[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1417 Reported in House (RH)]

                                                 Union Calendar No. 234
108th CONGRESS
  2d Session
                                H. R. 1417

                          [Report No. 108-408]

To amend title 17, United States Code, to replace copyright arbitration 
 royalty panels with a Copyright Royalty Judge, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 25, 2003

     Mr. Smith of Texas (for himself, Mr. Berman, and Mr. Conyers) 
 introduced the following bill; which was referred to the Committee on 
                             the Judiciary

                            January 30, 2004

Reported with amendments, committed to the Committee of the Whole House 
          on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on March 
                               25, 2003]

_______________________________________________________________________

                                 A BILL


 
To amend title 17, United States Code, to replace copyright arbitration 
 royalty panels with a Copyright Royalty Judge, 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 ``Copyright Royalty and Distribution 
Reform Act of 2003''.

SEC. 2. REFERENCE.

    Except as otherwise expressly provided, whenever in this Act an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of title 17, United States 
Code.

SEC. 3. COPYRIGHT ROYALTY JUDGE AND STAFF.

    (a) In General.--Chapter 8 is amended to read as follows:

          ``CHAPTER 8--PROCEEDINGS BY COPYRIGHT ROYALTY JUDGES

``Sec.
``801. Copyright Royalty Judges; appointment and functions.
``802. Copyright Royalty Judgeships; staff.
``803. Proceedings of Copyright Royalty Judges.
``804. Institution of proceedings.
``805. General rule for voluntarily negotiated agreements.
``Sec. 801. Copyright Royalty Judges; appointment and functions
    ``(a) Appointment.--The Librarian of Congress shall appoint 3 full-
time Copyright Royalty Judges, and shall appoint one of the three as 
the Chief Copyright Royalty Judge. In making such appointments, the 
Librarian shall consult with the Register of Copyrights.
    ``(b) Functions.--Subject to the provisions of this chapter, the 
functions of the Copyright Royalty Judges shall be as follows:
            ``(1) To make determinations and adjustments of reasonable 
        terms and rates of royalty payments as provided in sections 
        112(e), 114, 115, 116, 118, 119 and 1004. The rates applicable 
        under sections 114(f)(1)(B), 115, and 116 shall be calculated 
        to achieve the following objectives:
                    ``(A) To maximize the availability of creative 
                works to the public.
                    ``(B) To afford the copyright owner a fair return 
                for his or her creative work and the copyright user a 
                fair income under existing economic conditions.
                    ``(C) To reflect the relative roles of the 
                copyright owner and the copyright user in the product 
                made available to the public with respect to relative 
                creative contribution, technological contribution, 
                capital investment, cost, risk, and contribution to the 
                opening of new markets for creative expression and 
                media for their communication.
                    ``(D) To minimize any disruptive impact on the 
                structure of the industries involved and on generally 
                prevailing industry practices.
            ``(2) To make determinations concerning the adjustment of 
        the copyright royalty rates under section 111 solely in 
        accordance with the following provisions:
                    ``(A) The rates established by section 111(d)(1)(B) 
                may be adjusted to reflect--
                            ``(i) national monetary inflation or 
                        deflation; or
                            ``(ii) changes in the average rates charged 
                        cable subscribers for the basic service of 
                        providing secondary transmissions to maintain 
                        the real constant dollar level of the royalty 
                        fee per subscriber which existed as of the date 
                        of October 19, 1976,
                except that--
                            ``(I) if the average rates charged cable 
                        system subscribers for the basic service of 
                        providing secondary transmissions are changed 
                        so that the average rates exceed national 
                        monetary inflation, no change in the rates 
                        established by section 111(d)(1)(B) shall be 
                        permitted; and
                            ``(II) no increase in the royalty fee shall 
                        be permitted based on any reduction in the 
                        average number of distant signal equivalents 
                        per subscriber.
                The Copyright Royalty Judges may consider all factors 
                relating to the maintenance of such level of payments, 
                including, as an extenuating factor, whether the 
                industry has been restrained by subscriber rate 
                regulating authorities from increasing the rates for 
                the basic service of providing secondary transmissions.
                    ``(B) In the event that the rules and regulations 
                of the Federal Communications Commission are amended at 
                any time after April 8, 1976, to permit the carriage by 
                cable systems of additional television broadcast 
                signals beyond the local service area of the primary 
                transmitters of such signals, the royalty rates 
                established by section 111(d)(1)(B) may be adjusted to 
                insure that the rates for the additional distant signal 
                equivalents resulting from such carriage are reasonable 
                in the light of the changes effected by the amendment 
                to such rules and regulations. In determining the 
                reasonableness of rates proposed following an amendment 
                of Federal Communications Commission rules and 
                regulations, the Copyright Royalty Judges shall 
                consider, among other factors, the economic impact on 
                copyright owners and users; except that no adjustment 
                in royalty rates shall be made under this subparagraph 
                with respect to any distant signal equivalent or 
                fraction thereof represented by--
                            ``(i) carriage of any signal permitted 
                        under the rules and regulations of the Federal 
                        Communications Commission in effect on April 
                        15, 1976, or the carriage of a signal of the 
                        same type (that is, independent, network, or 
                        noncommercial educational) substituted for such 
                        permitted signal; or
                            ``(ii) a television broadcast signal first 
                        carried after April 15, 1976, pursuant to an 
                        individual waiver of the rules and regulations 
                        of the Federal Communications Commission, as 
                        such rules and regulations were in effect on 
                        April 15, 1976.
                    ``(C) In the event of any change in the rules and 
                regulations of the Federal Communications Commission 
                with respect to syndicated and sports program 
                exclusivity after April 15, 1976, the rates established 
                by section 111(d)(1)(B) may be adjusted to assure that 
                such rates are reasonable in light of the changes to 
                such rules and regulations, but any such adjustment 
                shall apply only to the affected television broadcast 
                signals carried on those systems affected by the 
                change.
                    ``(D) The gross receipts limitations established by 
                section 111(d)(1)(C) and (D) shall be adjusted to 
                reflect national monetary inflation or deflation or 
                changes in the average rates charged cable system 
                subscribers for the basic service of providing 
                secondary transmissions to maintain the real constant 
                dollar value of the exemption provided by such section, 
                and the royalty rate specified therein shall not be 
                subject to adjustment.
            ``(3) To authorize the distribution, under sections 111, 
        119, and 1007, of those royalty fees collected under sections 
        111, 119, and 1005, as the case may be, to the extent that the 
        Copyright Royalty Judges have found that the distribution of 
        such fees is not subject to controversy. In cases where the 
        Copyright Royalty Judges determine that controversy exists--
                    ``(A) the Copyright Royalty Judges shall determine 
                the distribution of such fees, in accordance with 
                section 111, 119, or 1007, as the case may be; and
                    ``(B) the Copyright Royalty Judges shall make a 
                partial distribution of such fees during the pendency 
                of the proceeding under subparagraph (A) if all 
                participants under section 803(b)(2) in the 
                proceeding--
                            ``(i) agree to such partial distribution;
                            ``(ii) sign an agreement obligating them to 
                        return any excess amounts to the extent 
                        necessary to comply with the final 
                        determination on the distribution of the fees 
                        made under subparagraph (A); and
                            ``(iii) file the agreement with the 
                        Copyright Royalty Judges.
        The Copyright Royalty Judges and any other officer or employee 
        acting in good faith in distributing funds under subparagraph 
        (B) shall not be held liable for the payment of any excess fees 
        under subparagraph (B). The Copyright Royalty Judges shall, at 
        the time the final determination is made, calculate any such 
        excess amounts.
            ``(4) To accept or reject royalty claims filed under 
        section 111, 119, and 1007, on the basis of timeliness or the 
        failure to establish the basis for a claim.
            ``(5) To accept or reject rate adjustment petitions as 
        provided in section 804 and petitions to participate as 
        provided in section 803(b)(1) and (2).
            ``(6) To determine the status of a digital audio recording 
        device or a digital audio interface device under sections 1002 
        and 1003, as provided in section 1010.
            ``(7)(A) To adopt as the basis for statutory terms and 
        rates or as a basis for the distribution of statutory royalty 
        payments, an agreement concerning such matters reached among 
        some or all of the participants in a proceeding at any time 
        during the proceeding, except that--
                    ``(i) the Copyright Royalty Judges shall provide to 
                the other participants in the proceeding under section 
                803(b)(2) that would be bound by the terms, rates, 
                distribution, or other determination set by the 
                agreement an opportunity to comment on the agreement 
                and object to its adoption as the basis for statutory 
                terms and rates or as a basis for the distribution of 
                statutory royalty payments, as the case may be; and
                    ``(ii) the Copyright Royalty Judges may decline to 
                adopt the agreement as the basis for statutory terms 
                and rates or as the basis for the distribution of 
                statutory royalty payments, as the case may be, if any 
                other participant described in subparagraph (A) objects 
                to the agreement and the Copyright Royalty Judges find, 
                based on the record before them, that the agreement is 
                not likely to meet the statutory standard for setting 
                the terms and rates, or for distributing the royalty 
                payments, as the case may be.
            ``(B) License agreements voluntarily negotiated pursuant to 
        section 112(e)(5), 114(f)(3), 115(c)(3)(E)(i), 116(c), or 
        118(b)(2) that do not result in statutory terms and rates shall 
        not be subject to clauses (i) and (ii) of subparagraph (A).
    ``(c) Rulings.--The Copyright Royalty Judges may make any necessary 
procedural or evidentiary rulings in any proceeding under this chapter 
and may, before commencing a proceeding under this chapter, make any 
such rulings that would apply to the proceedings conducted by the 
Copyright Royalty Judges. The Copyright Royalty Judges may consult with 
the Register of Copyrights in making any rulings under section 
802(f)(1).
    ``(d) Administrative Support.--The Librarian of Congress shall 
provide the Copyright Royalty Judges with the necessary administrative 
services related to proceedings under this chapter.
    ``(e) Location in Library of Congress.--The offices of the 
Copyright Royalty Judges and staff shall be in the Library of Congress.
``Sec. 802. Copyright Royalty Judgeships; staff
    ``(a) Qualifications of Copyright Royalty Judges.--Each Copyright 
Royalty Judge shall be an attorney who has at least 7 years of legal 
experience. The Chief Copyright Royalty Judge shall have at least 5 
years of experience in adjudications, arbitrations, or court trials. Of 
the other two Copyright Royalty Judges, one shall have significant 
knowledge of copyright law, and the other shall have significant 
knowledge of economics. An individual may serve as a Copyright Royalty 
Judge only if the individual is free of any financial conflict of 
interest under subsection (h). In this subsection, `adjudication' has 
the meaning given that term in section 551 of title 5, but does not 
include mediation.
    ``(b) Staff.--The Chief Copyright Royalty Judge shall hire 3 full-
time staff members to assist the Copyright Royalty Judges in performing 
their functions.
    ``(c) Terms.--The terms of the Copyright Royalty Judges shall each 
be 6 years, except of the individuals first appointed, the Chief 
Copyright Royalty Judge shall be appointed to a term of 6 years, and of 
the remaining Copyright Royalty Judges, one shall be appointed to a 
term of 2 years, and the other shall be appointed to a term of 4 years. 
An individual serving as a Copyright Royalty Judge may be reappointed 
to subsequent terms. The term of a Copyright Royalty Judge shall begin 
when the term of the predecessor of that Copyright Royalty Judge ends. 
When the term of office of a Copyright Royalty Judge ends, the 
individual serving that term may continue to serve until a successor is 
selected.
    ``(d) Vacancies or Incapacity.--
            ``(1) Vacancies.--If a vacancy should occur in the position 
        of Copyright Royalty Judge, the Librarian of Congress shall act 
        expeditiously to fill the vacancy, and may appoint an interim 
        Copyright Royalty Judge to serve until another Copyright 
        Royalty Judge is appointed under this section. An individual 
        appointed to fill the vacancy occurring before the expiration 
        of the term for which the predecessor of that individual was 
        appointed shall be appointed for the remainder of that term.
            ``(2) Incapacity.--In the case in which a Copyright Royalty 
        Judge is temporarily unable to perform his or her duties, the 
        Librarian of Congress may appoint an interim Copyright Royalty 
        Judge to perform such duties during the period of such 
        incapacity.
    ``(e) Compensation.--
            ``(1) Judges.--The Chief Copyright Royalty Judge shall 
        receive compensation at the rate of basic pay payable for level 
        AL-1 for administrative law judges pursuant to section 5372(b) 
        of title 5, and each of the other two Copyright Royalty Judges 
        shall receive compensation at the rate of basic pay payable for 
        level AL-2 for administrative law judges pursuant to such 
        section. The compensation of the Copyright Royalty Judges shall 
        not be subject to any regulations adopted by the Office of 
        Personnel Management pursuant to its authority under section 
        5376(b)(1) of title 5.
            ``(2) Staff members.--Of the staff members appointed under 
        subsection (b)--
                    ``(A) the rate of pay of one staff member shall be 
                not more than the basic rate of pay payable for GS-15 
                of the General Schedule;
                    ``(B) the rate of pay of one staff member shall be 
                not less than the basic rate of pay payable for GS-13 
                of the General Schedule and not more than the basic 
                rate of pay payable for GS-14 of such Schedule; and
                    ``(C) the rate of pay for the third staff member 
                shall be not less than the basic rate of pay payable 
                for GS-8 of the General Schedule and not more than the 
                basic rate of pay payable for GS-11 of such Schedule.
    ``(f) Independence of Copyright Royalty Judge.--
            ``(1) In making determinations.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Copyright Royalty Judges shall have full independence 
                in making determinations concerning adjustments and 
                determinations of copyright royalty rates and terms, 
                the distribution of copyright royalties, the acceptance 
                or rejection of royalty claims, rate adjustment 
                petitions, and petitions to participate, and in issuing 
                other rulings under this title, except that the 
                Copyright Royalty Judges may consult with the Register 
                of Copyrights on any matter other than a question of 
                fact. Any such consultations between the Copyright 
                Royalty Judges and the Register of Copyright on any 
question of law shall be in writing or on the record.
                    ``(B) Novel questions.--(i) Notwithstanding the 
                provisions of subparagraph (A), in any case in which 
                the Copyright Royalty Judges in a proceeding under this 
                title are presented with a novel question of law 
                concerning an interpretation of those provisions of 
                this title that are the subject of the proceeding, the 
                Copyright Royalty Judges shall request the Register of 
                Copyrights, in writing, to submit a written opinion on 
                the resolution of such novel question. The Register 
                shall submit and make public that opinion within such 
                time period as the Copyright Royalty Judges may 
                prescribe. Any consultations under this subparagraph 
                between the Copyright Royalty Judges and the Register 
                of Copyrights shall be in writing or on the record. The 
                opinion of the Register shall not be binding on the 
                Copyright Royalty Judges, but the Copyright Royalty 
                Judges shall take the opinion of the Register into 
                account in making the judges' determination on the 
                question concerned.
                    ``(ii) In clause (i), a `novel question of law' is 
                a question of law that has not been determined in prior 
                decisions, determinations, and rulings described in 
                section 803(a).
            ``(2) Performance appraisals.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law or any regulation of the Library of 
                Congress, and subject to subparagraph (B), the 
                Copyright Royalty Judges shall not receive performance 
                appraisals.
                    ``(B) Relating to sanction or removal.--To the 
                extent that the Librarian of Congress adopts 
                regulations under subsection (h) relating to the 
                sanction or removal of a Copyright Royalty Judge and 
                such regulations require documentation to establish the 
                cause of such sanction or removal, the Copyright 
                Royalty Judge may receive an appraisal related 
                specifically to the cause of the sanction or removal.
    ``(g) Inconsistent Duties Barred.--No Copyright Royalty Judge may 
undertake duties inconsistent with his or her duties and 
responsibilities as Copyright Royalty Judge.
    ``(h) Standards of Conduct.--The Librarian of Congress shall adopt 
regulations regarding the standards of conduct, including financial 
conflict of interest and restrictions against ex parte communications, 
which shall govern the Copyright Royalty Judges and the proceedings 
under this chapter.
    ``(i) Removal or Sanction.--The Librarian of Congress may sanction 
or remove a Copyright Royalty Judge for violation of the standards of 
conduct adopted under subsection (h), misconduct, neglect of duty, or 
any disqualifying physical or mental disability. Any such sanction or 
removal may be made only after notice and opportunity for a hearing, 
but the Librarian of Congress may suspend the Copyright Royalty Judge 
during the pendency of such hearing. The Librarian shall appoint an 
interim Copyright Royalty Judge during the period of any such 
suspension.
``Sec. 803. Proceedings of Copyright Royalty Judges
    ``(a) Proceedings.--
            ``(1) In general.--The Copyright Royalty Judges shall act 
        in accordance with this title, and to the extent not 
        inconsistent with this title, in accordance with subchapter II 
        of chapter 5 of title 5, in carrying out the purposes set forth 
        in section 801. The Copyright Royalty Judges shall act in 
        accordance with regulations issued by the Copyright Royalty 
        Judges and on the basis of a fully documented written record, 
        prior decisions of the Copyright Royalty Tribunal, prior 
        copyright arbitration royalty panel determinations, rulings by 
        the Librarian of Congress before the effective date of the 
        Copyright Royalty and Distribution Reform Act of 2003, prior 
        determinations of Copyright Royalty Judges under this chapter, 
        and decisions of the court in appeals under this chapter 
        before, on, or after such effective date. Any participant in a 
        proceeding under subsection (b)(2) may submit relevant 
        information and proposals to the Copyright Royalty Judges.
            ``(2) Judges acting as panel and individually.--The 
        Copyright Royalty Judges shall preside over hearings in 
        proceedings under this chapter en banc. The Chief Copyright 
        Royalty Judge may designate a Copyright Royalty Judge to 
        preside individually over such collateral and administrative 
        proceedings, and over such proceedings under paragraphs (1) 
        through (5) of subsection (b), as the Chief Judge considers 
        appropriate.
            ``(3) Determinations.--Final determinations of the 
        Copyright Royalty Judges in proceedings under this chapter 
        shall be made by majority vote. A Copyright Royalty Judge 
        dissenting from the majority on any determination under this 
        chapter may issue his or her dissenting opinion, which shall be 
        included with the determination.
    ``(b) Procedures.--
            ``(1) Initiation.--
                    ``(A) Call for petitions to participate.--(i) 
                Promptly upon the filing of a petition for a rate 
                adjustment or determination under section 804(a) or 
                804(b)(8), or by no later than January 5 of a year 
                specified in section 804 for the commencement of a 
                proceeding if a petition has not been filed by that 
                date, the Copyright Royalty Judges shall cause to be 
                published in the Federal Register notice of 
                commencement of proceedings under this chapter calling 
                for the filing of petitions to participate in a 
                proceeding under this chapter for the purpose of making 
                the relevant determination under section 111, 112, 114, 
                115, 116, 118, 119, 1004 or 1007, as the case may be.
                    ``(ii) Petitions to participate shall be filed by 
                no later than 30 days after publication of notice of 
                commencement of a proceeding, under clause (i), except 
                that the Copyright Royalty Judges may, for substantial 
                good cause shown and if there is no prejudice to the 
                participants that have already filed petitions, accept 
                late petitions to participate at any time up to the 
                date that is 90 days before the date on which 
                participants in the proceeding are to file their 
                written direct statements.
                    ``(B) Petitions to participate.--Each petition to 
                participate in a proceeding shall describe the 
                petitioner's interest in the subject matter of the 
                proceeding. Parties with similar interests may file a 
                single petition to participate.
            ``(2) Participation in general.--Subject to paragraph (4), 
        a person may participate in a proceeding under this chapter, 
        including through the submission of briefs or other 
        information, only if--
                    ``(A) that person has filed a petition to 
                participate in accordance with paragraph (1) (either 
                individually or as a group under paragraph (1)(B)), 
                together with a filing fee of $150;
                    ``(B) the Copyright Royalty Judges have not 
                determined that the petition to participate is facially 
                invalid; and
                    ``(C) the Copyright Royalty Judges have not 
                determined, sua sponte or on the motion of another 
                participant in the proceeding, that the person lacks a 
                significant interest in the proceeding.
            ``(3) Voluntary negotiation period.--
                    ``(A) In general.--Promptly after the date for 
                filing of petitions to participate in a proceeding, the 
                Copyright Royalty Judges shall make available to all 
                participants in the proceeding a list of such 
                participants and shall initiate a voluntary negotiation 
                period among the participants.
                    ``(B) Length of proceedings.--The voluntary 
                negotiation period initiated under subparagraph (A) 
                shall be 3 months.
                    ``(C) Determination of subsequent proceedings.--At 
                the close of the voluntary negotiation proceedings, the 
                Copyright Royalty Judges shall, if further proceedings 
                under this chapter are necessary, determine whether and 
                to what extent paragraphs (4) and (5) will apply to the 
                parties.
            ``(4) Small claims procedure in distribution proceedings.--
                    ``(A) In general.--If, in a proceeding under this 
                chapter to determine the distribution of royalties, a 
                participant in the proceeding asserts that the 
                contested amount of the claim is $10,000 or less, the 
                Copyright Royalty Judges shall decide the controversy 
                on the basis of the filing in writing of the initial 
                claim, the initial response by any opposing 
                participant, and one additional response by each such 
                party. The participant asserting the claim shall not be 
                required to pay the filing fee under paragraph (2).
                    ``(B) Bad faith inflation of claim.--If the 
                Copyright Royalty Judges determine that a participant 
                asserts in bad faith an amount in controversy in excess 
                of $10,000 for the purpose of avoiding a determination 
                under the procedure set forth in subparagraph (A), the 
                Copyright Royalty Judges shall impose a fine on that 
                participant in an amount not to exceed the difference 
                between the actual amount distributed and the amount 
                asserted by the participant.
            ``(5) Paper proceedings in ratemaking proceedings.--The 
        Copyright Royalty Judges in proceedings under this chapter to 
        determine royalty rates may decide, sua sponte or upon motion 
        of a participant, to determine issues on the basis of initial 
        filings in writing, initial responses by any opposing 
        participant, and one additional response by each such 
        participant. Prior to making such decision to proceed on such a 
        paper record only, the Copyright Royalty Judges shall offer to 
        all parties to the proceeding the opportunity to comment on the 
        decision. The procedure under this paragraph--
                    ``(A) shall be applied in cases in which there is 
                no genuine issue of material fact, there is no need for 
                evidentiary hearings, and all participants in the 
                proceeding agree in writing to the procedure; and
                    ``(B) may be applied under such other circumstances 
                as the Copyright Royalty Judges consider appropriate.
            ``(6) Regulations.--
                    ``(A) In general.--The Copyright Royalty Judges may 
                issue regulations to carry out their functions under 
                this title. Not later than 120 days after Copyright 
                Royalty Judges or interim Copyright Royalty Judges, as 
                the case may be, are first appointed after the 
                enactment of the Copyright Royalty and Distribution 
                Reform Act of 2003, such judges shall issue regulations 
                to govern proceedings under this chapter.
                    ``(B) Interim regulations.--Until regulations are 
                adopted under subparagraph (A), the Copyright Royalty 
                Judges shall apply the regulations in effect under this 
                chapter on the day before the effective date of the 
                Copyright Royalty and Distribution Reform Act of 2003, 
                to the extent such regulations are not inconsistent 
                with this chapter, except that functions carried out 
under such regulations by the Librarian of Congress, the Register of 
Copyrights, or copyright arbitration royalty panels that, as of such 
date of enactment, are to be carried out by the Copyright Royalty 
Judges under this chapter, shall be carried out by the Copyright 
Royalty Judges under such regulations.
                    ``(C) Requirements.--Regulations issued under 
                subparagraph (A) shall include the following:
                            ``(i) The written direct statements of all 
                        participants in a proceeding under paragraph 
                        (2) shall be filed by a date specified by the 
                        Copyright Royalty Judges, which may be no 
                        earlier than four months, and no later than 
                        five months, after the end of the voluntary 
                        negotiation period under paragraph (3). 
                        Notwithstanding the preceding sentence, a 
                        participant in a proceeding may, within 15 days 
                        after the end of the discovery period specified 
                        in clause (iii), file an amended written direct 
                        statement based on new information received 
                        during the discovery process.
                            ``(ii)(I) Following the submission to the 
                        Copyright Royalty Judges of written direct 
                        statements by the participants in a proceeding 
                        under paragraph (2), the judges shall meet with 
                        the participants for the purpose of setting a 
                        schedule for conducting and completing 
                        discovery. Such schedule shall be determined by 
                        the Copyright Royalty Judges.
                            ``(II) In this chapter, the term `written 
                        direct statements' means witness statements, 
                        testimony, and exhibits to be presented in the 
                        proceedings, and such other information that is 
                        necessary to establish terms and rates, or the 
                        distribution of royalty payments, as the case 
                        may be, as set forth in regulations issued by 
                        the Copyright Royalty Judges.
                            ``(iii) Hearsay may be admitted in 
                        proceedings under this chapter to the extent 
                        deemed appropriate by the Copyright Royalty 
                        Judges.
                            ``(iv) Discovery in such proceedings shall 
                        be permitted for a period of 60 days, except 
                        for discovery ordered by the Copyright Royalty 
                        Judges in connection with the resolution of 
                        motions, orders and disputes pending at the end 
                        of such period.
                            ``(v) Any participant under paragraph (2) 
                        in a proceeding under this chapter to determine 
                        royalty rates may, upon written notice, seek 
                        discovery of information and materials relevant 
                        and material to the proceeding. Any objection 
                        to any such discovery request shall be resolved 
                        by a motion or request to compel discovery made 
                        to the Copyright Royalty Judges. Each motion or 
                        request to compel discovery shall be determined 
                        by the Copyright Royalty Judges, or by a 
                        Copyright Royalty Judge when permitted under 
                        subsection (a)(2), who may approve the request 
                        only if the evidence that would be produced is 
                        relevant and material. A Copyright Royalty 
                        Judge may refuse a request to compel discovery 
                        of evidence that has been found to be relevant 
                        and material, only upon good cause shown. For 
                        purposes of the preceding sentence, the basis 
                        for `good cause' may only be that--
                                    ``(I) the discovery sought is 
                                unreasonably cumulative or duplicative, 
                                or is obtainable from another source 
                                that is more convenient, less 
                                burdensome, or less expensive;
                                    ``(II) the participant seeking 
                                discovery has had ample opportunity by 
                                discovery in the action to obtain the 
                                information sought; or
                                    ``(III) the burden or expense of 
                                the proposed discovery outweighs its 
                                likely benefit, taking into account the 
                                needs and resources of the 
                                participants, the importance of the 
                                issues at stake, and the importance of 
                                the proposed discovery in resolving the 
                                issues.
                            ``(vi) The rules in effect on the day 
                        before the effective date of the Copyright 
                        Royalty and Distribution Reform Act of 2003, 
                        relating to discovery in proceedings under this 
                        title to determine the distribution of royalty 
                        fees, shall continue to apply to such 
                        proceedings on and after such effective date.
                            ``(vii) The Copyright Royalty Judges may 
                        issue subpoenas requiring the production of 
                        evidence or witnesses, but only if the evidence 
                        requested to be produced or that would be 
                        proffered by the witness is relevant and 
                        material.
                            ``(viii) The Copyright Royalty Judges shall 
                        order a settlement conference among the 
                        participants in the proceeding to facilitate 
                        the presentation of offers of settlement among 
                        the participants. The settlement conference 
                        shall be held during a 21-day period following 
                        the end of the discovery period.
    ``(c) Determination of Copyright Royalty Judges.--
            ``(1) Timing.--The Copyright Royalty Judges shall issue 
        their determination in a proceeding not later than 11 months 
        after the conclusion of the 21-day settlement conference period 
        under subsection (b)(3)(C)(vi), but, in the case of a 
        proceeding to determine successors to rates or terms that 
        expire on a specified date, in no event later than 15 days 
        before the expiration of the then current statutory rates and 
        terms.
            ``(2) Rehearings.--
                    ``(A) In general.--The Copyright Royalty Judges 
                may, in exceptional cases, upon motion of a participant 
under subsection (b)(2), order a rehearing, after the determination in 
a proceeding is issued under paragraph (1), on such matters as the 
Copyright Royalty Judges determine to be appropriate.
                    ``(B) Timing for filing motion.--Any motion for a 
                rehearing under subparagraph (A) may only be filed 
                within 15 days after the date on which the Copyright 
                Royalty Judges deliver their initial determination 
                concerning rates and terms to the participants in the 
                proceeding.
                    ``(C) Participation by opposing party not 
                required.--In any case in which a rehearing is ordered, 
                any opposing party shall not be required to participate 
                in the rehearing.
                    ``(D) No negative inference.--No negative inference 
                shall be drawn from lack of participation in a 
                rehearing.
                    ``(E) Continuity of rates and terms.--(i) If the 
                decision of the Copyright Royalty Judges on any motion 
                for a rehearing is not rendered before the expiration 
                of the statutory rates and terms that were previously 
                in effect, in the case of a proceeding to determine 
                successors to rates and terms that expire on a 
                specified date, then--
                            ``(I) the initial determination of the 
                        Copyright Royalty Judges that is the subject of 
                        the rehearing motion shall be effective as of 
                        the day following the date on which the rates 
                        and terms that were previously in effect 
                        expire; and
                            ``(II) in the case of a proceeding under 
                        section 114(f)(1)(C) or 114(f)(2)(C), royalty 
                        rates and terms shall, for purposes of section 
                        114(f)(4)(B), be deemed to have been set at 
                        those rates and terms contained in the initial 
                        determination of the Copyright Royalty Judges 
                        that is the subject of the rehearing motion, as 
                        of the date of that determination.
                    ``(ii) The pendency of a motion for a rehearing 
                under this paragraph shall not relieve persons 
                obligated to make royalty payments who would be 
                affected by the determination on that motion from 
                providing the statements of account and any reports of 
                use, to the extent required, and paying the royalties 
                required under the relevant determination or 
                regulations.
                    ``(iii) Notwithstanding clause (ii), whenever 
                royalties described in clause (ii) are paid to a person 
                other than the Copyright Office, the entity designated 
                by the Copyright Royalty Judges to which such royalties 
                are paid by the copyright user (and any successor 
                thereto) shall, within 60 days after the motion for 
                rehearing is resolved or, if the motion is granted, 
                within 60 days after the rehearing is concluded, return 
                any excess amounts previously paid to the extent 
                necessary to comply with the final determination of 
                royalty rates by the Copyright Royalty Judges.
            ``(3) Contents of determination.--A determination of the 
        Copyright Royalty Judges shall be accompanied by the written 
        record, and shall set forth the facts that the Copyright 
        Royalty Judges found relevant to their determination. Among 
        other terms adopted in a determination, the Copyright Royalty 
        Judges may specify notice and recordkeeping requirements of 
        users of the copyrights at issue that apply in lieu of those 
        that would otherwise apply under regulations.
            ``(4) Continuing jurisdiction.--The Copyright Royalty 
        Judges may amend the determination or the regulations issued 
        pursuant to the determination in order to correct any technical 
        errors in the determination or to respond to unforeseen 
        circumstances that preclude the proper effectuation of the 
        determination.
            ``(5) Protective order.--The Copyright Royalty Judges may 
        issue such orders as may be appropriate to protect confidential 
        information, including orders excluding confidential 
        information from the record of the determination that is 
        published or made available to the public, except that any 
        terms or rates of royalty payments or distributions may not be 
        excluded.
            ``(6) Publication of determination.--The Librarian of 
        Congress shall cause the determination, and any corrections 
        thereto, to be published in the Federal Register. The Librarian 
        of Congress shall also publicize the determination and 
        corrections in such other manner as the Librarian considers 
        appropriate, including, but not limited to, publication on the 
        Internet. The Librarian of Congress shall also make the 
        determination, corrections, and the accompanying record 
        available for public inspection and copying.
    ``(d) Judicial Review.--
            ``(1) Appeal.--Any determination of the Copyright Royalty 
        Judges under subsection (c) may, within 30 days after the 
        publication of the determination in the Federal Register, be 
        appealed, to the United States Court of Appeals for the 
        District of Columbia Circuit, by any aggrieved participant in 
        the proceeding under subsection (b)(2) who fully participated 
        in the proceeding and who would be bound by the determination. 
        If no appeal is brought within that 30-day period, the 
        determination of the Copyright Royalty Judges shall be final, 
        and the royalty fee or determination with respect to the 
        distribution of fees, as the case may be, shall take effect as 
        set forth in paragraph (2).
            ``(2) Effect of rates.--
                    ``(A) Expiration on specified date.--When this 
                title provides that the royalty rates and terms that 
                were previously in effect are to expire on a specified 
                date, any adjustment or determination by the Copyright 
                Royalty Judges of successor rates and terms for an 
                ensuing statutory license period shall be effective as 
                of the day following the date of expiration of the 
                rates and terms that were previously in effect, even if 
                the determination of the Copyright Royalty Judges is 
                rendered on a later date.
                    ``(B) Other cases.--In cases where rates and terms 
                do not expire on a specified date or have not yet been 
established, successor or new rates or terms shall take effect on the 
first day of the second month that begins after the publication of the 
determination of the Copyright Royalty Judges in the Federal Register, 
except as otherwise provided in this title, and the rates and terms 
previously in effect, to the extent applicable, shall remain in effect 
until such successor rates and terms become effective.
                    ``(C) Obligation to make payments.--(i) The 
                pendency of an appeal under this subsection shall not 
                relieve persons obligated to make royalty payments 
                under section 111, 112, 114, 115, 116, 118, 119, or 
                1003, who would be affected by the determination on 
                appeal, from providing the statements of account (and 
                any report of use, to the extent required) and paying 
                the royalties required under the relevant determination 
                or regulations.
                    ``(ii) Notwithstanding clause (i), whenever 
                royalties described in clause (i) are paid to a person 
                other than the Copyright Office, the entity designated 
                by the Copyright Royalty Judges to which such royalties 
                are paid by the copyright user (and any successor 
                thereto) shall, within 60 days after the final 
                resolution of the appeal, return any excess amounts 
                previously paid (and interest thereon, if ordered 
                pursuant to paragraph (3)) to the extent necessary to 
                comply with the final determination of royalty rates on 
                appeal.
            ``(3) Jurisdiction of court.--If the court, pursuant to 
        section 706 of title 5, modifies or vacates a determination of 
        the Copyright Royalty Judges, the court may enter its own 
        determination with respect to the amount or distribution of 
        royalty fees and costs, and order the repayment of any excess 
        fees, the payment of any underpaid fees, and the payment of 
        interest pertaining respectively thereto, in accordance with 
        its final judgment. The court may also vacate the determination 
        of the Copyright Royalty Judges and remand the case to the 
        Copyright Royalty Judges for further proceedings in accordance 
        with subsection (a).
    ``(e) Administrative Matters.--
            ``(1) Deduction of costs of library of congress and 
        copyright office from filing fees.--
                    ``(A) Deduction from filing fees.--The Librarian of 
                Congress may, to the extent not otherwise provided 
                under this title, deduct from the filing fees collected 
                under subsection (b) for a particular proceeding under 
                this chapter the reasonable costs incurred by the 
                Librarian of Congress, the Copyright Office, and the 
                Copyright Royalty Judges in conducting that proceeding, 
                other than the salaries of the Copyright Royalty Judges 
                and the 3 staff members appointed under section 802(b).
                    ``(B) Authorization of appropriations.--There are 
                authorized to be appropriated such sums as may be 
                necessary to pay the costs of proceedings under this 
                chapter not covered by the filing fees collected under 
                subsection (b). All funds made available pursuant to 
                this subparagraph shall remain available until 
                expended.
            ``(2) Positions required for administration of compulsory 
        licensing.--Section 307 of the Legislative Branch 
        Appropriations Act, 1994, shall not apply to employee positions 
        in the Library of Congress that are required to be filled in 
        order to carry out section 111, 112, 114, 115, 116, 118, or 119 
        or chapter 10.
``Sec. 804. Institution of proceedings
    ``(a) Filing of Petition.--With respect to proceedings referred to 
in paragraphs (1) and (2) of section 801(b) concerning the 
determination or adjustment of royalty rates as provided in sections 
111, 112, 114, 115, 116, 118, and 1004, during the calendar years 
specified in the schedule set forth in subsection (b), any owner or 
user of a copyrighted work whose royalty rates are specified by this 
title, or are established under this chapter before or after the 
enactment of the Copyright Royalty and Distribution Reform Act of 2003, 
may file a petition with the Copyright Royalty Judges declaring that 
the petitioner requests a determination or adjustment of the rate. The 
Copyright Royalty Judges shall make a determination as to whether the 
petitioner has such a significant interest in the royalty rate in which 
a determination or adjustment is requested. If the Copyright Royalty 
Judges determine that the petitioner has such a significant interest, 
the Copyright Royalty Judges shall cause notice of this determination, 
with the reasons therefor, to be published in the Federal Register, 
together with the notice of commencement of proceedings under this 
chapter. With respect to proceedings under paragraph (1) of section 
801(b) concerning the determination or adjustment of royalty rates as 
provided in sections 112 and 114, during the calendar years specified 
in the schedule set forth in subsection (b), the Copyright Royalty 
Judges shall cause notice of commencement of proceedings under this 
chapter to be published in the Federal Register as provided in section 
803(b)(1)(A).
    ``(b) Timing of Proceedings.--
            ``(1) Section 111 proceedings.--(A) A petition described in 
        subsection (a) to initiate proceedings under section 801(b)(2) 
        concerning the adjustment of royalty rates under section 111 to 
        which subparagraph (A) or (D) of section 801(b)(2) applies may 
        be filed during the year 2004 and in each subsequent fifth 
        calendar year.
            ``(B) In order to initiate proceedings under section 
        801(b)(2) concerning the adjustment of royalty rates under 
        section 111 to which subparagraph (B) or (C) of section 
        801(b)(2) applies, within 12 months after an event described in 
        either of those subsections, any owner or user of a copyrighted 
        work whose royalty rates are specified by section 111, or by a 
        rate established under this chapter before or after the 
        enactment of the Copyright Royalty and Distribution Reform Act 
        of 2003, may file a petition with the Copyright Royalty Judges 
        declaring that the petitioner requests an adjustment of the 
        rate. The Copyright Royalty Judges shall then proceed as set 
        forth in subsection (a) of this section. Any change in royalty 
        rates made under this chapter pursuant to this subparagraph may 
be reconsidered in the year 2005, and each fifth calendar year 
thereafter, in accordance with the provisions in section 801(b)(3)(B) 
or (C), as the case may be. A petition for adjustment of rates under 
section 11(d)(1)(B) as a result of a change is the rules and 
regulations of the Federal Communications Commission shall set forth 
the change on which the petition is based.
            ``(2) Certain section 112 proceedings.--Proceedings under 
        this chapter shall be commenced in the year 2007 to determine 
        reasonable terms and rates of royalty payments for the 
        activities described in section 112(e)(1) relating to the 
        limitation on exclusive rights specified by section 
        114(d)(1)(C)(iv), to become effective on January 1, 2009. Such 
        proceedings shall be repeated in each subsequent fifth calendar 
        year.
            ``(3) Section 114 and corresponding 112 proceedings.--
                    ``(A) For eligible nonsubscription services and new 
                subscription services.--Proceedings under this chapter 
                shall be commenced as soon as practicable after the 
                effective date of the Copyright Royalty and 
                Distribution Reform Act of 2003 to determine reasonable 
                terms and rates of royalty payments under sections 114 
                and 112 for the activities of eligible nonsubscription 
                transmission services and new subscription services, to 
                be effective for the period beginning on January 1, 
                2006, and ending on December 31, 2010. Such proceedings 
                shall next be commenced in January 2009 to determine 
                reasonable terms and rates of royalty payments, to 
                become effective on January 1, 2011. Thereafter, such 
                proceedings shall be repeated in each subsequent fifth 
                calendar year.
                    ``(B) For preexisting subscription and satellite 
                digital audio radio services.--Proceedings under this 
                chapter shall be commenced in January 2006 to determine 
                reasonable terms and rates of royalty payments under 
                sections 114 and 112 for the activities of preexisting 
                subscription services, to be effective during the 
                period beginning on January 1, 2008, and ending on 
                December 31, 2012, and preexisting satellite digital 
                audio radio services, to be effective during the period 
                beginning on January 1, 2007, and ending on December 
                31, 2012. Such proceedings shall next be commenced in 
                2011 to determine reasonable terms and rates of royalty 
                payments, to become effective on January 1, 2013. 
                Thereafter, such proceedings shall be repeated in each 
                subsequent fifth calendar year.
                    ``(C)(i) Notwithstanding any other provision of 
                this chapter, this subparagraph shall govern 
                proceedings commenced pursuant to sections 114(f)(1)(C) 
                and 114(f)(2)(C) concerning new types of services.
                    ``(ii) Not later than 30 days after a petition to 
                determine rates and terms for a new type of service 
                that is filed by any copyright owner of sound 
                recordings, or such new type of service, indicating 
                that such new type of service is or is about to become 
                operational, the Copyright Royalty Judges shall issue a 
                notice for a proceeding to determine rates and terms 
                for such service.
                    ``(iii) The proceeding shall follow the schedule 
                set forth in such subsections (b), (c), and (d) of 
                section 803, except that--
                            ``(I) the determination shall be issued by 
                        not later than 24 months after the publication 
                        of the notice under clause (ii); and
                            ``(II) the decision shall take effect as 
                        provided in subsections (c)(2) and (d)(2) of 
                        section 803 and section 114(f)(4)(B)(ii) and 
                        (C).
                    ``(iv) The rates and terms shall remain in effect 
                for the period set forth in section 114(f)(1)(C) or 
                114(f)(2)(C), as the case may be.
            ``(4) Section 115 proceedings.--A petition described in 
        subsection (a) to initiate proceedings under section 801(b)(1) 
        concerning the adjustment or determination of royalty rates as 
        provided in section 115 may be filed in the year 2006 and in 
        each subsequent fifth calendar year, or at such other times as 
        the parties have agreed under section 115(c)(3)(B) and (C).
            ``(5) Section 116 proceedings.--(A) A petition described in 
        subsection (a) to initiate proceedings under section 801(b) 
        concerning the determination of royalty rates and terms as 
        provided in section 116 may be filed at any time within 1 year 
        after negotiated licenses authorized by section 116 are 
        terminated or expire and are not replaced by subsequent 
        agreements.
            ``(B) If a negotiated license authorized by section 116 is 
        terminated or expires and is not replaced by another such 
        license agreement which provides permission to use a quantity 
        of musical works not substantially smaller than the quantity of 
        such works performed on coin-operated phonorecord players 
        during the 1-year period ending March 1, 1989, the Copyright 
        Royalty Judges shall, upon petition filed under paragraph (1) 
        within 1 year after such termination or expiration, commence a 
        proceeding to promptly establish an interim royalty rate or 
        rates for the public performance by means of a coin-operated 
        phonorecord player of nondramatic musical works embodied in 
        phonorecords which had been subject to the terminated or 
        expired negotiated license agreement. Such rate or rates shall 
        be the same as the last such rate or rates and shall remain in 
        force until the conclusion of proceedings by the Copyright 
        Royalty Judges, in accordance with section 803, to adjust the 
        royalty rates applicable to such works, or until superseded by 
        a new negotiated license agreement, as provided in section 
        116(b).
            ``(6) Section 118 proceedings.--A petition described in 
        subsection (a) to initiate proceedings under section 801(b)(1) 
        concerning the determination of reasonable terms and rates of 
        royalty payments as provided in section 118 may be filed in the 
        year 2006 and in each subsequent fifth calendar year.
            ``(7) Section 1004 proceedings.--A petition described in 
        subsection (a) to initiate proceedings under section 801(b)(1) 
        concerning the adjustment of reasonable royalty rates under 
section 1004 may be filed as provided in section 1004(a)(3).
            ``(8) Proceedings concerning distribution of royalty 
        fees.--With respect to proceedings under section 801(b)(3) 
        concerning the distribution of royalty fees in certain 
        circumstances under section 111, 116, 119, or 1007, the 
        Copyright Royalty Judges shall, upon a determination that a 
        controversy exists concerning such distribution, cause to be 
        published in the Federal Register notice of commencement of 
        proceedings under this chapter.
``Sec. 805. General rule for voluntarily negotiated agreements
    ``Any rates or terms under this title that--
            ``(1) are agreed to by participants to a proceeding under 
        section 803(b)(2),
            ``(2) are adopted by the Copyright Royalty Judges as part 
        of a determination under this chapter, and
            ``(3) are in effect for a period shorter than would 
        otherwise apply under a determination pursuant to this chapter,
shall remain in effect for such period of time as would otherwise apply 
under such determination, except that the Copyright Royalty Judges 
shall adjust the rates pursuant to the voluntary negotiations to 
reflect national monetary inflation during the additional period the 
rates remain in effect.''.
    (b) Conforming Amendment.--The table of chapters for title 17, 
United States Code, is amended by striking the item relating to chapter 
8 and inserting the following:

``8. Proceedings by Copyright Royalty Judges................     801''.

SEC. 4. DEFINITION.

    Section 101 is amended by inserting after the definition of 
``copies'' the following:
            ``A `Copyright Royalty Judge' is a Copyright Royalty Judge 
        appointed under section 802 of this title, and includes any 
        individual serving as an interim Copyright Royalty Judge under 
        such section.''.

SEC. 5. TECHNICAL AMENDMENTS.

    (a) Cable Rates.--Section 111(d) is amended--
            (1) in paragraph (2), in the second sentence, by striking 
        ``a copyright arbitration royalty panel'' and inserting ``the 
        Copyright Royalty Judges.''; and
            (2) in paragraph (4)--
                    (A) in subparagraph (A), by striking ``Librarian of 
                Congress'' each place it appears and inserting 
                ``Copyright Royalty Judges'';
                    (B) in subparagraph (B)--
                            (i) in the first sentence, by striking 
                        ``Librarian of Congress shall, upon the 
                        recommendation of the Register of Copyrights,'' 
                        and inserting ``Copyright Royalty Judges 
                        shall'';
                            (ii) in the second sentence, by striking 
                        ``Librarian determines'' and inserting 
                        ``Copyright Royalty Judges determine''; and
                            (iii) in the third sentence--
                                    (I) by striking ``Librarian'' each 
                                place it appears and inserting 
                                ``Copyright Royalty Judges''; and
                                    (II) by striking ``convene a 
                                copyright arbitration royalty panel'' 
                                and inserting ``conduct a proceeding''; 
                                and
                    (C) in subparagraph (C), by striking ``Librarian of 
                Congress'' and inserting ``Copyright Royalty Judges''.
    (b) Ephemeral Recordings.--Section 112(e) is amended--
            (1) in paragraph (3)--
                    (A) by amending the first sentence to read as 
                follows: ``Voluntary negotiation proceedings initiated 
                pursuant to section 804(a) for the purpose of 
                determining reasonable terms and rates of royalty 
                payments for the activities specified by paragraph (1) 
                shall cover the 5-year period beginning on January 1 of 
                the second year following the year in which the 
                proceedings are commenced, or such other period as the 
                parties may agree.''; and
                    (B) in the third sentence, by striking ``Librarian 
                of Congress'' and inserting ``Copyright Royalty 
                Judges'';
            (2) in paragraph (4)--
                    (A) by amending the first sentence to read as 
                follows: ``In the absence of license agreements 
                negotiated under paragraphs (2) and (3), the Copyright 
                Royalty Judges shall commence a proceeding pursuant to 
                chapter 8 to determine and publish in the Federal 
                Register a schedule of reasonable rates and terms 
                which, subject to paragraph (5), shall be binding on 
                all copyright owners of sound recordings and 
                transmitting organizations entitled to a statutory 
                license under this subsection during the 5-year period 
                specified in paragraph (3), or such other period as the 
                parties may agree.'';
                    (B) by striking ``copyright arbitration royalty 
                panel'' each subsequent place it appears and inserting 
                ``Copyright Royalty Judges'';
                    (C) in the fourth sentence, by striking ``its 
                decision'' and inserting ``their decision''; and
                    (D) in the last sentence, by striking ``Librarian 
                of Congress'' and inserting ``Copyright Royalty 
                Judges'';
            (3) in paragraph (5), by striking ``or decision by the 
        Librarian of Congress'' and inserting ``, decision by the 
        Librarian of Congress, or determination by the Copyright 
        Royalty Judges'';
            (4) by striking paragraph (6) and redesignating paragraphs 
        (7), (8), and (9), as paragraphs (6), (7), and (8), 
        respectively; and
            (5) in paragraph (6)(A), as so redesignated, by striking 
        ``Librarian of Congress'' and inserting ``Copyright Royalty 
        Judges''.
    (c) Scope of Exclusive Rights in Sound Recordings.--Section 114(f) 
is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A)--
                            (i) by amending the first sentence to read 
                        as follows: ``Voluntary negotiation proceedings 
                        initiated pursuant to section 804(a) for the 
                        purpose of determining reasonable terms and 
                        rates of royalty payments for subscription 
                        transmissions by preexisting subscription 
                        services and transmissions by preexisting 
                        satellite digital audio radio services shall 
                        cover the 5-year period beginning on January 1 
                        of the year following the second year in which 
                        the proceedings are commenced, except where 
                        differential transitional periods are provided 
                        in section 804(b)(3), or such other period as 
                        the parties may agree.''; and
                            (ii) in the third sentence, by striking 
                        ``Librarian of Congress'' and inserting 
                        ``Copyright Royalty Judges'';
                    (B) in subparagraph (B)--
                            (i) by amending the first sentence to read 
                        as follows: ``In the absence of license 
                        agreements negotiated under subparagraph (A), 
                        the Copyright Royalty Judges shall commence a 
                        proceeding pursuant to chapter 8 to determine 
                        and publish in the Federal Register a schedule 
                        of rates and terms which, subject to paragraph 
                        (3), shall be binding on all copyright owners 
                        of sound recordings and entities performing 
                        sound recordings affected by this paragraph 
                        during the 5-year period specified in 
                        subparagraph (A), or such other date as the 
                        parties may agree.''; and
                            (ii) in the second sentence, by striking 
                        ``copyright arbitration royalty panel'' and 
                        inserting ``Copyright Royalty Judges''; and
                    (C) by amending subparagraph (C) to read as 
                follows:
            ``(C) The procedures under subparagraphs (A) and (B) also 
        shall be initiated pursuant to a petition filed by any 
        copyright owners of sound recordings, any preexisting 
        subscription services, or any preexisting satellite digital 
        audio radio services indicating that a new type of subscription 
        digital audio transmission service on which sound recordings 
        are performed is or is about to become operational, for the 
        purpose of determining reasonable terms and rates of royalty 
        payments with respect to such new type of transmission service 
        for the period beginning with the inception of such new type of 
        service and ending on the date on which the royalty rates and 
        terms for subscription digital audio transmission services most 
        recently determined under subparagraph (A) or (B) and chapter 8 
        expire, or such other period as the parties may agree.'';
            (2) in paragraph (2)--
                    (A) in subparagraph (A)--
                            (i) by amending the first sentence to read 
                        as follows: ``Voluntary negotiation proceedings 
                        initiated pursuant to section 804(a) for the 
                        purpose of determining reasonable terms and 
                        rates of royalty payments for public 
                        performances of sound recordings by means of 
                        eligible nonsubscription transmissions and 
                        transmissions by new subscription services 
                        specified by subsection (d)(2) shall cover the 
                        5-year period beginning on January 1 of the 
                        second year following the year in which the 
                        proceedings are commenced, except where 
                        different transitional periods are provided in 
                        section 804(b)(3)(A), or such other period as 
                        the parties may agree.''; and
                            (ii) in the third sentence, by striking 
                        ``Librarian of Congress'' and inserting 
                        ``Copyright Royalty Judges'';
                    (B) in subparagraph (B)--
                            (i) by amending the first sentence to read 
                        as follows: ``In the absence of license 
                        agreements negotiated under subparagraph (A), 
                        the Copyright Royalty Judges shall commence a 
                        proceeding pursuant to chapter 8 to determine 
                        and publish in the Federal Register a schedule 
                        of rates and terms which, subject to paragraph 
                        (3), shall be binding on all copyright owners 
                        of sound recordings and entities performing 
                        sound recordings affected by this paragraph 
                        during the period specified in subparagraph 
                        (A), or such other period as the parties may 
                        agree.''; and
                            (ii) by striking ``copyright arbitration 
                        royalty panel'' each subsequent place it 
                        appears and inserting ``Copyright Royalty 
                        Judges''; and
                    (C) by amending subparagraph (C) to read as 
                follows:
            ``(C) The procedures under subparagraphs (A) and (B) shall 
        also be initiated pursuant to a petition filed by any copyright 
        owners of sound recordings or any eligible nonsubscription 
        service or new subscription service indicating that a new type 
        of eligible nonsubscription service or new subscription service 
        on which sound recordings are performed is or is about to 
        become operational, for the purpose of determining reasonable 
        terms and rates of royalty payments with respect to such new 
type of service for the period beginning with the inception of such new 
type of service and ending on the date on which the royalty rates and 
terms for preexisting subscription digital audio transmission services 
or preexisting satellite digital radio audio services, as the case may 
be, most recently determined under subparagraph (A) or (B) and chapter 
8 expire, or such other period as the parties may agree.'';
            (3) in paragraph (3), by striking ``or decision by the 
        Librarian of Congress'' and inserting ``, decision by the 
        Librarian of Congress, or determination by the Copyright 
        Royalty Judges''; and
            (4) in paragraph (4), by striking ``Librarian of Congress'' 
        each place it appears and inserting ``Copyright Royalty 
        Judges''.
    (d) Phonorecords of Nondramatic Musical Works.--Section 115(c)(3) 
is amended--
            (1) in subparagraph (A)(ii), by striking ``(F)'' and 
        inserting ``(E)'';
            (2) in subparagraph (B)--
                    (A) by striking ``under this paragraph'' and 
                inserting ``under this section; and
                    (B) by striking ``subparagraphs (B) through (F)'' 
                and inserting ``this subparagraph and subparagraphs (B) 
                through (E)'';
            (3) in subparagraph (C)--
                    (A) by amending the first sentence to read as 
                follows: ``Voluntary negotiation proceedings initiated 
                pursuant to a petition filed under section 804(a) for 
                the purpose of determining reasonable terms and rates 
                of royalty payments for the activities specified by 
                this section shall cover the period beginning with the 
                effective date of such terms and rates, but not earlier 
                than January 1 of the second year following the year in 
                which the petition is filed, and ending on the 
                effective date of successor terms and rates, or such 
                other period as the parties may agree.''; and
                    (B) in the third sentence, by striking ``Librarian 
                of Congress'' and inserting ``Copyright Royalty 
                Judges'';
            (4) in subparagraph (D)--
                    (A) by amending the first sentence to read as 
                follows: ``In the absence of license agreements 
                negotiated under subparagraphs (B) and (C), the 
                Copyright Royalty Judges shall commence proceedings 
                pursuant to chapter 8 to determine and publish in the 
                Federal Register a schedule of rates and terms which, 
                subject to subparagraph (E), shall be binding on all 
                copyright owners of nondramatic musical works and 
                persons entitled to obtain a compulsory license under 
                subsection (a)(1) during the period specified in 
                subparagraph (C) or such other period as may be 
                determined pursuant to subparagraphs (B) and (C), or 
                such other period as the parties may agree.'';
                    (B) in the third sentence, by striking ``copyright 
                arbitration royalty panel'' and inserting ``Copyright 
                Royalty Judges''; and
                    (C) in the last sentence, by striking ``Librarian 
                of Congress'' and inserting ``Copyright Royalty 
                Judges'';
            (5) in subparagraph (E)--
                    (A) in clause (i)--
                            (i) in the first sentence, by striking 
                        ``the Librarian of Congress'' and inserting ``a 
                        copyright arbitration royalty panel, the 
                        Librarian of Congress, or the Copyright Royalty 
                        Judges''; and
                            (ii) in the second sentence, by striking 
                        ``(C), (D) or (F) shall be given effect'' and 
                        inserting ``(C) or (D) shall be given effect as 
                        to digital phonorecord deliveries''; and
                    (B) in clause (ii)(I), by striking ``(C), (D) or 
                (F)'' each place it appears and inserting ``(C) or 
                (D)''; and
            (6) by striking subparagraph (F) and redesignating 
        subparagraphs (G) through (L) as subparagraphs (F) through (K), 
        respectively.
    (e) Coin-Operated Phonorecord Players.--Section 116 is amended--
            (1) in subsection (b), by amending paragraph (2) to read as 
        follows:
            ``(2) Chapter 8 proceeding.--Parties not subject to such a 
        negotiation may have the terms and rates and the division of 
        fees described in paragraph (1) determined in a proceeding in 
        accordance with the provisions of chapter 8.''; and
            (2) in subsection (c)--
                    (A) in the subsection heading, by striking 
                ``Copyright Arbitration Royalty Panel Determinations'' 
                and inserting ``Determinations by Copyright Royalty 
                Judges''; and
                    (B) by striking ``a copyright arbitration royalty 
                panel'' and inserting ``the Copyright Royalty Judges''.
    (f) Use of Certain Works in Connection With Noncommercial 
Broadcasting.--Section 118 is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) in the first sentence, by striking 
                        ``Librarian of Congress'' and inserting 
                        ``Copyright Royalty Judges''; and
                            (ii) by striking the second and third 
                        sentences;
                    (B) in paragraph (2), by striking ``the Librarian 
                of Congress:'' and all that follows through the end of 
                the sentence and inserting ``a copyright arbitration 
                royalty panel, the Librarian of Congress, or the 
                Copyright Royalty Judge, if copies of such agreements 
                are filed with the Copyright Royalty Judges within 30 
                days of execution in accordance with regulations that 
                the Copyright Royalty Judges shall issue.''; and
                    (C) in paragraph (3)--
                            (i) in the second sentence--
                                    (I) by striking ``copyright 
                                arbitration royalty panel'' and 
                                inserting ``Copyright Royalty Judges''; 
                                and
                                    (II) by striking ``paragraph (2).'' 
                                and inserting ``paragraph (2) or 
                                (3).'';
                            (ii) in the last sentence, by striking 
                        ```Librarian of Congress'' and inserting 
                        ``Copyright Royalty Judges''; and
                            (iii) by striking ``(3) In'' and all that 
                        follows through the end of the first sentence 
                        and inserting the following:
            ``(3) Voluntary negotiation proceedings initiated pursuant 
        to a petition filed under section 804(a) for the purpose of 
        determining a schedule of terms and rates of royalty payments 
        by public broadcasting entities to copyright owners in works 
        specified by this subsection and the proportionate division of 
        fees paid among various copyright owners shall cover the 5-year 
        period beginning on January 1 of the second year following the 
        year in which the petition is filed. The parties to each 
        negotiation proceeding shall bear their own costs.
            ``(4) In the absence of license agreements negotiated under 
        paragraph (2) or (3), the Copyright Royalty Judges shall, 
        pursuant to chapter 8, conduct a proceeding to determine and 
        publish in the Federal Register a schedule of rates and terms 
        which, subject to paragraph (2), shall be binding on all owners 
        of copyright in works specified by this subsection and public 
        broadcasting entities, regardless of whether such copyright 
        owners have submitted proposals to the Copyright Royalty 
        Judges.'';
            (2) by striking subsection (c) and redesignating 
        subsections (d) through (g) as subsections (c) through (f), 
        respectively;
            (3) in subsection (c), as so redesignated, in the matter 
        preceding paragraph (1)--
                    (A) by striking ``(b)(2)'' and inserting ``(b)(2) 
                or (3)'';
                    (B) by striking ``(b)(3)'' and inserting 
                ``(b)(4)''; and
                    (C) by striking ``a copyright arbitration royalty 
                panel'' and inserting ``the Copyright Royalty Judges'';
            (4) in subsection (d), as so redesignated--
                    (A) by striking ``in the Copyright Office'' and 
                inserting ``with the Copyright Royalty Judges''; and
                    (B) by striking ``Register of Copyrights'' and 
                inserting ``Copyright Royalty Judges''; and
            (5) in subsection (f), as so redesignated, by striking 
        ``(d)'' and inserting ``(c)''.
    (g) Secondary Transmissions by Satellite Carriers.--Section 119(b) 
is amended--
            (1) in paragraph (3), by striking ``Librarian of Congress'' 
        and inserting ``Copyright Royalty Judges''; and
            (2) in paragraph (4)--
                    (A) in subparagraph (A), by striking ``Librarian of 
                Congress'' each place it appears and inserting 
                ``Copyright Royalty Judges''; and
                    (B) by amending subparagraphs (B) and (C) to read 
                as follows:
                    ``(B) Determination of controversy; 
                distributions.--After the first day of August of each 
                year, the Copyright Royalty Judges shall determine 
                whether there exists a controversy concerning the 
                distribution of royalty fees. If the Copyright Royalty 
                Judges determine that no such controversy exists, the 
                Librarian of Congress shall, after deducting reasonable 
                administrative costs under this paragraph, distribute 
                such fees to the copyright owners entitled to receive 
                them, or to their designated agents. If the Copyright 
                Royalty Judges find the existence of a controversy, the 
                Copyright Royalty Judges shall, pursuant to chapter 8 
                of this title, conduct a proceeding to determine the 
                distribution of royalty fees.
                    ``(C) Withholding of fees during controversy.--
                During the pendency of any proceeding under this 
                subsection, the Copyright Royalty Judges shall withhold 
                from distribution an amount sufficient to satisfy all 
                claims with respect to which a controversy exists, 
                subject to any distributions made under section 
                801(b)(3).''.
    (h) Digital Audio Recording Devices.--
            (1) Royalty payments.--Section 1004(a)(3) is amended by 
        striking ``Librarian of Congress'' each place it appears and 
        inserting ``Copyright Royalty Judges''.
            (2) Entitlement to royalty payments.--Section 1006(c) is 
        amended by striking ``Librarian of Congress shall convene a 
        copyright arbitration royalty panel which'' and inserting 
        ``Copyright Royalty Judges''.
            (3) Procedures for distributing royalty payments.--Section 
        1007 is amended--
                    (A) in subsection (a), by amending paragraph (1) to 
                read as follows:
            ``(1) Filing of claims.--During the first 2 months of each 
        calendar year, every interested copyright party seeking to 
        receive royalty payments to which such party is entitled under 
        section 1006 shall file with the Copyright Royalty Judges a 
        claim for payments collected during the preceding year in such 
        form and manner as the Copyright Royalty Judges shall prescribe 
        by regulation.''; and
                    (B) by amending subsections (b) and (c) to read as 
                follows:
    ``(b) Distribution of Payments in the Absence of a Dispute.--After 
the period established for the filing of claims under subsection (a), 
in each year, the Copyright Royalty Judges shall determine whether 
there exists a controversy concerning the distribution of royalty 
payments under section 1006(c). If the Copyright Royalty Judges 
determine that no such controversy exists, the Librarian of Congress 
shall, within 30 days after such determination, authorize the 
distribution of the royalty payments as set forth in the agreements 
regarding the distribution of royalty payments entered into pursuant to 
subsection (a). The Librarian of Congress shall, before such royalty 
payments are distributed, deduct the reasonable administrative costs 
incurred by the Librarian under this section.
    ``(c) Resolution of Disputes.--If the Copyright Royalty Judges find 
the existence of a controversy, the Copyright Royalty Judges shall, 
pursuant to chapter 8 of this title, conduct a proceeding to determine 
the distribution of royalty payments. During the pendency of such a 
proceeding, the Copyright Royalty Judges shall withhold from 
distribution an amount sufficient to satisfy all claims with respect to 
which a controversy exists, but shall, to the extent feasible, 
authorize the distribution of any amounts that are not in controversy. 
The Librarian of Congress shall, before such royalty payments are 
distributed, deduct the reasonable administrative costs incurred by the 
Librarian under this section.''.
            (4) Determination of certain disputes.--(A) Section 1010 is 
        amended to read as follows:
``Sec. 1010. Determination of certain disputes
    ``(a) Scope of Determination.--Before the date of first 
distribution in the United States of a digital audio recording device 
or a digital audio interface device, any party manufacturing, 
importing, or distributing such device, and any interested copyright 
party may mutually agree to petition the Copyright Royalty Judges to 
determine whether such device is subject to section 1002, or the basis 
on which royalty payments for such device are to be made under section 
1003.
    ``(b) Initiation of Proceedings.--The parties under subsection (a) 
shall file the petition with the Copyright Royalty Judges requesting 
the commencement of a proceeding. Within 2 weeks after receiving such a 
petition, the Chief Copyright Royalty Judge shall cause notice to be 
published in the Federal Register of the initiation of the proceeding.
    ``(c) Stay of Judicial Proceedings.--Any civil action brought under 
section 1009 against a party to a proceeding under this section shall, 
on application of one of the parties to the proceeding, be stayed until 
completion of the proceeding.
    ``(d) Proceeding.--The Copyright Royalty Judges shall conduct a 
proceeding with respect to the matter concerned, in accordance with 
such procedures as the Copyright Royalty Judges may adopt. The 
Copyright Royalty Judges shall act on the basis of a fully documented 
written record. Any party to the proceeding may submit relevant 
information and proposals to the Copyright Royalty Judges. The parties 
to the proceeding shall each bear their respective costs of 
participation.
    ``(e) Judicial Review.--Any determination of the Copyright Royalty 
Judges under subsection (d) may be appealed, by a party to the 
proceeding, in accordance with section 803(d) of this title. The 
pendency of an appeal under this subsection shall not stay the 
determination of the Copyright Royalty Judges. If the court modifies 
the determination of the Copyright Royalty Judges, the court shall have 
jurisdiction to enter its own decision in accordance with its final 
judgment. The court may further vacate the determination of the 
Copyright Royalty Judges and remand the case for proceedings as 
provided in this section.''.
            (B) The item relating to section 1010 in the table of 
        sections for chapter 10 is amended to read as follows:

``1010. Determination of certain disputes.''.

SEC. 6. EFFECTIVE DATE AND TRANSITION PROVISIONS.

    (a) Effective Date.--This Act and the amendments made by this Act 
shall take effect 6 months after the date of the enactment of this Act, 
except that the Librarian of Congress shall appoint interim Copyright 
Royalty Judges under section 802(d) of title 17, United States Code, as 
amended by this Act, within 90 days after such date of enactment to 
carry out the functions of the Copyright Royalty Judges under title 17, 
United States Code, to the extent that Copyright Royalty Judges 
provided for in section 801(a) of title 17, United States Code, as 
amended by this Act, have not been appointed before the end of that 90-
day period.
    (b) Transition Provisions.--
            (1) In general.--Subject to paragraph (2), the amendments 
        made by this Act shall not affect any proceedings commenced, 
        petitions filed, or voluntary agreements entered into before 
        the enactment of this Act under the provisions of title 17, 
        United States Code, amended by this Act, and pending on such 
        date of enactment. Such proceedings shall continue, 
        determinations made in such proceedings, and appeals taken 
        therefrom, as if this Act had not been enacted, and shall 
        continue in effect until modified under title 17, United States 
        Code, as amended by this Act. Such petitions filed and 
        voluntary agreements entered into shall remain in effect as if 
        this Act had not been enacted.
            (2) Effective periods for certain ratemaking proceedings.--
        Notwithstanding paragraph (1), terms and rates in effect under 
        section 114(f)(2) or 112(e) of title 17, United States Code, 
        for new subscription services, eligible nonsubscription 
        services, and services exempt under section 114(d)(1)(C)(iv) of 
        such title for the period 2003 through 2004, and any rates 
        published in the Federal Register under the authority of the 
        Small Webcaster Settlement Act of 2002 for the years 2003 
        through 2004, shall be effective until the first applicable 
        effective date for successor terms and rates specified in 
        section 804(b)(2) or (3)(A) of title 17, United States Code, or 
        until such later date as the parties may agree. Any proceeding 
        commenced before the enactment of this Act pursuant to section 
        114(f)(2) and chapter 8 of title 17, United States Code, to 
        adjust or determine such rates and terms for periods following 
        2004 shall be terminated upon the enactment of this Act and 
        shall be null and void.
    (c) Existing Appropriations.--Any funds made available in an 
appropriations Act before the date of the enactment of this Act to 
carry out chapter 8 of title 17, United States Code, shall be available 
to the extent necessary to carry out this section.
            Amend the title so as to read: ``A bill to amend title 17, 
        United States Code, to replace copyright arbitration royalty 
        panels with Copyright Royalty Judges, and for other 
        purposes.''.
                                                 Union Calendar No. 234

108th CONGRESS

  2d Session

                               H. R. 1417

                          [Report No. 108-408]

_______________________________________________________________________

                                 A BILL

To amend title 17, United States Code, to replace copyright arbitration 
 royalty panels with a Copyright Royalty Judge, and for other purposes.

_______________________________________________________________________

                            January 30, 2004

Reported with amendments, committed to the Committee of the Whole House 
          on the State of the Union, and ordered to be printed