The bill creates a new Section 514 in Title 17 of the United States Code entitled “Remedies for Infringement: Use of Technologies to Prevent Infringement of Copyrighted Works on Peer to Peer Computer Networks.”  The following provides a section-by-section analysis of the newly created Section 514.

§514(a) - General Safe Harbor.

§514(a) provides copyright owners with a safe harbor from liability under state or federal law only for actions designed to prevent the unauthorized distribution of their works via a publicly available, peer-to-peer (P2P) file-trading network. The safe harbor provided by §514(a) does not allow the removal of files or data from a P2P user’s computer, the corruption of files or data on a P2P user’s computer, or any other actions that would impair the integrity of any computer file or data.  §514(a) does not specify the particular technologies that a copyright owner can use pursuant to the safe harbor.  Rather, it allows the use of any technology that performs interdiction functions within the parameters outlined.

§514(b) - Exceptions to the Safe Harbor.

§514(b) further limits the safe harbor created by §514(a) by listing specific circumstances in which a copyright owner cannot rely on the safe harbor.  The safe harbor is unavailable if:

• the copyright owner impairs the trading of files that don’t contain her copyrighted work, unless such impairment is necessary to impair the trading of her copyrighted work (§514(b)(1)(A));
• the interdiction efforts of the copyright owner cause economic loss to any person other than the file trader (§514(b)(1)(B));
• the impairing actions cause more than de minimis economic loss to the file trader, other than loss involving the copyrighted works themselves (§514(b)(1)(C)); or
• the copyright owner fails to provide the notification required by §514(c) (§514(b)(2)).

§514(c) - Notification Requirement.

Before a copyright owner can avail itself of the safe harbor provided by §514(a), §514(c)(1) requires that the copyright owner notify the Department of Justice of the specific technologies with which it intends to block copyright infringements over P2P networks.  This provision essentially enables the Department of Justice to be a watchdog over the self-help measures employed by copyright owners.  By ensuring the Department of Justice will be aware of all impairing technologies that copyright owners intend to deploy, this requirement facilitates prosecution of any impairing actions that exceed the parameters of the safe harbor.  This provision also ensure that the Department of Justice will be kept abreast of the latest developments in interdiction technologies.

§514(c)(2) ensures that affected file traders and their ISPs can get all relevant information regarding interdiction activities.  This provision should ensure that affected file traders do not unfairly blame ISPs for disruptions caused by the interdiction actions of copyright owners.  At the request of these parties, the copyright owner must provide:
• the reason for interdicting the trading of a computer file or data containing the copyrighted work of the copyright owner,
• the name and address of the copyright owner, and
• the right of the affected file trader to bring the cause of action created by §514(d).

§514(d) - Cause of Action.

§514(d)(1) provides a new cause of action against a copyright owner who abuses the authority provided by the safe harbor. Under this cause of action, a file trader can seek compensation for economic loss suffered plus attorney’s fees.

 It is important to note that, as §514(f)(2) makes clear,  the new cause of action under §514(d)(1) is in addition to the other causes of action that may be available against a copyright owner who does not qualify for the safe harbor.  The combination of this new cause of action and pre-existing causes of action will deter copyright owners from using the safe harbor as an excuse to harass file traders, indiscriminately impair the operation of a P2P network, frustrate competitors, or otherwise take any action not encompassed within the safe harbor.  The potential liability flowing from this combination of remedies  will force copyright owners to carefully tailor their interdiction efforts to deal with infringements of their copyrighted works.

§514(d)(2) states that the new cause of action is only available as a remedy against actions that copyright owners could not legally take but for the safe harbor.  §514(d)(3) provides that the cause of action must be filed within one year after the claim accrued.

§514(e) - Suits by United States.

§514(e) provides further assurance against abusive actions by a copyright holder.   If a copyright owner has a recurring history of abusive interdiction, the United States may seek an injunction to prevent that copyright owner from availing itself of the safe harbor in the future.  The possibility of such an injunction should provide a substantial disincentive to potential abuse by copyright owners.  Further, it ensures that the United States government can stand in the place of affected file traders in the most egregious situations.

§514(f) - Construction with Other Statutes.

§514(f)(1) guarantees that this legislation will not be read to limit the ability of copyright owners to engage in interdiction efforts that would have been legal even in the absence of the safe harbor.

§514(f)(2) ensures that a copyright owner who fails to qualify for the safe harbor is subject to the full range of liability that would exist in the absence of the safe harbor.  In other words, if the interdiction efforts of a copyright owner constitute a violation of a state denial-of-service statute and do not qualify for the safe harbor, the copyright owner could be prosecuted under that statute.

§514(f)(3) ensures that interdiction efforts will not create a disincentive to utilize P2P networks for legitimate distribution of copyrighted works.

§514(g) - Definitions.

§514(g)(1) provides a definition of the term “economic loss,” which is used in both §514(b) and §514(d).  By defining “economic loss” as monetary costs only, the legislation intends to include only money lost, but to exclude any non-monetary loss such as “emotional distress.”

§514(g)(2) defines the term “peer-to-peer file trading network.”  This definition strictly limits the application of this safe harbor to interdiction efforts on decentralized P2P networks. Thus, copyright owners cannot avail themselves of the safe harbor for interdiction efforts on P2P systems utilizing a client-server relationship, such as the old Napster model.  Nor could copyright owners avail themselves of the safe harbor for interdiction efforts on websites, FTP sites, IM services, or IRC channels.  The definition is structured so narrowly to ensure that the safe harbor is only available in circumstances in which copyright owners have no effective alternative to technological self-help for addressing infringements.  While the Ninth Circuit decision in the Napster litigation demonstrates that a copyright owner can effectively sue to prevent infringement on a client-server file-sharing model, there may be no central service to sue in a truly decentralized P2P system.

§514(g)(3) defines the term “publicly accessible.”  The legislation provides a safe harbor only for interdiction efforts undertaken on publicly accessible P2P networks.  The legislation is limited in this way to ensure that the safe harbor only applies to interdiction efforts taken against clear copyright infringements.  While the unauthorized trading of copyrighted works on closed P2P systems might not constitute copyright infringements in some circumstances, the unauthorized distribution of a copyrighted work over a publicly accessible P2P system constitutes a clear copyright infringement.

§514(g)(4) defines the term “file trader.”  Under the legislation, the term “file trader” includes those who trade files or data over P2P systems, and the owners of the computers from which the files or data are made accessible to the P2P system.

§514(g)(5) defines the term “distribution” in the case of a computer connected to a P2P system.  Consistent with the accepted view that distribution of a copyrighted work is equivalent to making it publicly available, “distribution” is defined, in the case of a computer connected to a P2P system, as making that copyrighted work available over such a system.

§514(g)(6) defines the term “copyright owner.”  The term includes both the owner of one of the exclusive rights in a work, and any party authorized to act on the owner’s behalf.  This definition allows an authorized agent, such as an interdiction company or trade association, to undertake interdiction efforts on the owner’s behalf.