[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2724 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2724

     To amend title 17, United States Code, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 2, 2001

Mr. Cannon (for himself and Mr. Boucher) introduced the following bill; 
          which was referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
     To amend title 17, United States Code, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Music Online Competition Act of 
2001''.

SEC. 2. EXEMPTION OF CERTAIN PERFORMANCES IN ONLINE AND PHYSICAL RETAIL 
              ESTABLISHMENTS.

    (a) Exemption.--Section 110(7) of title 17, United States Code, is 
amended--
            (1) by striking ``(7)'' and inserting ``(7)(A)'';
            (2) by striking ``by a vending establishment'' and 
        inserting ``or of a sound recording by digital audio 
        transmission, by or in a physical vending establishment''; and
            (3) by adding after the semicolon at the end the following: 
        ``or
                    ``(B) performance of a sample of a nondramatic 
                musical work or a sample of a sound recording by 
                digital audio transmission, by or through a digital 
                online service open to the public at large without any 
                direct or indirect admission charge, if--
                            ``(i) the purpose of the performance is to 
                        promote the retail sale, distribution or 
                        license, by or through the service, of copies 
                        or phonorecords of the work, including by 
                        digital phonorecord delivery as defined in 
                        section 115(d)(1);
                            ``(ii) the transmitting entity transmits 
                        the sample solely to the particular recipient 
                        requesting the transmission; and,
                            ``(iii) the length of the sample does not 
                        exceed 30 seconds or, in the case of a sound 
                        recording of more than 5 minutes in duration, 
                        10 percent of that sound recording not to 
                        exceed 60 seconds;''.
    (b) Definition of Performance.--Section 110 of title 17, United 
States Code, is amended by adding at the end the following: ``For 
purposes of paragraph (7), a `performance' includes a transmission made 
by a transmitting organization to or on behalf of a vending 
establishment or a digital online service.''.

SEC. 3. EXEMPTION FOR EPHEMERAL RECORDINGS AND FOR MULTIPLE EPHEMERAL 
              RECORDINGS.

    (a) Exemption.--Section 112(a)(1) of title 17, United States Code, 
is amended--
            (1) in subparagraph (A), by striking ``made it, and'' and 
        inserting ``made it and, except to facilitate transmission of 
        the performance,''; and
            (2) in subparagraph (C), by striking ``public.'' and 
        inserting the following: ``public, except that a transmission 
        program as set forth in section 114(d)(2)(B) or section 
        114(d)(2)(C)(iii) is not required to be destroyed by a 
        transmitting organization entitled to a statutory license under 
        section 114(f).''.
    (b) Multiple Ephemeral Recordings Exemption.--Section 112 of title 
17, United States Code, is amended--
            (1) by striking subparagraph (C) of subsection (e)(1) and 
        redesignating subparagraph (D) as subparagraph (C);
            (2) by redesignating subsection (f) as subsection (g);
            (3) by adding after subsection (e) the following:
    ``(f) Notwithstanding the provisions of section 106, and except in 
the case of a motion picture or other audiovisual work, it is not an 
infringement of copyright for a transmitting organization entitled to 
transmit to the public a performance or display of a work, under a 
license, including a statutory license under section 114(f), or 
transfer of the copyright or under the limitations on exclusive rights 
in sound recordings specified by section 114(a) or for a transmitting 
organization that is a broadcast radio or television station licensed 
as such by the Federal Communications Commission and that makes a 
broadcast transmission of a performance of a sound recording in a 
digital format on a nonsubscription basis, to make one or more copies 
or phonorecords of a work included in a sound recording, if--
            ``(1) each copy or phonorecord is retained and used solely 
        by the transmitting organization that made it; and
            ``(2) each copy or phonorecord is used solely for the 
        transmitting organization's own transmissions within its local 
        service area, or for purposes of archival preservation or 
        security.''

SEC. 4. LICENSING FOR TRANSMISSION.

    (a) Statutory Performance License Payments.--Subsection (g) of 
section 114 of title 17, United States Code, is amended--
            (1) by striking paragraph (2), and
            (2) by adding after paragraph (1) the following:
            ``(2) Receipts from the statutory licensing of public 
        performances of sound recordings by digital audio transmission 
        in accordance with subsection (f) shall be allocated and paid 
        in the following manner:
                    ``(A) 45 percent of the receipts shall be paid, on 
                a per sound recording basis, to the recording artist or 
                artists featured on such sound recording or to a 
                designated collection and distribution organization on 
                behalf of such featured recording artist or artists.
                    ``(B) 2.5 percent of the receipts shall be 
                deposited in an escrow account managed by an 
                independent administrator jointly appointed by 
                copyright owners of sound recordings and the American 
                Federation of Musicians (or any successor entity) to be 
                distributed to nonfeatured musicians (whether or not 
                such musicians are members of the American Federation 
                of Musicians) who have performed on sound recordings.
                    ``(C) 2.5 percent of the receipts shall be 
                deposited in an escrow account managed by an 
                independent administrator jointly appointed by 
                copyright owners of sound recordings and the American 
                Federation of Television and Radio Artists (or any 
                successor entity) to be distributed to nonfeatured 
                vocalists (whether or not such vocalists are members of 
                the American Federation of Television and Radio 
                Artists) who have performed on sound recordings.
                    ``(D) 50 percent of the receipts shall be paid to a 
                designated collection and distribution organization on 
                behalf of the copyright owner of the exclusive right 
                under section 106(6) of this title to perform publicly 
                the sound recording by means of digital audio 
                transmission under the statutory license of subsection 
                (f) of this section.''.
    (b) Licensing Affiliates.--
            (1) In general.--Subsection (h) of section 114, title 17, 
        United States Code, is amended--
                    (A) by striking paragraphs (1) and (2) and 
                inserting the following:
            ``(1) If the copyright owner of a sound recording licenses 
        an affiliated entity the right to reproduce the copyrighted 
        work, to distribute the copyrighted work to the public by means 
        of a digital phonorecord delivery or to perform the copyrighted 
        work publicly, the copyright owner shall make the licensed 
        sound recording available on no less favorable terms and 
        conditions to all bona fide entities that offer similar 
        services, except that, if there are material differences in the 
        scope of the requested license with respect to the type of 
        service, the particular sound recordings licensed, the 
        frequency of use, the number of subscribers served, or the 
        duration, then the copyright owner may establish different 
        terms and conditions for such other services, that such 
        different terms and conditions--
                    ``(A) shall be limited to, and shall accurately 
                reflect any such material differences in the scope of 
                the requested license; and
                    ``(B) permitted under this paragraph, shall be made 
                available to all bona fide entities that offer similar 
                services.
            ``(2)(A) Except as provided in subparagraph (B), a 
        copyright owner that licenses a sound recording pursuant to 
        paragraph (1) shall not mandate as part of the terms and 
        conditions of the license that the licensee use any particular 
        digital rights management technology.
            ``(B) A copyright owner described in subparagraph (A) shall 
        not be prevented from including in the license a requirement 
        that the licensee implement digital rights management 
        technology that meets reasonable and nondiscriminatory 
        performance criteria the copyright owner has established to 
        protect a right of a copyright owner under this title in a work 
        or a portion thereof.
            ``(3)(A) Except as provided in subparagraph (B), a 
        copyright owner that licenses a sound recording pursuant to 
        paragraph (1) shall not mandate as part of the terms and 
        conditions of the license that the licensee use any particular 
        digital music player.
            ``(B) A copyright owner described in subparagraph (A) shall 
        not be prevented from including in the license a requirement 
        that the licensee use a digital music player that meets 
        reasonable and nondiscriminatory performance criteria the 
        copyright owner has established.
            ``(4) Enforcement.--(A) The Attorney General may 
        investigate an alleged violation of this subsection if an 
        investigation begins not later than 2 years after an alleged 
        violation occurred.
    ``(B) If the date of an alleged violation is unknown, the Attorney 
General may investigate to determine the date of the alleged violation.
    ``(C) If the Attorney General determines that a violation of this 
subsection has occurred, the Attorney General has the power to seek to 
enforce the requirements of this subsection through all appropriate 
means.
    ``(D) Nothing contained in this paragraph shall be construed to 
limit the authority of the Attorney General under any other provision 
of law.
            (2) Definitions.--Subsection (j) of section 114 of title 
        17, United States Code, is amended--
                    (A) by amending paragraph (1) to read as follows:
            ``(1) The term `affiliated entity' means an entity, other 
        than an entity that wholly owns or is wholly owned by the 
        licensor, engaging in digital audio transmissions covered by 
        section 106(6) or digital phonorecord deliveries in which the 
        licensor has any direct or indirect partnership or any 
        ownership interest amounting to 5 percent or more of the 
        outstanding voting or nonvoting stock.'';
                    (B) by redesignating paragraphs (6) through (15) as 
                paragraphs (9) through (18), respectively;
                    (C) by inserting after paragraph (5) the following:
            ``(6) The term `digital music player' means a technology 
        that renders audible the sounds in a sound recording embodied 
        in a digital audio transmission or a digital phonorecord 
        delivery.
            ``(7) The term `digital phonorecord delivery' shall have 
        the meaning given such term in section 115(d)(1).
            ``(8) The term `digital rights management technology' means 
        a technological measure used to limit the uses of copyrighted 
        work to those authorized by the copyright owner or the law.''.

SEC. 5. ELECTRONIC ADMINISTRATION OF THE COMPULSORY LICENSE FOR MAKING 
              AND DISTRIBUTING SOUND RECORDINGS.

    (a) Notice of Intention.--Section 115(b) of title 17, United States 
Code, is amended--
            (1) by striking paragraph (1) and inserting the following:
            ``(1) Notice.--(A) Any person who wishes to obtain a 
        compulsory license under this section shall do so by serving a 
        notice of intention to make and distribute phonorecords of the 
        work.
            ``(B) Such notice may be given by direct notice served upon 
        the copyright owner or by constructive notice that does not 
        identify the copyright owner and that is to be served upon the 
        Copyright Office.
            ``(C) Notice shall be served before or within 30 days after 
        making, and before distributing, any phonorecords of the work, 
        except that a notice of intention to make digital phonorecord 
        deliveries shall be made within 30 days after enactment of this 
        Act or before the making of a digital phonorecord delivery of 
        the work, whichever is later.
            ``(D) Any notice of intention may identify more than one 
        work and a constructive notice also may identify a work by one 
        or more copyright owners.
            ``(E) The notice shall comply, in form, content, and manner 
        of service, with requirements that the Register of Copyrights 
        shall prescribe by regulation.'';
            (2) by redesignating paragraph (2) as paragraph (3); and,
            (3) by inserting after paragraph (1) the following:
            ``(2) Royalty Fees.--Any person who obtains a compulsory 
        license under this section shall--
                    ``(A) pay royalty fees in accordance with 
                subsection (c); or
                    ``(B) if such royalty fees have not been 
                determined, agree to pay such royalty fees as shall be 
                determined in accordance with subsection (c).'';
            (4) in paragraph (3), as redesignated, by inserting ``or 
        (2)'' after ``(1)''.
    (b) Limited Digital Phonorecord Delivery.--Section 115(c) of title 
17, United States Code, is amended--
            (1) in paragraph (3)--
                    (A) in subparagraph (C) by striking ``and (ii)'' 
                and inserting ``(ii) limited digital phonorecord 
                deliveries, and (iii)'';
                    (B) in subparagraph (D)--
                            (i) by striking ``and (ii)'' and inserting 
                        ``(ii) limited digital phonorecord deliveries, 
                        and (iii)''; and
                            (ii) by inserting after ``as provided in 
                        subparagraphs (B) and (C).'' the following: 
                        ``In setting royalty rates and terms for 
                        limited digital phonorecord deliveries under 
                        this section, the copyright arbitration royalty 
                        panel also shall consider the limitations 
                        imposed upon the use of the limited digital 
                        phonorecord delivery by a transmission 
                        recipient in proportion to digital phonorecord 
                        deliveries in general, the extent to which 
                        limited digital phonorecord deliveries may 
                        promote or may substitute for the sales of 
                        phonorecords or otherwise may enhance or may 
                        interfere with the copyright owner's other 
                        streams of revenue from its nondramatic musical 
                        works, and the proportion of the revenue 
                        received by the compulsory licensee from every 
                        such act of distribution of the phonorecord 
                        under this clause equal to the proportion of 
                        the revenue received by the compulsory licensee 
                        from distribution of a general digital 
                        phonorecord delivery that is payable by a 
                        compulsory licensee under clause (2) and under 
                        chapter 8.'';
            (4) by inserting in paragraph (5) after ``next preceding.'' 
        the following: ``Payments for digital phonorecord deliveries 
        shall be made to the copyright owner or, if the notice of 
        intention has been served upon the Copyright Office, to either 
        the copyright owner or the Copyright Office.''
            (5) by inserting in paragraph (6) after ``copyright owner'' 
        the following: ``or, pursuant to paragraph (5) the Copyright 
        Office,''.
    (c) Definitions.--Section 115(d) of title 17, United States Code, 
is amended--
            (1) by striking the paragraph heading and inserting 
        ``Definitions.--''
            (2) by striking ``term has the following meaning'' and 
        inserting ``terms have the following meanings'';
            (3) by inserting after ``meanings:'' the following: 
        ``(1)'';
            (4) by inserting after paragraph (1) as so designated the 
        following:
            ``(2) A `limited digital phonorecord delivery' is a digital 
        phonorecord delivery that uses a technology that restricts the 
        time or manner in which the transmission recipient may render 
        such sound recording audible.''.
    (d) Electronic Filing and Notice to Copyright Owners.--
            (1) Duties of register.--Not later than 120 days after the 
        date of enactment of this Act, the Register of Copyrights 
        shall--
                    (A) establish procedures by which the notice of 
                intention may be served electronically upon the 
                Copyright Office, and by which reasonable notice of the 
                filing of a notice of intention may be given to the 
                owner of copyright in the nondramatic musical work;
                    (B) prescribe by regulation the requirements for 
                the form, content, and manner of electronic service of 
                the notice, including notices that identify one or more 
                works of a particular copyright owner and notices that 
                identify one or more works of numerous copyright 
                owners; and
                    (C) prescribe regulations for the appointment of a 
                designated agent to receive royalty fees and statements 
                of account, to distribute royalty fees to the copyright 
                owner, and to administer royalty fees that have been 
                submitted for unknown copyright owners.
            (2) Regulations.--The Register of Copyrights may prescribe 
        regulations whereby royalty fees are paid to an escrow account 
        at the last established rate in which the terms and rates for 
        the then-current period have not been determined, including for 
        the period prior to the date of enactment of this Act.

SEC. 6. LIMITATIONS ON EXCLUSIVE RIGHTS: INCIDENTAL AND ARCHIVAL 
              COPYING.

    (a) Title.--The title heading of section 117 of title 17, United 
States Code, is amended to read as follows:

``SEC. 117. LIMITATIONS ON EXCLUSIVE RIGHTS: COMPUTER PROGRAMS AND 
              DIGITAL COPIES.'';

    (b) Digital Copies.--Section 117 of title 17, United States Code, 
is amended--
            (1) by redesignating subsection (d) as subsection (f), and
            (2) by inserting after subsection (c) the following:
    ``(d) Notwithstanding the provisions of section 106, it is not an 
infringement to make or to authorize the making of a copy or 
phonorecord of a sound recording or a work included in a sound 
recording, in a digital format, provided that such copy or phonorecord 
is created by and is incidental to the operation of a device in the 
ordinary course of the use of a work otherwise lawful under this title.
    ``(e) Notwithstanding the provisions of section 106, it is not an 
infringement for the owner of a phonorecord lawfully acquired by 
digital phonorecord delivery, or a copy lawfully acquired by digital 
transmission of a literary work embodied in that phonorecord, to make 
or authorize the making of another phonorecord or copy of such works, 
if such new phonorecord or copy is for archival purposes only and that 
all archival phonorecord or copies are destroyed in the event that 
continued possession of the phonorecord or copy should cease to be 
rightful.''.

SEC. 7. EVALUATION OF IMPACT OF CERTAIN STATUTORY PERFORMANCE LICENSE 
              CRITERIA ON PROGRAMMING SERVICES.

    (a) Evaluation by the Register of Copyrights.--The Register of 
Copyrights, in consultation with the Assistant Secretary of the Office 
of Technology Policy of the Department of Commerce, shall evaluate the 
effects, under the statutory sound recording performance license set 
forth in section 114(d)(2) of title 17, United States Code, upon 
preexisting and emerging noninteractive digital audio transmission 
services of the criteria set forth in sections 114(d)(2)(B) and 
114(d)(2)(C)(i) and (ii) of such title, with respect to--
            (1) the economic costs of compliance with the criteria;
            (2) the effect of compliance with the criteria upon the 
        nature of the programming and the marketability of such 
        services;
            (3) whether any noninteractive digital audio transmission 
        service would be unable to comply with the criteria and, 
        therefore, to qualify for the statutory license;
            (4) whether any changes to the criteria, including the 
        elimination thereof, would enable additional noninteractive 
        digital audio transmission services to qualify for the 
        statutory license; and
            (5) the likely impact upon copyright owners of sound 
        recordings of any such changes to the criteria.
    (b) Report to Congress.--The Register of Copyrights shall, not 
later than 12 months after the date of enactment of this Act, submit to 
the Congress a report on the evaluation conducted under subsection (a), 
including any legislative recommendations the Register may have.
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