Senator Orrin Hatch in the U.S. Senate (Cong. Rec. S12376) (daily ed. Oct. 12, 1998):
Many other negotiations were conducted and agreements reached that made this legislation possible, including agreements between copyright owners and manufacturers of the consumer electronics devices that make the use of their works by the public possible. One such agreement reflects the understanding of the motion picture industry and consumer electronics manufacturers regarding standards for the incorporation of certain copyright protection technologies in analog videocassette recorders. This agreement was the basis for the new section 1201(k) of the Copyright Act, as added by the DMCA, which requires analog videocassette recorders to accommodate specific copy control technologies in wide use in the market today. I have received a letter from Mr. William A. Krepick, President and Chief Operating Officer of Macrovision Corporation--the producer of such copy protection technology--assuring me of his commitment to adhere to the spirit of this agreement by making such technology available on reasonable and nondiscriminatory terms, which in some circumstances will include royalty-free licenses. I would ask unanimous consent that the text of this letter be incorporated in the Record immediately after my remarks.
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Sunnyvale, CA, October 7, 1998.
Hon. Orrin Hatch,
Chairman, Committee on the Judiciary, U.S. Senate, Washington, DC.
Dear Chairman Hatch: I am writing this letter to you in your capacity as Chairman of the Senate-House Conference Committee on the Digital Millennium Copyright Act of 1998. We understand that the Conference Committee is prepared to include in the final legislation to be reported to the Senate and House of Representatives a provision that requires that analog videocassette recorders manufactured and/or sold in the United States must conform to two analog copy control technologies certain aspects of which are proprietary to Macrovision Corporation. As you may know, Macrovision Corporation has been in business for 15 years providing various copy control technologies to help copyright owners protect their valuable intellectual property. We license various technologies to hardware manufacturers, including manufacturers of consumer electronics and various computer-based products, and to Hollywood movie studios and other independent video producers.
We are a small company and have worked very hard over the past two-and-a-half years to demonstrate to the consumer electronics, computer, and motion picture companies and industries that our copy control technologies offer the best solution to digital-to-analog copy protection for the DVD format, as well as in its traditional analog videocassette application. We have worked with the companies and industries to ensure that compatibility and effectiveness are assured, and, as a result, our technologies have been required for use to provide protection of the analog outputs of DVD playback devices implementing the two encryption-based copy protection systems now in the market--the Content Scramble System (CSS) and DIVX.
We support the legislative proposals that are being considered by the Conference Committee, in the form of Subsection `k’ and its corresponding legislative history as attached to this letter. We also recognize the unique position that such legislation provides to our technology and our company. Accordingly, we are writing to assure you and your colleagues on the Conference Committee that we will not abuse our position in our licenses for the technologies for which responses are being required by this legislation. Specifically, we are willing to assure you and the Committee that any licenses that may be necessary to implement these technologies will be offered on reasonable and non-discriminatory terms, as that phrase is commonly used and understood in industry standards processes. We will modify certain terms and conditions of our baseline analog copy control license agreements--and offer the same modifications to existing licensees--if this legislation is enacted in order to eliminate our contractual requirements that analog videocassette recorders manufactured in or sold in the United States respond to our technologies and that certain display device manufacturers ensure that their products are compatible with our technologies, in the sense of not displaying visible artifacts or distortions in the authorized playback of material protected using our analog copy control technologies. The first of these requirements will now be the subject of the statutory requirement that is the subject of the legislative provision.
The second requirement will now be the subject of an inter-industry forum on compatibility issues, that will afford all interested parties an opportunity to work together to resolve such issues as they arise. We hasten to add that we do not expect such problems to arise, since our technologies have been proven to the satisfaction of the manufacturers that they do not cause problems, and we do not expect to make any material modifications to them in the future. Manufacturers already know what the technologies are and can test their products before finalizing their design. We commit to you and your colleagues that any changes that are made to our technologies will be the result of inter and intra industry consensus on the changes before they are made. Nevertheless, in order to reassure everyone involved, we are prepared to cooperate in the inter-industry forum that is being established. We have been assured that this forum will be established within six months after passage of this legislation and will include equal representation from the consumer electronics, computer, and movie studio industries.
With regard to our licensing terms, we commit to you and your colleagues that we will from the date of enactment adhere to the following points--which are essentially reflective of our current licensing policies. First, as stated above, our proprietary analog copy protection technology will be offered on reasonable and non-discriminatory terms, as that phrase is used in the normal industry parlance. Second, in relation to certain specific circumstances:
(a) Manufacturers of consumer-grade analog VHS and 8mm analog video cassette recorders/camcorders that are required by the legislation to conform to our proprietary analog copy protection technologies (and any new format analog videocassette recorder that is covered by paragraph (1)(A)(v) of the legislation and thereby required to conform to our proprietary analog copy control technologies) will be provided royalty-free licenses for the use of our relevant intellectual property in any device that plays back packaged, prerecorded content, or that reads and responds to or generates or carries forward the elements of these technologies associated with such content;
b) In the same circumstances as described in (a), other manufacturers of devices that generate, carry forward, and/or read and respond to the elements of these technologies will be provided with licenses carrying only modest fees (in the current dollar range of $25,000 initial payment and lesser amounts as recurring annual fees);
(c) Manufacturers of other products, including set-top-boxes and other devices that perform similar functions (including integrated devices containing such functionality), will be provided with licenses on reasonable and non-discriminatory terms, including royalty and other considerations.
In the absence of the specific attached legislative and explanatory language, Macrovision would not have made the above referenced commitments regarding our licensing terms and our contract clauses on VCR responsiveness and playability issues. We very much appreciate the work of you and your colleagues in helping to draft and, hopefully, ultimately enact this legislation. We also appreciate and acknowledge the leadership and cooperation of certain companies and individuals in getting this proposal to this point.
I understand that this letter will be incorporated into the official report of the Conference Committee and that the Conferees are relying on our representation herein. If you or other members of the Conference have any questions or need any clarification on any point, please do not hesitate to contact me, or have one of your staff contact me.
William A. Krepick,