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[House Report 111-361]
[From the U.S. Government Publishing Office]

111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    111-361

======================================================================

 
                         INFORMED P2P USER ACT

                                _______
                                

December 8, 2009.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Waxman, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1319]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 1319) to prevent the inadvertent disclosure of 
information on a computer through the use of certain ``peer-to-
peer'' file sharing software without first providing notice and 
obtaining consent from the owner or authorized user of the 
computer, having considered the same, report favorably thereon 
with amendments and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     4
Legislative History..............................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     5
Statement of Committee Oversight Findings and Recommendations....     5
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Statement of General Performance Goals and Objectives............     6
Constitutional Authority Statement...............................     6
Earmarks and Tax and Tariff Benefits.............................     6
Federal Advisory Committee Statement.............................     6
Applicability of Law to Legislative Branch.......................     6
Federal Mandates Statement.......................................     6
Committee Cost Estimate..........................................     6
Congressional Budget Office Cost Estimate........................     7
Section-by-Section Analysis of the Legislation...................     8
Explanation of Amendments........................................    10
Changes in Existing Law Made by the Bill, as Reported............    11

                               AMENDMENT

  The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Informed P2P User Act''.

SEC. 2. CONDUCT PROHIBITED.

  (a) Notice and Consent Required for File-sharing Software.--
          (1) Notice and consent required prior to installation.--It is 
        unlawful for any covered entity to install on a protected 
        computer or offer or make available for installation or 
        download on a protected computer a covered file-sharing program 
        unless such program--
                  (A) immediately prior to the installation or 
                downloading of such program--
                          (i) provides clear and conspicuous notice 
                        that such program allows files on the protected 
                        computer to be made available for searching and 
                        copying to one or more other computers; and
                          (ii) obtains the informed consent to the 
                        installation of such program from an owner or 
                        authorized user of the protected computer; and
                  (B) immediately prior to initial activation of a 
                file-sharing function of such program--
                          (i) provides clear and conspicuous notice of 
                        which files on the protected computer are to be 
                        made available for searching and copying to 
                        another computer; and
                          (ii) obtains the informed consent from an 
                        owner or authorized user of the protected 
                        computer for such files to be made available 
                        for searching and copying to another computer.
          (2) Non-application to pre-installed software.--Nothing in 
        subparagraph (A) shall apply to the installation of a covered 
        file-sharing program on a computer prior to the first sale of 
        such computer to an end user, provided that notice is provided 
        to the end user who first purchases the computer that such a 
        program has been installed on the computer.
  (b) Preventing the Disabling or Removal of Certain Software.--It is 
unlawful for any covered entity--
          (1) to prevent the reasonable efforts of an owner or 
        authorized user of a protected computer from blocking the 
        installation of a covered file-sharing program or file-sharing 
        function thereof; or
          (2) to prevent an owner or authorized user of a protected 
        computer from having a reasonable means to either--
                  (A) disable from the protected computer any covered 
                file-sharing program; or
                  (B) remove from the protected computer any covered 
                file-sharing program that the covered entity caused to 
                be installed on that computer or induced another 
                individual to install.

SEC. 3. ENFORCEMENT.

  (a) Unfair and Deceptive Acts and Practices.--A violation of section 
2 shall be treated as a violation of a rule defining an unfair or 
deceptive act or practice prescribed under section 18(a)(1)(B) of the 
Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).
  (b) Federal Trade Commission Enforcement.--The Federal Trade 
Commission shall enforce this Act in the same manner, by the same 
means, and with the same jurisdiction as though all applicable terms 
and provisions of the Federal Trade Commission Act were incorporated 
into and made a part of this Act.
  (c) Preservation of Federal and State Authority.--Nothing in this Act 
shall be construed to limit or supersede any other Federal or State 
law.

SEC. 4. DEFINITIONS.

  As used in this Act--
          (1) the term ``commercial entity'' means an entity engaged in 
        acts or practices in or affecting commerce, as such term is 
        defined in section 4 of the Federal Trade Commission Act (15 
        U.S.C. 44);
          (2) the term ``covered entity'' means--
                  (A) a commercial entity that develops a covered file-
                sharing program; and
                  (B) a commercial entity that disseminates or 
                distributes a covered file-sharing program and is owned 
                or operated by the commercial entity that developed the 
                covered file-sharing program;
          (3) the term ``protected computer'' has the meaning given 
        such term in section 1030(e)(2) of title 18, United States 
        Code; and
          (4) the term ``covered file-sharing program''--
                  (A) means a program, application, or software that is 
                commercially marketed or distributed to the public and 
                that enables--
                          (i) a file or files on the computer on which 
                        such program is installed to be designated as 
                        available for searching and copying to one or 
                        more other computers;
                          (ii) the searching of files on the computer 
                        on which such program is installed and the 
                        copying of any such file to another computer--
                                  (I) at the initiative of such other 
                                computer and without requiring any 
                                action by an owner or authorized user 
                                of the computer on which such program 
                                is installed; and
                                  (II) without requiring an owner or 
                                authorized user of the computer on 
                                which such program is installed to have 
                                selected or designated another computer 
                                as the recipient of any such file; and
                          (iii) an owner or authorized user of the 
                        computer on which such program is installed to 
                        search files on one or more other computers 
                        using the same or a compatible program, 
                        application, or software, and copy such files 
                        to such owner or user's computer; and
                  (B) does not include a program, application, or 
                software designed primarily to--
                          (i) operate as a server that is accessible 
                        over the Internet using the Internet Domain 
                        Name system;
                          (ii) transmit or receive email messages, 
                        instant messaging, real-time audio or video 
                        communications, or real-time voice 
                        communications; or
                          (iii) provide network or computer security, 
                        network management, maintenance, diagnostics, 
                        technical support or repair, or to detect or 
                        prevent fraudulent activities.

SEC. 5. RULEMAKING.

  The Federal Trade Commission may promulgate regulations under section 
553 of title 5, United States Code to accomplish the purposes of this 
Act. In promulgating rules under this Act, the Federal Trade Commission 
shall not require the deployment or use of any specific products or 
technologies.

SEC. 6. NONAPPLICATION TO GOVERNMENT.

  The prohibition in section 2 of this Act shall not apply to the 
Federal Government or any instrumentality of the Federal Government, 
nor to any State government or government of a subdivision of a State.

  Amend the title so as to read:

    A bill to prevent the inadvertent disclosure of information 
on a computer through certain ``peer-to-peer'' file sharing 
programs without first providing notice and obtaining consent 
from an owner or authorized user of the computer.

                          PURPOSE AND SUMMARY

    H.R. 1319, the ``Informed P2P User Act'', was introduced on 
March 5, 2009, by Rep. Mary Bono Mack (R-CA), along with Rep. 
Joe Barton (R-TX), the Ranking Member of the Committee on 
Energy and Commerce, and Rep. John Barrow (D-GA). The purpose 
of the bill is to reduce inadvertent disclosures of sensitive 
information by making users of certain file-sharing programs 
more aware of how such programs work, how files are shared, and 
the potential risks involved with the use of such programs.
    The bill prohibits developers of covered file-sharing 
programs from installing, or making available for installation 
or downloading, a covered-file sharing program without first 
providing consumers with notice that the program allows files 
on the consumer's computer to be searched and copied. The 
developer must then obtain the informed consent of the 
consumer.
    Under H.R. 1319, any covered file-sharing program must 
provide notice and obtain consent twice: when the program is 
first installed or downloaded and again immediately before the 
file-sharing function is activated for the first time. The bill 
also makes it unlawful to prevent the reasonable efforts of a 
consumer to block the installation of a file-sharing program. 
Finally, the program must provide a reasonable means to disable 
or remove the program.

                  BACKGROUND AND NEED FOR LEGISLATION

    File-sharing software enables consumers to share files over 
the Internet by accessing each other's computer hard drives. To 
share files, consumers download and install software from the 
Internet, which enables them both to designate files on their 
computer for others to copy, as well as search for and copy 
files on other computers that are running the same or similar 
file-sharing program. Once the files have been designated for 
sharing, either intentionally or otherwise, any other person on 
the file-sharing network can copy those files. People can share 
any kind of file, from spreadsheets to movies. Currently, one 
of the most common and well-known uses of such software is 
commercial file-sharing programs used by millions of consumers 
to lawfully share music, videos, pictures, and other files. 
Lawful applications of file-sharing technology provide enormous 
benefits to business, academia, and consumers.
    The use of file-sharing software, however, also presents 
significant risks for consumers. For example, recent news 
reports and studies highlight the danger of inadvertent sharing 
of sensitive information, such as Social Security numbers, tax 
returns, and health records.\1\ Sensitive government documents 
have been discovered on file-sharing networks, including 
engineering and communications information about the 
President's helicopter, Marine One.\2\
---------------------------------------------------------------------------
    \1\File-Sharing Breach at Investment Firm Highlights Dangers of P2P 
Networks--Again, Computer World (July 9, 2008) (online at 
www.computerworld.com/action/article.do?command= 
viewArticleBasic&articleId=9108418); M. Eric Johnson, Dan McGuire, and 
Nicholas D. Wiley, Why File Sharing Networks Are Dangerous?, 
Communications of the ACM (Feb. 2009); and Academic Claims to Find 
Sensitive Medical Info Exposed on Peer-to-Peer Networks, Wired.com 
(Mar. 2, 2009) (online at www.wired.com/threatlevel/2009/03/p2p-
networks-le/).
    \2\Report: Obama Helicopter Security Breached, MSNBC (Mar. 1, 2009) 
(online at www.msnbc.msn.com/id/29447088/).
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    Inadvertent file sharing can occur for several reasons. In 
some cases, users simply do not understand which folders are 
available to other users on the network. In other cases, users 
mistakenly place sensitive documents in shared folders. Some 
consumers, focused on exchanging specific types of files such 
as music or videos, fail to appreciate that the software can be 
used to share any file on their computer. Different types of 
file-sharing software operate differently, and the risk of 
inadvertent sharing varies from program to program. File-
sharing software users must understand the risk of inadvertent 
file sharing, properly configure their software, and know what 
files are designated for sharing on their computer.
    Reports of users inadvertently sharing sensitive files date 
back to the beginning of this decade, when file-sharing 
software and certain peer-to-peer (P2P) applications first 
became popular on the Internet.\3\ Over the past few years, 
certain distributors of file-sharing software have made efforts 
to improve disclosures and implement protections to reduce the 
risk of the inadvertent disclosure of sensitive information. 
Despite these efforts, the problem persists.
---------------------------------------------------------------------------
    \3\See, e.g., Nathaniel S. Good and Aaron Krekelberg, Usability and 
Privacy: A Study of Kazaa P2P File-Sharing, Conference on Human Factors 
in Computing Systems (Apr. 2003).
---------------------------------------------------------------------------
    H.R. 1319, the Informed P2P User Act, is intended to reduce 
inadvertent disclosures of sensitive information by making 
users of file-sharing programs more aware of the risks 
involved. H.R. 1319 focuses on a particular type of file-
sharing application that can expose its users to a specific 
risk: inadvertently exposing their personal or sensitive data 
to downloading by users of the same or compatible file-sharing 
software without their specific knowledge or permission.

                          LEGISLATIVE HISTORY

    On March 5, 2009, Rep. Bono Mack, with Ranking Member 
Barton and Rep. Barrow, introduced H.R. 1319, the Informed P2P 
User Act. Rep. Bono Mack introduced similar legislation, H.R. 
7176, in the 110th Congress. H.R. 1319 was referred to the 
Subcommittee on Commerce, Trade, and Consumer Protection on 
March 6, 2009. The Subcommittee held a legislative hearing on 
H.R. 1319 on May 5, 2009. Testimony was heard from witnesses 
representing the Bureau of Consumer Protection of the Federal 
Trade Commission (FTC); the Center for Democracy and 
Technology; the Business Software Alliance; the Distributed 
Computing Data Industry Association; the Electronic Privacy 
Information Center; Tiversa, Inc.; and the Center for the Study 
of Digital Property of the Progress & Freedom Foundation. There 
was no Subcommittee markup held on the legislation, as it was 
taken up directly in the full Committee.

                        COMMITTEE CONSIDERATION

    The Committee on Energy and Commerce met in open markup 
session on September 30, 2009, and considered H.R. 1319, as 
introduced on March 5, 2009. The Committee adopted by a voice 
vote a manager's amendment offered by Mr. Waxman to the bill. 
The full Committee subsequently agreed to order H.R. 1319 
favorably reported to the House, amended, by a voice vote.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto. A motion by Mr. Waxman to order H.R. 1319 favorably 
reported to the House, amended, was agreed to by a voice vote. 
There were no recorded votes taken during consideration and 
passage of H.R. 1319.

     STATEMENT OF COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the oversight findings and recommendations of the Committee are 
reflected in the descriptive portions of this report.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee adopts as its own the 
estimate of budget authority and revenues regarding H.R. 1319 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974. The Committee finds that H.R. 1319 would result in no new 
or increased entitlement authority, or tax expenditures or 
revenues.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the performance goals and 
objectives of the Committee are reflected in the descriptive 
portions of this report.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee must include a 
statement citing the specific powers granted to Congress to 
enact the law proposed by H.R. 1319. Article I, section 8, 
clauses 3 and 18 of the Constitution of the United States 
grants the Congress the power to enact this law.

                  EARMARKS AND TAX AND TARIFF BENEFITS

    H.R. 1319 does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI of the Rules of the House of 
Representatives.

                  FEDERAL ADVISORY COMMITTEE STATEMENT

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., section 5(b) of the Federal 
Advisory Committee Act.

             APPLICABILITY OF LAW TO THE LEGISLATIVE BRANCH

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to terms and conditions of 
employment or access to public services and accommodations.
    H.R. 1319 prohibits developers of covered file-sharing 
programs from installing, or making available for installation 
or downloading, a covered-file sharing program without first 
providing consumers with notice that the program allows files 
on the consumer's computer to be searched and copied. This bill 
does not relate to employment or access to public services and 
accommodations in the legislative branch.

                       FEDERAL MANDATES STATEMENT

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement on 
whether the provisions of the report include unfunded mandates. 
In compliance with this requirement the Committee adopts as its 
own the estimated of federal mandates prepared by the Director 
of the Congressional Budget Office.

                        COMMITTEE COST ESTIMATE

    Pursuant to clause 3(d)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee adopts as its own the 
cost estimate of H.R. 1319 prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for H.R. 1319 from the Director of 
Congressional Budget Office:

                                                  October 19, 2009.
Hon. Henry A. Waxman,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1319, the Informed 
P2P User Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 1319--Informed P2P User Act

    H.R. 1319 would place new notification requirements on 
companies that develop or distribute software that allows files 
to be shared between computers. Specifically, the bill would 
require such companies to provide clear notice that file-
sharing capability is being installed on a computer. Further, 
prior to activation of the file-sharing function, the bill 
would require companies to specify which files would be made 
available for sharing and obtain the user's consent before the 
files would be made available to be shared. The bill also would 
make it unlawful to prevent a user of the software from 
disabling or removing the file-sharing capability. The Federal 
Trade Commission (FTC) would be required to develop regulations 
to impose those requirements and to enforce the new 
restrictions.
    Based on information from the FTC, CBO estimates that 
implementing H.R. 1319 would cost about $1 million annually 
over the 2010-2014 period, assuming availability of the 
necessary amounts. The additional costs would be incurred to 
develop and enforce the notification requirements. CBO 
estimates that enacting H.R. 1319 could increase federal 
revenues from additional civil penalties assessed for 
violations of the new regulations. We estimate that any 
additional revenues would not be significant because of the 
relatively small number of cases expected to be involved. 
Enacting the bill would not affect direct spending.
    H.R. 1319 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.
    The bill would impose private-sector mandates as defined in 
UMRA. It would require companies that develop or distribute 
software that allows files to be shared between computers to 
provide certain features that give the user control over 
various functions of the software.
    Based on information from industry sources, CBO expects the 
mandates in the bill would require only marginal changes in 
such software, which would impose minimal costs. Consequently, 
CBO estimates that the cost of the mandates would fall well 
below the annual threshold established in UMRA for private-
sector mandates ($139 million in 2009, adjusted annually for 
inflation.
    The CBO staff contacts for this estimate are Susan Willie 
(for federal costs) and Sam Wice (for the private-sector 
impact). The estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    Section 1 provides that the short title of H.R. 1319 is the 
``Informed P2P User Act''

Section 2. Conduct prohibited

    Subparagraph 2(a)(1)(A) requires that if a covered entity 
installs a covered file-sharing program, or makes that program 
available for installation or downloading, that file-sharing 
program must provide clear and conspicuous notice prior to 
installation or downloading that the program allows files on 
the computer to be made available for searching and copying to 
other computers. Subparagraph (A) further requires that 
following such notice, the file-sharing program must then 
obtain the owner or authorized user's informed consent to the 
installation or downloading of the program.
    Subparagraph 2(a)(1)(B) requires notice to be provided and 
consent obtained a second time. Specifically, the file-sharing 
program must provide clear and conspicuous notice of which 
files on the user's computer are to be made available for 
searching and copying prior to the initial activation of a 
file-sharing function of the program. The program must then 
obtain the informed consent from the owner or authorized user 
of the computer for such files to be made available for 
searching and copying to another computer. Pursuant to this 
subparagraph, notice must be provided, and consent must be 
obtained, only the first time the file-sharing function of a 
covered file-sharing program is activated on a protected 
computer; and does not include subsequent uses of the program 
on that protected computer.
    Paragraph 2(a)(2) provides that the requirement for notice 
and consent prior to initial installation or downloading of a 
covered file-sharing program does not apply to the installation 
of a covered file-sharing program on a computer prior to the 
first sale of such computer to an end user. Notice must, 
however, be provided to the end user who first purchases the 
computer that a covered file-sharing program has been installed 
on the computer. This notice should be clear and conspicuous 
and serve the purpose of alerting the consumer that covered 
file-sharing software already is installed on the computer and 
such software may make files on that computer available for 
searching and copying by other computers. The notice and 
consent requirements of Subparagraph 2(a)(1)(B) that apply 
prior to the initial activation of a file-sharing function, 
however, still apply to such software. This paragraph 
acknowledges the fact that for preinstalled software the 
consumer does not take any affirmative step to install or 
download the software, thus there is no reasonable opportunity 
for the covered entity to provide notice and obtain consent 
prior to installation.
    Subparagraph 2(b)(1) prohibits a covered entity from 
preventing a consumer's reasonable efforts to block the 
installation of a covered file-sharing program or file-sharing 
function thereof. Thus, it would be unlawful for a covered 
entity to install a covered file-sharing program on a 
consumer's computer through any practice or mechanism that is 
designed to circumvent security or other settings enabled by 
the consumer.
    Subparagraph 2(b)(2) prohibits a covered entity from 
preventing a consumer from having a reasonable means to either 
(A) disable from the consumer's computer any covered file-
sharing program or (B) remove from the consumer's computer any 
covered file-sharing program that is installed on that 
computer. This provision is intended to prohibit covered 
entities from employing tactics that make their programs 
difficult to remove. For example, practices such as installing 
multiple copies of a program to avoid permanent deletion, 
constantly changing file name or file location to escape 
detection, or reinstalling automatically without the user's 
intervention after a program has been removed would violate 
this provision.
    The Committee recognizes that software development is a 
highly innovative field, and does not seek to impose specific 
design requirements on software that may prove to be 
inappropriate in some circumstances or unduly burdensome. 
Rather, paragraph (2) is intended to prohibit those practices 
designed to frustrate a consumer's effort to prevent a covered 
file-sharing program from being installed in the first place or 
from easily disabling or removing such a program after it has 
been installed.

Section 3. Enforcement

    Section 3 provides for enforcement by the FTC and 
establishes that a violation of section 2 shall be treated as 
an unfair act or practice in violation of a regulation under 
section 18 of the FTC Act.

Section 4. Definitions

    Paragraph (1) defines the term ``commercial entity'' to 
mean an entity engaged in acts or practices in commerce, as 
commerce is defined in section 4 of the Federal Trade 
Commission Act.
    Paragraph (2) defines a ``covered entity'' to include a 
commercial entity that develops a covered file-sharing program 
and a commercial entity that disseminates or distributes a 
covered file-sharing program and is owned or operated by the 
commercial entity that developed the program. Entities that 
merely disseminate, distribute, or otherwise make covered file-
sharing software available to the public, but are not owned or 
operated by the entity that developed the program, are not 
required to comply with the provisions of this Act. In 
addition, individuals who develop or modify a covered file-
sharing program for personal use or who do not profit from such 
activities also are not covered, as they are not commercial 
entities.
    Paragraph (3) defines the term ``protected computer'' to 
have the same meaning as the term in section 1030(e)(2) of 
title 18, United States Code.
    Paragraph (4) defines the term ``covered file-sharing 
program'' to mean a program, application, or software 
commercially marketed or distributed to the public that 
satisfies all the requirements set forth in clauses (i), (ii), 
and (iii).
    Pursuant to clause (i), the program must enable files on 
the computer on which it is installed to be designated as 
available for searching and copying to one or more other 
computers. This is satisfied if the user of the computer takes 
an affirmative action to designate files for searching and 
copying or if the program automatically initiates some action 
to designate files or folders for searching and copying by 
other computers.
    Clause (ii) requires that the program enables files on the 
computer on which the program is installed to be searched and 
copied by other computers. In this case, the searching and 
copying is done at the initiative of the other computer without 
requiring any action by the owner of the computer on which the 
program is installed.
    Finally, clause (iii) provides that the program allows the 
owner of the computer on which the program is installed to 
search files on other computers using the same or compatible 
file-sharing program.
    Paragraph (4)(B) specifically excludes certain programs, 
applications, and software from the definition. There are many 
kinds of distributed computing applications that are not 
intended to be covered by H.R. 1319, ranging from peer-to-peer 
technologies used internal to a corporate enterprise to cloud 
computing.

                       EXPLANATION OF AMENDMENTS

    During markup by the full Committee, Chairman Waxman 
offered a manager's amendment in the nature of a substitute. 
The manager's amendment narrows the definition of a covered 
file-sharing program to avoid sweeping in legitimate 
technologies that are unrelated to the problem of inadvertent 
file-sharing, such as Web servers, e-mail, instant messaging, 
and computer security software. The manager's amendment also 
adds a new definition for ``covered entity'' that limits 
liability under the bill only to those commercial entities that 
develop a covered file-sharing program or distribute a covered 
file-sharing program and are owned or operated by a developer.
    The manager's amendment clarifies that it is unlawful for a 
covered entity to ``install on a protected computer or offer or 
make available for installation or download'' a covered file-
sharing program unless the program makes the required 
disclosures. Under the manager's amendment, the requirement for 
notice prior to installation does not apply to software 
installed prior to the initial sale of a computer if notice 
that a covered file-sharing program has been installed is 
otherwise provided in some form.
    Finally, the manager's amendment provides the FTC with 
discretionary rulemaking authority and clarifies that the bill 
does not apply to the federal government.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    There are no changes in existing federal law made by the 
bill, as reported.

                                  
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