The first objective of the DMCA is to implement provisions of the WIPO treaties. The treaties are intended to harmonize copyright laws in the international arena, by raising minimum standards of protection for copyrighted works, including cyberspace commerce protection and new digital-era protections for sound recordings. Passage of the DMCA enables the Senate to ratify the WIPO treaties, which it is expected to do early next term. The treaties must be signed by 30 countries before they become effective, and the United States, which has championed the treaties, would be the third country to sign. The United States, already substantially in line with treaty standards, needed to enhance protection in two areas to come into full compliance, by enacting "anti-circumvention" provisions (to prevent electronic theft in the digital age), and prohibitions against alteration of copyright management information. Congress included a new chapter (Chapter 12) to the Copyright Act, providing civil remedies and criminal penalties for violations of either provision.

Under the WIPO treaties, signatory countries must provide "adequate legal protection and effective legal remedies" against the circumvention of technological measures, such as encryption technology, used to restrict unauthorized or unlawful copying. Among other things, the DMCA prohibits the sale of "black boxes" used to circumvent anti-copying technology. The anti-circumvention provisions are limited by carefully crafted exemptions for libraries, archives and educational institutions, legitimate encryption research and "security testing" (obtaining access to a computer, computer system or computer network for the sole purpose of testing, investigating or correcting a security flaw or vulnerability, provided that the person engaging such testing is doing so with the consent of the owner or operator of the computer, computer system or computer network). Also, analog video cassette recorders must now be equipped with certain standardized copy control technology.

Both of the new WIPO treaties require signatory countries to protect the integrity of copyright management information. This includes information that identifies the work, the author of the work, and the owner of any right in the work as well as any information about the terms and conditions of its use, and any numbers or codes representing such information, when any of this information is digitally "attached" to a copy of the work or appears in connection with the communication of the work to the public.

The second objective of the DMCA is to implement an agreement between copyright owners and Internet service providers concerning liability for on-line uses of copyrighted works. Internet service providers will enjoy greater certainty under the DMCA, with reduced exposure for copyright infringement if certain conditions are met. Compliance with the DMCA's safe harbor provisions insulates Internet service providers from liability for monetary awards for direct, vicarious and contributory infringement (including damages, costs, and attorneys' fees), for (i) acting as a "mere conduit" for infringing transmissions, (ii) "system caching" (if certain other conditions are met), and (iii) other "innocent" conduct where infringing material may be accessed by a hyperlink or stored by the Internet service provider, provided in each case that the service provider moves expeditiously to remove infringing material when apprised of it.

Another component of the DMCA was enacted in response to MAI Systems Corp. v. Peak Computer, Inc., the Ninth Circuit decision that loading software into a computer's RAM to permit a third party service provider to service the hardware constitutes copyright infringement. That case held that 17 U.S.C. §117's exemption for making a RAM copy to boot up software did not extend to third party service providers. The "Computer Maintenance or Repair Copyright Exemption" was added to the DMCA to clarify that an independent service provider that is not itself a licensee of a computer program resident on its client's machine, may activate that machine for the purpose of servicing the hardware components without infringing copyright in the software. The DMCA sets forth conditions, intended to protect the copyright software owners, that must be met to claim the exemption.

The DMCA also establishes a compulsory licensing mechanism for "webcasting" copyrighted music via the Internet. Webcasters, such as broadcast.com, currently "stream" media files transmitting music ("webcasts") to listeners, without the efficiency of a compulsory or blanket licensing regime for clearing rights to the copyrighted sound recordings they webcast. ASCAP and BMI currently offer blanket licenses for webcasting the musical compositions incorporated in sound recordings, similar to the licenses traditionally offered to radio broadcasters, but such licenses do not cover the use of sound recordings. The new statutory licensing provisions are important because while U.S. copyright law recognizes no "performance right" for radio broadcasts of sound recordings (as opposed to musical compositions, which are accorded such rights), under the Digital Performance Rights in Sound Recordings Act of 1995 ("DPRSR"), owners of sound recording copyrights (usually record companies) do have performance rights for certain digital transmissions, and thus are in a position to license and participate in revenues of "webcasters". The DMCA sets forth requirements a webcaster must meet to qualify for statutory licensing of copyrighted sound recordings, including limitations relating to interactivity, programming length (incorporating by reference the "sound recording performance complement" provisions of the existing Copyright Act), and other requirements. Before the DMCA, a webcaster could either negotiate licenses with each owner of copyright in the sound recordings it sought to webcast, or construe its digital transmissions as exempt under the DPRSR, an interpretation opposed by the Recording Industry Association of America. The DMCA also provides a statutory license and certain exemptions for "ephemeral recordings" made in connection with permissible broadcasts and transmissions. Many webcasters will find much to like in the new law.

The DMCA also creates a new intellectual property right for boat hull designs. This new form of industrial design protection was enacted in response to the Supreme Court's 1989 invalidation of the Florida state law providing protection for boat hull designs (Bonito Boats v. Thunder Craft Boats, Inc.). The term of protection is ten years, shorter than existing copyright, utility patent or design patent terms. The law will be in effect for two years, during which the Copyright Office will conduct a study to determine its efficacy.

Other miscellaneous amendments to the Copyright Act contained in the DMCA include the requirement that assignees of motion picture copyrights honor certain collective bargaining agreements (to ensure payment of residuals), and a confirmation of certain aspects of the role and operations of the Copyright Office. Taken as a whole, and particularly when considered in combination with the Sonny Bono Term Extension Act and Fairness in Music Licensing Act (also approved by Congress just a few days before the DMCA) the 105th Congress has accomplished in its final days the most extensive overhaul of the Copyright Act in over 20 years.