only 

of the infringer’s gross revenue, and the infringer is required 

to prove his or her deductible expenses and the elements of 

profit attributable to factors other than the copyrighted work.

(2) DAMAGES FOR PRE-RELEASE INFRINGEMENT.—

(A) IN GENERAL.—In the case of any pre-release work, 

actual damages shall be presumed conclusively to be no 

less than $10,000 per infringement, if a person—

(i) distributes such work by making it available on 

a computer network accessible to members of the public; and 

(ii) knew or should have known that the work was 

intended for commercial distribution. 

(B) DEFINITION.—For purposes of this subsection, the 

term ‘‘pre-release work’’ has the meaning given that term in 

section 506(h).

* * * * * * *

§ 506. Criminal offenses 

ø(a) CRIMINAL INFRINGEMENT.—Any person who infringes a 

copyright willfully either—

ø(1) for purposes of commercial advantage or private financial gain, or 

ø(2) by the reproduction or distribution, including by electronic means, during any 180-day period, of 1 or more copies 

or phonorecords of 1 or more copyrighted works, which have a 

total retail value of more than $1,000, 

shall be punished as provided under section 2319 of title 18, United 

States Code. For purposes of this subsection, evidence of reproduction or distribution of a copyrighted work, by itself, shall not be 

sufficient to establish willful infringement.¿

(a) CRIMINAL INFRINGEMENT.—Any person who—

(1) infringes a copyright willfully and for purposes of commercial advantage or private financial gain, 

(2) infringes a copyright willfully by the reproduction or 

distribution, including by the offering for distribution to the 

public by electronic means, during any 180-day period, of 1 or 

more copies or phonorecords of 1 or more copyrighted works, 

which have a total retail value of more than $1,000, or 

(3) infringes a copyright by the knowing distribution, including by the offering for distribution to the public by electronic means, with reckless disregard of the risk of further infringement, during any 180-day period, of—

(A) 1,000 or more copies or phonorecords of 1 or more 

copyrighted works, 

29

(B) 1 or more copies or phonorecords of 1 or more copyrighted works with a total retail value of more than 

$10,000, or 

(C) 1 or more copies or phonorecords of 1 or more copyrighted pre-release works, 

shall be punished as provided under section 2319 of title 18. For 

purposes of this subsection, evidence of reproduction or distribution 

of a copyrighted work, by itself, shall not be sufficient to establish 

the necessary level of intent under this subsection. 

* * * * * * *

(g) LIMITATION ON LIABILITY OF SERVICE PROVIDERS.—No legal 

entity shall be liable for a violation of subsection (a)(3) by reason 

of performing any function described in subsection (a), (b), (c), or (d) 

of section 512 if such legal entity would not be liable for monetary 

relief under section 512 by reason of performing such function. Except for purposes of determining whether an entity qualifies for the 

limitation on liability under subsection (a)(3) of this section, the 

legal conclusion of whether an entity qualifies for a limitation on 

liability under section 512 shall not be considered in a judicial determination of whether the entity violates subsection (a) of this section. 

(h) DEFINITIONS.—In this section: 

(1) PRE-RELEASE WORK.—The term ‘‘pre-release work’’ refers 

to a work protected under this title which has a commercial 

and economic value and which, at the time of the act of infringement that is the basis for the offense under subsection 

(a)(3), the defendant knew or should have known had not yet 

been made available by the copyright owner to individual members of the general public in copies or phonorecords for sale, license, or rental. 

(2) RETAIL VALUE.— The ‘‘retail value’’ of a copyrighted 

work is the retail price of that work in the market in which it 

is sold. In the case of an infringement of a copyright by distribution, if the retail price does not adequately reflect the economic value of the infringement, then the retail value may be 

determined using other factors, including but not limited to 

suggested retail price, wholesale price, replacement cost of the 

item, licensing, or distribution-related fees.

* * * * * * *

CHAPTER 113 OF TITLE 18, UNITED STATES CODE

CHAPTER 113—STOLEN PROPERTY

Sec. 

2311. Definitions. 

* * * * * * *

2319A. Unauthorized fixation of and trafficking in sound recordings and music 

videos of live musical performances. 

2319B. Unauthorized recording of motion pictures in a motion picture exhibition facility.

* * * * * * *

30

§ 2319. Criminal infringement of a copyright 

(a) * * *

* * * * * * *

(d) Any person who commits an offense under section 506(a)(3) 

of title 17—

(1) shall be imprisoned not more than 3 years, or fined in 

the amount set forth in this title, or both, or, if the offense was 

committed for purposes of commercial advantage or private financial gain, imprisoned for not more than 5 years, or fined in 

the amount set forth in this title, or both; and 

(2) shall, if the offense is a second or subsequent offense 

under paragraph (1), be imprisoned not more than 6 years, or 

fined in the amount set forth in this title, or both, or, if the offense was committed for purposes of commercial advantage or 

private financial gain, imprisoned for not more than 10 years, 

or fined in the amount set forth in this title, or both.

ø(d)¿ (e)(1) During preparation of the presentence report pursuant to Rule 32(c) of the Federal Rules of Criminal Procedure, victims of the offense shall be permitted to submit, and the probation 

officer shall receive, a victim impact statement that identifies the 

victim of the offense and the extent and scope of the injury and loss 

suffered by the victim, including the estimated economic impact of 

the offense on that victim. 

* * * * * * *

ø(e)¿ (f) As used in this section—

(1) the terms ‘‘phonorecord’’ and ‘‘copies’’ have, respectively, the meanings set forth in section 101 (relating to definitions) of title 17; øand¿

(2) the terms ‘‘reproduction’’ and ‘‘distribution’’ refer to the 

exclusive rights of a copyright owner under clauses (1) and (3) 

respectively of section 106 (relating to exclusive rights in copyrighted works), as limited by sections 107 through 122, of title 

17ø.¿; and

(3) the term ‘‘financial gain’’ has the meaning given that 

term in section 101 (relating to definitions) of title 17.

* * * * * * *

§ 2319B. Unauthorized recording of motion pictures in a motion picture exhibition facility 

(a) OFFENSE.—Any person who, without the authorization of the 

copyright owner, knowingly uses or attempts to use an audiovisual 

recording device to transmit or make a copy of a motion picture or 

other audiovisual work protected under title 17, or any part thereof, 

from a performance of such work in a motion picture exhibition facility, shall—

(1) be imprisoned for not more than 3 years, fined under 

this title, or both; or 

(2) if the offense is a second or subsequent offense, be imprisoned for no more than 6 years, fined under this title, or 

both. 

The possession by a person of an audiovisual recording device in a 

motion picture exhibition facility may be considered as evidence in 

any proceeding to determine whether that person committed an ofVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00030 Fmt 6659 Sfmt 6603 E:\HR\OC\HR700.XXX HR700
31

fense under this subsection, but shall not, by itself, be sufficient to 

support a conviction of that person for such offense. 

(b) FORFEITURE AND DESTRUCTION.—When a person is convicted of an offense under subsection (a), the court in its judgment 

of conviction shall, in addition to any penalty provided, order the 

forfeiture and destruction or other disposition of all unauthorized 

copies of motion pictures or other audiovisual works protected under 

title 17, or parts thereof, and any audiovisual recording devices or 

other equipment used in connection with the offense. 

(c) AUTHORIZED ACTIVITIES.—This section does not prevent any 

lawfully authorized investigative, protective, or intelligence activity 

by an officer, agent, or employee of the United States, a State, or 

a political subdivision of a State, or by a person acting under a contract with the United States, a State, or a political subdivision of 

a State. 

(d) IMMUNITY FOR THEATERS AND AUTHORIZED PERSONS.—With 

reasonable cause, the owner or lessee of a motion picture facility 

where a motion picture is being exhibited, the authorized agent or 

employee of such owner or lessee, the licensor of the motion picture 

being exhibited, or the agent or employee of such licensor—

(1) may detain, in a reasonable manner and for a reasonable time, any person suspected of committing an offense under 

this section for the purpose of questioning that person or summoning a law enforcement officer; and 

(2) shall not be held liable in any civil or criminal action 

by reason of a detention under paragraph (1). 

(e) VICTIM IMPACT STATEMENT.—

(1) IN GENERAL.—During the preparation of the presentence 

report under rule 32(c) of the Federal Rules of Criminal Procedure, victims of an offense under this section shall be permitted 

to submit to the probation officer a victim impact statement 

that identifies the victim of the offense and the extent and scope 

of the injury and loss suffered by the victim, including the estimated economic impact of the offense on that victim. 

(2) CONTENTS.—A victim impact statement submitted 

under this subsection shall include—

(A) producers and sellers of legitimate works affected 

by conduct involved in the offense; 

(B) holders of intellectual property rights in the works 

described in subparagraph (A); and 

(C) the legal representatives of such producers, sellers, 

and holders. 

(f) DEFINITIONS.—In this section: 

(1) AUDIOVISUAL WORK, COPY, ETC.—The terms ‘‘audiovisual work’’, ‘‘copy’’, ‘‘copyright owner’’, ‘‘motion picture’’, and 

‘‘transmit’’ have, respectively, the meanings given those terms in 

section 101 of title 17. 

(2) AUDIOVISUAL RECORDING DEVICE.—The term ‘‘audiovisual recording device’’ means a digital or analog photographic 

or video camera, or any other technology or device capable of 

enabling the recording or transmission of a copyrighted motion 

picture or other audiovisual work, or any part thereof, regardless of whether audiovisual recording is the sole or primary 

purpose of the device. 

32

(3) MOTION PICTURE EXHIBITION FACILITY.—The term ‘‘motion picture exhibition facility’’ means a movie theater, screening room, or other venue that is being used primarily for the 

exhibition of a copyrighted motion picture, if such exhibition is 

open to the public or is made to an assembled group of viewers 

outside of a normal circle of a family and its social acquaintances. 

(g) STATE LAW NOT PREEMPTED.—Nothing in this section may 

be construed to annul or limit any rights or remedies under the 

laws of any State.

* * * * * * *

SECTION 32 OF THE TRADEMARK ACT OF 1946

SEC. 32. (1)***

* * * * * * *

(3)(A) Any person who engages in the conduct described in 

paragraph (11) of section 110 of title 17, United States Code, and 

who complies with the requirements set forth in that paragraph is 

not liable on account of such conduct for a violation of any right 

under this Act. 

(B) A manufacturer, licensee, or licensor of technology that enables the making of limited portions of audio or video content of a 

motion picture imperceptible that is authorized under subparagraph 

(A) is not liable on account of such manufacture or license for a violation of any right under this Act, if such manufacturer, licensee, 

or licensor ensures that the technology provides a clear and conspicuous notice that the performance of the motion picture is altered 

from the performance intended by the director or copyright holder 

of the motion picture. 

(C) Any manufacturer, licensee, or licensor of technology described in subparagraph (B) who fails to comply with the requirement under subparagraph (B) to provide notice with respect to a 

motion picture shall be liable in a civil action brought by the copyright owner of the motion picture that is modified by the technology 

in an amount not to exceed $1,000 for each such motion picture. 

(D) The requirement under subparagraph (B) to provide notice, 

and the provisions of subparagraph (C), shall apply only with respect to technology manufactured after the end of the 180-day period 

beginning on the date of the enactment of the Family Movie Act of 

2004.

MARKUP TRANSCRIPT

BUSINESS MEETING 

WEDNESDAY, SEPTEMBER 8, 2004

HOUSE OF REPRESENTATIVES, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Committee met, pursuant to notice, at 10:00 a.m., in Room 

2141, Rayburn House Office Building, Hon. F. James Sensenbrenner, Jr., [Chairman of the Committee] Presiding. 

33

[Intervening business.] 

Chairman SENSENBRENNER. The next item on the agenda is H.R. 

4077, the ‘‘Piracy Deterrence and Education Act of 2004.’’

The Chair recognizes the gentleman from Texas, Mr. Smith, the 

Chairman of the Subcommittee on Courts, the Internet, and Intellectual Property, for a motion. 

Mr. SMITH. Mr. Chairman, the Subcommittee on Courts, the 

Internet, and Intellectual Property reports favorably the bill H.R. 

4077 with a single amendment in the nature of a substitute and 

moves its favorable recommendation to the full House. 

Chairman SENSENBRENNER. Without objection, the bill will be 

considered as read and open for amendment at any point. 

[The bill, H.R. 4077, follows:]

34

I

108TH CONGRESS

2D SESSION H. R. 4077

To enhance criminal enforcement of the copyright laws, to educate the public

about the application of copyright law to the Internet, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 31, 2004

Mr. SMITH of Texas (for himself, Mr. BERMAN, and Mr. CONYERS) introduced

the following bill; which was referred to the Committee on the Judiciary

A BILL

To enhance criminal enforcement of the copyright laws, to

educate the public about the application of copyright

law to the Internet, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Piracy Deterrence and

5 Education Act of 2004’’.

6 SEC. 2. FINDINGS.

7 The Congress finds as follows:

8 (1) The Internet, while changing the way our

9 society communicates, has also changed the nature


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•HR 4077 IH

1 of many crimes, including the theft of intellectual

2 property.

3 (2) Trafficking in infringing copyrighted works

4 through increasingly sophisticated electronic means,

5 including peer-to-peer file trading networks, Internet

6 chat rooms, and news groups, threatens lost jobs,

7 lost income for creators, lower tax revenue, and

8 higher prices for honest purchasers.

9 (3) The most popular peer-to-peer file trading

10 software programs have been downloaded by com11 puter users over 200,000,000 times. At any one time

12 there are over 3,000,000 users simultaneously using

13 just one of these services. Each month, on average,

14 over 2,300,000,000 digital-media files are trans15 ferred among users of peer-to-peer systems.

16 (4) Many computer users simply believe that

17 they will not be caught or prosecuted for their con18 duct.

19 (5) The security and privacy threats posed by

20 certain peer-to-peer networks extend beyond users

21 inadvertently enabling a hacker to access files. Mil22 lions of copies of one of the most popular peer-to23 peer networks contain software that could allow an

24 independent company to take over portions of users’


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3

•HR 4077 IH

1 computers and Internet connections and has the ca2 pacity to keep track of users’ online habits.

3 (6) In light of these considerations, Federal law

4 enforcement agencies should actively pursue crimi5 nals who steal the copyrighted works of others, and

6 prevent such activity through enforcement and

7 awareness. The public should be educated about the

8 security and privacy risks associated with being con9 nected to certain peer-to-peer networks.

10 SEC. 3. DETERRENCE AND COORDINATION.

11 (a) PROGRAM; SHARING OF INFORMATION.—The Di12 rector of the Federal Bureau of Investigation, in consulta13 tion with the Register of Copyrights, shall—

14 (1) develop a program based on providing of in15 formation and notice to deter members of the public

16 from committing acts of copyright infringement

17 through the Internet; and

18 (2) facilitate the sharing among law enforce19 ment agencies, Internet service providers, and copy20 right owners of information concerning acts of copy21 right infringement described in paragraph (1).

22 The program under paragraph (1) shall include issuing

23 appropriate warnings to individuals engaged in acts of

24 copyright infringement described in paragraph (1) that

25 they may be subject to criminal prosecution.


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4

•HR 4077 IH

1 (b) CONSTRUCTION.—Nothing in this section shall be

2 construed to expand the investigative or enforcement pow3 ers of the Federal Bureau of Investigation nor to affect

4 the duty, if any, of Internet service providers to monitor

5 their service, affirmatively seek facts indicating infringing

6 activity, or share private information about the users of

7 their systems.

8 (c) PROHIBITION ON USE OF CERTAIN FUNDS.—The

9 program created under subsection (a)(1) shall not use

10 funds or resources of the Department of Justice allocated

11 for criminal investigation or prosecution.

12 SEC. 4. DESIGNATION AND TRAINING OF AGENTS IN COM13 PUTER HACKING AND INTELLECTUAL PROP14 ERTY UNITS.

15 (a) DESIGNATION OF AGENTS IN CHIPS UNITS.—

16 The Attorney General shall ensure that any unit in the

17 Department of Justice responsible for investigating com18 puter hacking or responsible for investigating intellectual

19 property crimes is assigned at least one agent to support

20 such unit for the purpose of investigating crimes relating

21 to the theft of intellectual property.

22 (b) TRAINING.—The Attorney General shall ensure

23 that each agent assigned under subsection (a) has received

24 training in the investigation and enforcement of intellec25 tual property crimes.


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•HR 4077 IH

1 SEC. 5. EDUCATION PROGRAM.

2 (a) ESTABLISHMENT.—There shall be established

3 within the Office of the Associate Attorney General of the

4 United States an Internet Use Education Program.

5 (b) PURPOSE.—The purpose of the Internet Use

6 Education Program shall be to—

7 (1) educate the general public concerning the

8 value of copyrighted works and the effects of the

9 theft of such works on those who create them; and

10 (2) educate the general public concerning the

11 privacy, security, and other risks of using the Inter12 net to obtain illegal copies of copyrighted works.

13 (c) SECTOR SPECIFIC MATERIALS.—The Internet

14 Use Educational Program shall, to the extent appropriate,

15 develop materials appropriate to Internet users in dif16 ferent sectors of the general public where criminal copy17 right infringement is a concern. The Attorney General

18 shall consult with appropriate interested parties in devel19 oping such sector-specific materials.

20 (d) CONSULTATIONS.—The Attorney General shall

21 consult with the Register of Copyrights and the Secretary

22 of Commerce in developing the Internet Use Education

23 Program under this section.

24 (e) PROHIBITION ON USE OF CERTAIN FUNDS.—The

25 program created under this section shall not use funds or


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•HR 4077 IH

1 resources of the Department of Justice allocated for crimi2 nal investigation or prosecution.

3 SEC. 6. ACTIONS BY THE GOVERNMENT OF THE UNITED

4 STATES.

5 Section 411(a) of title 17, United States Code, is

6 amended in the first sentence by striking ‘‘Except for’’

7 and inserting ‘‘Except for an action brought by the Gov8 ernment of the United States or by any agency or instru9 mentality thereof, or’’.

10 SEC. 7. AUTHORIZED APPROPRIATIONS.

11 There are authorized to be appropriated to the De12 partment of Justice for fiscal year 2005 not less than

13 $15,000,000 for the investigation and prosecution of viola14 tions of title 17, United States Code.

15 SEC. 8. PREVENTION OF SURREPTITIOUS RECORDING IN

16 MOTION PICTURE THEATERS.

17 (a) SHORT TITLE.—This section may be cited as the

18 ‘‘Artists’ Rights and Theft Prevention Act of 2004’’ or

19 the ‘‘ART Act’’.

20 (b) CRIMINAL PENALTIES FOR UNAUTHORIZED RE21 CORDING OF MOTION PICTURES IN A MOTION PICTURE

22 THEATER.—

23 (1) IN GENERAL.—Chapter 113 of title 18,

24 United States Code, is amended by adding after sec25 tion 2319A the following new section:


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•HR 4077 IH

1 ‘‘§ 2319B. Unauthorized recording of motion pictures

2 in a motion picture theater

3 ‘‘(a) OFFENSE.—Whoever, without the authorization

4 of the copyright owner, knowingly uses or attempts to use

5 an audiovisual recording device in a motion picture theater

6 to transmit or make a copy of a motion picture or other

7 audiovisual work protected under title 17, or any part

8 thereof, in a motion picture theater shall—

9 ‘‘(1) be imprisoned for not more than 3 years,

10 fined under this title, or both; or

11 ‘‘(2) if the offense is a second or subsequent of12 fense, be imprisoned for no more than 6 years, fined

13 under this title, or both.

14 ‘‘(b) FORFEITURE AND DESTRUCTION.—When a per15 son is convicted of a violation of subsection (a), the court

16 in its judgment of conviction shall, in addition to any pen17 alty provided, order the forfeiture and destruction or other

18 disposition of all unauthorized copies of motion pictures

19 or other audiovisual works protected under title 17, or

20 parts thereof, and any audiovisual recording devices or

21 other equipment used in connection with the violation.

22 ‘‘(c) AUTHORIZED ACTIVITIES.—This section does

23 not prevent any lawfully authorized investigative, protec24 tive, or intelligence activity by an officer, agent, or em25 ployee of the United States, a State, or a political subdivi26 sion of a State, or by a person acting pursuant to a conVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00040 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 tract with the United States, a State, or a political sub2 division of a State.

3 ‘‘(d) VICTIM IMPACT STATEMENT.—

4 ‘‘(1) IN GENERAL.—During the preparation of

5 the presentence report pursuant to rule 32(c) of the

6 Federal Rules of Criminal Procedure, victims of an

7 offense under this section shall be permitted to sub8 mit to the probation officer a victim impact state9 ment that identifies the victim of the offense and the

10 extent and scope of the injury and loss suffered by

11 the victim, including the estimated economic impact

12 of the offense on that victim.

13 ‘‘(2) CONTENTS.—A victim impact statement

14 submitted under this subsection shall include—

15 ‘‘(A) producers and sellers of legitimate

16 works affected by conduct involved in the of17 fense;

18 ‘‘(B) holders of intellectual property rights

19 in the works described in subparagraph (A);

20 and

21 ‘‘(C) the legal representatives of such pro22 ducers, sellers, and holders.

23 ‘‘(e) DEFINITIONS.—In this section:

24 ‘‘(1) AUDIOVISUAL WORK, COPY, ETC.—The

25 terms ‘audiovisual work’, ‘copy’, ‘copyright owner’,


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•HR 4077 IH

1 ‘motion picture’, and ‘transmit’ have, respectively,

2 the meanings given those terms in section 101 of

3 title 17.

4 ‘‘(2) AUDIOVISUAL RECORDING DEVICE.—The

5 term ‘audiovisual recording device’ means a digital

6 or analog photographic or video camera, or any

7 other technology or device capable of enabling the

8 recording or transmission of a copyrighted motion

9 picture or other audiovisual work, or any part there10 of, regardless of whether audiovisual recording is the

11 sole or primary purpose of the device.

12 ‘‘(3) MOTION PICTURE THEATER.—The term

13 ‘motion picture theater’ means a movie theater,

14 screening room, or other venue that is being used

15 primarily for public performance of a motion pic16 ture.’’.

17 (2) CONFORMING AMENDMENT.—The table of

18 sections for chapter 113 of title 18, United States

19 Code, is amended by inserting after the item relating

20 to section 2319A the following:

‘‘2319B. Unauthorized recording of motion pictures in a motion picture theater.’’.

21 SEC. 9. SENSE OF THE CONGRESS ON NEED TO TAKE STEPS

22 TO PREVENT ILLEGAL ACTIVITY ON PEER-TO23 PEER SERVICES.

24 (a) FINDINGS.—The Congress finds as follows:


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•HR 4077 IH

1 (1) The most popular publicly accessible peer2 to-peer file sharing software programs combined

3 have been downloaded worldwide over 600,000,000

4 times.

5 (2) The vast majority of software products, in6 cluding peer-to-peer technology, do not pose an in7 herent risk. Responsible persons making software

8 products should be encouraged and commended for

9 the due diligence and reasonable care they take in10 cluding by providing instructions, relevant informa11 tion in the documentation, disseminating patches,

12 updates, and other appropriate modifications to the

13 software.

14 (3) Massive volumes of illegal activity, including

15 the distribution of child pornography, viruses, and

16 confidential personal information, and copyright in17 fringement occur on publicly accessible peer-to-peer

18 file sharing services every day. Some publicly acces19 sible peer-to-peer file sharing services expose con20 sumers, particularly children, to serious risks, in21 cluding legal liability, loss of privacy, threats to com22 puter security, and exposure to illegal and inappro23 priate material.

24 (4) The following studies and reports dem25 onstrate that pornography, including child pornogVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00043 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 raphy, is prevalent on publicly available peer-to-peer

2 file sharing services, and children are regularly ex3 posed to pornography when using publicly available

4 peer-to-peer file-sharing services:

5 (A) A February 2004 report by the Gen6 eral Accounting Office (GAO) states that chil7 dren using peer-to-peer file-sharing technology

8 can be exposed inadvertently to pornographic

9 content. When searching for popular terms like

10 ‘‘Britney’’, ‘‘Pokemon’’, and ‘‘Olsen twins’’,

11 more than half the files retrieved were porno12 graphic, including 8 percent containing child

13 pornography or child erotica.

14 (B) The GAO also found that when

15 searching the most popular peer-to-peer service

16 for keywords known to be associated with child

17 pornography, 42 percent of the returns (543

18 out of 1,286 files) were associated with images

19 of child pornography.

20 (C) From 2001, when the National Center

21 for Missing and Exploited Children began to

22 track peer-to-peer child pornography, until

23 2002, the number of reported incidents in24 creased over 400 percent—compared to an in25 crease of less than 100 percent for chat rooms,


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•HR 4077 IH

1 less than 32 percent for websites, and no in2 crease for news groups and bulletin boards.

3 (5) The full potential of peer-to-peer technology

4 to benefit consumers has yet to be realized and will

5 not be achieved until these problems are adequately

6 addressed.

7 (6) To date, the businesses that run publicly ac8 cessible file-sharing services have refused or failed to

9 voluntarily and sufficiently address these problems.

10 (7) Many users of publicly available peer-to11 peer file-sharing services are drawn to these systems

12 by the lure of obtaining ‘‘free’’ music and movies.

13 (8) While some users use parental controls to

14 protect children from pornography available on the

15 Internet and search engines, not all such controls

16 work on publicly accessible peer-to-peer networks.

17 (9) Businesses that run publicly accessible peer18 to-peer file sharing services have openly acknowl19 edged, and numerous studies and reports have estab20 lished, that these services facilitate and profit from

21 massive amounts of copyright infringement, causing

22 enormous damage to the economic well-being of the

23 copyright industries whose works are being illegally

24 ‘‘shared’’ and downloaded.


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•HR 4077 IH

1 (10) The legitimate digital music marketplace

2 offers consumers a wide and growing array of

3 choices for obtaining music legally, without exposure

4 to the risks posed by publicly accessible peer-to-peer

5 file sharing services.

6 (11) The Federal Trade Commission issued a

7 Consumer Alert in July of 2003 warning consumers

8 that some file-sharing services contain damaging vi9 ruses and worms and, without the computer user’s

10 knowledge or consent, install spyware to monitor a

11 user’s browsing habits and send data to third parties

12 or automatically open network connections.

13 (12) Publicly available peer-to-peer file-sharing

14 services can and should adopt reasonable business

15 practices and use technology in the marketplace to

16 address the existing risks posed to consumers by

17 their services and facilitate the legitimate use of

18 peer-to-peer file sharing technology and software.

19 (b) SENSE OF CONGRESS.—It is the sense of the

20 Congress that—

21 (1) responsible software developers should be

22 commended, recognized, and encouraged for their ef23 forts to protect consumers;

24 (2) currently the level of ongoing and persistent

25 illegal and dangerous activity on publicly accessible


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•HR 4077 IH

1 peer-to-peer file sharing services is harmful to con2 sumers, minors, and the economy; and

3 (3) therefore, the Congress and the executive

4 branch should consider all appropriate measures to

5 protect consumers and children, and prevent such il6 legal activity.

7 SEC. 10. ENHANCEMENT OF CRIMINAL COPYRIGHT IN8 FRINGEMENT.

9 (a) CRIMINAL INFRINGEMENT.—Section 506 of title

10 17, United States Code, is amended—

11 (1) by amending subsection (a) to read as fol12 lows:

13 ‘‘(a) CRIMINAL INFRINGEMENT.—Any person who—

14 ‘‘(1) infringes a copyright willfully and for pur15 poses of commercial advantage or private financial

16 gain,

17 ‘‘(2) infringes a copyright willfully by the repro18 duction or distribution, including by the offering for

19 distribution to the public by electronic means, during

20 any 180-day period, of 1 or more copies or

21 phonorecords of 1 or more copyrighted works, which

22 have a total retail value of more than $1,000, or

23 ‘‘(3) infringes a copyright by the knowing dis24 tribution, including by the offering for distribution

25 to the public by electronic means, with reckless disVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00047 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 regard of the risk of further infringement, during

2 any 180-day period, of—

3 ‘‘(A) 1,000 or more copies or phonorecords

4 of 1 or more copyrighted works,

5 ‘‘(B) 1 or more copies or phonorecords of

6 1 or more copyrighted works with a total retail

7 value of more than $10,000, or

8 ‘‘(C) 1 or more copies or phonorecords of

9 1 or more copyrighted pre-release works,

10 shall be punished as provided under section 2319 of title

11 18. For purposes of this subsection, evidence of reproduc12 tion or distribution of a copyrighted work, by itself, shall

13 not be sufficient to establish the necessary level of intent

14 under this subsection.’’; and

15 (2) by adding at the end the following:

16 ‘‘(g) DEFINITIONS.—In this section:

17 ‘‘(1) PRE-RELEASE WORK.—The term ‘pre-re18 lease work’ refers to a work protected under this

19 title which has a commercial and economic value and

20 which, at the time of the infringement, the defend21 ant knew or should have known that the work had

22 not yet been made available by the copyright owner

23 to individual members of the general public in copies

24 or phonorecords for sale, license, or rental.


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•HR 4077 IH

1 ‘‘(2) RETAIL VALUE.—The ‘retail value’ of a

2 copyrighted work is the retail price of that work in

3 the market in which it is sold. In the case of an in4 fringement of a copyright by distribution, if the re5 tail price does not adequately reflect the economic

6 value of the infringement, then the retail value may

7 be determined using other factors, including but not

8 limited to suggested retail price, wholesale price, re9 placement cost of the item, licensing, or distribution10 related fees.’’.

11 (b) PENALTIES.—Section 2319 of title 18, United

12 States Code, is amended—

13 (1) by redesignating subsections (d) and (e) as

14 subsections (e) and (f), respectively;

15 (2) by inserting after subsection (c) the fol16 lowing:

17 ‘‘(d) Any person who commits an offense under sec18 tion 506(a)(3) of title 17—

19 ‘‘(1) shall be imprisoned not more than 3 years,

20 or fined in the amount set forth in this title, or both,

21 or, if the offense was committed for purposes of

22 commercial advantage or private financial gain, im23 prisoned for not more than 5 years, or fined in the

24 amount set forth in this title, or both; and


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•HR 4077 IH

1 ‘‘(2) shall, if the offense is a second or subse2 quent offense under paragraph (1), be imprisoned

3 not more than 6 years, or fined in the amount set

4 forth in this title, or both, or, if the offense was

5 committed for purposes of commercial advantage or

6 private financial gain, imprisoned for not more than

7 10 years, or fined in the amount set forth in this

8 title, or both.’’; and

9 (3) in subsection (f), as so redesignated—

10 (A) in paragraph (1), by striking ‘‘and’’

11 after the semicolon;

12 (B) in paragraph (2), by striking the pe13 riod and inserting ‘‘; and’’; and

14 (C) by adding at the end the following:

15 ‘‘(3) the term ‘financial gain’ has the meaning

16 given that term in section 101 (relating to defini17 tions) of title 17.’’.

18 (c) CIVIL REMEDIES FOR INFRINGEMENT OF A COM19 MERCIAL PRE-RELEASE COPYRIGHTED WORK.—Section

20 504(b) of title 17, United States Code, is amended—

21 (1) by striking ‘‘The copyright owner’’ and in22 serting the following:

23 ‘‘(1) IN GENERAL.—The copyright owner’’; and

24 (2) by adding at the end the following:


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•HR 4077 IH

1 ‘‘(2) DAMAGES FOR PRE-RELEASE INFRINGE2 MENT.—

3 ‘‘(A) IN GENERAL.—In the case of any

4 pre-release work, actual damages shall be pre5 sumed conclusively to be no less than $10,000

6 per infringement, if a person—

7 ‘‘(i) distributes such work by making

8 it available on a computer network acces9 sible to members of the public; and

10 ‘‘(ii) knew or should have known that

11 the work was intended for commercial dis12 tribution.

13 ‘‘(B) DEFINITION.—For purposes of this

14 subsection, the term ‘pre-release work’ has the

15 meaning given that term in section 506(g).’’.

16 SEC. 11. AMENDMENT OF FEDERAL SENTENCING GUIDE17 LINES REGARDING THE INFRINGEMENT OF

18 COPYRIGHTED WORKS AND RELATED

19 CRIMES.

20 (a) AMENDMENT TO THE SENTENCING GUIDE21 LINES.—Pursuant to its authority under section 994 of

22 title 28, United States Code, and in accordance with this

23 section, the United States Sentencing Commission shall

24 review and, if appropriate, amend the sentencing guide25 lines and policy statements applicable to persons convicted


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•HR 4077 IH

1 of intellectual property rights crimes, including sections

2 2318, 2319, 2319A, 2319B, 2320 of title 18, United

3 States Code, and sections 506, 1201, and 1202 of title

4 17, United States Code.

5 (b) FACTORS.—In carrying out this section, the Sen6 tencing Commission shall—

7 (1) take all appropriate measures to ensure that

8 the sentencing guidelines and policy statements ap9 plicable to the offenses described in subsection (a)

10 are sufficiently stringent to deter and adequately re11 flect the nature of such offenses;

12 (2) consider whether to provide a sentencing en13 hancement for those convicted of the offenses de14 scribed in subsection (a) when the conduct involves

15 the display, performance, publication, reproduction,

16 or distribution of a copyrighted work before the time

17 when the copyright owner has authorized the dis18 play, performance, publication, reproduction, or dis19 tribution of the original work, whether in the media

20 format used by the infringing good or in any other

21 media format;

22 (3) consider whether the definition of

23 ‘‘uploading’’ contained in Application Note 3 to

24 Guideline 2B5.3 is adequate to address the loss atVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00052 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 tributable to people broadly distributing copyrighted

2 works over the Internet without authorization; and

3 (4) consider whether the sentencing guidelines

4 and policy statements applicable to the offenses de5 scribed in subsection (a) adequately reflect any harm

6 to victims from infringement in circumstances where

7 law enforcement cannot determine how many times

8 copyrighted material is reproduced or distributed.

9 (c) PROMULGATION.—The Commission may promul10 gate the guidelines or amendments under this section in

11 accordance with the procedures set forth in section 21(a)

12 of the Sentencing Act of 1987, as though the authority

13 under that Act had not expired.

Æ


I4077.AAU
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Chairman SENSENBRENNER. And the Subcommittee amendment 

in the nature of a substitute which the Members have before them 

will be considered as read, considered as the original text for purposes of amendment and open for amendment at any point. 

[The amendment follows:]

55 H.L.C.

AMENDMENT IN THE NATURE OF A SUBSTITUTE

TO H.R. 4077, AS REPORTED BY THE

SUBCOMMITTEE ON COURTS, THE INTERNET, AND

INTELLECTUAL PROPERTY

Strike all after the enacting clause and insert the

following:

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Piracy Deterrence and

3 Education Act of 2004’’.

4 SEC. 2. FINDINGS.

5 The Congress finds as follows:

6 (1) The Internet, while changing the way our

7 society communicates, has also changed the nature

8 of many crimes, including the theft of intellectual

9 property.

10 (2) Trafficking in infringing copyrighted works

11 through increasingly sophisticated electronic means,

12 including peer-to-peer file trading networks, Internet

13 chat rooms, and news groups, threatens lost jobs,

14 lost income for creators, lower tax revenue, and

15 higher prices for honest purchasers.

16 (3) The most popular peer-to-peer file trading

17 software programs have been downloaded by comVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00055 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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2

H.L.C.

1 puter users over 200,000,000 times. At any one time

2 there are over 3,000,000 users simultaneously using

3 just one of these services. Each month, on average,

4 over 2,300,000,000 digital-media files are trans5 ferred among users of peer-to-peer systems.

6 (4) Many computer users simply believe that

7 they will not be caught or prosecuted for their con8 duct.

9 (5) The security and privacy threats posed by

10 certain peer-to-peer networks extend beyond users

11 inadvertently enabling a hacker to access files. Mil12 lions of copies of one of the most popular peer-to13 peer networks contain software that could allow an

14 independent company to take over portions of users’

15 computers and Internet connections and has the ca16 pacity to keep track of users’ online habits.

17 (6) In light of these considerations, Federal law

18 enforcement agencies should actively pursue crimi19 nals who steal the copyrighted works of others, and

20 prevent such activity through enforcement and

21 awareness. The public should be educated about the

22 security and privacy risks associated with being con23 nected to certain peer-to-peer networks.


4077A.AAC
57

3

H.L.C.

1 SEC. 3. DETERRENCE AND COORDINATION.

2 (a) PROGRAM; SHARING OF INFORMATION.—The Di3 rector of the Federal Bureau of Investigation, in consulta4 tion with the Register of Copyrights, shall—

5 (1) develop a program based on providing of in6 formation and notice to deter members of the public

7 from committing acts of copyright infringement

8 through the Internet; and

9 (2) facilitate the sharing among law enforce10 ment agencies, Internet service providers, and copy11 right owners of information concerning acts of copy12 right infringement described in paragraph (1).

13 The program under paragraph (1) shall include issuing

14 appropriate warnings to individuals engaged in acts of

15 copyright infringement described in paragraph (1) that

16 they may be subject to criminal prosecution.

17 (b) CONSTRUCTION.—Nothing in this section shall be

18 construed to expand the investigative or enforcement pow19 ers of the Federal Bureau of Investigation nor to affect

20 the duty, if any, of Internet service providers to monitor

21 their service, affirmatively seek facts indicating infringing

22 activity, or share private information about the users of

23 their systems.

24 (c) PROHIBITION ON USE OF CERTAIN FUNDS.—The

25 program created under subsection (a)(1) shall not use


4077A.AAD
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4

H.L.C.

1 funds or resources of the Department of Justice allocated

2 for criminal investigation or prosecution.

3 SEC. 4. DESIGNATION AND TRAINING OF AGENTS IN COM4 PUTER HACKING AND INTELLECTUAL PROP5 ERTY UNITS.

6 (a) DESIGNATION OF AGENTS IN CHIPS UNITS.—

7 The Attorney General shall ensure that any unit in the

8 Department of Justice responsible for investigating com9 puter hacking or responsible for investigating intellectual

10 property crimes is assigned at least one agent to support

11 such unit for the purpose of investigating crimes relating

12 to the theft of intellectual property.

13 (b) TRAINING.—The Attorney General shall ensure

14 that each agent assigned under subsection (a) has received

15 training in the investigation and enforcement of intellec16 tual property crimes.

17 SEC. 5. EDUCATION PROGRAM.

18 (a) ESTABLISHMENT.—There shall be established

19 within the Office of the Associate Attorney General of the

20 United States an Internet Use Education Program.

21 (b) PURPOSE.—The purpose of the Internet Use

22 Education Program shall be to—

23 (1) educate the general public concerning the

24 value of copyrighted works and the effects of the

25 theft of such works on those who create them; and


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5

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1 (2) educate the general public concerning the

2 privacy, security, and other risks of using the Inter3 net to obtain illegal copies of copyrighted works.

4 (c) SECTOR SPECIFIC MATERIALS.—The Internet

5 Use Educational Program shall, to the extent appropriate,

6 develop materials appropriate to Internet users in dif7 ferent sectors of the general public where criminal copy8 right infringement is a concern. The Attorney General

9 shall consult with appropriate interested parties in devel10 oping such sector-specific materials.

11 (d) CONSULTATIONS.—The Attorney General shall

12 consult with the Register of Copyrights and the Secretary

13 of Commerce in developing the Internet Use Education

14 Program under this section.

15 (e) PROHIBITION ON USE OF CERTAIN FUNDS.—The

16 program created under this section shall not use funds or

17 resources of the Department of Justice allocated for crimi18 nal investigation or prosecution.

19 (f) ADDITIONAL PROHIBITION ON THE USE OF

20 FUNDS.—The program created under this section shall

21 not use any funds or resources of the Department of Jus22 tice allocated for the Civil Rights Division of the Depart23 ment, including any funds allocated for the enforcement

24 of civil rights or the Voting Rights Act of 1965.


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1 SEC. 6. ACTIONS BY THE GOVERNMENT OF THE UNITED

2 STATES.

3 Section 411(a) of title 17, United States Code, is

4 amended in the first sentence by striking ‘‘Except for’’

5 and inserting ‘‘Except for an action brought by the Gov6 ernment of the United States or by any agency or instru7 mentality thereof, or’’ .

8 SEC. 7. AUTHORIZED APPROPRIATIONS.

9 There are authorized to be appropriated to the De10 partment of Justice for fiscal year 2005 not less than

11 $15,000,000 for the investigation and prosecution of viola12 tions of title 17, United States Code.

13 SEC. 8. PREVENTION OF SURREPTITIOUS RECORDING IN

14 MOTION PICTURE THEATERS.

15 (a) SHORT TITLE.—This section may be cited as the

16 ‘‘Artists’ Rights and Theft Prevention Act of 2004’’ or

17 the ‘‘ART Act’’.

18 (b) CRIMINAL PENALTIES FOR UNAUTHORIZED RE19 CORDING OF MOTION PICTURES IN A MOTION PICTURE

20 THEATER.—

21 (1) IN GENERAL.—Chapter 113 of title 18,

22 United States Code, is amended by adding after sec23 tion 2319A the following new section:


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1 ‘‘§ 2319B. Unauthorized recording of motion pictures

2 in a motion picture theater

3 ‘‘(a) OFFENSE.—Whoever, without the authorization

4 of the copyright owner, knowingly uses or attempts to use

5 an audiovisual recording device in a motion picture theater

6 to transmit or make a copy of a motion picture or other

7 audiovisual work protected under title 17, or any part

8 thereof, in a motion picture theater shall—

9 ‘‘(1) be imprisoned for not more than 3 years,

10 fined under this title, or both; or

11 ‘‘(2) if the offense is a second or subsequent of12 fense, be imprisoned for no more than 6 years, fined

13 under this title, or both.

14 ‘‘(b) FORFEITURE AND DESTRUCTION.—When a per15 son is convicted of a violation of subsection (a), the court

16 in its judgment of conviction shall, in addition to any pen17 alty provided, order the forfeiture and destruction or other

18 disposition of all unauthorized copies of motion pictures

19 or other audiovisual works protected under title 17, or

20 parts thereof, and any audiovisual recording devices or

21 other equipment used in connection with the violation.

22 ‘‘(c) AUTHORIZED ACTIVITIES.—This section does

23 not prevent any lawfully authorized investigative, protec24 tive, or intelligence activity by an officer, agent, or em25 ployee of the United States, a State, or a political subdivi26 sion of a State, or by a person acting pursuant to a conVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00061 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 tract with the United States, a State, or a political sub2 division of a State.

3 ‘‘(d) VICTIM IMPACT STATEMENT.—

4 ‘‘(1) IN GENERAL.—During the preparation of

5 the presentence report pursuant to rule 32(c) of the

6 Federal Rules of Criminal Procedure, victims of an

7 offense under this section shall be permitted to sub8 mit to the probation officer a victim impact state9 ment that identifies the victim of the offense and the

10 extent and scope of the injury and loss suffered by

11 the victim, including the estimated economic impact

12 of the offense on that victim.

13 ‘‘(2) CONTENTS.—A victim impact statement

14 submitted under this subsection shall include—

15 ‘‘(A) producers and sellers of legitimate

16 works affected by conduct involved in the of17 fense;

18 ‘‘(B) holders of intellectual property rights

19 in the works described in subparagraph (A);

20 and

21 ‘‘(C) the legal representatives of such pro22 ducers, sellers, and holders.

23 ‘‘(e) DEFINITIONS.—In this section:

24 ‘‘(1) AUDIOVISUAL WORK, COPY, ETC.—The

25 terms ‘audiovisual work’, ‘copy’, ‘copyright owner’,


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H.L.C.

1 ‘motion picture’, and ‘transmit’ have, respectively,

2 the meanings given those terms in section 101 of

3 title 17.

4 ‘‘(2) AUDIOVISUAL RECORDING DEVICE.—The

5 term ‘audiovisual recording device’ means a digital

6 or analog photographic or video camera, or any

7 other technology or device capable of enabling the

8 recording or transmission of a copyrighted motion

9 picture or other audiovisual work, or any part there10 of, regardless of whether audiovisual recording is the

11 sole or primary purpose of the device.

12 ‘‘(3) MOTION PICTURE THEATER.—The term

13 ‘motion picture theater’ means a movie theater,

14 screening room, or other venue that is being used

15 primarily for public performance of a motion pic16 ture.’’.

17 (2) CONFORMING AMENDMENT.—The table of

18 sections for chapter 113 of title 18, United States

19 Code, is amended by inserting after the item relating

20 to section 2319A the following:

‘‘2319B. Unauthorized recording of motion pictures in a motion picture theater.’’.

21 SEC. 9. SENSE OF THE CONGRESS ON NEED TO TAKE STEPS

22 TO PREVENT ILLEGAL ACTIVITY ON PEER-TO23 PEER SERVICES.

24 (a) FINDINGS.—The Congress finds as follows:


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H.L.C.

1 (1) The most popular publicly accessible peer2 to-peer file sharing software programs combined

3 have been downloaded worldwide over 600,000,000

4 times.

5 (2) The vast majority of software products, in6 cluding peer-to-peer technology, do not pose an in7 herent risk. Responsible persons making software

8 products should be encouraged and commended for

9 the due diligence and reasonable care they take in10 cluding by providing instructions, relevant informa11 tion in the documentation, disseminating patches,

12 updates, and other appropriate modifications to the

13 software.

14 (3) Massive volumes of illegal activity, including

15 the distribution of child pornography, viruses, and

16 confidential personal information, and copyright in17 fringement occur on publicly accessible peer-to-peer

18 file sharing services every day. Some publicly acces19 sible peer-to-peer file sharing services expose con20 sumers, particularly children, to serious risks, in21 cluding legal liability, loss of privacy, threats to com22 puter security, and exposure to illegal and inappro23 priate material.

24 (4) The following studies and reports dem25 onstrate that pornography, including child pornogVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00064 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 raphy, is prevalent on publicly available peer-to-peer

2 file sharing services, and children are regularly ex3 posed to pornography when using publicly available

4 peer-to-peer file-sharing services:

5 (A) A February 2004 report by the Gen6 eral Accounting Office (GAO) states that chil7 dren using peer-to-peer file-sharing technology

8 can be exposed inadvertently to pornographic

9 content. When searching for popular terms like

10 ‘‘Britney’’, ‘‘Pokemon’’, and ‘‘Olsen twins’’,

11 more than half the files retrieved were porno12 graphic, including 8 percent containing child

13 pornography or child erotica.

14 (B) The GAO also found that when

15 searching the most popular peer-to-peer service

16 for keywords known to be associated with child

17 pornography, 42 percent of the returns (543

18 out of 1,286 files) were associated with images

19 of child pornography.

20 (C) From 2001, when the National Center

21 for Missing and Exploited Children began to

22 track peer-to-peer child pornography, until

23 2002, the number of reported incidents in24 creased over 400 percent—compared to an in25 crease of less than 100 percent for chat rooms,


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H.L.C.

1 less than 32 percent for websites, and no in2 crease for news groups and bulletin boards.

3 (5) The full potential of peer-to-peer technology

4 to benefit consumers has yet to be realized and will

5 not be achieved until these problems are adequately

6 addressed.

7 (6) To date, the businesses that run publicly ac8 cessible file-sharing services have refused or failed to

9 voluntarily and sufficiently address these problems.

10 (7) Many users of publicly available peer-to11 peer file-sharing services are drawn to these systems

12 by the lure of obtaining ‘‘free’’ music and movies.

13 (8) While some users use parental controls to

14 protect children from pornography available on the

15 Internet and search engines, not all such controls

16 work on publicly accessible peer-to-peer networks.

17 (9) Businesses that run publicly accessible peer18 to-peer file sharing services have openly acknowl19 edged, and numerous studies and reports have estab20 lished, that these services facilitate and profit from

21 massive amounts of copyright infringement, causing

22 enormous damage to the economic well-being of the

23 copyright industries whose works are being illegally

24 ‘‘shared’’ and downloaded.


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H.L.C.

1 (10) The legitimate digital music marketplace

2 offers consumers a wide and growing array of

3 choices for obtaining music legally, without exposure

4 to the risks posed by publicly accessible peer-to-peer

5 file sharing services.

6 (11) The Federal Trade Commission issued a

7 Consumer Alert in July of 2003 warning consumers

8 that some file-sharing services contain damaging vi9 ruses and worms and, without the computer user’s

10 knowledge or consent, install spyware to monitor a

11 user’s browsing habits and send data to third parties

12 or automatically open network connections.

13 (12) Publicly available peer-to-peer file-sharing

14 services can and should adopt reasonable business

15 practices and use technology in the marketplace to

16 address the existing risks posed to consumers by

17 their services and facilitate the legitimate use of

18 peer-to-peer file sharing technology and software.

19 (b) SENSE OF CONGRESS.—It is the sense of the

20 Congress that—

21 (1) responsible software developers should be

22 commended, recognized, and encouraged for their ef23 forts to protect consumers;

24 (2) currently the level of ongoing and persistent

25 illegal and dangerous activity on publicly accessible


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H.L.C.

1 peer-to-peer file sharing services is harmful to con2 sumers, minors, and the economy; and

3 (3) therefore, the Congress and the executive

4 branch should consider all appropriate measures to

5 protect consumers and children, and prevent such il6 legal activity.

7 SEC. 10. ENHANCEMENT OF CRIMINAL COPYRIGHT IN8 FRINGEMENT.

9 (a) CRIMINAL INFRINGEMENT.—Section 506 of title

10 17, United States Code, is amended—

11 (1) by amending subsection (a) to read as fol12 lows:

13 ‘‘(a) CRIMINAL INFRINGEMENT.—Any person who—

14 ‘‘(1) infringes a copyright willfully and for pur15 poses of commercial advantage or private financial

16 gain,

17 ‘‘(2) infringes a copyright willfully by the repro18 duction or distribution, including by the offering for

19 distribution to the public by electronic means, during

20 any 180-day period, of 1 or more copies or

21 phonorecords of 1 or more copyrighted works, which

22 have a total retail value of more than $1,000, or

23 ‘‘(3) infringes a copyright by the knowing dis24 tribution, including by the offering for distribution

25 to the public by electronic means, with reckless disVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00068 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 regard of the risk of further infringement, during

2 any 180-day period, of—

3 ‘‘(A) 1,000 or more copies or phonorecords

4 of 1 or more copyrighted works,

5 ‘‘(B) 1 or more copies or phonorecords of

6 1 or more copyrighted works with a total retail

7 value of more than $10,000, or

8 ‘‘(C) 1 or more copies or phonorecords of

9 1 or more copyrighted pre-release works, ’’; and

10 shall be punished as provided under section 2319 of title

11 18. For purposes of this subsection, evidence of reproduc12 tion or distribution of a copyrighted work, by itself, shall

13 not be sufficient to establish the necessary level of intent

14 under this subsection.

15 (2) by adding at the end the following:

16 ‘‘(g) DEFINITIONS.—In this section:

17 ‘‘(1) PRE-RELEASE WORK.—The term ‘pre-re18 lease work’ refers to a work protected under this

19 title which has a commercial and economic value and

20 which, at the time of the infringement, the defend21 ant knew or should have known that that the work

22 had not yet been made available by the copyright

23 owner to individual members of the general public in

24 copies or phonorecords for sale, license, or rental.


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H.L.C.

1 ‘‘(2) RETAIL VALUE.— The ‘retail value’ of a

2 copyrighted work is the retail price of that work in

3 the market in which it is sold. In the case of an in4 fringement of a copyright by distribution, if the re5 tail price does not adequately reflect the economic

6 value of the infringement, then the retail value may

7 be determined using other factors, including but not

8 limited to suggested retail price, wholesale price, re9 placement cost of the item, licensing, or distribution10 related fees.’’.

11 (b) PENALTIES.—Section 2319 of title 18, United

12 States Code, is amended—

13 (1) by redesignating subsections (d) and (e) as

14 subsections (e) and (f), respectively;

15 (2) by inserting after subsection (c) the fol16 lowing:

17 ‘‘(d) Any person who commits an offense under sec18 tion 506(a)(3) of title 17—

19 ‘‘(1) shall be imprisoned not more than 3 years,

20 or fined in the amount set forth in this title, or both,

21 or, if the offense was committed for purposes of

22 commercial advantage or private financial gain, im23 prisoned for not more than 5 years, or fined in the

24 amount set forth in this title, or both; and


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17

H.L.C.

1 ‘‘(2) shall, if the offense is a second or subse2 quent offense under paragraph (1), be imprisoned

3 not more than 6 years, or fined in the amount set

4 forth in this title, or both, or, if the offense was

5 committed for purposes of commercial advantage or

6 private financial gain, imprisoned for not more than

7 10 years, or fined in the amount set forth in this

8 title, or both.’’; and

9 (3) in subsection (f), as so redesignated—

10 (A) in paragraph (1), by striking ‘‘and’’

11 after the semicolon;

12 (B) in paragraph (2), by striking the pe13 riod and inserting ‘‘; and’’; and

14 (C) by adding at the end the following:

15 ‘‘(3) the term ‘financial gain’ has the meaning

16 given that term in section 101 (relating to defini17 tions) of title 17.’’.

18 (c) CIVIL REMEDIES FOR INFRINGEMENT OF A COM19 MERCIAL PRE-RELEASE COPYRIGHTED WORK.—Section

20 504(b) of title 17, United States Code, is amended—

21 (1) by striking ‘‘The copyright owner’’ and in22 serting the following:

23 ‘‘(1) IN GENERAL.—The copyright owner’’; and

24 (2) by adding at the end the following:


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H.L.C.

1 ‘‘(2) DAMAGES FOR PRE-RELEASE INFRINGE2 MENT.—

3 ‘‘(A) IN GENERAL.—In the case of any

4 pre-release work, actual damages shall be pre5 sumed conclusively to be no less than $10,000

6 per infringement, if a person—

7 ‘‘(i) distributes such work by making

8 it available on a computer network acces9 sible to members of the public; and

10 ‘‘(ii) knew or should have known that

11 the work was intended for commercial dis12 tribution.

13 ‘‘(B) DEFINITION.—For purposes of this

14 subsection, the term ‘pre-release work’ has the

15 meaning given that term in section 506(g). ’’.

16 SEC. 11. AMENDMENT OF FEDERAL SENTENCING GUIDE17 LINES REGARDING THE INFRINGEMENT OF

18 COPYRIGHTED WORKS AND RELATED

19 CRIMES.

20 (a) AMENDMENT TO THE SENTENCING GUIDE21 LINES.—Pursuant to its authority under section 994 of

22 title 28, United States Code, and in accordance with this

23 section, the United States Sentencing Commission shall

24 review and, if appropriate, amend the sentencing guide25 lines and policy statements applicable to persons convicted


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H.L.C.

1 of intellectual property rights crimes, including sections

2 2318, 2319, 2319A, 2319B, 2320 of title 18, United

3 States Code, and sections 506, 1201, and 1202 of title

4 17, United States Code.

5 (b) FACTORS.—In carrying out this section, the Sen6 tencing Commission shall—

7 (1) take all appropriate measures to ensure that

8 the sentencing guidelines and policy statements ap9 plicable to the offenses described in subsection (a)

10 are sufficiently stringent to deter and adequately re11 flect the nature of such offenses;

12 (2) consider whether to provide a sentencing en13 hancement for those convicted of the offenses de14 scribed in subsection (a) when the conduct involves

15 the display, performance, publication, reproduction,

16 or distribution of a copyrighted work before the time

17 when the copyright owner has authorized the dis18 play, performance, publication, reproduction, or dis19 tribution of the original work, whether in the media

20 format used by the infringing good or in any other

21 media format;

22 (3) consider whether the definition of

23 ‘‘uploading’’ contained in Application Note 3 to

24 Guideline 2B5.3 is adequate to address the loss atVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00073 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 tributable to people broadly distributing copyrighted

2 works over the Internet without authorization; and

3 (4) consider whether the sentencing guidelines

4 and policy statements applicable to the offenses de5 scribed in subsection (a) adequately reflect any harm

6 to victims from infringement in circumstances where

7 law enforcement cannot determine how many times

8 copyrighted material is reproduced or distributed.

9 (c) PROMULGATION.—The Commission may promul10 gate the guidelines or amendments under this section in

11 accordance with the procedures set forth in section 21(a)

12 of the Sentencing Act of 1987, as though the authority

13 under that Act had not expired.


4077A.AAU
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Chairman SENSENBRENNER. The Chair recognizes the gentleman 

from Texas, Mr. Smith, to strike the last word. 

Mr. SMITH. Mr. Chairman, I move to strike the last word. 

Chairman SENSENBRENNER. Gentleman’s recognized for 5 minutes. 

Mr. SMITH. Thank you, Mr. Chairman. 

First of all, I would like to thank the gentleman from California, 

Mr. Berman, for his contributions to this piece of legislation. This 

has been genuinely a cooperative effort, and I appreciate his support of this bill and perhaps his grudging support of the combination of this bill with the Family Movie Act. 

I would also like to thank Representative Forbes, who was here 

a minute ago, for working with MPAA in helping to narrow the 

focus of the bill which I think also improved it. 

Mr. Chairman, piracy of intellectual property over the Internet, 

especially on peer-to-peer networks, has reached alarming levels. 

Millions of pirated movies, music, software, game and other copyrighted files are now available for free download via certain peerto-peer networks. This piracy harms everyone, from those looking 

for legitimate sources of content to those who create it. 

I have heard from songwriters, video store owners, software publishers and games developers who feel the impact of such piracy 

every day. They have urged Congress to better educate the public 

about the harms of piracy while also warning and penalizing those 

who continue to steal from others. P-to-P technology is an essential 

development of our Nation’s high-tech economy. However, like all 

new technologies, it has been abused by those who want to commit 

crimes. 

This legislation addresses P-to-P piracy by better educating the 

public about copyright law, authorizing creation of a system to 

warn on-line users of potential infringement, increasing cooperation among Federal agencies and intellectual property owners, penalizing those who bring camcorders into movie theaters for the 

purpose of making pirated DVD, and assisting Federal law enforcement authorities in their efforts to investigate and prosecute intellectual property crimes. 

The Subcommittee on Courts, the Internet, and Intellectual Property reported this bill in March to the full Committee; and I will 

shortly offer a manager’s amendment to H.R. 4077 to make 

changes that have resulted from an ongoing series of discussions 

with interested parties. 

The key components of legislation include the development of a 

voluntary system for DOJ to warn Internet users of potentially illegal activity while protecting their privacy and addressing ISP cost 

concerns; a designation of dedicated intellectual property crime 

agents within DOJ, computer hacking and intellectual property 

sections who prosecute cybercrimes; and the creation of criminal 

penalties for those who go into movie theaters with camcorders to 

record new movies in order to create pirated DVDs. Finally, it has 

the creation of a new criminal penalties for those who wrongly 

make available over 1,000 copyrighted works for others to 

download. 

Mr. Chairman, the Internet has revolutionized how Americans 

locate information, shop, and communicate. We must not let new 

Internet technologies become a haven for criminals. H.R. 4077 will 

76

accomplish this, and I would urge the Members of the Committee 

to support it, and I yield back the balance of my time. 

Chairman SENSENBRENNER. Does the gentleman from California, 

Mr. Berman, wish to add to this discussion? 

Mr. BERMAN. I do, Mr. Chairman. 

Chairman SENSENBRENNER. He is recognized for 5 minutes. 

Mr. BERMAN. Mr. Chairman, while I was proud to work with my 

friend, the Chairman of the Subcommittee, on H.R. 4077 as originally introduced and as passed by our Subcommittee, I have some 

reservations about the substitute which will be offered later in this 

markup. I will defer an explanation of these reservations until the 

substitute is offered, but I will ask my colleagues to reject the substitute and vote to report the bill as reported by the Subcommittee. 

Copyright piracy poses a grave threat to the livelihood of all 

copyright creators. On just one peer-to-peer file swapping network 

a relatively small number of people are at this very moment likely 

offering for distribution more than 850 million mostly infringing 

files to be downloaded by millions of strangers. Web sites, Internet 

relay chat channels, file transfer protocol sites remain havens for 

theft of pre-released movies music and software. 

In the case of pre-released movies, copies often originate with 

surreptitious camcorders in public theaters. One Yahoo-run affinity 

group alone hosts almost 50,000 pages of copyright-infringing needlework designs. 

I think an objective view understands that the solution to copyright piracy involves many elements, most of which don’t require 

congressional involvement. Customer, consumers must have convenient access to legal content, copyright owners must utilize technology both to protect their creations and thwart piracy. Copyright 

owners must continue to educate consumers about the importance 

of copyright protection and use civil suits to protect their legal 

rights. 

Criminal prosecutions also play an important role, particularly in 

deterring egregious infringements by otherwise judgment-proof infringers. While several piracy rings have recently been prosecuted, 

there has been no prosecutions against egregious uploaders on public P-to-P networks. In examining why, it has become clear that 

law enforcement authorities need additional resources, statutory 

authority and incentives to make them a productive participant in 

the anti-piracy battle. H.R. 4077 is designed to fulfill these needs 

and therefore is one part of the overall solution to copyright piracy. 

I want to mention just a couple of its provisions. 

Section 10 insures that criminal copyright prosecutions can be 

brought against copyright infringers who knowingly distribute massive amounts of copyrighted works or enormously valuable copyrighted works with reckless disregard of the risk of future infringement. As a result of this provision, it will be clear that criminal 

prosecutions can be brought against an infringer who knowingly 

uploads onto public P-to-P networks 1,000 or more copyrighted 

works, a copyrighted work worth more than $10,000, or a pre-released copyrighted work. The high threats are threshold and mens 

rea standards included in section 10 ensure that only the most 

egregious infringers are subject to criminal liability. 

Section 8 clarifies it is a felony to surreptitiously record a movie 

in the theater. Organized piracy rings distribute copies of these 

77

surreptitious recordings on-line or on the street as pirate DVDs, 

video disks or VHS tapes. 

Section 6, which enables criminal prosecution of copyright infringement involving unregistered works, is important to photographers and other individual copyright owners who cannot practically register their copyrights in those images. Without the threat 

of statutory damages, which they can’t get with unregistered 

works, there is no credible deterrent to infringement. Criminal 

prosecution would help remedy this situation. 

And, finally, section 3 directs the FBI to develop a program to 

deter copyright infringement on-line and to facilitate sharing of information about on-line copyright infringements among law enforcement ISPs and copyright owners. 

Mr. Chairman, taken together, the provisions of H.R. 4077 as reported by the Subcommittee advance important objectives and I encourage my colleagues to stick with this version and report it favorably. I yield back. 

Chairman SENSENBRENNER. Without objection, all Members may 

put opening statements in the record at this point in time. 

The Chair recognizes the gentleman from Texas, Mr. Smith, for 

purposes of offering an amendment in the nature of a substitute. 

Mr. SMITH. Mr. Chairman, I have an amendment at the desk. 

Chairman SENSENBRENNER. The clerk will report the amendment. 

The CLERK. Amendment in the nature of a substitute to H.R. 

4077 offered by Mr. Smith of Texas. 

Chairman SENSENBRENNER. Without objection, the amendment is 

considered as read and open for amendment at any point; and the 

gentleman from Texas, Mr. Smith, is recognized for 5 minutes. 

[The amendment follows:]

78 H.L.C.

AMENDMENT IN THE NATURE OF A SUBSTITUTE

TO H.R. 4077

OFFERED BY MR. SMITH OF TEXAS

Strike all after the enacting clause and insert the

following:

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Piracy Deterrence and

3 Education Act of 2004’’.

4 SEC. 2. FINDINGS.

5 The Congress finds as follows:

6 (1) The Internet, while changing the way our

7 society communicates, has also changed the nature

8 of many crimes, including the theft of intellectual

9 property.

10 (2) Trafficking in infringing copyrighted works

11 through increasingly sophisticated electronic means,

12 including peer-to-peer file trading networks, Internet

13 chat rooms, and news groups, threatens lost jobs,

14 lost income for creators, lower tax revenue, and

15 higher prices for honest purchasers.

16 (3) The most popular peer-to-peer file trading

17 software programs have been downloaded by com18 puter users over 600,000,000 times. At any one time


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H.L.C.

1 there are over 3,000,000 users simultaneously using

2 just one of these services. Each month, on average,

3 over 2,300,000,000 digital-media files are trans4 ferred among users of peer-to-peer systems.

5 (4) Many computer users simply believe that

6 they will not be caught or prosecuted for their con7 duct.

8 (5) The security and privacy threats posed by

9 certain peer-to-peer networks extend beyond users

10 inadvertently enabling a hacker to access files. Mil11 lions of copies of one of the most popular peer-to12 peer networks contain software that could allow an

13 independent company to take over portions of users’

14 computers and Internet connections and has the ca15 pacity to keep track of users’ online habits.

16 (6) In light of these considerations, Federal law

17 enforcement agencies should actively pursue crimi18 nals who steal the copyrighted works of others, and

19 prevent such activity through enforcement and

20 awareness. The public should be educated about the

21 security and privacy risks associated with being con22 nected to certain peer-to-peer networks.


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1 SEC. 3. VOLUNTARY PROGRAM OF DEPARTMENT OF JUS2 TICE.

3 (a) VOLUNTARY PROGRAM.—The Attorney General is

4 authorized to establish a program under which the De5 partment of Justice, in cases where persons who are sub6 scribers of Internet service providers appear to be engag7 ing in copyright infringing conduct in the course of using

8 that Internet service, would send to the Internet Service

9 providers notices that warn such persons of the penalties

10 for such copyright infringement. The Internet service pro11 viders may forward the notices to such persons.

12 (b) LIMITATIONS ON PROGRAM.—

13 (1) EXTENT AND LENGTH OF PROGRAM.—The

14 program under subsection (a) shall terminate at the

15 end of the 18-month period beginning on the date of

16 the enactment of this Act and shall be limited to not

17 more than 10,000 notices.

18 (2) PRIVACY PROTECTIONS.—No Internet serv19 ice provider that receives a notice from the Depart20 ment of Justice under subsection (a) may disclose to

21 the Department any identifying information about

22 the subscriber that is the subject of the notice except

23 pursuant to court order or other applicable legal

24 process that requires such disclosure.

25 (c) REIMBURSEMENT OF INTERNET SERVICE PRO26 VIDERS.—The Department of Justice shall reimburse


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1 Internet Service providers for all reasonable costs incurred

2 by such service providers in forwarding notices under sub3 section (a).

4 (d) REPORTS TO CONGRESS.—The Attorney General

5 shall submit to the Congress a report on the program es6 tablished under subsection (a) both at the time the pro7 gram is initiated and at the conclusion of the program.

8 SEC. 4. DESIGNATION AND TRAINING OF AGENTS IN COM9 PUTER HACKING AND INTELLECTUAL PROP10 ERTY UNITS.

11 (a) DESIGNATION OF AGENTS IN CHIPS UNITS.—

12 The Attorney General shall ensure that any unit in the

13 Department of Justice responsible for investigating com14 puter hacking or responsible for investigating intellectual

15 property crimes is assigned at least one agent to support

16 such unit for the purpose of investigating crimes relating

17 to the theft of intellectual property.

18 (b) TRAINING.—The Attorney General shall ensure

19 that each agent assigned under subsection (a) has received

20 training in the investigation and enforcement of intellec21 tual property crimes.

22 SEC. 5. EDUCATION PROGRAM.

23 (a) ESTABLISHMENT.—There shall be established

24 within the Office of the Associate Attorney General of the

25 United States an Internet Use Education Program.


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1 (b) PURPOSE.—The purpose of the Internet Use

2 Education Program shall be to—

3 (1) educate the general public concerning the

4 value of copyrighted works and the effects of the

5 theft of such works on those who create them; and

6 (2) educate the general public concerning the

7 privacy, security, and other risks of using the Inter8 net to obtain illegal copies of copyrighted works.

9 (c) SECTOR SPECIFIC MATERIALS.—The Internet

10 Use Educational Program shall, to the extent appropriate,

11 develop materials appropriate to Internet users in dif12 ferent sectors of the general public where criminal copy13 right infringement is a concern. The Attorney General

14 shall consult with appropriate interested parties in devel15 oping such sector-specific materials.

16 (d) CONSULTATIONS.—The Attorney General shall

17 consult with the Register of Copyrights and the Secretary

18 of Commerce in developing the Internet Use Education

19 Program under this section.

20 (e) PROHIBITION ON USE OF CERTAIN FUNDS.—The

21 program created under this section shall not use funds or

22 resources of the Department of Justice allocated for crimi23 nal investigation or prosecution.

24 (f) ADDITIONAL PROHIBITION ON THE USE OF

25 FUNDS.—The program created under this section shall


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1 not use any funds or resources of the Department of Jus2 tice allocated for the Civil Rights Division of the Depart3 ment, including any funds allocated for the enforcement

4 of civil rights or the Voting Rights Act of 1965.

5 SEC. 6. ACTIONS BY THE GOVERNMENT OF THE UNITED

6 STATES.

7 Section 411(a) of title 17, United States Code, is

8 amended in the first sentence by striking ‘‘Except for’’

9 and inserting ‘‘Except for an action brought by the Gov10 ernment of the United States or by any agency or instru11 mentality thereof, or’’ .

12 SEC. 7. AUTHORIZED APPROPRIATIONS.

13 There are authorized to be appropriated to the De14 partment of Justice for fiscal year 2005 not less than

15 $15,000,000 for the investigation and prosecution of viola16 tions of title 17, United States Code.

17 SEC. 8. CRIMINAL PENALTIES FOR UNAUTHORIZED RE18 CORDING OF MOTION PICTURES IN A MO19 TION PICTURE EXHIBITION FACILITY.

20 (a) IN GENERAL.—Chapter 113 of title 18, United

21 States Code, is amended by adding after section 2319A

22 the following new section:


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1 ‘‘§ 2319B. Unauthorized recording of motion pictures

2 in a motion picture exhibition facility

3 ‘‘(a) OFFENSE.—Any person who, without the au4 thorization of the copyright owner, knowingly uses or at5 tempts to use an audiovisual recording device to transmit

6 or make a copy of a motion picture or other audiovisual

7 work protected under title 17, or any part thereof, from

8 a performance of such work in a motion picture exhibition

9 facility, shall—

10 ‘‘(1) be imprisoned for not more than 3 years,

11 fined under this title, or both; or

12 ‘‘(2) if the offense is a second or subsequent of13 fense, be imprisoned for no more than 6 years, fined

14 under this title, or both.

15 The possession by a person of an audiovisual recording

16 device in a motion picture exhibition facility may be con17 sidered as evidence in any proceeding to determine wheth18 er that person committed an offense under this subsection,

19 but shall not, by itself, be sufficient to support a conviction

20 of that person for such offense.

21 ‘‘(b) FORFEITURE AND DESTRUCTION.—When a per22 son is convicted of an offense under subsection (a), the

23 court in its judgment of conviction shall, in addition to

24 any penalty provided, order the forfeiture and destruction

25 or other disposition of all unauthorized copies of motion

26 pictures or other audiovisual works protected under title


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1 17, or parts thereof, and any audiovisual recording devices

2 or other equipment used in connection with the offense.

3 ‘‘(c) AUTHORIZED ACTIVITIES.—This section does

4 not prevent any lawfully authorized investigative, protec5 tive, or intelligence activity by an officer, agent, or em6 ployee of the United States, a State, or a political subdivi7 sion of a State, or by a person acting under a contract

8 with the United States, a State, or a political subdivision

9 of a State.

10 ‘‘(d) IMMUNITY FOR THEATERS AND AUTHORIZED

11 PERSONS.—With reasonable cause, the owner or lessee of

12 a motion picture facility where a motion picture is being

13 exhibited, the authorized agent or employee of such owner

14 or lessee, the licensor of the motion picture being exhib15 ited, or the agent or employee of such licensor—

16 ‘‘(1) may detain, in a reasonable manner and

17 for a reasonable time, any person suspected of com18 mitting an offense under this section for the purpose

19 of questioning that person or summoning a law en20 forcement officer; and

21 ‘‘(2) shall not be held liable in any civil or

22 criminal action by reason of a detention under para23 graph (1).

24 ‘‘(e) VICTIM IMPACT STATEMENT.—


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1 ‘‘(1) IN GENERAL.—During the preparation of

2 the presentence report under rule 32(c) of the Fed3 eral Rules of Criminal Procedure, victims of an of4 fense under this section shall be permitted to submit

5 to the probation officer a victim impact statement

6 that identifies the victim of the offense and the ex7 tent and scope of the injury and loss suffered by the

8 victim, including the estimated economic impact of

9 the offense on that victim.

10 ‘‘(2) CONTENTS.—A victim impact statement

11 submitted under this subsection shall include—

12 ‘‘(A) producers and sellers of legitimate

13 works affected by conduct involved in the of14 fense;

15 ‘‘(B) holders of intellectual property rights

16 in the works described in subparagraph (A);

17 and

18 ‘‘(C) the legal representatives of such pro19 ducers, sellers, and holders.

20 ‘‘(f) DEFINITIONS.—In this section:

21 ‘‘(1) AUDIOVISUAL WORK, COPY, ETC.—The

22 terms ‘audiovisual work’, ‘copy’, ‘copyright owner’,

23 ‘motion picture’, and ‘transmit’ have, respectively,

24 the meanings given those terms in section 101 of

25 title 17.


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1 ‘‘(2) AUDIOVISUAL RECORDING DEVICE.—The

2 term ‘audiovisual recording device’ means a digital

3 or analog photographic or video camera, or any

4 other technology or device capable of enabling the

5 recording or transmission of a copyrighted motion

6 picture or other audiovisual work, or any part there7 of, regardless of whether audiovisual recording is the

8 sole or primary purpose of the device.

9 ‘‘(3) MOTION PICTURE EXHIBITION FACILITY.—

10 The term ‘motion picture exhibition facility’ means

11 a movie theater, screening room, or other venue that

12 is being used primarily for the exhibition of a copy13 righted motion picture, if such exhibition is open to

14 the public or is made to an assembled group of view15 ers outside of a normal circle of a family and its so16 cial acquaintances.

17 ‘‘(g) STATE LAW NOT PREEMPTED.—Nothing in this

18 section may be construed to annul or limit any rights or

19 remedies under the laws of any State.’’.

20 (b) CLERICAL AMENDMENT.—The table of sections

21 at the beginning of chapter 113 of title 18, United States

22 Code, is amended by inserting after the item relating to

23 section 2319A the following:

‘‘2319B. Unauthorized recording of motion pictures in a motion picture exhibition facility.’’.


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1 SEC. 9. SENSE OF THE CONGRESS ON NEED TO TAKE STEPS

2 TO PREVENT ILLEGAL ACTIVITY ON PEER-TO3 PEER SERVICES.

4 (a) FINDINGS.—The Congress finds as follows:

5 (1) The most popular publicly accessible peer6 to-peer file sharing software programs combined

7 have been downloaded worldwide over 600,000,000

8 times.

9 (2) The vast majority of software products, in10 cluding peer-to-peer technology, do not pose an in11 herent risk. Responsible persons making software

12 products should be encouraged and commended for

13 the due diligence and reasonable care they take in14 cluding by providing instructions, relevant informa15 tion in the documentation, disseminating patches,

16 updates, and other appropriate modifications to the

17 software.

18 (3) Massive volumes of illegal activity, including

19 the distribution of child pornography, viruses, and

20 confidential personal information, and copyright in21 fringement occur on publicly accessible peer-to-peer

22 file sharing services every day. Some publicly acces23 sible peer-to-peer file sharing services expose con24 sumers, particularly children, to serious risks, in25 cluding legal liability, loss of privacy, threats to comVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00088 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 puter security, and exposure to illegal and inappro2 priate material.

3 (4) Several studies and reports demonstrate

4 that pornography, including child pornography, is

5 prevalent on publicly available peer-to-peer file shar6 ing services, and children are regularly exposed to

7 pornography when using such peer-to-peer file shar8 ing services.

9 (5) The full potential of peer-to-peer technology

10 to benefit consumers has yet to be realized and will

11 not be achieved until these problems are adequately

12 addressed.

13 (6) To date, the businesses that run publicly ac14 cessible file-sharing services have refused or failed to

15 voluntarily and sufficiently address these problems.

16 (7) Many users of publicly available peer-to17 peer file-sharing services are drawn to these systems

18 by the lure of obtaining ‘‘free’’ music and movies.

19 (8) While some users use parental controls to

20 protect children from pornography available on the

21 Internet and search engines, not all such controls

22 work on publicly accessible peer-to-peer networks.

23 (9) Businesses that run publicly accessible peer24 to-peer file sharing services have openly acknowl25 edged, and numerous studies and reports have estabVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00089 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 lished, that these services facilitate and profit from

2 massive amounts of copyright infringement, causing

3 enormous damage to the economic well-being of the

4 copyright industries whose works are being illegally

5 ‘‘shared’’ and downloaded.

6 (10) The legitimate digital music marketplace

7 offers consumers a wide and growing array of

8 choices for obtaining music legally, without exposure

9 to the risks posed by publicly accessible peer-to-peer

10 file sharing services.

11 (11) The Federal Trade Commission issued a

12 Consumer Alert in July of 2003 warning consumers

13 that some file-sharing services contain damaging vi14 ruses and worms and, without the computer user’s

15 knowledge or consent, install spyware to monitor a

16 user’s browsing habits and send data to third parties

17 or automatically open network connections.

18 (12) Publicly available peer-to-peer file-sharing

19 services can and should adopt reasonable business

20 practices and use technology in the marketplace to

21 address the existing risks posed to consumers by

22 their services and facilitate the legitimate use of

23 peer-to-peer file sharing technology and software.

24 (b) SENSE OF CONGRESS.—It is the sense of the

25 Congress that—


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1 (1) responsible software developers should be

2 commended, recognized, and encouraged for their ef3 forts to protect consumers;

4 (2) currently the level of ongoing and persistent

5 illegal and dangerous activity on publicly accessible

6 peer-to-peer file sharing services is harmful to con7 sumers, minors, and the economy; and

8 (3) therefore, the Congress and the executive

9 branch should consider all appropriate measures to

10 protect consumers and children, and prevent such il11 legal activity.

12 SEC. 10. ENHANCEMENT OF CRIMINAL COPYRIGHT IN13 FRINGEMENT.

14 (a) CRIMINAL INFRINGEMENT.—Section 506 of title

15 17, United States Code, is amended—

16 (1) by amending subsection (a) to read as fol17 lows:

18 ‘‘(a) CRIMINAL INFRINGEMENT.—Any person who—

19 ‘‘(1) infringes a copyright willfully and for pur20 poses of commercial advantage or private financial

21 gain,

22 ‘‘(2) infringes a copyright willfully by the repro23 duction or distribution, including by the offering for

24 distribution to the public by electronic means, during

25 any 180-day period, of 1 or more copies or


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1 phonorecords of 1 or more copyrighted works, which

2 have a total retail value of more than $1,000, or

3 ‘‘(3) infringes a copyright by the knowing dis4 tribution, including by the offering for distribution

5 to the public by electronic means, with reckless dis6 regard of the risk of further infringement, during

7 any 180-day period, of—

8 ‘‘(A) 1,000 or more copies or phonorecords

9 of 1 or more copyrighted works,

10 ‘‘(B) 1 or more copies or phonorecords of

11 1 or more copyrighted works with a total retail

12 value of more than $10,000, or

13 ‘‘(C) 1 or more copies or phonorecords of

14 1 or more copyrighted pre-release works,’’; and

15 shall be punished as provided under section 2319 of title

16 18. For purposes of this subsection, evidence of reproduc17 tion or distribution of a copyrighted work, by itself, shall

18 not be sufficient to establish the necessary level of intent

19 under this subsection.

20 (2) by adding at the end the following:

21 ‘‘(g) LIMITATION ON LIABILITY OF SERVICE PRO22 VIDERS.—No legal entity shall be liable for a violation of

23 subsection (a)(3) by reason of performing any function de24 scribed in subsection (a), (b), (c), or (d) of section 512

25 if such legal entity would not be liable for monetary relief


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1 under section 512 by reason of performing such function.

2 Except for purposes of determining whether an entity

3 qualifies for the limitation on liability under subsection

4 (a)(3) of this section, the legal conclusion of whether an

5 entity qualifies for a limitation on liability under section

6 512 shall not be considered in a judicial determination of

7 whether the entity violates subsection (a) of this section.

8 ‘‘(h) DEFINITIONS.—In this section:

9 ‘‘(1) PRE-RELEASE WORK.—The term ‘pre-re10 lease work’ refers to a work protected under this

11 title which has a commercial and economic value and

12 which, at the time of the act of infringement that is

13 the basis for the offense under subsection (a)(3), the

14 defendant knew or should have known had not yet

15 been made available by the copyright owner to indi16 vidual members of the general public in copies or

17 phonorecords for sale, license, or rental.

18 ‘‘(2) RETAIL VALUE.— The ‘retail value’ of a

19 copyrighted work is the retail price of that work in

20 the market in which it is sold. In the case of an in21 fringement of a copyright by distribution, if the re22 tail price does not adequately reflect the economic

23 value of the infringement, then the retail value may

24 be determined using other factors, including but not

25 limited to suggested retail price, wholesale price, reVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00093 Fmt 6659 Sfmt 6601 E:\HR\OC\HR700.XXX HR700

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1 placement cost of the item, licensing, or distribution2 related fees.’’.

3 (b) PENALTIES.—Section 2319 of title 18, United

4 States Code, is amended—

5 (1) by redesignating subsections (d) and (e) as

6 subsections (e) and (f), respectively;

7 (2) by inserting after subsection (c) the fol8 lowing:

9 ‘‘(d) Any person who commits an offense under sec10 tion 506(a)(3) of title 17—

11 ‘‘(1) shall be imprisoned not more than 3 years,

12 or fined in the amount set forth in this title, or both,

13 or, if the offense was committed for purposes of

14 commercial advantage or private financial gain, im15 prisoned for not more than 5 years, or fined in the

16 amount set forth in this title, or both; and

17 ‘‘(2) shall, if the offense is a second or subse18 quent offense under paragraph (1), be imprisoned

19 not more than 6 years, or fined in the amount set

20 forth in this title, or both, or, if the offense was

21 committed for purposes of commercial advantage or

22 private financial gain, imprisoned for not more than

23 10 years, or fined in the amount set forth in this

24 title, or both.’’; and

25 (3) in subsection (f), as so redesignated—


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H.L.C.

1 (A) in paragraph (1), by striking ‘‘and’’

2 after the semicolon;

3 (B) in paragraph (2), by striking the pe4 riod and inserting ‘‘; and’’; and

5 (C) by adding at the end the following:

6 ‘‘(3) the term ‘financial gain’ has the meaning

7 given that term in section 101 (relating to defini8 tions) of title 17.’’.

9 (c) CIVIL REMEDIES FOR INFRINGEMENT OF A COM10 MERCIAL PRE-RELEASE COPYRIGHTED WORK.—Section

11 504(b) of title 17, United States Code, is amended—

12 (1) by striking ‘‘The copyright owner’’ and in13 serting the following:

14 ‘‘(1) IN GENERAL.—The copyright owner’’; and

15 (2) by adding at the end the following:

16 ‘‘(2) DAMAGES FOR PRE-RELEASE INFRINGE17 MENT.—

18 ‘‘(A) IN GENERAL.—In the case of any

19 pre-release work, actual damages shall be pre20 sumed conclusively to be no less than $10,000

21 per infringement, if a person—

22 ‘‘(i) distributes such work by making

23 it available on a computer network acces24 sible to members of the public; and


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1 ‘‘(ii) knew or should have known that

2 the work was intended for commercial dis3 tribution.

4 ‘‘(B) DEFINITION.—For purposes of this

5 subsection, the term ‘pre-release work’ has the

6 meaning given that term in section 506(h). ’’.

7 SEC. 11. AMENDMENT OF FEDERAL SENTENCING GUIDE8 LINES REGARDING THE INFRINGEMENT OF

9 COPYRIGHTED WORKS AND RELATED

10 CRIMES.

11 (a) AMENDMENT TO THE SENTENCING GUIDE12 LINES.—Pursuant to its authority under section 994 of

13 title 28, United States Code, and in accordance with this

14 section, the United States Sentencing Commission shall

15 review and, if appropriate, amend the sentencing guide16 lines and policy statements applicable to persons convicted

17 of intellectual property rights crimes, including sections

18 2318, 2319, 2319A, 2319B, 2320 of title 18, United

19 States Code, and sections 506, 1201, and 1202 of title

20 17, United States Code.

21 (b) FACTORS.—In carrying out this section, the Sen22 tencing Commission shall—

23 (1) take all appropriate measures to ensure that

24 the sentencing guidelines and policy statements ap25 plicable to the offenses described in subsection (a)


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1 are sufficiently stringent to deter and adequately re2 flect the nature of such offenses;

3 (2) consider whether to provide a sentencing en4 hancement for those convicted of the offenses de5 scribed in subsection (a) when the conduct involves

6 the display, performance, publication, reproduction,

7 or distribution of a copyrighted work before the time

8 when the copyright owner has authorized the dis9 play, performance, publication, reproduction, or dis10 tribution of the original work, whether in the media

11 format used by the infringing good or in any other

12 media format;

13 (3) consider whether the definition of

14 ‘‘uploading’’ contained in Application Note 3 to

15 Guideline 2B5.3 is adequate to address the loss at16 tributable to people broadly distributing copyrighted

17 works over the Internet without authorization; and

18 (4) consider whether the sentencing guidelines

19 and policy statements applicable to the offenses de20 scribed in subsection (a) adequately reflect any harm

21 to victims from infringement in circumstances where

22 law enforcement cannot determine how many times

23 copyrighted material is reproduced or distributed.

24 (c) PROMULGATION.—The Commission may promul25 gate the guidelines or amendments under this section in


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1 accordance with the procedures set forth in section 21(a)

2 of the Sentencing Act of 1987, as though the authority

3 under that Act had not expired.

4 SEC. 12. EXEMPTION FROM INFRINGEMENT FOR SKIPPING

5 AUDIO CONTENT IN MOTION PICTURES.

6 (a) SHORT TITLE.—This section may be cited as the

7 ‘‘Family Movie Act of 2004’’.

8 (b) EXEMPTION FROM COPYRIGHT AND TRADEMARK

9 INFRINGEMENT FOR SKIPPING OF AUDIO OR VIDEO CON10 TENT OF MOTION PICTURES.—Section 110 of title 17,

11 United States Code, is amended—

12 (1) in paragraph (9), by striking ‘‘and’’ after

13 the semicolon at the end;

14 (2) in paragraph (10), by striking the period at

15 the end and inserting ‘‘; and’’; and

16 (3) by inserting after paragraph (10) the fol17 lowing:

18 ‘‘(11)(A) the making of limited portions of

19 audio or video content of a motion picture impercep20 tible by or for the owner or other lawful possessor

21 of an authorized copy of that motion picture in the

22 course of viewing of that work for private use in a

23 household, by means of consumer equipment or serv24 ices that—


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1 ‘‘(i) are operated by an individual in that

2 household;

3 ‘‘(ii) serve only such household; and

4 ‘‘(iii) do not create a fixed copy of the al5 tered version; and

6 ‘‘(B) the use of technology to make such audio

7 or video content imperceptible, that does not create

8 a fixed copy of the altered version.’’.

9 (c) EXEMPTION FROM TRADEMARK INFRINGE10 MENT.—Section 32 of the Trademark Act of 1946 (15

11 U.S.C. 1114) is amended by adding at the end the fol12 lowing:

13 ‘‘(3)(A) Any person who engages in the conduct de14 scribed in paragraph (11) of section 110 of title 17,

15 United States Code, and who complies with the require16 ments set forth in that paragraph is not liable on account

17 of such conduct for a violation of any right under this Act.

18 ‘‘(B) A manufacturer, licensee, or licensor of tech19 nology that enables the making of limited portions of

20 audio or video content of a motion picture imperceptible

21 that is authorized under subparagraph (A) is not liable

22 on account of such manufacture or license for a violation

23 of any right under this Act. Such manufacturer, licensee,

24 or licensor shall ensure that the technology provides a

25 clear and conspicuous notice that the performance of the


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1 motion picture is altered from the performance intended

2 by the director or copyright holder of the motion picture.

3 ‘‘(C) Any manufacturer, licensee, or licensor of tech4 nology described in subparagraph (B) who fails to comply

5 with the requirement under subparagraph (B) to provide

6 notice with respect to a motion picture shall be liable in

7 a civil action brought by the copyright owner of the motion

8 picture that is modified by the technology in an amount

9 not to exceed $1,000 for each such motion picture.

10 ‘‘(D) The requirement under subparagraph (B) to

11 provide notice, and the provisions of subparagraph (C),

12 shall apply only with respect to technology manufactured

13 after the end of the 180-day period beginning on the date

14 of the enactment of the Family Movie Act of 2004.’’.

15 (d) DEFINITION.—In this section, the term ‘‘Trade16 mark Act of 1946’’ means the Act entitled ‘‘An Act to

17 provide for the registration and protection of trademarks

18 used in commerce, to carry out the provisions of certain

19 international conventions, and for other purposes’’, ap20 proved July 5, 1946 (15 U.S.C. 1051 et seq.).


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Mr. SMITH. Thank you, Mr. Chairman. This manager’s amendment that I offer now incorporates changes developed over the past 

few months in consultation with a wide variety of individuals, 

groups and Government agencies. These changes reflect a balance 

between the right of users and owners of intellectual property 

while ensuring that the Federal Government is able to pursue 

those who steal intellectual property. 

The changes incorporated in my manager amendment include ensuring that the section 3 provisions that authorize the Department 

of Justice to send warnings of potential piracy are voluntary for 

ISPs to communicate, ensuring that the same section 3 provisions 

protect consumer privacy, conforming the camcording provisions in 

section 8 to a Senate companion bill clarifying the references to 

Government studies in the sense of Congress resolution in section 

9, and adding a provision to section 10 to protect ISPs from facing 

criminal sanctions for their routine day-to-day activities. 

Mr. Chairman, I have also included in my manager’s amendment 

H.R. 4586, the ‘‘Family Movie Act of 2004,’’ which this Committee 

reported out last July on a bipartisan vote. Copyright enforcement 

is just as important as clarifying that copyright law cannot be used 

to limit a parent’s right to control what their children watch in the 

privacy of their own homes. 

I urge my colleagues to support this manager amendment, and 

I will yield back the balance of my time. 

Chairman SENSENBRENNER. Are there second degree amendments to the amendment in the nature of a substitute offered by 

the gentleman from Texas? 

Mr. BERMAN. Mr. Chairman. 

Chairman SENSENBRENNER. Gentleman from California, Mr. Berman. 

Mr. BERMAN. I move to strike the last word. 

Chairman SENSENBRENNER. Gentleman is recognized for 5 minutes. 

Mr. BERMAN. Mr. Chairman, I reluctantly oppose this amendment because it includes the text of H.R. 4586, sometimes referred 

to over here as the ‘‘ClearPlay’’ language. H.R. 4586 wrongfully 

takes sides in a private lawsuit, interferes with marketplace negotiations, impinges on artistic freedom and rights and is unnecessarily overbroad. 

I am not going to go through all of the arguments because we—

I made them in the last markup and I didn’t prevail. But I do want 

to focus on one particular aspect—two particular aspects of the 

problem here. During the full Committee markup of the bill, H.R. 

4586, the text of which is now included in this substitute amendment, the bill’s sponsors argued that those reasons that I gave 

were not compelling. But I don’t believe they ever responded to perhaps the most compelling argument; namely, the bill may accomplish the opposite of what they intend. H.R. 4586 only allows one 

movie filtering technology to go to market without fear of infringement liability. But it is not the technology that the bill’s sponsors 

intend to protect. 

Nissan Corporation, not ClearPlay, claims to have a patent over 

ClearPlay type technology. Nissan has sued ClearPlay for patent 

infringement, and there is some indication of the likelihood of their 

prevailing. Nissan recently convinced the huge company Thompson 

102

Electronics to pull its ClearPlay enabled DVD players from the retail market. If H.R. 4586 were to become law, Nissan Corporation 

may be the only company ultimately benefited. So what is Nissan 

Corporation? Nissan distributes a technology, called CustomPlay, 

that allows movie viewers to either reduce or enhance the level of 

violence, sex and profanity in a movie. The Nissan Web sites state 

that using CustomPlay technology, and I will repeat myself here, 

an adult can play a version of an adult individual video that 

seamlessly excludes content inconsistent with the viewer’s adult 

content preferences and that is presented at a level of explicitness 

preferred by the adult. Adult content categories are standardized 

and are organized into five groups, who, what, camera, position 

and fetish. In other words, H.R. 4586 exclusively protects from liability a technology, that among other things, enables viewers of 

pornographic movies to filter out the nonpornographic scenes. 

Though titled the Family Movie Act, H.R. 4586 may end up being 

called the Pornography Enhancement Act. This outcome is the opposite of what I think the sponsors intend. Thus, I would urge they 

pull their support for H.R. 4586 or explain to the Committee why 

they believe their bill won’t backfire on those they asked to vote for 

it. 

There is another reason to oppose H.R. 4586, and it involves the 

fact that despite its title it covers television programs as well as 

movies. This bill uses the definition of motion picture found in section 101 of the Copyright Act, and this definition clearly includes 

television programming. Serious consequences result from the fact 

that this bill covers television as well. One consequence is that the 

bill would imperil the future of free over the air television by enabling ad skipping. This bill allows a digital video recorder service 

like TiVo to develop a filter that strips all commercials during playback of TV shows. 

This is no far-fetched possibility. A DVR company called Replay 

TV was sued by owners of TV programming for providing an ad 

skipping feature in its DVR. Conversely, the bill protects from 

copyright liability a DVR service that replaces the original ads that 

came with the TV programming with its own advertisements. I understand that at least one DVR company may already be testing 

such technologies. What economic model will underwrite the creation of free broadcast programming if all commercials are 

stripped? 

Unfortunately, the inclusion of TV programs within the ambit of 

this bill does not appear to be an unintended consequence. The bill 

sponsors have refused the entreaties of both broadcasters and owners of TV programming to limit the applicability of the bill to prerecorded movies. Apparently the bill sponsors want the bill to cover 

TV. 

What is next? Recorded and broadcast music, video games, on 

line magazines, photographs? This is a slippery slope that the 

sponsors appear intent to slide down. 

I ask my colleagues to vote against the substitute because it includes this unwise language. 

Chairman SENSENBRENNER. Are there any second degree amendments to the amendment in the nature of a substitute offered by 

the gentleman from Texas? Gentlewoman from California, Ms. 

Lofgren. 

103

Ms. LOFGREN. I move to strike the last word. 

Chairman SENSENBRENNER. Gentlewoman is recognized for 5 

minutes. 

Ms. LOFGREN. I will not consume the entire 5 minutes. I did 

want to address the voluntary program that is included in the 

manager’s amendment. This was drafted late and I understand it 

was—the intent is to avoid the concern that was raised by the 

original draft and I appreciate that effort. However, in reaching out 

to the ISP world, there continues to be some concern about how 

this might in fact work. It is intended to be voluntary. If the ISP 

does not wish to forward the notices, they are under this act under 

no obligation to do so. But there is concern about this measure, and 

I am just hoping that between now and the floor that if we get additional comments or even suggestions that we might be open to 

considering them in the manager’s amendment. 

I am not going to vote against the provision as a consequence. 

I just wanted to raise the issue and it may be that the concerns 

are misplaced. I, you know, have not had enough time to really 

thoroughly explore that. 

Mr. SMITH. If the gentlewoman would yield. 

Ms. LOFGREN. I would. 

Mr. SMITH. I could go into greater detail but I will be happy to 

talk to you about that between now and the full floor. I think we 

can address all your concerns and hope to do so shortly. 

Ms. LOFGREN. I would welcome that opportunity, and as I say, 

the concerns may be misplaced, but I would like to explore them 

a little further, and I yield back. 

Mr. COBLE. Mr. Chairman. 

Chairman SENSENBRENNER. The gentlewoman yield back? The 

gentleman from North Carolina, Mr. Coble. 

Mr. COBLE. I thank the Chairman and I won’t use the entire 5 

minutes, Mr. Chairman. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. COBLE. But some people I think are concerned that the Family Movie Act, which is included as part of the substitute to Chairman Smith’s anti-piracy bill, could allow the use of technology to 

fast forward through publicly aired broadcasts, including commercial advertisements. I am going to probably go along the same trail 

that Mr. Berman charted earlier. Advertisements or commercials 

pay for many of these publicly aired broadcasts, and without these 

commercials I fear the broadcast would be obsolete or maybe even 

substandard. And I am concerned and I am going to put this to 

you, Mr. Smith, or to Mr. Berman, that the language in the Family 

Movie Act, would that—strike that. The language in the Family 

Movie Act should be amended to clarify that the publicly aired 

broadcast should not be changed by ClearPlay policy. Now what do 

you say to that? 

Mr. SMITH. If the gentleman from North Carolina would yield, I 

am happy that he brought that subject up. I too have heard some 

concerns expressed just in the last day or two, but quite frankly I 

think those concerns are unfounded and the fears are being raised 

by certain organizations who oppose the bill regardless of whether 

that would be the case or not. Let me say that the technology that 

we are talking about in this legislation does not in any shape or 

104

form address, cover commercials or other kinds of broadcasting 

that you are concerned about. In this case we are talking about 

technology that is used by parents, as you well know, to filter out 

violence and sex and so forth in a certain predesignated way. This 

bill does represent a delicate balance, so I wouldn’t want to see it 

amended. However, I would be happy to work with you as well as 

the gentleman from Florida, Mr. Feeney, on report language to reassure you all that that is not the intent of the Family Movie Act. 

Mr. BERMAN. Would the gentleman yield? 

Mr. SMITH. It is not my time. 

Mr. COBLE. Well, let me reclaim my time and then I will yield 

to Mr. Berman. 

Mr. BERMAN. Thank you. The language of the bill clearly applies. 

The language exempts from any copyright liability technology 

which seeks to make imperceptible portions of a filmed program. 

As I explained under section 101 of the Copyright Act, television 

programming is included in this definition. ‘‘imperceptible’’ doesn’t 

just apply to sex or violence. It applies to any frame, including commercials. You may want—you may name it a bill to do these 

things, but you rejected every amendment to limit it to those 

things, and as it stands this bill clearly applies to scenes having 

nothing to do with sex or nudity or violence and certainly includes 

commercials. So just on a factual basis I understand disagreeing 

with me and saying we wanted to include TV programming, but I 

think it is wrong to create an impression which is not the fact that 

this cannot apply to making imperceptible TV. 

Mr. COBLE. Let me reclaim my time to say this. Then I will yield 

to the gentleman. But let me say this first. I have a little discomfort right now. But Mr. Smith has very generously offered to work 

with Mr. Feeney, with me, I assume with Mr. Berman, Ms. Lofgren 

and others, prior to going to the floor. Did I read you correctly, Mr. 

Chairman? 

Mr. SMITH. Would the gentleman from North Carolina yield? 

Mr. COBLE. I will indeed. 

Mr. SMITH. I first of all thank him for his support, and I will reemphasize that we will work together on report language. I 

thought it was interesting what the gentleman from California just 

said. A few minutes ago he described this bill as on our side we 

call it the ClearPlay bill. Well, as the gentleman well knows, 

ClearPlay technology only addressed itself to approximately 1,600 

movies and those 1,600 movies in different configurations are in 

fact skipped over, their violent and offensive sexual parts are 

skipped over by ClearPlay. The gentleman himself said that that 

is what the nature of the bill did and it addressed it self on 

ClearPlay, which has nothing to do with the commercials or nothing to do with any other entity other than these particular movies. 

So I think the gentleman by his own words a while ago admitted 

that this legislation did not get into commercial. 

Mr. COBLE. Well, I promised the Chairman of the full Committee 

that I would not exhaust 5 minutes, so I am coming close to that 

right now. 

Chairman SENSENBRENNER. The gentleman gets a ‘‘get out of jail 

free’’ card. 

Mr. COBLE. Well, I have got a couple of seconds to go. 

105

Mr. BERMAN. No one has suggested that ClearPlay is either trying to enhance pornographic scenes or obliterate commercials. But 

this bill is not a bill limited to ClearPlay. First of all, it is not 

even——

Chairman SENSENBRENNER. The gentleman’s time has expired. 

Mr. BERMAN. I would ask unanimous consent that the gentleman 

have one additional minute. 

Chairman SENSENBRENNER. Without objection. 

Mr. BERMAN. If the gentleman would continue to yield to me, 

today is today. Who knows what ClearPlay or some other company 

will do tomorrow if this bill were to become law, and given that 

there is a patent infringement suit against ClearPlay it is not even 

clear if ClearPlay will be able to market this technology in the future. The company that claims to own the patent wants to market 

it in a very different way. You have got to deal with the language 

of the bill. It doesn’t limit it to violence, to sexual—to the sexual 

explicitness, or to nudity, or profanity. It is open ended. It simply 

says a technology which makes imperceptible these—any scenes 

from a movie is not a copyright violation. That can include when 

applied to TV programming the commercials. That is—I mean 

there really isn’t—can’t be any serious legal dispute about that. 

And if report language could overcome a statute, statutory language, I would feel much more comfortable. But report language 

can’t overcome the very explicit clear language of the text. You are 

going to have to change the language to——

Chairman SENSENBRENNER. The gentleman’s time has once again 

expired. 

Mr. GOODLATTE. Mr. Chairman. 

Chairman SENSENBRENNER. The gentleman from Virginia, Mr. 

Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. I will try to be brief. 

First of all, I want to thank Chairman Smith and Congressman 

Forbes for their work on this legislation, which is important and 

I support it. During the Subcommittee markup of the legislation I 

asked that the Subcommittee work to address the concerns that 

many Internet service providers had that they would be liable 

under the bill for their routine practices, and I am pleased to say 

the legislation today includes a provision that addresses these concerns. And I applaud the efforts of Chairman Sensenbrenner and 

Chairman Smith to address the concerns, while ensuring that 

strong protection of intellectual property rights continues. I know 

that it hasn’t addressed the concerns of everybody, and I hope that 

Chairman Smith will remain open to continue to work on that. But 

I think a lot of progress has been made and I am very appreciative 

of that. 

I do want to also thank Chairman Smith for his statement that 

he intends to make it clear that this bill will not allow for the addition of offensive content or other manipulation that would cause 

the films to be of that nature, and I hope that if there is a way 

to take care of it, either in report language or legislatively, we can 

continue to work on that subject, and I would be happy to yield to 

him if he wants to add anything more to this subject because I am 

supportive of his efforts to allow this type of work to be done. 

Ms. LOFGREN. Would the gentleman yield? 

Mr. GOODLATTE. I will yield to the gentlewoman from California. 

106

Ms. LOFGREN. Just on that point, I don’t think personally it is 

necessary to have such language because the—what we have 

talked about is not changing the fundamental copy protected work. 

What you are talking about, skipping, editing what is already there 

but not changing the fundamental copy protected work. And if you 

were to add material you would be altering the copy protected 

work. So I do think you can put it in, but I think it is superfluous. 

Really this is about—we have talked about pornography and the 

right of parents to protect. But I really see this as a much broader 

issue, the right of consumers to watch whatever they want and to 

use technology to assist you to watch whatever you want. And I 

don’t want to repeat the hearings and markups that we had in 

Subcommittee, but I think that that is kind of the, you know, beer 

and sandwich rule. I mean, if you can leave the room to go to the 

refrigerator and skip the part that you are skipping through the 

technology, why couldn’t you use technology to skip through it. 

So I just wanted to add, I understand the concern, but you would 

be altering the work if you were to add material and therefore, I 

think it is precluded under that. And I thank the gentleman for 

yielding. 

Mr. GOODLATTE. I thank the gentlewoman for her comments and 

yield to the gentleman from Texas. 

Mr. SMITH. I would like to—thank you. First of all, I would like 

to thank the gentleman from Virginia for his support and his comments on this legislation. And let me reiterate what I mentioned 

a while ago, that we will be happy to work you and I will enlarge 

the group to say Representative Lofgren on appropriate report language to try to satisfy your concerns. I thank you again for your 

support. 

Mr. GOODLATTE. Mr. Chairman, I yield back. 

Chairman SENSENBRENNER. Are there second degree amendments to the amendment in the nature of a substitute offered by 

the gentleman from Texas? If not, the question occurs on the Smith 

amendment in the nature of a substitute, as amended. All in favor 

will say aye. Opposed no. The ayes appear to have it. The ayes 

have it and the amendment in the nature of a substitute is agreed 

to. 

Without objection, the Subcommittee amendment in the nature 

of a substitute laid down as the base text, as amended by the 

Smith substitute, is adopted. Reporting quorum is present. The 

question occurs on the motion to report the bill H.R. 4——

Mr. BERMAN. Mr. Chairman, move to strike the last word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. BERMAN. I congratulate the Chairman of the Subcommittee 

on the passage of his substitute amendment. He has truly found a 

way to put me between a rock and a hard place. I am going to vote 

for this bill because I think of the importance of the provisions that 

we have worked on together and some of the adjustments you have 

made along the lines that Ms. Lofgren talked about. I had hoped 

that your own reflected judgment on the issue of the impact of the 

ClearPlay language on television programming will cause you to 

make changes between now and the floor in that language, and 

that the Senate in its great wisdom will deal with the rest of the 

ClearPlay language. 

107

Chairman SENSENBRENNER. The gentleman is given permission 

to revise and extend his remarks as it relates to the Senate. The 

gentleman yield back. 

Mr. BERMAN. I do. 

Chairman SENSENBRENNER. The reporting quorum is still 

present. The question occurs on the motion to report the bill H.R. 

4077 favorably, as amended. All in favor will say aye. Opposed no. 

The ayes appear to have it. The ayes have it and the motion to report favorably is agreed to. 

Without objection, the bill will be reported favorably to the 

House in the form of a single amendment in the nature of a substitute incorporating the amendments adopted here today. 

Without objection, the Chair is authorized to move to go to conference pursuant to House rules. Without objection, the staff is directed to make any technical and conforming changes and all Members will be given 2 days, as provided by House rules, in which to 

submit additional dissenting, supplemental or minority views. 

(109)

1 H.R. 4586 was reported by the Committee on the Judiciary on September 8, 2004. H.R. Rep. 

No. 670, 108th Cong., 2d Sess. (2004). 2 H.R. 4586, the ‘‘Family Movie Act of 2004,’’ 108th Cong., 2d Sess. (2004). The bill’s proponents refer to movies that have been sanitized of what they consider to be offensive content 

as ‘‘family friendly.’’ 3See Derivative Rights, Moral Rights, and Movie Filtering Technology: Hearing Before the 

Subcomm. on Courts, the Internet, and Intellectual Property of the House Comm. on the Judiciary, 108th Cong., 2d Sess. 86 (May 20, 2004) (written statement of Taylor Hackford, Directors 

Guild of America) [hereinafter May 20, 2004 Hearing]. 4Family Movie Act of 2004: Hearing on H.R. 4586 Before the Subcomm. on Courts, the Internet, and Intellectual Property of the House Comm. on the Judiciary, 108th Cong., 2d Sess. 67–

70 (June 17, 2004) (statement of Jack Valenti, President and Chief Executive Officer, Motion 

Picture Ass’n of America) [hereinafter H.R. 4586 Hearing]. 5Declaration of Dean Robert Rosen In Support of the Director Parties’ Opposition to 

ClearPlay, Inc.’s, Trilogy Studios, Inc.’s, and Family Shield Technologies, LLC’s Motion for Summary Judgment, Huntsman v. Soderbergh (D. Colo.) (02–M–1662) [hereinafter Rosen Decl.]. 6 H.R. 4586 Hearing at 6 (statement of Marybeth Peters, Register of Copyrights). 

MINORITY VIEWS

While we support the anti-piracy provisions of H.R. 4077, we oppose section 12 of the bill as reported. Section 12 adds to H.R. 4077 

the text of H.R. 4586, the ‘‘Family Movie Act of 2004.’’ 1 With the 

purported goal of sanitizing undesired content in motion pictures, 

section 12 immunizes from copyright and trademark liability any 

for-profit companies that develop movie-editing software to make 

content imperceptible without permission from the movies’ creators.2 Section 12 takes sides in a private lawsuit, interferes with 

marketplace negotiations, fails to achieve its goal, is unnecessary 

and overbroad, may increase the level of undesired content, and 

impinges on artistic freedom and rights. 

The bill’s proponents would have us believe that this bill is about 

whether children should be forced to watch undesired content, but 

it is not. The issue in this debate is who should make editorial decisions about what movie content children see: parents or a forprofit company. Supporters of section 12 believe companies should 

be allowed to do the editing for profit, and without permission of 

film creators, while opponents believe parents are the best qualified to know what their children should not see. The legislation 

would accomplish little beyond inflaming the debate over indecent 

content in popular media and interfering with marketplace solutions to parental concerns. 

That is why section 12 is opposed by: (1) entities concerned with 

the intellectual property and artistic rights of creators, including 

the Directors Guild of America,3 the Motion Picture Association of 

America,4 and the Dean of the UCLA Film School; 5 and (2) experts 

on copyright law, such as the Register of Copyrights.6

A. SECTION 12 WOULD IMPROPERLY INTERFERE WITH PENDING LITIGA- TION AND PREMATURELY TERMINATE MARKETPLACE NEGOTIATIONS

TO SETTLE THE DISPUTE

As a preliminary matter, the legislation is inappropriate because 

it not only addresses the primary issues in a pending lawsuit but 

110

7 Huntsman v. Soderbergh, No. 02–M–1662 (D. Colo. filed Aug. 29, 2002). The parties are 

awaiting a ruling on a motion for summary judgment. 8 Complaint and Jury Demand, Huntsman v. Soderbergh (D. Colo.) (No. 02–M–1662). 

9 ClearPlay has fourteen filter settings: (1) strong action violence, (2) gory/brutal violence, (3) 

disturbing images (i.e., macabre and bloody images), (4) sensual content, (5) crude sexual content, (6) nudity (including art), (7) explicit sexual situations, (8) vain references to deity, (9) 

crude language and humor, (10) ethnic and racial slurs, (11) cursing, (12) strong profanity, (13) 

graphic vulgarity, and (14) explicit drug use. 10See The Player Control Parties’ Opening Brief in Support of Their Motion for Summary 

Judgment, Huntsman v. Soderbergh (D. Colo.) (No. 02–M–1662). Section 106(2) of title 17, 

United States Code, gives to authors the exclusive right to ‘‘prepare derivative works based on 

the copyrighted work.’’ The Copyright Act further defines a ‘‘derivative work’’ as ‘‘a work based 

upon one or more preexisting works, such as a translation, musical arrangement, dramatization, 

fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work 

consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a 

whole, represent an original work of authorship, is a ‘derivative work.’ ’’ 17 U.S.C. § 101. 

The Register of Copyrights has testified as to her opinion about the copyright issues involved 

in the case. The Register believes that infringement of the exclusive right under 17 U.S.C. 

§ 106(2) to make derivative works requires creation of a fixed copy of a derivative work. H.R. 

4586 Hearing at 7. While the Register’s opinion clearly bears much authority, it is neither binding on a court nor dispositive of the pending lawsuit. Due to the novelty of both the legal and 

technological issues involved, the court may very well reach a different conclusion from that 

drawn by the Register.

also takes sides with one of the parties to that suit. The U.S. District Court for the District of Colorado currently has before it a 

case that began as an action brought by a company called Clean 

Flicks against directors of movies.7 Clean Flicks sought a declaratory judgment against several directors that its business practice of 

providing edited versions of movies to consumers does not violate 

the rights of those who own the copyrights and trademarks for the 

original movies.8

In the course of litigation, the number of parties expanded. Because Clean Flicks claimed that its conduct was lawful under the 

Copyright Act, the directors sought to join the movie studios in the 

dispute. In addition, a Utah-based company known as ClearPlay 

joined on the side of Clean Flicks. ClearPlay employees view motion pictures and create software filters that tag scenes they find 

offensive in each movie; this editing is done without notice to or 

permission from the copyright owners (the movie studios) or movie 

directors.9 When downloaded to a specially-adapted DVD player, 

the ClearPlay software filter instructs the player to ‘‘skip and 

mute’’ the tagged content when the affiliated DVD movie is played. 

Consumers who play a DVD they have rented or purchased would 

thus not see or hear the scenes that ClearPlay has tagged for filtering. 

The bill directly addresses copyright and trademark issues raised 

in the case and inappropriately takes the side of one party. First, 

the content creators allege in the lawsuit that ClearPlay makes derivative works in violation of the Copyright Act; in particular, they 

argue ClearPlay’s editing software violates their exclusive rights as 

movie copyright owners to make modifications or other derivations 

of the original movies.10

Though no court has ruled on this issue, the bill would assist 

ClearPlay by preemptively vitiating this legal claim. It would 

amend the law to state that certain technology which makes portions of motion picture content imperceptible during playback does 

not violate copyright law. While not benefitting Clean Flicks and 

certain other defendants, the bill is specifically designed to legalize 

ClearPlay technology. 

111

11See The Player Control Parties’ Opening Brief in Support of Their Motion for Summary 

Judgment, Huntsman v. Soderbergh (D. Colo.) (No. 02–M–1662). 12See 15 U.S.C. § 1125(a)(1). 13Despite the extremely complicated nature of these negotiations, they had proceeded quite 

far. In December 2003, the DGA agreed not to object under its collective bargaining agreement 

if the studios offered ClearPlay a license to utilize the edits contained in television and airplane 

versions of movies. The DGA believed this compromise was tolerable because a film’s director 

usually makes the necessary edits for television and airplane versions and is able to control the 

integrity of such edited versions. Over the course of the next several months, the studios conveyed an offer along these lines to ClearPlay. 

More recently, ClearPlay presented the studios with a counteroffer. The studios forwarded this 

counteroffer to the DGA for its response. In a May 29, 2004 response, the DGA relaxed certain 

limitations on a previous agreement to allow ClearPlay to license the television and airplane 

versions of movies. Rather than accept this offer, or present a good-faith counteroffer, ClearPlay 

apparently has enlarged its demands: (1) for movies where, no airplane or television version is 

available, it has sought the ability to edit them; and (2) with regard to films for which television 

or airplane versions have been made available, it is asking that it be able to make its own edits, 

rather than use the pre-existing edited versions.

Second, film directors claim that ClearPlay violates their trademark rights under section 43(a) of the Lanham Act.11 The directors 

allege that ClearPlay uses their trademarked names in a way that 

is likely to cause confusion as to the affiliation, connection, or association of ClearPlay with the director, or as to the origin, sponsorship, or approval of ClearPlay by the director.12 Their allegation is 

based on the fact that a ClearPlay-sanitized film still indicates the 

name of the director, making it incorrectly appear as if the director 

has approved the sanitized version. 

As with the copyright claims against ClearPlay, the bill would 

usurp judicial consideration of the trademark claims against 

ClearPlay by legalizing the very conduct at issue in the pending 

litigation. The bill would make it legal under trademark law to sell 

a product that alters a work and then still attribute that work to 

the original’s creator. The effect would again be to specifically benefit one party, ClearPlay, to the detriment of all others involved in 

pending litigation. 

In summary, the directors and movie studios have non-frivolous 

legal claims against ClearPlay. Because the case has not proceeded 

past the most preliminary stages at the trial level, there has not 

been any statutory interpretation, let alone a problematic one, that 

would justify a legislative solution. In other words, the law has yet 

to be interpreted in this area, so there is no rational basis for Congress to pass legislation that eliminates certain copyright and 

trademark rights that are at issue between specific parties. 

Passage of this legislation is even more problematic considering 

that, over the past year, movie creators have negotiated in good 

faith to settle their dispute with ClearPlay. The movie creators had 

offered ClearPlay terms that would allow it to deploy its technology 

without fear of copyright or trademark liability.13 Unfortunately, 

due to the two hearings on this issue and the movement of this editing proposal, those negotiations have stalled; ClearPlay has been 

emboldened to present several new demands that represent a significant step back from its previous positions. The growing prospects for a legislative fix have caused ClearPlay to abandon goodfaith negotiation and have made it less likely that consumers will 

have the choices the bill’s proponents allegedly desire.

In short, fundamental fairness prohibits Congress from passing 

legislation to influence a pending case and private business negotiations. As a matter of equity, it is unfair to change the rules in 

112

14See H.R. 4586 Hearing at 8 (statement of Marybeth Peters, Register of Copyrights) (‘‘I do 

not believe that such legislation should be enacted—and certainly not at this time. As you know, 

litigation addressing whether the manufacture and distribution of such software violates the 

copyright law and the Lanham Act is currently pending in the United States District Court for 

the District of Colorado. A summary judgment motion is pending. The court has not yet ruled 

on the merits. Nor has a preliminary injunction been issued—or even sought.’’). 15 H.R. 4586 Hearing at 9 (written statement of Marybeth Peters) (emphasis added). 16Motion Picture Ass’n of America, Movie Rating System Celebrates 34th Anniversary with 

Overwhelming Parental Support (Oct. 31, 2002) (press release). The industry has five rating categories: G for General Audiences, PG for Parental Guidance Suggested, PG-13 for Parental Caution Suggested for children under 13, R for Restricted (parent or guardian required for children 

under 17), and NC-17 for No Children 17 and under admitted. 17 In 1999, filmmakers released 14 G-rated and 24 PG-rated major motion pictures. In 2000, 

there were 16 G-rated and 27 PG-rated films. In 2001, 8 G-rated and 27 PG-rated movies were 

released. In 2002, 12 G-rated and 50 PG-rated pictures were distributed. Finally, in 2003, 11 

G-rated and 34 PG-rated motion pictures were released. 

the middle of the game, particularly to help one specific entity; if 

passed, section 12 would be an unfortunate example of such unfairness. For these reasons, section 12 should not be considered while 

litigation is pending.14

B. SECTION 12 IS UNNECESSARY

Regardless of the outcome of the pending litigation, this legislation should not be brought before the House because it is unnecessary. Its supposed rationale is to make it easier for parents and 

children to avoid watching motion pictures with undesired content, 

but parents and children already have such options. 

At the outset, there is an obvious marketplace solution to 

undesired content in that consumers can merely elect not to view 

it. As the Register of Copyrights testified at a hearing on the bill 

underlying the amendment:

I cannot accept the proposition that not to permit parents to 

use such products means that they are somehow forced to expose their children (or themselves) to unwanted depictions of 

violence, sex and profanity. There is an obvious choice—one 

which any parent can and should make: don’t let your children 

watch a movie unless you approve of the content of the entire 

movie.15

The motion picture industry has even enhanced the ability of 

consumers to exercise this choice. For decades and on a voluntary 

basis, it has implemented a rating system for its products that indicates the level of sexual or violent content and the target audience age.16 Each and every major motion picture released in theaters or on DVD or VHS bears such a rating. Such ratings effectively enable parents to steer their children away from movies they 

consider inappropriate. 

Most importantly, the film rating system enable parents to identify movies that they consider appropriate for their children, and 

the industry has acted to make this choice meaningful. The industry annually releases dozens of films geared toward audiences who 

do not wish to see sexual, violent, or profane content.17 As a result, 

it is clear that the movie industry provides parents with abundant 

opportunity to find films they will consider appropriate for their 

children. The movie industry has, therefore, already met the request of an H.R. 4586 supporter who looked forward to a day when 

113

18 H.R. 4586 Hearing at 15 (statement of Amitai Etzioni, Founder and Director, The Institute 

for Communitarian Policy Studies, George Washington University). 19May 20, 2004 Hearing at 20 (statement of Jeff J. McIntyre, Senior Legislative and Federal 

Affairs Officer, American Psychological Ass’n). 20FEDERAL TRADE COMM’N, MARKETING VIOLENT ENTERTAINMENT TO CHILDREN: A FOURTH

FOLLOW-UP REVIEW OF INDUSTRY PRACTICES IN THE MOTION PICTURE, MUSIC RECORDING &

ELECTRONIC GAME INDUSTRIES 10 (July 2004). 21David Pogue, Add ‘‘Cut’’ and ‘‘Bleep’’ to a DVD’s Options, N.Y. TIMES, May 27, 2004, at G1.

‘‘the industry will get around to issue us age-appropriate products.’’ 18

While some of the bill’s supporters say these choices are meaningless on the grounds that the entertainment industry markets 

violent and sexual content to youth,19 that claim is false according 

to the most recent and objective report. The Federal Trade Commission conducted the most recent study on this issue and concluded the following: 

On the whole, the motion picture industry has continued to 

comply with its pledge not to specifically target children under 

17 when advertising films rated R for violence. In addition, the 

studios generally are providing clear and conspicuous ratings 

and rating information in advertisements for their R- and PG13 rated films.20

The industry is, therefore, doing its part to keep undesired content 

away from children. 

The facts demonstrate that parents have the information and 

tools necessary to make and enforce informed choices about the 

media their children experience and have plenty of wholesome 

media alternatives to offer their children. 

C. SECTION 12 WOULD LEGALIZE EDITING THAT IS INCOMPREHENSIBLE

AND OVERBROAD AND WOULD LEAD TO AN INCREASE IN UNDESIRED

CONTENT

Section 12 would lead to editing that is inconsistent, overbroad, 

and counterproductive. First, ClearPlay does not screen out the 

content it purportedly is designed to filter. The New York Times

found that ClearPlay’s editing does not conform to its own standards:

For starters, its editors are wildly inconsistent. They duly 

mute every ‘‘Oh my God,’’ ‘‘You bastard,’’ and ‘‘We’re gonna 

have a helluva time’’ (meaning sex). But they leave intact various examples of crude teen slang and a term for the male 

anatomy.

In ‘‘Pirates of the Caribbean,’’ ‘‘God-forsaken island’’ is bleeped, 

but ‘‘heathen gods’’ slips through.21

In this regard, ClearPlay is seemingly ineffective, and the legislation would be, as well. 

Second, the legislation is overbroad and would go beyond its allegedly intended effects of legalizing tools for sanitizing movies of 

sex, violence, and profanity. In fact, section 12 would legalize a far 

wider and less desirable universe of filters for profit than its sponsors have disclosed. Filters could be based on social, political, and 

professional prejudices and could edit more than just movies. 

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22 ClearPlay actually has made such edits. ‘‘In its alterations of the film, ClearPlay chooses 

to omit the racist language [used by white police officers against a young Rubin Carter] that 

is integral to our understanding of the story. . . . ClearPlay skips these lines in full, choosing 

to fast-forward its version of the movie to a later part of the interrogation scene. However, it 

is via this racist and threatening language that the audience connects with the intimidation that 

the young Carter must feel and the racism he is encountering at the very center of law enforcement.’’ Rosen Decl., supra note 4, at 6–7. 23See Markup of H.R. 4586 Before the House Comm. on the Judiciary, 108th Cong., 2d Sess. 

(July 21, 2004) (amendment offered by Rep. Adam Schiff (D-CA) to limit editing to profane, sexual, and violent content) [hereinafter H.R. 4586 Markup]. The amendment was defeated by voice 

vote. Id. 24 H.R. 4586 Markup (statement of Rep. Lamar Smith (R-TX)). 25 H.R. 4586. 

For instance, because the bill is not explicitly limited to the deletion of sex, violence, and profanity, it would legalize socially-undesirable editing, such as:

• A filter that edits out racial conflict between law enforcement and minorities in The Hurricane, conflict that sets the 

context for how the minorities later react to the police; 22

• A filter that skips over the nude scenes from Schindler’s 

List, scenes that are critical to conveying the debasement 

and dehumanization suffered by concentration camp prisoners;

• A filter that strips Jungle Fever of scenes showing interracial 

romance and leaves only those scenes depicting interracial 

conflict; and

• A filter marketed by Holocaust revisionists that removes 

from World War II documentaries any footage of concentration camp.

The legislation also would immunize products that filter political 

or business content based on the opinions of the creator, including:

• A filter that skips over political advertisements contrary to 

the positions of the developer’s beliefs;

• A filter that cleanses news stories, such as by editing out 

comments in support of or in opposition to government policies; and

• A filter that deletes television stories either helpful to the filter developer’s competitor or critical of the developer’s corporate parent.

We would hope that none of the bill’s proponents would condone 

such malicious editing. Unfortunately, at the full Committee markup of the legislation, the sponsors rejected an effort to limit the 

proposal to its purported scope of profane, sexual, and violent content.23 If enacted, section 12 could lead to the editing of artistic 

works based upon racial, religious, social, political, and business biases. 

Moreover, the bill would permit the editing of works other than 

movies. While the bill’s author argues that its purpose is to sanitize 

movies,24 a close reading of the legislation shows that it would permit the editing of broadcast television programming, as well. More 

specifically, section 12 permits the ‘‘making of limited portions of 

audio or video content of a motion picture imperceptible.’’ 25 The 

copyright law defines ‘‘motion pictures’’ as ‘‘audiovisual works consisting of a series of related images which, when shown in succesVerDate jul 14 2003 22:33 Sep 24, 2004 Jkt 029006 PO 00000 Frm 00114 Fmt 6601 Sfmt 6601 E:\HR\OC\HR700.XXX HR700
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26 17 U.S.C. § 101. 27 H.R. REP. NO. 1476, 94th Cong., 2d Sess. (1976) (House report on the 1976 Copyright Act). 28 In the Matter of Commission Seeks Public Comment on Spectrum Policy Task Force Report: 

Joint Reply Comments of the Association for Maximum Service Television, Inc. and the National 

Association of Broadcasters Before the Federal Communications Comm’n, ET Docket No. 02–135 

13 (Feb. 28, 2003). 29 Using CustomPlay, ‘‘[a]n adult can play a version of an adult video that seamlessly excludes 

content inconsistent with the viewer’s adult content preferences, and that is presented at a level 

of explicitness preferred by the adult. Adult content categories are standardized and are organized into five groups Who, What, Camera, Position, and Fetish.’’ CustomPlay, Content Preferences (visited Aug. 24, 2004) <http://www.customplay.com/mccontent.htm>. 30 Nissim Corp. v. ClearPlay, No. 04–21140 (S.D. Fla. filed May 13, 2004). 31 In response to a cease-and-desist letter from Nissim, a manufacturer of DVD players, Thomson, pulled ClearPlay-enabled players from the retail market. 32SAM RICKETSON, THE BERNE CONVENTION: 1886–1986 456 (1997) (‘‘Any author, whether he 

writes, paints, or composes, embodies some part of himself—his thoughts, ideas, sentiments and 

feelings—in his work, and this gives rise to an interest as deserving of protection as any of the 

other personal interests protected by the institutions of positive law, such as reputation, bodily 

integrity, and confidences. The interest in question here relates to the way in which the author 

presents his work to the world, and the way in which his identification with the work is maintained.’’). 

sion, impart an impression of motion, together with accompanying 

sounds, if any.’’ 26 Because this definition includes television programs,27 the legislation would permit editing of broadcast television. 

As a result, the bill would legalize a filter that skips, for instance, all commercial advertisements during playback of free, 

over-the-air broadcast television programming. The revenues that 

broadcast television companies generate from selling commercial 

advertisement time is the sole means by which television programming is financed.28 Permitting television commercials to be deleted 

would reduce the ability of television programmers to sell ad time 

and thus make it financially difficult for television stations to remain in business. Consumers across the country would thus be deprived of a prime and free source of news, entertainment, and other 

information. 

Finally, the legislation could lead to increased violence and sexual content in entertainment. Just as section 12 allows nudity to 

be edited out, it allows everything except nudity to be deleted. This 

concern is not merely hypothetical. Nissim Corporation has patented a technology called CustomPlay that, among other things, enables viewers of pornographic movies to filter out the non-pornographic scenes and ‘‘enhance’’ the adult-viewing experience.29

Additionally, because section12 only protects technology developers like ClearPlay from liability for copyright and trademark infringement, Nissim may cause the bill to backfire on its sponsors. 

Nissim has sued ClearPlay for patent infringement, claiming to 

have a patent on ClearPlay-type film-editing technology.30 If 

Nissim’s claims are valid, then only Nissim could distribute such 

film-editing software.31 Thus, contrary to its stated purpose, 

section12 could succeed in legalizing only Nissam’s technology, 

which enables users to increase the proportion of sex or violence in 

a movie. 

D. SECTION 12 WOULD IMPAIR ARTISTIC FREEDOM AND INTEGRITY

The problems with this legislation are compounded by the fact 

that it violates principles of artistic freedom and expression. The 

concept of protecting artistic freedom is well recognized.32 The National Endowment for the Arts states ‘‘[a]rtistic work and freedom 

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33 NATIONAL ENDOWMENT FOR THE ARTS, STRATEGIC PLAN: FY2003–2008 3 (Feb. 2003). 34 Id. at 8. 35 Berne Convention for the Protection of Literary and Artistic Works, art. 6bis, 1971. 36 17 U.S.C. § 106A. 37 15 U.S.C. § 1125. 38 133 CONG. REC. H1293 (daily ed. Mar. 16, 1987) (statement of Rep. Robert Kastenmeier). 39 H.R. 4586 Hearing at 10 (written statement of Marybeth Peters).

of expression are a vital part of any democratic society.’’ 33 For this 

reason, the NEA seeks to preserve works of art,34 and an important part of preservation is to ensure artists are involved in how 

their creations are portrayed. 

This principle, commonly referred to as a ‘‘moral right,’’ is so important that it is required by international agreements and is codified in U.S. law. For instance, the Berne Convention for the Protection of Literary and Artistic Works grants creators the right to object to ‘‘any distortion, mutilation, or other modification of, or other 

derogatory action in relation to, the said work, which would be 

prejudicial to his honor or reputation.’’ 35 The United States, recognizing the importance of this right, subsequently enacted it into 

both copyright law 36 and trademark law.37

While moral rights protection for U.S. creators is far weaker 

than the protection afforded European creators, a certain level of 

protection for the moral rights of U.S. creators does exist. The ability of creators to bring claims under the Lanham Act, just as directors have done against ClearPlay, does provide creators with an 

important ability to protect their moral rights. In fact, the availability of section 43(a) was one of the specific reasons Congress decided, during adoption of the Berne Convention Implementation 

Act, that U.S. law met the moral rights obligations contained in the 

Berne Convention.38 By limiting the availability of Lanham Act 

suits, section12 would limit the moral rights of directors in a way 

that conflicts with U.S. obligations under the Berne Convention. 

Contrary to our laws and international obligations, section 12 

does not require that filtering be done with the permission of the 

content creator or owner, but rather creates an exemption from 

copyright and trademark liability for filtering. As the Register of 

Copyrights stated before the Subcommittee:

I have serious reservations about enacting legislation that permits persons other than the creators or authorized distributors 

of a motion picture to make a profit by selling adaptations of 

somebody else’s motion picture. It’s one thing to say that an individual, in the privacy of his or her home, should be able to 

filter out undesired scenes or [dialogue] from his or her private 

home viewing of a movie. It’s another matter to say that a forprofit company should be able to commercially market a product that alters a director’s artistic vision.39

It is clear, therefore, that the legislation violates an artist’s right 

to his or her artistic integrity. To permit editing of a creation without the permission of the creator is to encourage censorship and to 

vitiate freedom of expression. 

In conclusion, section 12 is ill-conceived, poorly-drafted legislation. Beyond its patent assault on intellectual property rights, the 

bill inappropriately involves Congress in a private business dispute 

and would lead to socially undesirable editing and actually permit 

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the distribution of technology that makes pornography even more

pornographic. Finally, it encourages unwarranted intrusions into 

artistic freedom.

JOHN CONYERS, JR. 

HOWARD L. BERMAN. 

ROBERT C. SCOTT. 

MELVIN L. WATT. 

SHEILA JACKSON LEE. 

MAXINE WATERS. 

ROBERT WEXLER. 

TAMMY BALDWIN. 

LINDA T. SA ́ NCHEZ.

Æ