House Report No. 105-551(Part 2) (Committee on Commerce) (pages 23-25, 38-41):
Prohibiting Certain Devices

H.R. 2281, as reported by the Committee on the Judiciary, would regulate--in the name of copyright law--the manufacture and sale of devices that can be used to improperly circumvent technological protection measures. The Committee on Commerce adopted an amendment that moves the anti-circumvention provisions out of Title 17 and establishes them as free-standing provisions of law. The Committee believes that this is the most appropriate way to implement the treaties, in large part because these regulatory provisions have little, if anything, to do with copyright law. The anti-circumvention provisions (and the accompanying penalty provisions for violations of them) would be separate from, and cumulative to, the existing claims available to copyright owners. In the Committee’s judgment, it therefore is more appropriate to implement the treaties through free-standing provisions of law rather than codifying them in Title 17.

Article 1, Section 8, Clause 8 of the United States Constitution authorizes the Congress to promulgate laws governing the scope of proprietary rights in, and use privileges with respect to, intangible "works of authorship." As set forth in the Constitution, the fundamental goal is "[t]o promote the Progress of Science and useful Arts. * * *." In the more than 200 years since enactment of the first Federal copyright law in 1790, the maintenance of this balance has contributed significantly to the growth of markets for works of the imagination as well as the industries that use such works. Congress has historically advanced this constitutional objective by regulating the use of information--not the devices or means by which the information is delivered or used by information consumers--and by ensuring an appropriate balance between the interests of copyright owners and information users. For example, Section 106 of the Copyright Act (17 U.S.C. 106) establishes certain rights copyright owners have in their works, including limitations on the use of these works without their authorization. Likewise, Sections 107 through 121 of the Copyright Act (17 U.S.C. 107 121) set forth the circumstances in which such uses will be deemed permissible, or otherwise lawful even though unauthorized. And Sections 501 through 511, as well as Section 602 of the Copyright Act (17 U.S.C. 501 511, 602) specify rights of action for copyright infringement, and prescribe penalties in connection with those actions.

In general, all of these provisions are technology neutral. They do not regulate commerce in information technology, i.e., products and devices for transmitting, storing, and using information. Instead, they prohibit certain actions and create exceptions to permit certain conduct deemed to be in the greater public interest, all in a way that balances the interests of copyright owners and users of copyrighted works. In a September 16, 1997, letter to Congress, 62 copyright law professors expressed their concern about the implications of regulating devices in the name of copyright law. They said in relevant part:

Although [they] would be codified in Title 17, [the anti-circumvention provisions] would not be an ordinary copyright provision; liability under the section would result from conduct separate and independent from any act of copyright infringement or any intent to promote infringement. Thus, enactment of [the anti-circumvention provisions] would represent an unprecedented departure into the zone of what might be called paracopyright--an uncharted new domain of legislative provisions designed to strengthen copyright protection by regulating conduct which traditionally has fallen outside the regulatory sphere of intellectual property law.

While the Committee on Commerce agrees with these distinguished professors, the Committee also recognizes that the digital environment poses a unique threat to the rights of copyright owners, and as such, necessitates protection against devices that undermine copyright interests. In contrast to the analog experience, digital technology enables pirates to reproduce and distribute perfect copies of works--at virtually no cost at all to the pirate. As technology advances, so must our laws. The Committee thus seeks to protect the interests of copyright owners in the digital environment, while ensuring that copyright law remain technology neutral. Hence, the Committee has removed the anti-circumvention provisions from Title 17, and established them as free-standing provisions of law. . . .

(a)Violations regarding circumvention of technological protection measures

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To provide meaningful protection and enforcement of the copyright owner’s right to control access to his or her copyrighted work (as defined under Section 102(a)(1)), Section 102(a)(2) supplements Section 102(a)(1) with prohibitions on creating and making available certain technologies, products and services used, developed or advertised to defeat technological protection measures that protect against unauthorized access. FN 2

FN 2 The Committee has previously reported laws that similarly protect against unauthorized access to works. See, e.g., 47 U.S.C. 553(a)(2) (prohibiting the manufacture or distribution of equipment intended for the unauthorized reception of cable television service); 47 U.S.C 605(e)(4) (prohibiting the manufacture, assembly, import, and sale of equipment used in the unauthorized decryption of satellite cable programming); see also H. Rep. No.780, 102d Cong., 2d Sess. (1992) report accompanying H.R. 4567, which would have established the Audio Home Recording Act’s anti-circumvention provisions as free-standing provisions of law).

Specifically, Section 102(a)(2) prohibits any person from manufacturing, importing, offering to the public, providing, or otherwise trafficking in certain technologies, products, services, devices, components, or parts that can be used to circumvent a technological protection measure that otherwise effectively controls access to a copyrighted work. The Committee believes it is very important to emphasize that Section 102(a)(2) is aimed fundamentally at outlawing so-called "black boxes" that are expressly intended to facilitate circumvention of technological protection measures for purposes of gaining access to a work. This provision is not aimed at products that are capable of commercially significant noninfringing uses, such as consumer electronics, telecommunications, and computer products--including videocassette recorders, telecommunications switches, personal computers, and servers--used by businesses and consumers for perfectly legitimate purposes. Thus, for a technology, product, service, device, component, or part thereof to be prohibited under this subsection, one of three conditions must be met. It must: (1) be primarily designed or produced for the purpose of circumventing; (2) have only a limited commercially significant purpose or use other than to circumvent; or (3) be marketed by the person who manufactures it, imports it, offers it to the public, provides it or otherwise traffics in it, or by another person acting in concert with that person with that person’s knowledge, for use in circumventing a technological protection measure that effectively controls access to a copyrighted work. This provision is designed to protect copyright owners, and simultaneously allow the development of technology.

Section 102(a)(3) defines certain terms used throughout Section 102(a). Subparagraph (A) defines the term "circumvent a technological protection measure" as meaning "to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological protection measure, without the authority of the copyright owner." This definition applies to subsection (a) only, which covers protections against unauthorized initial access to a copyrighted work. Subparagraph (B) states that a technological protection measure "effectively controls access to a work" if the measure, in the ordinary course of its operation, requires the application of information, or a process or a treatment, with the authority of the copyright owner, to gain access to the work. In the Committee’s view, measures that can be deemed to "effectively control access to a work" would be those based on encryption, scrambling, authentication, or some other measure which requires the use of a "key" provided by a copyright owner to gain access to a work.

(b) Additional violations

Section 102(b) applies to those technological protection measures employed by copyright owners that effectively protect their copyrights, as opposed to those technological protection measures covered by Section 102(a), which prevent unauthorized access to a copyrighted work. Unlike subsection (a), which prohibits the circumvention of access control technologies, subsection (b) does not, by itself, prohibit the circumvention of effective technological copyright protection measures.

Paralleling Section 102(a)(2), Section 102(b)(1) seeks to provide meaningful protection and enforcement of copyright owners’ use of technological protection measures to protect their rights by prohibiting the act of making or selling the technological means to overcome these protections and thereby facilitate copyright infringement. Subsection (b)(1) prohibits manufacturing, importing, offering to the public, providing, or otherwise trafficking in certain technologies, products, services, devices, components, or parts thereof that can be used to circumvent a technological protection measure that effectively protects a right of a copyright owner. As previously stated in the discussion of Section 102(a)(2), the Committee believes it is very important to emphasize that Section 102(b)(1) is aimed fundamentally at outlawing so-called "black boxes" that are expressly intended to facilitate circumvention of technological protection measures for purposes of gaining access to a work. This provision is not aimed at products that are capable of commercially significant noninfringing uses, such as consumer electronics, telecommunications, and computer products--including videocassette recorders, telecommunications switches, personal computers, and servers--used by businesses and consumers for perfectly legitimate purposes.

Thus, once again, for a technology, product, service, device, component, or part thereof to be prohibited under this subsection, one of three conditions must be met. It must: (1) be primarily designed or produced for the purpose of circumventing; (2) have only limited commercially significant purpose or use other than to circumvent; or (3) be marketed by the person who manufactures it, imports it, offers it to the public, provides it, or otherwise traffics in it, or by another person acting in concert with that person with that person’s knowledge, for use in circumventing a technological protection measure that effectively protects the right of a copyright owner. Like Section 102(a)(2), this provision is designed to protect copyright owners, and simultaneously allow the development of technology.

Section 102(b)(2) defines certain terms used solely within subsection (b). In particular, subparagraph (A) defines the term "circumvent protection afforded by a technological protection measure" as "avoiding, bypassing, removing, deactivating, or otherwise impairing a technological protection measure." Subparagraph (B) provides that a technological protection measure "effectively protects a right of a copyright owner" if the measure, in the ordinary course of its operation, prevents, restricts, or otherwise limits the exercise of a copyright owner’s rights. In the Committee’s view, measures that can be deemed to "effectively control access to a work" would be those based on encryption, scrambling, authentication, or some other measure which requires the use of a "key" provided by a copyright owner to gain access to a work.

With respect to the effectiveness of technological protection measures, the Committee believes it is important to stress as well that those measures that cause noticeable and recurring adverse effects on the authorized display or performance of works should not be deemed to be effective. Unless product designers are adequately consulted about the design and implementation of technological protection measures (and the means of preserving copyright management information), such measures may cause severe "playability" problems. The Committee on Commerce is particularly concerned that the introduction of such measures not impede the introduction of digital television monitors or new digital audio playback devices. The Committee has a strong, long-standing interest in encouraging the introduction in the market of exciting new products. Recently, for example, the Committee learned that, as initially proposed, a proprietary copy protection scheme that is today widely used to protect analog motion pictures could have caused significant viewability problems, including noticeable artifacts, with certain television sets until it was modified with the cooperation of the consumer electronics industry.

Under the bill as reported, nothing would make it illegal for a manufacturer of a product or device (to which Section 102 would otherwise apply) to design or modify the product or device solely to the extent necessary to mitigate a frequently occurring and noticeable adverse effect on the authorized performance or display of a work that is caused by a technological protection measure in the ordinary course of its design and operation. Similarly, recognizing that a technological protection measure may cause a problem with a particular device, or combination of devices, used by a consumer, it is the Committee’s view that nothing in the bill should be interpreted to make it illegal for a retailer or individual consumer to modify a product or device solely to the extent necessary to mitigate a noticeable adverse effect on the authorized performance or display of a work that is communicated to or received by that particular product or device if that adverse effect is caused by a technological protection measure in the ordinary course of its design and operation.

The Committee believes that the affected industries should be able to work together to avoid such problems. The Committee is aware that multi-industry efforts to develop copy control technologies that are both effective and avoid such noticeable and recurring adverse effects have been underway over the past two years. The Committee strongly encourages the continuation of those efforts, which it views as offering substantial benefits to copyright owners in whose interest it is to achieve the introduction of effective technological protection (and copyright management information) measures that do not interfere with the normal operations of affected products.

(c) Other rights, etc., not affected

Subsection (c) sets forth several provisions clarifying the scope of Section 102. Section 102(c)(1) provides that Section 102 shall not have any effect on rights, remedies, limitations, or defenses to copyright infringement, including fair use, under Title 17. Section 102(c)(2) provides that Section 102 shall not alter the existing doctrines of contributory or vicarious liability for copyright infringement in connection with any technology, product, service, device, component or part thereof. Section 102(c)(3) clarifies that nothing in Section 102 creates an affirmative mandate requiring manufacturers of consumer electronics, telecommunications, and computing products to design their products or their parts and components to affirmatively respond to any particular technological protection measure employed to protect a copyrighted work.