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S 692 IS

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

March 24, 2003

Mr. WYDEN introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation

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

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

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

SEC. 2. CONGRESSIONAL FINDINGS AND PURPOSE.

(a) FINDINGS- Congress finds the following:

(1) Consumers have developed a number of legitimate expectations concerning how they may use and manipulate legally acquired information or entertainment content for reasonable, personal, and noncommercial purposes. In addition, as digital technology creates new ways to use and manipulate content, consumers are likely to develop new expectations that reflect the new technological possibilities.

(2) Digital technologies also can facilitate unlawful reproduction and distribution of information or entertainment content subject to copyright protection. To combat this problem, technology and content companies are developing and deploying technologies to prevent or deter such unlawful behavior.

(3) Such technologies could help promote a competitive digital marketplace in which consumers have a broad range of choices and media businesses can pursue a variety of business models. However, there are also significant risks.

(4) There is a risk that technologies developed to prevent unlawful reproduction and distribution of digital information and entertainment content could have the side effect of restricting consumers' flexibility to use and manipulate such content for reasonable, personal, and noncommercial purposes.

(5) There is a risk that such technologies could unfairly surprise consumers by frustrating their expectations concerning how they may use and manipulate digital content they have legally acquired.

(6) There is a risk that such technologies could result in greater market power for the holders of exclusive rights and reduce competition, by limiting the ability of unaffiliated entities to engage in the lawful secondhand sale or distribution of such content.

(b) PURPOSES- The purposes of this Act are--

(1) to ensure that consumers of digital information and entertainment content are informed in advance of technological features that may restrict the uses and manipulation of such content, so that--

(A) consumers may factor this information into their purchasing decisions; and

(B) there will be a strong, market-based incentive for the development of technologies that address the problem of unlawful reproduction and distribution of content in ways that still preserve the maximum possible flexibility for consumers to use and manipulate such content for lawful and reasonable purposes; and

(2) to express the sense of Congress concerning the importance of retaining competition among distribution channels for digital information and entertainment content.

SEC. 3. FAIR DISCLOSURE OF TECHNOLOGICAL USE RESTRICTIONS.

(a) FTC RULEMAKING- Not later than 1 year after the date of enactment of this Act, the Federal Trade Commission shall issue rules to implement the disclosure requirements described in subsection (b).

(b) DISCLOSURE REQUIREMENTS-

(1) IN GENERAL- If a producer or distributor of copyrighted digital content sells such content or access to such content subject to technological features that limit the practical ability of the purchaser to play, copy, transmit, or transfer such content on, to, or between devices or classes of devices that consumers commonly use with respect to that type of content, the producer or distributor shall disclose the nature of such limitations to the purchaser in a clear and conspicuous manner prior to such sale.

(2) MANNER OF DISCLOSURE- The Federal Trade Commission shall prescribe the manner of disclosure required under this subsection, which may include labels on packaging or such other means as the Commission determines appropriate to achieve the purposes of this section. The Commission may

prescribe different manners of disclosure for different types of content and different distribution channels.

(c) DISCLOSURE OF CERTAIN LIMITATIONS ON REASONABLE CONSUMER ACTIVITIES- The following are examples of limitations which shall trigger the disclosure requirements of subsection (b):

(1) Limitations on the recording for later viewing or listening (popularly referred to as `time shifting') of audio or video programming delivered--

(A) via free over-the-air broadcasting; or

(B) as part of a multichannel video or audio system in which the consumer obtains the programming as part of a subscription package, with no per view charges and no ability to select the specific time at which individual programs will be delivered.

(2) Limitations on the reasonable and noncommercial use of legally acquired audio or video content--

(A) in different physical locations of the consumer's choice (popularly referred to as `space shifting'); or

(B) on the electronic platform or device of the consumer's choice, including platforms or devices requiring that the content be translated into a comparable format before such use.

(3) Limitations on making backup copies of legally acquired content distributed in a form or medium that is subject to accidental erasure, damage, or destruction in the ordinary course of use, including through computer failure or computer viruses, to be used only in the event that the original copies are lost or damaged.

(4) Limitations on using limited excerpts of legally acquired content for purposes such as criticism, comment, news reporting, teaching, scholarship, or research.

(5) Limitations on engaging in the secondhand transfer or sale of legally acquired content to another consumer, provided that the transferor does not retain the content or any copy thereof and that the transferee obtains only such rights to the use and enjoyment of the content as the transferor possessed at the time of transfer.

(d) EXCEPTION TO DISCLOSURE REQUIREMENT- The Federal Trade Commission shall not require disclosure under subsection (b) with respect to any limitation that applies only to uses--

(1) that are sufficiently unusual or uncommon that the burdens of prior disclosure would outweigh the utility to consumers; or

(2) that have no significant application for lawful purposes.

(e) ANNUAL FTC REVIEW- On an annual basis, the Federal Trade Commission shall review the effectiveness of its rules implementing this section to determine whether revisions are warranted to serve the purposes of this section. In conducting this review, the Commission shall consider whether changes in technology or in consumer practices have led to new, legitimate consumer expectations concerning specific uses of digital information or entertainment content that would result in consumers suffering unfair surprise if a technology were to limit those uses without prior notice.

SEC. 4. EFFECT ON OTHER LAWS.

(a) NO LIMITING EFFECT ON FAIR USE- Nothing in this Act shall be interpreted to suggest that a consumer activity not referred to in section 3(c) or in the Federal Trade Commission's rules implementing this Act may not constitute a fair use within the meaning of section 107 of title 17, United States Code.

(b) UNLAWFUL REPRODUCTION OR DISTRIBUTION- Nothing in this Act shall be interpreted to permit the otherwise unlawful reproduction or distribution of copyrighted content or to shield a person engaging in such activity from any type of legal action or judgment.

SEC. 5. COMPETITION IN DISTRIBUTION CHANNELS.

It is the sense of Congress that--

(1) competition among distribution outlets and methods generally benefits consumers; and

(2) just as copyright holders have sold content embodied in tangible products such as audio cassettes, videotapes, and compact discs to multiple competing retail distributors, copyright holders selling digital content in electronic form for distribution over the Internet should offer to license such content to multiple unaffiliated distributors, to enable competition among different distribution models and technologies.

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