H. Rept. 113-356 - UNLOCKING CONSUMER CHOICE AND WIRELESS COMPETITION ACT113th Congress (2013-2014)
Committee Report
Hide Overview| Report Type: | House Report |
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| Accompanies: | H.R.1123 |
| Committees: | House Judiciary Committee |
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113th Congress } { Report
2d Session } HOUSE OF REPRESENTATIVES { 113-356
=======================================================================
UNLOCKING CONSUMER CHOICE AND WIRELESS COMPETITION ACT
_______
February 25, 2014.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Goodlatte, from the Committee on the Judiciary, submitted the
following
R E P O R T
together with
MINORITY AND ADDITIONAL VIEWS
[To accompany H.R. 1123]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 1123) to promote consumer choice and wireless
competition by permitting consumers to unlock mobile wireless
devices, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 2
Background and Need for the Legislation.......................... 2
Hearings......................................................... 3
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 5
New Budget Authority and Tax Expenditures........................ 5
Congressional Budget Office Cost Estimate........................ 5
Duplication of Federal Programs.................................. 7
Disclosure of Directed Rule Makings.............................. 7
Performance Goals and Objectives................................. 7
Advisory on Earmarks............................................. 7
Section-by-Section Analysis...................................... 7
Minority Views................................................... 9
Additional Views................................................. 14
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Unlocking Consumer Choice and Wireless
Competition Act''.
SEC. 2. REPEAL OF EXISTING RULE AND ADDITIONAL RULEMAKING BY LIBRARIAN
OF CONGRESS.
(a) Repeal and Replace.--Paragraph (3) of section 201.40(b) of title
37, Code of Federal Regulations, as amended and revised by the
Librarian of Congress on October 28, 2012, pursuant to the Librarian's
authority under section 1201(a) of title 17, United States Code, shall
have no force and effect, and such paragraph shall read, and shall be
in effect, as such paragraph was in effect on July 27, 2010, subject to
subsections (c) and (d).
(b) Rulemaking.--Not later than 1 year after the date of the
enactment of this Act, the Librarian of Congress, upon the
recommendation of the Register of Copyrights, who shall consult with
the Assistant Secretary for Communications and Information of the
Department of Commerce and report and comment on his or her views in
making such recommendation, shall determine, consistent with the
requirements set forth under section 1201(a)(1) of title 17, United
States Code, whether to extend the exemption for the class of works
described in section 201.40(b)(3) of title 37, Code of Federal
Regulations, as amended by subsection (a) of this section, to include
any other category of wireless devices in addition to wireless
telephone handsets.
(c) Unlocking at Direction of Purchaser or Family Member.--With
respect to paragraph (3) of section 201.40(b) of title 37, Code of
Federal Regulations, as made effective by subsection (a) of this
subsection, and with respect to any other category of wireless devices,
in addition to wireless telephone handsets, with respect to which, as
determined by the Librarian of Congress in a rulemaking conducted under
subsection (b) or otherwise under section 1201(a)(1)(C) of title 17,
United States Code, circumvention of a computer program by the owner of
a copy of the program is permitted solely in order to connect to a
wireless communications network when such connection is authorized by
the operator of such network, in the case of a purchaser of such
handset or device for personal use, such circumvention may be initiated
by the purchaser, by a family member of such purchaser, or by another
person at the direction of such purchaser or family member, for the
sole use or benefit of such purchaser or family member.
(d) Rule of Construction.--Nothing in this Act alters, or shall be
construed to alter, the authority of the Librarian of Congress under
section 1201(a)(1) of title 17, United States Code, including the
authority, with respect to the applicable 3-year period, to modify or
delete paragraph (3) of section 201.40(b) of title 37, Code of Federal
Regulations, or modify or delete any category of wireless devices
exempted under subsection (b) of this section.
Purpose and Summary
The legislation repeals an existing exemption made by the
Librarian of Congress pursuant to Section 1201 of Title 17
concerning the circumvention of access control measures on cell
phones, also known as ``unlocking'', reinstates an earlier
version of this exemption, directs the Librarian of Congress to
undertake a new rulemaking for other cellular devices such as
tablets with cellular connectivity, and permits unlocking to be
initiated by the owner of a device or by an entity or person of
their choosing under specific purposes for current or future
exemptions related to wireless devices. The legislation is not
intended to enable bulk unlocking by resellers.
Background and Need for the Legislation
The legislation repeals a current exemption in favor of
reinstating an earlier exemption for which the Librarian of
Congress previously determined that an adequate record had been
established. Rapid technological change in the cellular
telephone industry, including consumer interest in more
expensive smartphones, has resulted in a shift away from the
earlier practice of consumers essentially disposing of their
old cell phones after a few years of ownership. Especially for
smartphones, consumers now use their cell phones for longer
periods of time; reuse their devices upon upgrading by giving
their older devices to family members; or sell their used
devices in a growing marketplace for used phones and then using
the proceeds from the sale to offset the cost of replacement
devices. Since consumers with a legitimate interest in
unlocking are unable to do so without risk of violating 17
U.S.C. Sec. 1201, the Committee has supported this legislation.
Even with the recent industry announcement in December 2013
concerning unlocking, the legislation is needed to avoid the
potential for criminal or civil sanctions for those who unlock
cellphones for consumers.
Consumers seeking to own a cellphone without the initial
upfront cost are more willing than ever to purchase a used
cellphone, but may be prevented from using their newly acquired
device on their network of choice since that device may be
locked to a particular carrier. Since consumers may have
acquired the used cellphone via an online store or auction
site, they may not be able to work with, or even know, the
original purchaser and/or network carrier to have the device
unlocked by the original network carrier. Consumers seeking to
switch network carriers may also need assistance unlocking
their cellphones, either out of personal preference or an
inability to enable the unlocking on their own. The Committee
believes that consumers should be able to seek help from others
such as relatives, neighbors, cellular providers and their
agents, etc. . . . to effect the unlocking. The Committee does
not support efforts to use this legislation for bulk unlocking.
In these situations, the consumer must already be in possession
of the cellular device in order to use this provision.
The Committee considered H.R. 1123 with a focus on
individuals being granted the right to unlock, or seek
assistance to unlock, their wireless devices. Such actions
would be opposite not only the Committee's legislative intent,
but also the specific statutory language adopted by the
Committee. The Committee received testimony on, and is aware
generally, of ongoing criminal enterprises in large cities that
profitably steal large numbers of smartphones for resale after
they are unlocked. This legislation would not enable such
enterprises to avoid prosecution under the law for the
underlying theft or for the circumvention.
The Committee also considered H.R. 1123 with a focus on the
specific issue of unlocking wireless devices, rather than the
broader issue of circumvention.
Hearings
The Committee's Subcommittee on Courts, Intellectual
Property, and the Internet held a hearing on H.R. 1123 on June
6, 2013. Testimony was received from Michael Altschul, Senior
Vice President and General Counsel, CTIA The Wireless
Association; Steve Berry, CEO, Competitive Carriers
Association; Steve Metalitz, Partner, Mitchell, Silberberg, and
Knupp, LLP; and George Slover, Senior Policy Counsel, Consumers
Union. Additional material was submitted by Disruptive
Innovation and the Library Copyright Alliance.
Committee Consideration
On July 31, 2013 the Committee met in open session and
ordered the bill H.R. 1123 favorably reported with an
amendment, by a voice vote, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that one
rollcall vote occurred during the Committee's consideration of
H.R. 1123--the Committee considered a 2nd degree amendment
offered by Mr. Watt of North Carolina that would have limited
the legal right to unlock a cell phone to the purchaser or a
wireless communications network provider or its authorized
agent or licensed vendor. The Watt amendment was defeated 8 to
17.
ROLLCALL NO. 1
------------------------------------------------------------------------
Ayes Nays Present
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Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC)................................. X
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................
Mr. Bachus (AL)................................ X
Mr. Issa (CA).................................. X
Mr. Forbes (VA)................................ X
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)...............................
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................ X
Mr. Gowdy (SC)................................. X
Mr. Amodei (NV)................................
Mr. Labrador (ID)..............................
Ms. Farenthold (TX)............................
Mr. Holding (NC)............................... X
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Smith (MO).................................Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Mr. Scott (VA)................................. X
Mr. Watt (NC).................................. X
Ms. Lofgren (CA)............................... X
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR).............................
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................
Mr. Jeffries (NY).............................. X
------------------------
Total...................................... 8 17
------------------------------------------------------------------------
There were two amendments adopted by voice vote: the
underlying manager's amendment offered by Mr. Goodlatte of
Virginia and the 2nd degree amendment offered by Mr. Chaffetz
of Utah and Ms. Lofgren of California.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 1123, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, November 5, 2013.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1123, the
``Unlocking Consumer Choice and Wireless Competition Act.''
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie,
who can be reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 1123--Unlocking Consumer Choice and Wireless Competition Act.
As ordered reported by the House Committee on the Judiciary
on July 31, 2013.
CBO estimates that implementing H.R. 1123 would have no
significant effect on discretionary spending over the 2014-2018
period. Enacting H.R. 1123 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
H.R. 1123 would repeal a rule published in October 2012 by
the Librarian of Congress (LOC) that would limit the ability of
certain owners of wireless telephone handsets to ``unlock''
their phones, that is, to circumvent software protections that
prevent the owner from connecting to a different wireless
network. The bill would reinstate an earlier rule that provided
broader authority to circumvent such software protections. H.R.
1123 also would direct the LOC to consider, within a year after
enactment, whether to extend that broader authority to other
categories of wireless devices in addition to smartphones.
Based on information from the LOC, CBO expects that
implementing the provisions of the bill would not have a
significant effect on the agency's workload.
H.R. 1123 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act and would not affect the
budgets of state, local, or tribal governments.
H.R. 1123 would impose a private-sector mandate by
eliminating an existing right of action for wireless carriers
(and others)--who are currently able to pursue legal action
against those who, without permission, circumvent the access
controls on wireless telephone handsets sold after January 26,
2013. The cost of the mandate would be the forgone net value of
settlements and damages in such cases. A search of the
literature suggests that few, if any, of those types of
lawsuits have been brought against individual consumers.
Because such claims would probably be uncommon in the future
and the damage awards allowed in such cases would be relatively
small, CBO estimates that the cost of this mandate would be
small and fall below the annual threshold established in UMRA
for private-sector mandates ($150 million in 2013, adjusted
annually for inflation). If the Librarian of Congress decides
to broaden the exemption allowed under the bill to cover other
types of mobile devices, such an action would expand the limit
of such rights of action. The cost of that expansion would
depend on what devices the Librarian would include under the
exemption. CBO has no basis to estimate additional costs as
they would depend on the regulatory actions taken by the
Librarian.
The CBO staff contacts for this estimate are Susan Willie
(for Federal costs), and Marin Burnett and Nathan Musick (for
the private-sector impact). The estimate was approved by
Theresa Gullo, Deputy Assistant Director for Budget Analysis.
Duplication of Federal Programs
No provision of H.R. 1123 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that H.R. 1123 specifically directs
the Librarian of Congress to conduct one rule making proceeding
within the meaning of 5 U.S.C. 551.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
1123 reinstates an earlier exemption to 17 U.S.C. 1201 to
permit individuals to unlock their cell phones, creates a new
rulemaking to determine if that exemption should be extended to
other cellular devices, and enables others to legally provide
technical assistance for the purpose of unlocking.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 1123 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Short title. Section 1 sets forth the short title
of the bill as the ``Unlocking Consumer Choice and Wireless
Competition Act.''
Sec. 2. Repeal of Existing Rule and Additional Rulemaking
by Librarian of Congress. Subsection 2(a) reinstates an
exemption in paragraph (3) of section 201.40(b) of title 37,
Code of Federal Regulations, that was in effect on July 27,
2010. This exemption was made pursuant to the authority of the
Librarian of Congress as a part of his statutory authority
under Section 1201(a). This exemption, set forth in paragraph
(3) of section 201.40(b) of Title 37, Code of Federal
Regulations states ``(3) Computer programs, in the form of
firmware or software, that enable used wireless telephone
handsets to connect to a wireless telecommunications network,
when circumvention is initiated by the owner of the copy of the
computer program solely in order to connect to a wireless
telecommunications network and access to the network is
authorized by the operator of the network.''
Subsection 2(b) creates an expedited process to determine
whether or not the reinstated rule should cover other
categories of wireless devices. The Committee added this
provision to permit the Librarian of Congress to create parity
among devices with cellular connectivity. Although the language
of Subsection 2(b) does not limit the categories of devices
that connect to wireless telecommunications networks to be
considered, the Committee anticipates that this Subsection will
be most relevant to computer tablet devices that have the
ability to connect to wireless networks. The Committee expects
robust debate among interested parties before the resulting
Copyright Office rulemaking process concerning which additional
categories of devices, if any, should be exempt from the 1201
anti-circumvention restrictions. Given the technical
similarities among cellular connected devices, the Committee
expects the Register of Copyrights and Librarian of Congress to
either create a blanket exemption or no exemption in the future
for all cellular devices.
Subsection 2(c) allows an act of unlocking to be initiated
by the purchaser of a wireless telephone handset, by a family
member of such person, or by another person at the direction of
such purchaser or family member for the sole use or benefit of
such purchaser or family member. This circumvention must be
within the constraints of the exemption that had previously
been granted by the Librarian of Congress, that are adopted by
the Librarian based on the narrow additional rulemaking
authorized by this legislation, or that may be adopted for the
same purpose in subsequent proceedings under Section
1201(a)(1)(C). As reinstated, section 201.40(b)(3) of title 37,
Code of Federal Regulations, allows such acts of circumvention
to be initiated by the owner of the copy of the computer
program on the phone that enables it to connect to a wireless
telecommunications network, and then only when performed solely
in order to connect to a wireless telecommunications network
and such access is authorized by the operator of the network.
For accuracy, the Committee notes that language of the
exemption adopted by the Librarian should have referred to the
owner of the device, rather than the owner of the copy of the
computer program since most computer programs are licensed,
rather than sold, although the Committee believes that the
difference in language has no substantive effect. However, the
Committee will change the language of this legislative
provision accordingly in future actions.
As these limitations imply, the legislation does not grant
the Librarian authority to authorize circumvention in any other
context in which the Librarian may grant an exemption under
Section 1201(a)(1)(C). The Committee understands that unlocking
a handset to enable it to connect to the network of another
carrier typically involves the simple entry of a code, and that
doing so results in nothing more than enabling the phone to
connect to another network. In reporting this legislation, the
Committee notes the unique circumstances of the phone unlocking
situation, including the fact that the circumvention that is
authorized enables the purchaser only to connect his or her
device to a wireless telephone network other than the one
associated with the device when it was purchased. Circumvention
for unlocking does not compromise the security of the
information on the phone, and it does not expose any
copyrighted works present on the phone to increased risk of
infringement. Legalization of circumvention that has such
harmful effects is not the intent of this legislation and it
would not be authorized by its provisions.
Nothing in this Act is intended to serve as a limitation on
section 1201(a)(2) or section 1201(b), which remain critical to
the effectiveness of Chapter 12 of Title 17 and are in no way
altered or modified by the provisions of this legislation.
Section 2(d) contains a rule of construction to clarify the
legislation's impact upon the Librarian's existing authority.
Specifically, as a result of this legislation, the Librarian is
not allowed to modify the usual 3-year cycle for its section
1201 rulemakings, to modify or delete existing exemptions, or
to modify or delete exemptions created by subsection (b).
Minority Views
H.R. 1123, the ``Unlocking Consumer Choice and Wireless
Competition Act,'' as introduced, was a bipartisan, bicameral
bill designed to restore consumers' ability to unlock their
cell phones. We support this common sense proposal because it
provides consumers with greater choice by allowing them to keep
their existing cell phones if they choose to switch to a new
cellular network provider. We also agree that individuals who
are not technologically savvy should be allowed to obtain
assistance with unlocking their cell phones.
Nonetheless, we believe that amendments adopted during the
Judiciary Committee's markup of this legislation merit further
attention. In particular, Congress should consider the possible
unintended policy consequences of the following key changes
made by the manager's amendment: (1) the expansion of the
universe of persons authorized to unlock cell phones; (2) the
imposition of the third party assistance requirement on any
future exemptions involving the category of works that includes
tablets; and (3) the potential impact on the Copyright Office
rulemaking process. We submit these views to highlight these
changes and identify issues of possible concern regarding the
bill as reported.
We would also note that since the Committee's markup of
H.R. 1123 on July 31, 2013, the five largest mobile carriers
have agreed to allow cell phone unlocking after a consumer's
service contract expires. Specifically, in December 2013, five
major U.S. wireless companies entered into a voluntary
commitment with the Federal Communications Commission that will
make it easier for consumers to unlock their devices and switch
from one carrier to another.\1\ The adoption of these voluntary
principles undoubtedly will assist consumers and may mitigate
the need to rush legislation to the floor.
---------------------------------------------------------------------------
\1\The five wireless companies are: AT&T, Sprint, T-Mobile, U.S.
Cellular, and Verizon Wireless. Letter from Steve Largent, President &
CEO, CTIA, to Thomas E. Wheeler, Chair, Federal Communications
Commission et al. (Dec. 12, 2013), available at http://www.fcc.gov/
document/ctia-letter-carrier-unlocking-voluntary-agreement-fcc-
statements.
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DESCRIPTION AND BACKGROUND
Public policy surrounding the use of cell phones is
increasingly important as a result of the growing popularity of
smartphones, which enable consumers to access a variety of
services and perform multiple functions from a single device.
Given the technology involved with these devices, these policy
decisions invariably involve overlapping issues of copyright
law, competition and communications law.
Consumers often obtain new cell phones at a deep discount
as part of their contract. Cell phone locking has been used as
a means to ensure that consumers do not switch cellular
providers before carriers have recouped the initial device
subsidy. The process that enables a device to work on other
cell phone networks by changing the software settings is known
as cell phone unlocking. By changing internal software settings
that are usually secured by technological protection measures,
cell phones can operate on alternate carrier networks.
Under current law, it is prohibited to circumvent access
controls that protect copyrighted works.\2\ Because software
contained in cell phones is often protected by copyright law,
an exemption is legally required to circumvent those protection
measures for purposes that do not constitute an infringing use
of the copyrighted work. These anti-circumvention provisions
were established by the 1998 Digital Millennium Copyright Act
(DMCA), which also created a triennial review, called the 1201
proceeding, to provide a process to determine whether
exemptions to the prohibition against circumvention are
warranted for various categories of works.\3\ The DMCA
authorizes the Librarian of the Congress to issue temporary
exemptions during a triennial rulemaking process.\4\ This
process allows the Copyright Office to issue rules that keep
pace with advances in technology and account for and reflect
changes in business practices and consumer needs, and avoids
statutory proscriptions that are outdated by rapid advances in
technology and business practices.
---------------------------------------------------------------------------
\2\17 U.S.C. Sec. 1201 (2014).
\3\Digital Millennium Copyright Act, Pub. L. No. 105-304, 112 Stat.
2860 (1998).
\4\17 U.S.C. Sec. 1201(a)(1)(c) (2014).
---------------------------------------------------------------------------
The Copyright Office recommended an exemption for cell
phone unlocking in the 2006 and 2010 rulemaking proceedings.\5\
In 2012, however, it determined that an exemption was no longer
warranted because the evidentiary record showed that carriers
were now offering unlocked cell phones in the marketplace and
providing consumers with greater choices. The 2012 rulemaking
concluded that an exemption should continue for phones
purchased by consumers on or before January 26, 2013, but that
phones purchased after that date would not be provided an
exemption from the anti-circumvention prohibition.\6\ The 2012
decision by the Copyright Office was intended to provide a 90-
day period during which consumers would have sufficient time to
purchase phones that would be covered by the exemption.
---------------------------------------------------------------------------
\5\See http://www.copyright.gov/1201/2006 and http://
www.copyright.gov/1201/2010.
\6\See U.S. Copyright Office, Section 1201 Rulemaking Fifth
Triennial Proceeding to Determine Exemptions to the Prohibition on
Circumvention, Recommendation of the Register of Copyrights (Oct. 2012)
[hereinafter Recommendation of the Register of Copyrights].
---------------------------------------------------------------------------
Shortly after the 2012 rulemaking decision was issued, more
than 114,000 individuals signed a petition criticizing it and
demanding that unlocking be exempted from the prohibition.
Likewise, the White House and the Federal Communications
Commission also expressed support for an exemption for cell
phone unlocking.\7\
---------------------------------------------------------------------------
\7\R. David Edelman, It's Time to Legalize Cell Phone Unlocking,
available at http://
petitions.whitehouse.gov/response/its-time-legalize-cell-phone-
unlocking; Ajit v. Pai, Don't Treat Consumers Like Criminals, N.Y.
Times, Jun. 5, 2013, at A23.
---------------------------------------------------------------------------
SECTION-BY-SECTION EXPLANATION
The following is a description of the substantive
provisions of H.R. 1123, as reported.
Sec. 2. Repeal of Existing Rule and Additional Rulemaking
By the Librarian of Congress. Subsection (a) of section 2 of
the bill reinstates the previous exemption by negating the
October 2012 change and reinstating the 2009 exemption, subject
to subsections (c) and (d), which deal with unlocking at the
direction of the purchaser or family member and rules of
construction.
Subsection (b) directs the Librarian of Congress, upon the
recommendation of the Register of Copyrights, to consult with
the Assistant Secretary for Communications and Information at
the Department of Commerce and undertake a new rulemaking
within 12 months to determine if any other category of wireless
devices in addition to wireless telephone handsets should also
be covered by an exemption.
Subsection (c) permits circumvention by the purchaser of
the handset, by a family member of the purchaser, or by another
person at the direction of the purchaser or family member, for
the sole use or benefit of the purchaser or family member.
Subsection (d) states that nothing in the bill alters or
can be construed to alter the authority of the Librarian of the
Congress under section 1201(a)(1) of title 17, United States
Code, including the authority, with respect to the applicable
3-year period, to modify or delete paragraph (3) of section
201.40(b) of title 37, Code of Federal Regulations, or modify
or delete any category of wireless devices exempted under
subsection (b) of this section.
ISSUES RAISED BY H.R. 1123
I. Inadequate Process
H.R. 1123, as originally introduced, represented a
carefully crafted agreement that was supported by Members of
both parties, industry experts, and key consumer and business
stakeholders. On the eve of the Committee's markup, however,
this compromise was replaced with the text of an amendment by
Representatives Jason Chaffetz and Zoe Lofgren (Chaffetz/
Lofgren Amendment), which was not officially released to all
Democratic Members until 9:00 pm on the night preceding the
markup that was scheduled for 11:00 am the following morning.
As a result, our Members neither had sufficient time to review
the language and assess its potential ramifications nor to
consult with consumer groups, as well as governmental and
private sector representatives for their analysis.
II. Third Party Assistance
As introduced, H.R. 1123 restored the 2010 exemption, which
adequately responded to the concern that consumers should be
able to unlock their cell phones. The two prior exemptions by
the Copyright Office never explicitly authorized third party
assistance, and the introduced bill was consistent with that
approach.
The Chaffetz/Lofgren Amendment, however, added a third-
party assistance provision that expanded the universe of
individuals who could lawfully perform the unlocking service
which exceeded the exemptions previously allowed by the
Copyright Office. Under the Amendment, any ``family member''--
which is not defined in the measure--or any third-party that a
purchaser (or family member) authorizes to unlock a phone can
do so. The Amendment's failure to define who would qualify as a
``family member'' could invite unnecessary and unenforceable
probes into who may qualify as a ``family member.'' In
addition, this language may unintentionally aid those who
traffic in stolen devices and encourage the bulk purchase and
sale of unlocked phones by unauthorized dealers. Further, the
Amendment's explicit authorization of third-party assistance
was made permanent and thus would be virtually unreviewable
under the traditional 1201 proceeding even though future
advancements in technology may render the provision
unnecessary. This third-party assistance provision was not
included in the bills introduced by the House and Senate on a
bipartisan basis in March.
This last-minute expansion has been made without a record
showing that it is necessary and without any safeguards to
minimize the possibility of fraud or other activities that
could harm consumers. Testimony from the hearing on the
original bill indicated that having carriers involved in
unlocking would not pose an obstacle to consumers as they
should be able to unlock with a new carrier or agent of the new
carrier. This allows the individual to get the appropriate
technical assistance from the carrier to whom he or she wants
to transfer service. This process would be effective, and would
ensure that a cottage industry does not form that can exploit
consumers. As Mr. Mike Altschul, General Counsel, CTIA
testified during the Committee's hearing on the bill, ``the
benefit of having the carrier do the unlocking is that you do
not go to a third party source on the Internet or elsewhere
which, in the unlocking process, increases the risk of malware
and viruses being inserted into the devices.''\8\ These are
issues that we do not take lightly and the bill as reported
could increase the likelihood of these concerns.
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\8\Unlocking Consumer Choice and Wireless Competition Act: Hearing
on H.R. 1123 Before the Subcomm. on Courts, Intellectual Property, and
the Internet of the H. Comm. on the Judiciary, 113th Cong. 55 (2013)
(testimony of Michael Altschul, General Counsel, CTIA--The Wireless
Association).
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In response to the Chaffetz/Lofgren Amendment, Committee
Ranking Member John Conyers, Jr. (D-MI) and Subcommittee on
Courts, Intellectual Property, and the Internet Ranking Member
Melvin Watt (D-NC) offered at the markup a substitute amendment
that would have limited the measure's third-party assistance
provision to carriers or their authorized agents (Watt/Conyers
Amendment). The Watt/Conyers Amendment was offered in
recognition of the concern that the explicit authorization in
the Chaffetz/Lofgren Amendment that would allow virtually
anyone to perform the act of unlocking is perceived as a
potential erosion of the prohibition in 1201(b) that applies
beyond the cell phone market. The Watt/Conyers Amendment failed
by a vote of 8 to 17.
III. Imposition of Third-Party Requirement on Future Exemptions
Involving the Category of Works that Includes Tablets
As introduced, the bill would have restored the previous
authority for cell phone unlocking and authorized an out-of-
cycle 1201 rulemaking proceeding for related wireless devices
such as tablets and other connected devices. Following the out-
of-cycle proceeding, requests for a cell phone unlocking
exemption as well as that for tablets and other devices would
be considered along with any other exemption request every 3
years under the customary processes and procedures mandated by
the DMCA.
The bill as reported by the Committee requires third party
assistance to unlock devices beyond cell phones whenever the
Copyright Office issues an exemption for those devices. The
Copyright Office has never recommended an exemption for ``other
categor[ies] of wireless devices,'' in the first instance.
Under H.R. 1123 as reported, if the Copyright Office grants an
exemption for cell phones or the other category of wireless
devices in future proceedings, it is mandated to also permit
third party unlocking. This issue--unlocking and the need for
assistance for devices beyond cell phones--deserves and
requires further examination.
IV. Potential Impact on Copyright Office Rulemaking
The bill as introduced preserved the 1201 process by
narrowly focusing on the specific determination concerning an
exemption for cell phone unlocking. This targeted approach left
intact the valuable proceedings under which the Copyright
Office gathers evidence to determine whether exemptions are
warranted to the legal ban against circumventing technological
measures that protect uninhibited access to copyrighted works.
The Chaffetz/Lofgren Amendment also requires an out-of-
cycle proceeding to consider whether tablets and other wireless
devices should be exempt from the anti-circumvention
prohibition. As noted above, however, the amendment also added
the third-party assistance requirement to any future
rulemakings in which an exemption is authorized for cell phones
or any other wireless devices, including tablets, for which
there has never been an exemption provided in prior triennial
reviews. The technology in wireless devices as a category, as
opposed to cellular handsets, has never justified an exemption
in prior 1201 proceedings. In an effort to ensure that third
party assistance to unlock tablets is statutorily mandated
whenever the Copyright Office grants an exemption for the
category of works that includes tablets, the Chaffetz/Lofgren
Amendment removes the ability of the Copyright Office to
evaluate relevant evidence and intervening developments, and it
does so without regard to its impact on the broad range of
devices that are encompassed by that category.
The current process of evaluating the options and
technological advances available to consumers to ensure a
healthy competitive marketplace and protect copyrights has been
time-tested. Steven Metallitz, Counsel to the Joint Creators
and Copyright Owners, explained the reasons why we should
respect the Copyright Office rulemaking:
First, instead of the Copyright Office ranging the
field to regulate uses of access controls that a
government official might think are problematic, it
relies on private parties to step forward to identify
exactly where the exemptions are needed. Second,
exemptions are reserved for situations in which they
are necessary or it is impossible or extremely
burdensome to make a noninfringing use without
circumventing access controls. Third, all the
exemptions expire after 3 years. So the Copyright
Office and the Librarian take another look at that
point. That makes sense, given the pace of technology
and pace of change in market developments. And fourth,
the Copyright Office has consistently provided detailed
explanations of its recommendations. We do not always
agree with them, but they provide a lot of useful
guidance.\9\
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\9\Id. at 41 (testimony of Steven J. Metalitz, Counsel, Joint
Creators and Copyright Owners).
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CONCLUSION
We support legislation that restores the ability of
consumers to unlock their cell phones and that preserves the
Copyright Office's role in conducting a robust review of the
requests for exemptions from the DMCA's anti-circumvention
provisions. As originally introduced, H.R. 1123 achieved these
goals. Unexamined changes to the original bill made during the
Committee's markup raise issues that may result in unintended,
adverse consequences. In light of the voluntary agreement
reached in December 2013 by the major cellular network
providers that further improves consumer's ability to unlock
existing phones and switch carriers, these issues may also
warrant further examination.
John Conyers, Jr.
Jerrold Nadler.
Robert C. ``Bobby'' Scott.
Sheila Jackson Lee.
Additional Views
The Unlocking Consumer Choice Act as reported by the
Judiciary Committee is intended to fix a problem caused by a
Copyright Office decision in implementing section 1201 of the
Digital Millennium Copyright Act. Section 1201 forbids
circumvention of technological measures that control access to
a work protected by copyright. The penalties for violations
include civil liability, imprisonment, and heavy fines.
Under section 1201, persons are legally barred from
unlocking their personally owned cell phones or tablets, even
after the expiration of their service contract.
Allowing consumers to unlock their wireless devices enjoys
wide support from multiple stakeholders. In an official
response to a ``We the People'' petition, the White House gave
full support for allowing consumers to unlock their cell phones
and tablets.\1\
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\1\https://petitions.whitehouse.gov/response/its-time-legalize-
cell-phone-unlocking.
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Subsequently all the major wireless service providers
voluntarily agreed to unlock cell phones and tablets for
customers who were no longer under contractual obligation with
the service provider. In announcing the agreement to unlock
cell phones and tablets, CTIA stated that the ``agreement will
continue to foster the world-leading range of devices and
offerings that Americans enjoy today.''\2\
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\2\CTIA Announces Voluntary Principles on Unlocking Wireless
Devices, http://blog.ctia.org/2013/12/12/ctia-announces-voluntary-
principles-unlocking-wireless-devices.
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By permitting consumers to unlock phones for personal use,
this bill will strengthen consumer choice and protections. It
allows the tech savvy to assist their less savvy family members
and friends in unlocking their device. Additionally, allowing
any third-party to assist with the unlocking will ensure that
any fees associated with unlocking will be reasonable. This
also provides consumers with the freedom of not having to deal
with former service providers, or potentially face restrictions
on cell phone unlocking in foreign countries when taking their
phone overseas.
However, this bill is just a small step in the right
direction of a much bigger issue. The current broad protections
for other types of ``digital locks'' harms consumer choice,
encourages anti-competitive behavior, and stifles innovation
and does not conform to the thinking outlined in Lexmark V.
Static Control Components.\3\
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\3\Lexmark Intern. v. Static Control Components, 387 F. 3d 522.
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Lexmark had developed a microchip based authentication
system for its printer toner cartridges that prevented the use
of refilled cartridges as well as the use of third-party
competing cartridges.
Lexmark asserted that section 1201 of the Digital
Millennium Copyright Act prevented Static Control Components
(or any other printer cartridge manufacturer) from creating its
own version of the authentication chip because of the copyright
associated with the software used to operate the printer, even
though the lock itself did not protect this software or any
other copyrightable content. This essentially eliminated all
competition.
The court in Lexmark sided with Static Control Components
and, recognizing the potential for future abuses, in his
concurring opinion Judge Merritt wrote that: ``our holding
should not be limited to the narrow facts surrounding either
the Toner Loading Program or the Printer Engine Program. We
should make clear that in the future companies like Lexmark
cannot use the DMCA in conjunction with copyright law to create
monopolies of manufactured goods for themselves . . .''\4\ In
other words, using a lock to assert control over a non-
copyrightable product rather than to protect copyrightable
content was not a permissible understanding of 1201. Otherwise
the DMCA could impermissibly be used to protect monopoly.
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\4\Lexmark Intern. v. Static Control Components, 387 F. 3d 522,
Judge Merritt Concurring at 551.
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The view that circumvention alone is illegal cuts off the
potential of innovation to use devices in unique but otherwise
lawful ways not intended by the manufacturer. In essence, at
stake is what it means to ``own'' a device that has been
purchased. Individuals should be free to tinker with and
customize the devices they own to the fullest extent unless the
rights of others, such as copyright owners, are infringed.
Judge Merritt understood that ``Congress did not intend to
allow the DMCA to be used offensively in this manner, but
rather only sought to reach those who circumvented protective
measures `for the purpose' of pirating works protected by the
copyright statute.''\5\
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\5\Id. at 552.
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While I support the Unlocking Consumer Choice Act as
introduced and as reported out of the Judiciary Committee, it
is time for Congress to reexamine section 1201 and make clear
that circumvention for uses that do not infringe on copyright
are permitted--as was the original intent of the law.
Zoe Lofgren.