3.  Excerpts From House Report on Section 108

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==================== The following excerpts are reprinted from the House Report on the new copyright law (H.R.  Rep.  No. 94-1476, pages 74-79).  All of the House Report’s discussion of section 108 is reprinted here; similarities and differences between the House and Senate Reports on particular points will be noted below. =======================================
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a.  House Report:  Introductory Statement

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===================== This paragraph is substantially the same in the Senate and House Reports. ==================================
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Notwithstanding the exclusive rights of the owners of copyright, section 108 provides that under certain conditions it is not an infringement of copyright for a library or archives, or any of its employees acting within the scope of their employment, to reproduce or distribute not more than one copy or phonorecord of a work, provided (1) the reproduction or distribution is made without any purpose of direct or indirect commercial advantage and (2) the collections of the library or archives are open to the public or available not only to researchers affiliated with the library or archives, but also to other persons doing research in a specialized field, and (3) the reproduction or distribution of the work includes a notice of copyright.

b.  House Report:  Discussion of Libraries and Archives in Profit-Making
   Institutions

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=================== The Senate and House Reports differ substantially on this point.  The Senate Report’s discussion is reprinted at page 17, above. ============================
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Under this provision, a purely commercial enterprise could not establish a collection of copyrighted works, call itself a library or archive, and engage in for-profit reproduction and distribution of photocopies.  Similarly, it would not be possible for a non-profit institution, by means of contractual arrangements with a commercial copying enterprise, to authorize the enterprise to carry out copying and distribution functions that would be exempt if conducted by the non-profit institution itself.

The reference to “indirect commercial advantage” has raised questions as to the status of photocopying done by or for libraries or archival collections within industrial, profitmaking, or proprietary institutions (such as the research and development departments of chemical, pharmaceutical, automobile, and oil corporations, the library of a propriatary hospital, the collections owned by a law or medical partnership, etc.).

There is a direct interrelationship between this problem and the prohibitions against “multiple” and “systematic” photocopying in section 108 (g) (1) and (2).  Under section 108, a library in a profit-making organization would not be authorized to: