The Family Entertainment and Copyright Act would assure manufacturers of DVD players and other devices using such technology they would not be violating copyrights of the Hollywood producers of movies.
The House passed it Tuesday on a voice vote. The Senate passed it in February.
The bill also would make it a federal crime to use video cameras to record films in movie theaters, and it would set tough penalties of up to 10 years in prison for anyone caught distributing a movie or song prior to its commercial release.
"Imagine the frustration of spending months or even years working on an album only to have those carefully crafted plans usurped by an eleventh-hour theft," said Mitch Bainwol, chief executive for the Recording Industry Association of America.
Moviegoers caught using video cameras in theaters would face up to three years in prison for a first offense and up to six years for later arrests.
More than 90 percent of pirated movies are recorded by people in the audience with a camcorder, said Dan Glickman, the head of the Motion Picture Association of America.
"Video theft hurts taxpayers, it hurts consumers, it hurts the creative process and it hurts the hundreds of thousands of people who work hard each day to make the magic of the movies," said Glickman, whose son is a producer.
The bill's most controversial provision focused on new filtering technology that lets parents automatically skip or mute sections of commercial movies that contain foul language, violence or nudity.
The author of the provision, Rep. Lamar Smith, R-Texas, compared a parent's freedom to skip violent movie scenes to skipping offensive passages in a book. That section of the bill was rewritten to explicitly provide no legal protections for companies that sell copies of edited movies.
"It lets parents decide for themselves what children see and hear on television," Smith said. "Raising children may be the toughest job in the world. Parents need all the help they can get."
"The intent of the movie-filtering technology is to sanitize movies to protect children," said Rep. Diane Watson, D-Calif. "While I support family friendly entertainment, I believe this method is not only a violation of filmmakers' copyright protections but also an infringement of their artistic vision."
Critics of the bill have argued it was aimed at helping one company, Utah-based ClearPlay Inc., whose technology is used in some DVD players to help parents filter inappropriate material by muting dialogue or skipping scenes. ClearPlay sells filters for hundreds of movies that can be added to such DVD players for $4.95 each month.
Unlike ClearPlay, some other companies produce edited DVD copies of popular movies and sell them directly to consumers.
Hollywood executives have complained that ClearPlay's technology represents unauthorized editing of their movies. They maintain that ClearPlay should pay them licensing fees for altering their creative efforts.
The Directors Guild of America sued ClearPlay in federal court in Colorado alleging copyright violations. The company's chief executive, Bill Aho, said he expects the lawsuit will be dismissed after Bush signs the bill into law.
The bill is Senate 167.