WASHINGTON--Legislators are readying a bill that could sharply limit Americans' rights relating to copying music, taping TV shows, and transferring files through the Internet.

At the same time, the draft legislation seen by CNET News.com would place the struggling Webcasting industry on firmer legal footing.

Two key House legislators wrote the double-edged proposal in consultation with the Library of Congress' Copyright Office. They appear likely to introduce it this month.

The creation of the two-part draft comes as politicians and judges are grappling with the slippery mix of high-speed Net access, digital content, and the popularity of file-swapping networks. Last week, record labels hinted they might broaden their legal fusillade to encompass lawsuits against individuals.

Reps. Howard Coble of North Carolina and Howard Berman of California, who authored the draft, say their proposed changes to copyright law follow suggestions made last August by the Copyright Office.

"The Copyright Office recommended that Congress amend the Copyright Act," the two politicians wrote in a five-page letter sent last month to members of the subcommittee that oversees intellectual property. Coble is the Republican chairman of the panel, and Berman, who announced plans last month for an unrelated bill assailing peer-to-peer networks, is the senior Democrat.

The first part of their proposal, which would limit backup copies, has already drawn objections from academics and nonprofit groups that have reviewed it.

Under current copyright law, Americans who record a TV program or radio segment generally may "sell or otherwise dispose of" that analog recording or digital file as they wish.

The proposed bill would end that exemption, handing copyright owners substantial new control over the distribution of their works by curtailing copying rights granted to consumers under a doctrine known as "fair use."

"If you were to take today's episode of 'E.R.' and tape it and give it to your mother, it would be copyright infringement under this bill," said Jessica Litman, a professor at Wayne State University who specializes in copyright law.

Aiding Webcasters
A less incendiary section of the draft would give a minor boost to Webcasters by saying they're off the hook for temporary copies, called cached or buffered copies, made while streaming music to listeners. To qualify, a Webcaster must be licensed by an agency such as ASCAP and must ink an agreement with the record labels.

According to the draft bill, such Webcasting "is not an infringement of copyright"--if temporary copies are made only to facilitate music distribution and if the copies are stored only for a time that's necessary for the broadcast.

Critics of the measure said it would address a significant issue in how copyright law is applied to Webcasting. They noted, however, that it leaves some loopholes and ignores more pressing licensing issues threatening the industry, such as a recently proposed royalty scheme that some Net radio broadcasters say will put them out of business.

"Exempting Webcasters' buffer copies from royalty obligations (is) the right thing to do--but almost meaningless given that, absent quick congressional action, the royalty scheme recently adopted by the Library of Congress will shut down most Webcasters the day it takes effect," said Philip Corwin, a lobbyist at Butera and Andrews representing Sharman Networks, which distributes the Kazaa file-sharing software.

Last month, the Librarian of Congress set royalty fees for Web radio companies, ruling they would pay 0.07 cent, or about a 14th of a cent, for each song played for a single listener. Many Webcasters have said the rates are prohibitively high.

Slow to take sides
In an unusual twist, Coble and Berman stressed in their letter to colleagues that their authorship of the draft bill does not necessarily "constitute an endorsement of its contents." Rep. John Conyers of Michigan, the top Democrat on the full Judiciary committee, also helped in the creation and included the same unusual disclaimer.

Spokeswoman Gene Smith said Thursday that Berman opposes the bill and drafted it only at the request of House Judiciary Committee Chairman James Sensenbrenner, R-Wis.

"Part of it exempts buffer copies," Smith said. "Howard thinks there has been no demonstrated need for that. It's not a demonstrated problem.

"The biggest impediment to more licensed, lawful services online is piracy, and that's why he is pushing his peer-to-peer bill," Smith said. Berman represents California's San Fernando Valley, adjacent to Los Angeles and Hollywood's cluster of entertainment companies.

Last month, Berman said he would introduce a bill to let copyright owners, such as record labels or movie studios, launch technological attacks against file-swapping networks, where their wares are illegally traded. He plans to introduce it next week.

Coble's office declined to comment on the substance of the draft bill.

"We're awaiting the responses from the subcommittee members," a spokesman for Coble said.

The origin of the joint proposal lies in the 1998 Digital Millennium Copyright Act ( DMCA). Part of that controversial law, which has been the subject of high-visibility court challenges and led to the prosecution of Russian programmer Dmitry Sklyarov, required the Copyright Office and the Commerce Department to report on how effective key portions of the DMCA have been.

In its analysis, the Commerce Department made no proposals to amend the DMCA. But the Copyright Office did in its report released last August.

In March, the House Judiciary committee asked for public comments based on the Copyright Office's recommendation. The panel's announcement said, "We are initiating a process to review relevant digital music issues and related proposals to amend the Copyright Act that have been brought or will be brought to our attention."

Curtailing fair use
One impetus for the draft bill, which remains untitled, could be to derail a more comprehensive bill favored by Webcasters called the Music Online Competition Act. It's co-authored by Rep. Rick Boucher, D-Va., who has vowed to oppose some of the more dramatic attempts by the music industry to tighten copyright laws.

Some of the same opponents appear poised to offer a lukewarm endorsement of the Webcasting measure in the draft bill, while denouncing the limits on fair-use rights.

R. Polk Wagner, who teaches intellectual property law at the University of Pennsylvania, says the proposal has "the potential to cut back fair use rather substantially."

"Let's say I obtained a copyrighted work under fair use, say a photo of Mickey Mouse," Wagner said. "If I wanted to discuss, criticize or share that work, I need to interact with other people. Yet section one of the draft bill quite clearly says I have no rights to distribute the work, which would seem to rather severely limit my use. In the digital era, interaction takes place by transferring and copying files."

Fred von Lohmann, an attorney with the Electronic Frontier Foundation, went further in his criticism.

"The Berman-Coble change would arguably make it illegal for me to swap my iPod with a friend for a week, something I recently did," von Lohmann said. "Who knows what cool stuff might have thrived in this niche exception, but for (this proposed) change?"

In accordance with the Film and Music Industy's new strategy of targeting individual users, it appears that Cox communications is sending out warnings to users trading files over Gnutella at the behest of the MPAA (Something Sony Music has been known to do). The warning lists which files the user has downloaded, as well as the date of the offense and the IP address of the offender. There is no indication as to whether or not Cox actually confirms the information before sending the letter. Originally spotted at the Politechbot mailing list, we reprint the letter below.

Dear Customer,

We are writing on behalf of Cox Communications to advise you that we have received a notification that you are using your Cox High Speed Internet service to post or transmit material that infringes the copyrights of a complainant's members. I have enclosed a copy of the complaint letter. Pursuant to the provisions of the Digital Millennium Copyright Act ("DMCA"), which is codified at 17 U.S.C. § 512, upon receiving such notification, Cox is required to "act expeditiously to remove, or disable access to" the infringing material in order to avoid liability for any alleged copyright infringement. Accordingly, Cox will suspend your account and disable your connection to the Internet within 24 hours of your receipt of this email if the offending material is not removed.

Please be aware that the DMCA also provides procedures by which a subscriber accused of copyright violation can respond to the allegations of infringement and, under certain circumstances, cause his or her account to be reinstated. To do so, however, the response must meet
certain criteria. Pursuant to section (g) of the DMCA (17 U.S.C. §512(g)), you have the right to submit to Cox a counter-notification which, to be effective, must include the following elements:

(a) a physical or electronic signature of the subscriber;
(b) identification of the material that has been removed or to whichaccess has been disabled and the location at which the material appeared before it was removed or disabled;
(c) a statement under penalty of perjury that the subscriber has a good faith belief that the material was removed or disabled as a result of mistake or misidentification of the material to be removed or disabled;
(d) the subscriber's name, address, and telephone number and a statement that the subscriber consents to the jurisdiction of the Federal District Court for the judicial district in which the address is located.

In the event that you submit to Cox a counter-notification that includes these elements, Cox will forward your counter notification to the complainant and advise them that Cox will cease disabling access to the allegedly infringing material in ten (10) business days. Unless the
complainant notifies us that it has filed an action seeking a court order to restrain you from engaging in the allegedly infringing activity prior to the expiration of those ten (10) business days, Cox will reactivate your account.

We have received information that an individual has utilized the above referenced IP address at the noted date and time to offer downloads of copyrighted motion picture(s) through a peer-to-peer service, including such title(s) as:

Harry Potter And The Sorcerer's Stone
Jay And Silent Bob Strike Back
Simpsons, The (TV)
Windtalkers

The distribution of unauthorized copies of copyrighted motion pictures constitutes copyright infringement under the Copyright Act, Title 17 United States Code Section 106(3). This conduct may also violate the laws of other countries, international law, and/or treaty obligations.

Since you own this IP address, we request that you immediately do the following:

1. Disable access to the individual who has engaged in the conduct described above, and;
2. Take appropriate action against the account holder under your Abuse Policy/Terms of Service Agreement.

On behalf of the respective owners of the exclusive rights to the copyrighted material at issue in this notice, we hereby state, pursuant to the Digital Millennium Copyright Act, Title 17 United States Code Section 512, that we have a good faith belief that use of the material in the manner complained of is not authorized by the copyright owners, their respective agents, or the law.

Also pursuant to the Digital Millennium Copyright Act, we hereby state, under penalty of perjury, under the laws of the State of California and under the laws of the United States, that the information in this notification is accurate and that we are authorized to act on behalf of the owners of the exclusive rights being infringed as set forth in this notification.

Please contact us at the above listed address or by replying to this email should you have any questions. Kindly include the above noted Reference # in the subject line of all email correspondence.

We thank you for your cooperation in this matter. Your prompt response is requested.

As an Independent Filmmaker, or someone that has a interest in the matter of copyright...This is so silly. Once again, the amount of money made by the industry, no matter what media film, music, or television. The amount of money being made is huge.

As an Indie Filmmaker, I make nothing yet spend everything to do what I do...The others who inbark in the journey for the love of filmmaking never complain about the royalties that could be intitled to us. To do what you love, and have others view what you love is a reward in itself.

The laws of copyright is sad to me. I never onced looked at the material made by me and my crew to be something that should be held so close. The art is what we do it for, and that should be where the heart is. To ask for people to pay in any such way, is sad. I understand that it is hard to follow any line of work in the entertainment industy as a steady paying way of life. But, let us artists remember why he decided to venture into this avenue. It was nevera about the money...it was always about the love.

I've met many bands, filmmakers, and artist who never was in the mainstream. Who never had agents, publicity, or any other means of exposure. Yet, they still strive on to continue down the road that is still so hard. Why? its never because of the goals of making it rich. It was always about what they liked to do, and didn't know anything else...

This is the only way for bigger artists to insure there place in the world. While cutting the legs from under the people that are in the underground, who never had the money, agents, or marketing plan that the mainstream consists of.

Last, I would just like to say sorry to those in the industry that I might offend in anyway.

My views of this matter was always cut clean and simple. Let the people be free, with no restrictions.

You will always get what your worth in the end. If you put in 110%, you'll get 110% back...remember that... _________________Isnt it funny? This feeling inside...