[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1551 Engrossed Amendment Senate (EAS)]
<DOC>
In the Senate of the United States,
September 18, 2018.
Resolved, That the bill from the House of Representatives (H.R.
1551) entitled ``An Act to amend the Internal Revenue Code of 1986 to
modify the credit for production from advanced nuclear power
facilities.'', do pass with the following
AMENDMENT:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Orrin G. Hatch
Music Modernization Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Customs user fees.
TITLE I--MUSIC LICENSING MODERNIZATION
Sec. 101. Short title.
Sec. 102. Blanket license for digital uses and mechanical licensing
collective.
Sec. 103. Amendments to section 114.
Sec. 104. Random assignment of rate court proceedings.
Sec. 105. Performing rights society consent decrees.
Sec. 106. Effective date.
TITLE II--CLASSICS PROTECTION AND ACCESS
Sec. 201. Short title.
Sec. 202. Unauthorized use of pre-1972 sound recordings.
TITLE III--ALLOCATION FOR MUSIC PRODUCERS
Sec. 301. Short title.
Sec. 302. Payment of statutory performance royalties.
Sec. 303. Effective date.
TITLE IV--SEVERABILITY
Sec. 401. Severability.
SEC. 2. CUSTOMS USER FEES.
Section 13031(j)(3)(A) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)(A)) is amended by
striking ``October 13, 2027'' and inserting ``October 20, 2027''.
TITLE I--MUSIC LICENSING MODERNIZATION
SEC. 101. SHORT TITLE.
This title may be cited as the ``Musical Works Modernization Act''.
SEC. 102. BLANKET LICENSE FOR DIGITAL USES AND MECHANICAL LICENSING
COLLECTIVE.
(a) Amendment.--Section 115 of title 17, United States Code, is
amended--
(1) in subsection (a)--
(A) in the subsection heading, by inserting ``in
General'' after ``Availability and Scope of Compulsory
License'';
(B) by striking paragraph (1) and inserting the
following:
``(1) Eligibility for compulsory license.--
``(A) Conditions for compulsory license.--A person
may by complying with the provisions of this section
obtain a compulsory license to make and distribute
phonorecords of a nondramatic musical work, including
by means of digital phonorecord delivery. A person may
obtain a compulsory license only if the primary purpose
in making phonorecords of the musical work is to
distribute them to the public for private use,
including by means of digital phonorecord delivery,
and--
``(i) phonorecords of such musical work
have previously been distributed to the public
in the United States under the authority of the
copyright owner of the work, including by means
of digital phonorecord delivery; or
``(ii) in the case of a digital music
provider seeking to make and distribute digital
phonorecord deliveries of a sound recording
embodying a musical work under a compulsory
license for which clause (i) does not apply--
``(I) the first fixation of such
sound recording was made under the
authority of the musical work copyright
owner, and the sound recording
copyright owner has the authority of
the musical work copyright owner to
make and distribute digital phonorecord
deliveries embodying such work to the
public in the United States; and
``(II) the sound recording
copyright owner, or the authorized
distributor of the sound recording
copyright owner, has authorized the
digital music provider to make and
distribute digital phonorecord
deliveries of the sound recording to
the public in the United States.
``(B) Duplication of sound recording.--A person may
not obtain a compulsory license for the use of the work
in the making of phonorecords duplicating a sound
recording fixed by another, including by means of
digital phonorecord delivery, unless--
``(i) such sound recording was fixed
lawfully; and
``(ii) the making of the phonorecords was
authorized by the owner of the copyright in the
sound recording or, if the sound recording was
fixed before February 15, 1972, by any person
who fixed the sound recording pursuant to an
express license from the owner of the copyright
in the musical work or pursuant to a valid
compulsory license for use of such work in a
sound recording.''; and
(C) in paragraph (2), by striking ``A compulsory
license'' and inserting ``Musical arrangement.--A
compulsory license'';
(2) by striking subsection (b) and inserting the following:
``(b) Procedures To Obtain a Compulsory License.--
``(1) Phonorecords other than digital phonorecord
deliveries.--A person who seeks to obtain a compulsory license
under subsection (a) to make and distribute phonorecords of a
musical work other than by means of digital phonorecord
delivery shall, before, or not later than 30 calendar days
after, making, and before distributing, any phonorecord of the
work, serve notice of intention to do so on the copyright
owner. If the registration or other public records of the
Copyright Office do not identify the copyright owner and
include an address at which notice can be served, it shall be
sufficient to file the notice of intention with the Copyright
Office. The notice shall comply, in form, content, and manner
of service, with requirements that the Register of Copyrights
shall prescribe by regulation.
``(2) Digital phonorecord deliveries.--A person who seeks
to obtain a compulsory license under subsection (a) to make and
distribute phonorecords of a musical work by means of digital
phonorecord delivery--
``(A) prior to the license availability date,
shall, before, or not later than 30 calendar days
after, first making any such digital phonorecord
delivery, serve a notice of intention to do so on the
copyright owner (but may not file the notice with the
Copyright Office, even if the public records of the
Office do not identify the owner or the owner's
address), and such notice shall comply, in form,
content, and manner of service, with requirements that
the Register of Copyrights shall prescribe by
regulation; or
``(B) on or after the license availability date,
shall, before making any such digital phonorecord
delivery, follow the procedure described in subsection
(d)(2), except as provided in paragraph (3).
``(3) Record company individual download licenses.--
Notwithstanding paragraph (2)(B), a record company may, on or
after the license availability date, obtain an individual
download license in accordance with the notice requirements
described in paragraph (2)(A) (except for the requirement that
notice occur prior to the license availability date). A record
company that obtains an individual download license as
permitted under this paragraph shall provide statements of
account and pay royalties as provided in subsection (c)(2)(I).
``(4) Failure to obtain license.--
``(A) Phonorecords other than digital phonorecord
deliveries.--In the case of phonorecords made and
distributed other than by means of digital phonorecord
delivery, the failure to serve or file the notice of
intention required by paragraph (1) forecloses the
possibility of a compulsory license under paragraph
(1). In the absence of a voluntary license, the failure
to obtain a compulsory license renders the making and
distribution of phonorecords actionable as acts of
infringement under section 501 and subject to the
remedies provided by sections 502 through 506.
``(B) Digital phonorecord deliveries.--
``(i) In general.--In the case of
phonorecords made and distributed by means of
digital phonorecord delivery:
``(I) The failure to serve the
notice of intention required by
paragraph (2)(A) or paragraph (3), as
applicable, forecloses the possibility
of a compulsory license under such
paragraph.
``(II) The failure to comply with
paragraph (2)(B) forecloses the
possibility of a blanket license for a
period of 3 years after the last
calendar day on which the notice of
license was required to be submitted to
the mechanical licensing collective
under such paragraph.
``(ii) Effect of failure.--In either case
described in subclause (I) or (II) of clause
(i), in the absence of a voluntary license, the
failure to obtain a compulsory license renders
the making and distribution of phonorecords by
means of digital phonorecord delivery
actionable as acts of infringement under
section 501 and subject to the remedies
provided by sections 502 through 506.'';
(3) by amending subsection (c) to read as follows:
``(c) General Conditions Applicable to Compulsory License.--
``(1) Royalty payable under compulsory license.--
``(A) Identification requirement.--To be entitled
to receive royalties under a compulsory license
obtained under subsection (b)(1) the copyright owner
must be identified in the registration or other public
records of the Copyright Office. The owner is entitled
to royalties for phonorecords made and distributed
after being so identified, but is not entitled to
recover for any phonorecords previously made and
distributed.
``(B) Royalty for phonorecords other than digital
phonorecord deliveries.--Except as provided by
subparagraph (A), for every phonorecord made and
distributed under a compulsory license under subsection
(a) other than by means of digital phonorecord
delivery, with respect to each work embodied in the
phonorecord, the royalty shall be the royalty
prescribed under subparagraphs (D) through (F),
paragraph (2)(A), and chapter 8. For purposes of this
subparagraph, a phonorecord is considered `distributed'
if the person exercising the compulsory license has
voluntarily and permanently parted with its possession.
``(C) Royalty for digital phonorecord deliveries.--
For every digital phonorecord delivery of a musical
work made under a compulsory license under this
section, the royalty payable shall be the royalty
prescribed under subparagraphs (D) through (F),
paragraph (2)(A), and chapter 8.
``(D) Authority to negotiate.--Notwithstanding any
provision of the antitrust laws, any copyright owners
of nondramatic musical works and any persons entitled
to obtain a compulsory license under subsection (a) may
negotiate and agree upon the terms and rates of royalty
payments under this section and the proportionate
division of fees paid among copyright owners, and may
designate common agents on a nonexclusive basis to
negotiate, agree to, pay or receive such royalty
payments. Such authority to negotiate the terms and
rates of royalty payments includes, but is not limited
to, the authority to negotiate the year during which
the royalty rates prescribed under this subparagraph,
subparagraphs (E) and (F), paragraph (2)(A), and
chapter 8 shall next be determined.
``(E) Determination of reasonable rates and
terms.--Proceedings under chapter 8 shall determine
reasonable rates and terms of royalty payments for the
activities specified by this section during the period
beginning with the effective date of such rates and
terms, but not earlier than January 1 of the second
year following the year in which the petition
requesting the proceeding is filed, and ending on the
effective date of successor rates and terms, or such
other period as the parties may agree. Any copyright
owners of nondramatic musical works and any persons
entitled to obtain a compulsory license under
subsection (a) may submit to the Copyright Royalty
Judges licenses covering such activities. The parties
to each proceeding shall bear their own costs.
``(F) Schedule of reasonable rates.--The schedule
of reasonable rates and terms determined by the
Copyright Royalty Judges shall, subject to paragraph
(2)(A), be binding on all copyright owners of
nondramatic musical works and persons entitled to
obtain a compulsory license under subsection (a) during
the period specified in subparagraph (E), such other
period as may be determined pursuant to subparagraphs
(D) and (E), or such other period as the parties may
agree. The Copyright Royalty Judges shall establish
rates and terms that most clearly represent the rates
and terms that would have been negotiated in the
marketplace between a willing buyer and a willing
seller. In determining such rates and terms for digital
phonorecord deliveries, the Copyright Royalty Judges
shall base their decision on economic, competitive, and
programming information presented by the parties,
including--
``(i) whether use of the compulsory
licensee's service may substitute for or may
promote the sales of phonorecords or otherwise
may interfere with or may enhance the musical
work copyright owner's other streams of revenue
from its musical works; and
``(ii) the relative roles of the copyright
owner and the compulsory licensee in the
copyrighted work and the service made available
to the public with respect to the relative
creative contribution, technological
contribution, capital investment, cost, and
risk.
``(2) Additional terms and conditions.--
``(A) Voluntary licenses and contractual royalty
rates.--
``(i) In general.--License agreements
voluntarily negotiated at any time between one
or more copyright owners of nondramatic musical
works and one or more persons entitled to
obtain a compulsory license under subsection
(a) shall be given effect in lieu of any
determination by the Copyright Royalty Judges.
Subject to clause (ii), the royalty rates
determined pursuant to subparagraphs (E) and
(F) of paragraph (1) shall be given effect as
to digital phonorecord deliveries in lieu of
any contrary royalty rates specified in a
contract pursuant to which a recording artist
who is the author of a nondramatic musical work
grants a license under that person's exclusive
rights in the musical work under paragraphs (1)
and (3) of section 106 or commits another
person to grant a license in that musical work
under paragraphs (1) and (3) of section 106, to
a person desiring to fix in a tangible medium
of expression a sound recording embodying the
musical work.
``(ii) Applicability.--The second sentence
of clause (i) shall not apply to--
``(I) a contract entered into on or
before June 22, 1995, and not modified
thereafter for the purpose of reducing
the royalty rates determined pursuant
to subparagraphs (E) and (F) of
paragraph (1) or of increasing the
number of musical works within the
scope of the contract covered by the
reduced rates, except if a contract
entered into on or before June 22,
1995, is modified thereafter for the
purpose of increasing the number of
musical works within the scope of the
contract, any contrary royalty rates
specified in the contract shall be
given effect in lieu of royalty rates
determined pursuant to subparagraphs
(E) and (F) of paragraph (1) for the
number of musical works within the
scope of the contract as of June 22,
1995; and
``(II) a contract entered into
after the date that the sound recording
is fixed in a tangible medium of
expression substantially in a form
intended for commercial release, if at
the time the contract is entered into,
the recording artist retains the right
to grant licenses as to the musical
work under paragraphs (1) and (3) of
section 106.
``(B) Sound recording information.--Except as
provided in section 1002(e), a digital phonorecord
delivery licensed under this paragraph shall be
accompanied by the information encoded in the sound
recording, if any, by or under the authority of the
copyright owner of that sound recording, that
identifies the title of the sound recording, the
featured recording artist who performs on the sound
recording, and related information, including
information concerning the underlying musical work and
its writer.
``(C) Infringement remedies.--
``(i) In general.--A digital phonorecord
delivery of a sound recording is actionable as
an act of infringement under section 501, and
is fully subject to the remedies provided by
sections 502 through 506, unless--
``(I) the digital phonorecord
delivery has been authorized by the
sound recording copyright owner; and
``(II) the entity making the
digital phonorecord delivery has
obtained a compulsory license under
subsection (a) or has otherwise been
authorized by the musical work
copyright owner, or by a record company
pursuant to an individual download
license, to make and distribute
phonorecords of each musical work
embodied in the sound recording by
means of digital phonorecord delivery.
``(ii) Other remedies.--Any cause of action
under this subparagraph shall be in addition to
those available to the owner of the copyright
in the nondramatic musical work under
subparagraph (J) and section 106(4) and the
owner of the copyright in the sound recording
under section 106(6).
``(D) Liability of sound recording owners.--The
liability of the copyright owner of a sound recording
for infringement of the copyright in a nondramatic
musical work embodied in the sound recording shall be
determined in accordance with applicable law, except
that the owner of a copyright in a sound recording
shall not be liable for a digital phonorecord delivery
by a third party if the owner of the copyright in the
sound recording does not license the distribution of a
phonorecord of the nondramatic musical work.
``(E) Recording devices and media.--Nothing in
section 1008 shall be construed to prevent the exercise
of the rights and remedies allowed by this paragraph,
subparagraph (J), and chapter 5 in the event of a
digital phonorecord delivery, except that no action
alleging infringement of copyright may be brought under
this title against a manufacturer, importer or
distributor of a digital audio recording device, a
digital audio recording medium, an analog recording
device, or an analog recording medium, or against a
consumer, based on the actions described in such
section.
``(F) Preservation of rights.--Nothing in this
section annuls or limits--
``(i) the exclusive right to publicly
perform a sound recording or the musical work
embodied therein, including by means of a
digital transmission, under paragraphs (4) and
(6) of section 106;
``(ii) except for compulsory licensing
under the conditions specified by this section,
the exclusive rights to reproduce and
distribute the sound recording and the musical
work embodied therein under paragraphs (1) and
(3) of section 106, including by means of a
digital phonorecord delivery; or
``(iii) any other rights under any other
provision of section 106, or remedies available
under this title, as such rights or remedies
exist before, on, or after the date of
enactment of the Digital Performance Right in
Sound Recordings Act of 1995.
``(G) Exempt transmissions and retransmissions.--
The provisions of this section concerning digital
phonorecord deliveries shall not apply to any exempt
transmissions or retransmissions under section
114(d)(1). The exemptions created in section 114(d)(1)
do not expand or reduce the rights of copyright owners
under paragraphs (1) through (5) of section 106 with
respect to such transmissions and retransmissions.
``(H) Distribution by rental, lease, or lending.--A
compulsory license obtained under subsection (b)(1) to
make and distribute phonorecords includes the right of
the maker of such a phonorecord to distribute or
authorize distribution of such phonorecord, other than
by means of a digital phonorecord delivery, by rental,
lease, or lending (or by acts or practices in the
nature of rental, lease, or lending). With respect to
each nondramatic musical work embodied in the
phonorecord, the royalty shall be a proportion of the
revenue received by the compulsory licensee from every
such act of distribution of the phonorecord under this
clause equal to the proportion of the revenue received
by the compulsory licensee from distribution of the
phonorecord under subsection (a)(1)(A)(ii)(II) that is
payable by a compulsory licensee under that clause and
under chapter 8. The Register of Copyrights shall issue
regulations to carry out the purpose of this
subparagraph.
``(I) Payment of royalties and statements of
account.--Except as provided in paragraphs (4)(A)(i)
and (10)(B) of subsection (d), royalty payments shall
be made on or before the twentieth day of each month
and shall include all royalties for the month next
preceding. Each monthly payment shall be made under
oath and shall comply with requirements that the
Register of Copyrights shall prescribe by regulation.
The Register shall also prescribe regulations under
which detailed cumulative annual statements of account,
certified by a certified public accountant, shall be
filed for every compulsory license under subsection
(a). The regulations covering both the monthly and the
annual statements of account shall prescribe the form,
content, and manner of certification with respect to
the number of records made and the number of records
distributed.
``(J) Notice of default and termination of
compulsory license.--In the case of a license obtained
under paragraph (1), (2)(A), or (3) of subsection (b),
if the copyright owner does not receive the monthly
payment and the monthly and annual statements of
account when due, the owner may give written notice to
the licensee that, unless the default is remedied not
later than 30 days after the date on which the notice
is sent, the compulsory license will be automatically
terminated. Such termination renders either the making
or the distribution, or both, of all phonorecords for
which the royalty has not been paid, actionable as acts
of infringement under section 501 and fully subject to
the remedies provided by sections 502 through 506. In
the case of a license obtained under subsection
(b)(2)(B), license authority under the compulsory
license may be terminated as provided in subsection
(d)(4)(E).'';
(4) by amending subsection (d) to read as follows:
``(d) Blanket License for Digital Uses, Mechanical Licensing
Collective, and Digital Licensee Coordinator.--
``(1) Blanket license for digital uses.--
``(A) In general.--A digital music provider that
qualifies for a compulsory license under subsection (a)
may, by complying with the terms and conditions of this
subsection, obtain a blanket license from copyright
owners through the mechanical licensing collective to
make and distribute digital phonorecord deliveries of
musical works through one or more covered activities.
``(B) Included activities.--A blanket license--
``(i) covers all musical works (or shares
of such works) available for compulsory
licensing under this section for purposes of
engaging in covered activities, except as
provided in subparagraph (C);
``(ii) includes the making and distribution
of server, intermediate, archival, and
incidental reproductions of musical works that
are reasonable and necessary for the digital
music provider to engage in covered activities
licensed under this subsection, solely for the
purpose of engaging in such covered activities;
and
``(iii) does not cover or include any
rights or uses other than those described in
clauses (i) and (ii).
``(C) Other licenses.--A voluntary license for
covered activities entered into by or under the
authority of 1 or more copyright owners and 1 or more
digital music providers, or authority to make and
distribute permanent downloads of a musical work
obtained by a digital music provider from a sound
recording copyright owner pursuant to an individual
download license, shall be given effect in lieu of a
blanket license under this subsection with respect to
the musical works (or shares thereof) covered by such
voluntary license or individual download authority and
the following conditions apply:
``(i) Where a voluntary license or
individual download license applies, the
license authority provided under the blanket
license shall exclude any musical works (or
shares thereof) subject to the voluntary
license or individual download license.
``(ii) An entity engaged in covered
activities under a voluntary license or
authority obtained pursuant to an individual
download license that is a significant
nonblanket licensee shall comply with paragraph
(6)(A).
``(iii) The rates and terms of any
voluntary license shall be subject to the
second sentence of clause (i) and clause (ii)
of subsection (c)(2)(A) and paragraph (9)(C),
as applicable.
``(D) Protection against infringement actions.--A
digital music provider that obtains and complies with
the terms of a valid blanket license under this
subsection shall not be subject to an action for
infringement of the exclusive rights provided by
paragraphs (1) and (3) of section 106 under this title
arising from use of a musical work (or share thereof)
to engage in covered activities authorized by such
license, subject to paragraph (4)(E).
``(E) Other requirements and conditions apply.--
Except as expressly provided in this subsection, each
requirement, limitation, condition, privilege, right,
and remedy otherwise applicable to compulsory licenses
under this section shall apply to compulsory blanket
licenses under this subsection.
``(2) Availability of blanket license.--
``(A) Procedure for obtaining license.--A digital
music provider may obtain a blanket license by
submitting a notice of license to the mechanical
licensing collective that specifies the particular
covered activities in which the digital music provider
seeks to engage, as follows:
``(i) The notice of license shall comply in
form and substance with requirements that the
Register of Copyrights shall establish by
regulation.
``(ii) Unless rejected in writing by the
mechanical licensing collective not later than
30 calendar days after the date on which the
mechanical licensing collective receives the
notice, the blanket license shall be effective
as of the date on which the notice of license
was sent by the digital music provider, as
shown by a physical or electronic record.
``(iii) A notice of license may only be
rejected by the mechanical licensing collective
if--
``(I) the digital music provider or
notice of license does not meet the
requirements of this section or
applicable regulations, in which case
the requirements at issue shall be
specified with reasonable particularity
in the notice of rejection; or
``(II) the digital music provider
has had a blanket license terminated by
the mechanical licensing collective
during the 3-year period preceding the
date on which the mechanical licensing
collective receives the notice pursuant
to paragraph (4)(E).
``(iv) If a notice of license is rejected
under clause (iii)(I), the digital music
provider shall have 30 calendar days after
receipt of the notice of rejection to cure any
deficiency and submit an amended notice of
license to the mechanical licensing collective.
If the deficiency has been cured, the
mechanical licensing collective shall so
confirm in writing, and the license shall be
effective as of the date that the original
notice of license was provided by the digital
music provider.
``(v) A digital music provider that
believes a notice of license was improperly
rejected by the mechanical licensing collective
may seek review of such rejection in an
appropriate district court of the United
States. The district court shall determine the
matter de novo based on the record before the
mechanical licensing collective and any
additional evidence presented by the parties.
``(B) Blanket license effective date.--Blanket
licenses shall be made available by the mechanical
licensing collective on and after the license
availability date. No such license shall be effective
prior to the license availability date.
``(3) Mechanical licensing collective.--
``(A) In general.--The mechanical licensing
collective shall be a single entity that--
``(i) is a nonprofit entity, not owned by
any other entity, that is created by copyright
owners to carry out responsibilities under this
subsection;
``(ii) is endorsed by, and enjoys
substantial support from, musical work
copyright owners that together represent the
greatest percentage of the licensor market for
uses of such works in covered activities, as
measured over the preceding 3 full calendar
years;
``(iii) is able to demonstrate to the
Register of Copyrights that the entity has, or
will have prior to the license availability
date, the administrative and technological
capabilities to perform the required functions
of the mechanical licensing collective under
this subsection and that is governed by a board
of directors in accordance with subparagraph
(D)(i); and
``(iv) has been designated by the Register
of Copyrights, with the approval of the
Librarian of Congress pursuant to section 702,
in accordance with subparagraph (B).
``(B) Designation of mechanical licensing
collective.--
``(i) Initial designation.--Not later than
270 days after the enactment date, the Register
of Copyrights shall initially designate the
mechanical licensing collective as follows:
``(I) Not later than 90 calendar
days after the enactment date, the
Register shall publish notice in the
Federal Register soliciting information
to assist in identifying the
appropriate entity to serve as the
mechanical licensing collective,
including the name and affiliation of
each member of the board of directors
described under subparagraph (D)(i) and
each committee established pursuant to
clauses (iii), (iv), and (v) of
subparagraph (D).
``(II) After reviewing the
information requested under subclause
(I) and making a designation, the
Register shall publish notice in the
Federal Register setting forth--
``(aa) the identity of and
contact information for the
mechanical licensing
collective; and
``(bb) the reasons for the
designation.
``(ii) Periodic review of designation.--
Following the initial designation of the
mechanical licensing collective, the Register
shall, every 5 years, beginning with the fifth
full calendar year to commence after the
initial designation, publish notice in the
Federal Register in the month of January
soliciting information concerning whether the
existing designation should be continued, or a
different entity meeting the criteria described
in clauses (i) through (iii) of subparagraph
(A) shall be designated. Following publication
of such notice, the Register shall--
``(I) after reviewing the
information submitted and conducting
additional proceedings as appropriate,
publish notice in the Federal Register
of a continuing designation or new
designation of the mechanical licensing
collective, as the case may be, and the
reasons for such a designation, with
any new designation to be effective as
of the first day of a month that is not
less than 6 months and not longer than
9 months after the date on which the
Register publishes the notice, as
specified by the Register; and
``(II) if a new entity is
designated as the mechanical licensing
collective, adopt regulations to govern
the transfer of licenses, funds,
records, data, and administrative
responsibilities from the existing
mechanical licensing collective to the
new entity.
``(iii) Closest alternative designation.--
If the Register is unable to identify an entity
that fulfills each of the qualifications set
forth in clauses (i) through (iii) of
subparagraph (A), the Register shall designate
the entity that most nearly fulfills such
qualifications for purposes of carrying out the
responsibilities of the mechanical licensing
collective.
``(C) Authorities and functions.--
``(i) In general.--The mechanical licensing
collective is authorized to perform the
following functions, subject to more particular
requirements as described in this subsection:
``(I) Offer and administer blanket
licenses, including receipt of notices
of license and reports of usage from
digital music providers.
``(II) Collect and distribute
royalties from digital music providers
for covered activities.
``(III) Engage in efforts to
identify musical works (and shares of
such works) embodied in particular
sound recordings, and to identify and
locate the copyright owners of such
musical works (and shares of such
works).
``(IV) Maintain the musical works
database and other information relevant
to the administration of licensing
activities under this section.
``(V) Administer a process by which
copyright owners can claim ownership of
musical works (and shares of such
works), and a process by which
royalties for works for which the owner
is not identified or located are
equitably distributed to known
copyright owners.
``(VI) Administer collections of
the administrative assessment from
digital music providers and significant
nonblanket licensees, including receipt
of notices of nonblanket activity.
``(VII) Invest in relevant
resources, and arrange for services of
outside vendors and others, to support
the activities of the mechanical
licensing collective.
``(VIII) Engage in legal and other
efforts to enforce rights and
obligations under this subsection,
including by filing bankruptcy proofs
of claims for amounts owed under
licenses, and acting in coordination
with the digital licensee coordinator.
``(IX) Initiate and participate in
proceedings before the Copyright
Royalty Judges to establish the
administrative assessment under this
subsection.
``(X) Initiate and participate in
proceedings before the Copyright Office
with respect to activities under this
subsection.
``(XI) Gather and provide
documentation for use in proceedings
before the Copyright Royalty Judges to
set rates and terms under this section.
``(XII) Maintain records of the
activities of the mechanical licensing
collective and engage in and respond to
audits described in this subsection.
``(XIII) Engage in such other
activities as may be necessary or
appropriate to fulfill the
responsibilities of the mechanical
licensing collective under this
subsection.
``(ii) Restrictions concerning licensing
and administrative activities.--With respect to
the administration of licenses, except as
provided in clauses (i) and (iii) and
subparagraph (E)(v), the mechanical licensing
collective may only--
``(I) issue blanket licenses
pursuant to subsection (d)(1); and
``(II) administer blanket licenses
for reproduction or distribution rights
in musical works for covered
activities, including collecting and
distributing royalties, pursuant to
blanket licenses.
``(iii) Additional administrative
activities.--Subject to paragraph (11)(C), the
mechanical licensing collective may also
administer, including by collecting and
distributing royalties, voluntary licenses
issued by, or individual download licenses
obtained from, copyright owners only for
reproduction or distribution rights in musical
works for covered activities, for which the
mechanical licensing collective shall charge
reasonable fees for such services.
``(iv) Restriction on lobbying.--The
mechanical licensing collective may not engage
in government lobbying activities, but may
engage in the activities described in
subclauses (IX), (X), and (XI) of clause (i).
``(D) Governance.--
``(i) Board of directors.--The mechanical
licensing collective shall have a board of
directors consisting of 14 voting members and 3
nonvoting members, as follows:
``(I) Ten voting members shall be
representatives of music publishers--
``(aa) to which songwriters
have assigned exclusive rights
of reproduction and
distribution of musical works
with respect to covered
activities; and
``(bb) none of which may be
owned by, or under common
control with, any other board
member.
``(II) Four voting members shall be
professional songwriters who have
retained and exercise exclusive rights
of reproduction and distribution with
respect to covered activities with
respect to musical works they have
authored.
``(III) One nonvoting member shall
be a representative of the nonprofit
trade association of music publishers
that represents the greatest percentage
of the licensor market for uses of
musical works in covered activities, as
measured for the 3-year period
preceding the date on which the member
is appointed.
``(IV) One nonvoting member shall
be a representative of the digital
licensee coordinator, provided that a
digital licensee coordinator has been
designated pursuant to paragraph
(5)(B). Otherwise, the nonvoting member
shall be the nonprofit trade
association of digital licensees that
represents the greatest percentage of
the licensee market for uses of musical
works in covered activities, as
measured over the preceding 3 full
calendar years.
``(V) One nonvoting member shall be
a representative of a nationally
recognized nonprofit trade association
whose primary mission is advocacy on
behalf of songwriters in the United
States.
``(ii) Bylaws.--
``(I) Establishment.--Not later
than 1 year after the date on which the
mechanical licensing collective is
initially designated by the Register of
Copyrights under subparagraph (B)(i),
the collective shall establish bylaws
to determine issues relating to the
governance of the collective,
including, but not limited to--
``(aa) the length of the
term for each member of the
board of directors;
``(bb) the staggering of
the terms of the members of the
board of directors;
``(cc) a process for
filling a seat on the board of
directors that is vacated
before the end of the term with
respect to that seat;
``(dd) a process for
electing a member to the board
of directors; and
``(ee) a management
structure for daily operation
of the collective.
``(II) Public availability.--The
mechanical licensing collective shall
make the bylaws established under
subclause (I) available to the public.
``(iii) Board meetings.--The board of
directors shall meet not less frequently than
biannually and discuss matters pertinent to the
operations of the mechanical licensing
collective, including the mechanical licensing
collective budget.
``(iv) Operations advisory committee.--The
board of directors of the mechanical licensing
collective shall establish an operations
advisory committee consisting of not fewer than
6 members to make recommendations to the board
of directors concerning the operations of the
mechanical licensing collective, including the
efficient investment in and deployment of
information technology and data resources. Such
committee shall have an equal number of members
of the committee who are--
``(I) musical work copyright owners
who are appointed by the board of
directors of the mechanical licensing
collective; and
``(II) representatives of digital
music providers who are appointed by
the digital licensee coordinator.
``(v) Unclaimed royalties oversight
committee.--The board of directors of the
mechanical licensing collective shall establish
and appoint an unclaimed royalties oversight
committee consisting of 10 members, 5 of which
shall be musical work copyright owners and 5 of
which shall be professional songwriters whose
works are used in covered activities.
``(vi) Dispute resolution committee.--The
board of directors of the mechanical licensing
collective shall establish and appoint a
dispute resolution committee that shall--
``(I) consist of not fewer than 6
members; and
``(II) include an equal number of
representatives of musical work
copyright owners and professional
songwriters.
``(vii) Mechanical licensing collective
annual report.--
``(I) In general.--Not later than
June 30 of each year commencing after
the license availability date, the
mechanical licensing collective shall
post, and make available online for a
period of not less than 3 years, an
annual report that sets forth
information regarding--
``(aa) the operational and
licensing practices of the
collective;
``(bb) how royalties are
collected and distributed;
``(cc) budgeting and
expenditures;
``(dd) the collective total
costs for the preceding
calendar year;
``(ee) the projected annual
mechanical licensing collective
budget;
``(ff) aggregated royalty
receipts and payments;
``(gg) expenses that are
more than 10 percent of the
annual mechanical licensing
collective budget; and
``(hh) the efforts of the
collective to locate and
identify copyright owners of
unmatched musical works (and
shares of works).
``(II) Submission.--On the date on
which the mechanical licensing
collective posts each report required
under subclause (I), the collective
shall provide a copy of the report to
the Register of Copyrights.
``(viii) Independent officers.--An
individual serving as an officer of the
mechanical licensing collective may not, at the
same time, also be an employee or agent of any
member of the board of directors of the
collective or any entity represented by a
member of the board of directors, as described
in clause (i).
``(ix) Oversight and accountability.--
``(I) In general.--The mechanical
licensing collective shall--
``(aa) ensure that the
policies and practices of the
collective are transparent and
accountable;
``(bb) identify a point of
contact for publisher inquiries
and complaints with timely
redress; and
``(cc) establish an anti-
comingling policy for funds not
collected under this section
and royalties collected under
this section.
``(II) Audits.--
``(aa) In general.--
Beginning in the fourth full
calendar year that begins after
the initial designation of the
mechanical licensing collective
by the Register of Copyrights
under subparagraph (B)(i), and
in every fifth calendar year
thereafter, the collective
shall retain a qualified
auditor that shall--
``(AA) examine the
books, records, and
operations of the
collective;
``(BB) prepare a
report for the board of
directors of the
collective with respect
to the matters
described in item (bb);
and
``(CC) not later
than December 31 of the
year in which the
qualified auditor is
retained, deliver the
report described in
subitem (BB) to the
board of directors of
the collective.
``(bb) Matters addressed.--
Each report prepared under item
(aa) shall address the
implementation and efficacy of
procedures of the mechanical
licensing collective--
``(AA) for the
receipt, handling, and
distribution of royalty
funds, including any
amounts held as
unclaimed royalties;
``(BB) to guard
against fraud, abuse,
waste, and the
unreasonable use of
funds; and
``(CC) to protect
the confidentiality of
financial, proprietary,
and other sensitive
information.
``(cc) Public
availability.--With respect to
each report prepared under item
(aa), the mechanical licensing
collective shall--
``(AA) submit the
report to the Register
of Copyrights; and
``(BB) make the
report available to the
public.
``(E) Musical works database.--
``(i) Establishment and maintenance of
database.--The mechanical licensing collective
shall establish and maintain a database
containing information relating to musical
works (and shares of such works) and, to the
extent known, the identity and location of the
copyright owners of such works (and shares
thereof) and the sound recordings in which the
musical works are embodied. In furtherance of
maintaining such database, the mechanical
licensing collective shall engage in efforts to
identify the musical works embodied in
particular sound recordings, as well as to
identify and locate the copyright owners of
such works (and shares thereof), and update
such data as appropriate.
``(ii) Matched works.--With respect to
musical works (and shares thereof) that have
been matched to copyright owners, the musical
works database shall include--
``(I) the title of the musical
work;
``(II) the copyright owner of the
work (or share thereof), and the
ownership percentage of that owner;
``(III) contact information for
such copyright owner;
``(IV) to the extent reasonably
available to the mechanical licensing
collective--
``(aa) the international
standard musical work code for
the work; and
``(bb) identifying
information for sound
recordings in which the musical
work is embodied, including the
name of the sound recording,
featured artist, sound
recording copyright owner,
producer, international
standard recording code, and
other information commonly used
to assist in associating sound
recordings with musical works;
and
``(V) such other information as the
Register of Copyrights may prescribe by
regulation.
``(iii) Unmatched works.--With respect to
unmatched musical works (and shares of works)
in the database, the musical works database
shall include--
``(I) to the extent reasonably
available to the mechanical licensing
collective--
``(aa) the title of the
musical work;
``(bb) the ownership
percentage for which an owner
has not been identified;
``(cc) if a copyright owner
has been identified but not
located, the identity of such
owner and the ownership
percentage of that owner;
``(dd) identifying
information for sound
recordings in which the work is
embodied, including sound
recording name, featured
artist, sound recording
copyright owner, producer,
international standard
recording code, and other
information commonly used to
assist in associating sound
recordings with musical works;
and
``(ee) any additional
information reported to the
mechanical licensing collective
that may assist in identifying
the work; and
``(II) such other information
relating to the identity and ownership
of musical works (and shares of such
works) as the Register of Copyrights
may prescribe by regulation.
``(iv) Sound recording information.--Each
musical work copyright owner with any musical
work listed in the musical works database shall
engage in commercially reasonable efforts to
deliver to the mechanical licensing collective,
including for use in the musical works
database, to the extent such information is not
then available in the database, information
regarding the names of the sound recordings in
which that copyright owner's musical works (or
shares thereof) are embodied, to the extent
practicable.
``(v) Accessibility of database.--The
musical works database shall be made available
to members of the public in a searchable,
online format, free of charge. The mechanical
licensing collective shall make such database
available in a bulk, machine-readable format,
through a widely available software
application, to the following entities:
``(I) Digital music providers
operating under the authority of valid
notices of license, free of charge.
``(II) Significant nonblanket
licensees in compliance with their
obligations under paragraph (6), free
of charge.
``(III) Authorized vendors of the
entities described in subclauses (I)
and (II), free of charge.
``(IV) The Register of Copyrights,
free of charge (but the Register shall
not treat such database or any
information therein as a Government
record).
``(V) Any other person or entity
for a fee not to exceed the marginal
cost to the mechanical licensing
collective of providing the database to
such person or entity.
``(vi) Additional requirements.--The
Register of Copyrights shall establish
requirements by regulations to ensure the
usability, interoperability, and usage
restrictions of the musical works database.
``(F) Notices of license and nonblanket activity.--
``(i) Notices of licenses.--The mechanical
licensing collective shall receive, review, and
confirm or reject notices of license from
digital music providers, as provided in
paragraph (2)(A). The collective shall maintain
a current, publicly accessible list of blanket
licenses that includes contact information for
the licensees and the effective dates of such
licenses.
``(ii) Notices of nonblanket activity.--The
mechanical licensing collective shall receive
notices of nonblanket activity from significant
nonblanket licensees, as provided in paragraph
(6)(A). The collective shall maintain a
current, publicly accessible list of notices of
nonblanket activity that includes contact
information for significant nonblanket
licensees and the dates of receipt of such
notices.
``(G) Collection and distribution of royalties.--
``(i) In general.--Upon receiving reports
of usage and payments of royalties from digital
music providers for covered activities, the
mechanical licensing collective shall--
``(I) engage in efforts to--
``(aa) identify the musical
works embodied in sound
recordings reflected in such
reports, and the copyright
owners of such musical works
(and shares thereof);
``(bb) confirm uses of
musical works subject to
voluntary licenses and
individual download licenses,
and the corresponding pro rata
amounts to be deducted from
royalties that would otherwise
be due under the blanket
license; and
``(cc) confirm proper
payment of royalties due;
``(II) distribute royalties to
copyright owners in accordance with the
usage and other information contained
in such reports, as well as the
ownership and other information
contained in the records of the
collective; and
``(III) deposit into an interest-
bearing account, as provided in
subparagraph (H)(ii), royalties that
cannot be distributed due to--
``(aa) an inability to
identify or locate a copyright
owner of a musical work (or
share thereof); or
``(bb) a pending dispute
before the dispute resolution
committee of the mechanical
licensing collective.
``(ii) Other collection efforts.--Any
royalties recovered by the mechanical licensing
collective as a result of efforts to enforce
rights or obligations under a blanket license,
including through a bankruptcy proceeding or
other legal action, shall be distributed to
copyright owners based on available usage
information and in accordance with the
procedures described in subclauses (I) and (II)
of clause (i), on a pro rata basis in
proportion to the overall percentage recovery
of the total royalties owed, with any pro rata
share of royalties that cannot be distributed
deposited in an interest-bearing account as
provided in subparagraph (H)(ii).
``(H) Holding of accrued royalties.--
``(i) Holding period.--The mechanical
licensing collective shall hold accrued
royalties associated with particular musical
works (and shares of works) that remain
unmatched for a period of not less than 3 years
after the date on which the funds were received
by the mechanical licensing collective, or not
less than 3 years after the date on which the
funds were accrued by a digital music provider
that subsequently transferred such funds to the
mechanical licensing collective pursuant to
paragraph (10)(B), whichever period expires
sooner.
``(ii) Interest-bearing account.--Accrued
royalties for unmatched works (and shares
thereof) shall be maintained by the mechanical
licensing collective in an interest-bearing
account that earns monthly interest--
``(I) at the Federal, short-term
rate; and
``(II) that accrues for the benefit
of copyright owners entitled to payment
of such accrued royalties.
``(I) Musical works claiming process.--When a
copyright owner of an unmatched work (or share of a
work) has been identified and located in accordance
with the procedures of the mechanical licensing
collective, the collective shall--
``(i) update the musical works database and
the other records of the collective
accordingly; and
``(ii) provided that accrued royalties for
the musical work (or share thereof) have not
yet been included in a distribution pursuant to
subparagraph (J)(i), pay such accrued royalties
and a proportionate amount of accrued interest
associated with that work (or share thereof) to
the copyright owner, accompanied by a
cumulative statement of account reflecting
usage of such work and accrued royalties based
on information provided by digital music
providers to the mechanical licensing
collective.
``(J) Distribution of unclaimed accrued
royalties.--
``(i) Distribution procedures.--After the
expiration of the prescribed holding period for
accrued royalties provided in subparagraph
(H)(i), the mechanical licensing collective
shall distribute such accrued royalties, along
with a proportionate share of accrued interest,
to copyright owners identified in the records
of the collective, subject to the following
requirements, and in accordance with the
policies and procedures established under
clause (ii):
``(I) The first such distribution
shall occur on or after January 1 of
the second full calendar year to
commence after the license availability
date, with not less than 1 such
distribution to take place during each
calendar year thereafter.
``(II) Copyright owners' payment
shares for unclaimed accrued royalties
for particular reporting periods shall
be determined in a transparent and
equitable manner based on data
indicating the relative market shares
of such copyright owners as reflected
in reports of usage provided by digital
music providers for covered activities
for the periods in question, including,
in addition to usage data provided to
the mechanical licensing collective,
usage data provided to copyright owners
under voluntary licenses and individual
download licenses for covered
activities, to the extent such
information is available to the
mechanical licensing collective. In
furtherance of the determination of
equitable market shares under this
subparagraph--
``(aa) the mechanical
licensing collective may
require copyright owners
seeking distributions of
unclaimed accrued royalties to
provide, or direct the
provision of, information
concerning the usage of musical
works under voluntary licenses
and individual download
licenses for covered
activities; and
``(bb) the mechanical
licensing collective shall take
appropriate steps to safeguard
the confidentiality and
security of usage, financial,
and other sensitive data used
to compute market shares in
accordance with the
confidentiality provisions
prescribed by the Register of
Copyrights under paragraph
(12)(C).
``(ii) Establishment of distribution
policies.--The unclaimed royalties oversight
committee established under subparagraph (D)(v)
shall establish policies and procedures for the
distribution of unclaimed accrued royalties and
accrued interest in accordance with this
subparagraph, including the provision of usage
data to copyright owners to allocate payments
and credits to songwriters pursuant to clause
(iv), subject to the approval of the board of
directors of the mechanical licensing
collective.
``(iii) Public notice of unclaimed accrued
royalties.--The mechanical licensing collective
shall--
``(I) maintain a publicly
accessible online facility with contact
information for the collective that
lists unmatched musical works (and
shares of works), through which a
copyright owner may assert an ownership
claim with respect to such a work (and
a share of such a work);
``(II) engage in diligent, good-
faith efforts to publicize, throughout
the music industry--
``(aa) the existence of the
collective and the ability to
claim unclaimed accrued
royalties for unmatched musical
works (and shares of such
works) held by the collective;
``(bb) the procedures by
which copyright owners may
identify themselves and provide
contact, ownership, and other
relevant information to the
collective in order to receive
payments of accrued royalties;
``(cc) any transfer of
accrued royalties for musical
works under paragraph (10)(B),
not later than 180 days after
the date on which the transfer
is received; and
``(dd) any pending
distribution of unclaimed
accrued royalties and accrued
interest, not less than 90 days
before the date on which the
distribution is made; and
``(III) as appropriate, participate
in music industry conferences and
events for the purpose of publicizing
the matters described in subclause
(II).
``(iv) Songwriter payments.--Copyright
owners that receive a distribution of unclaimed
accrued royalties and accrued interest shall
pay or credit a portion to songwriters (or the
authorized agents of songwriters) on whose
behalf the copyright owners license or
administer musical works for covered
activities, in accordance with applicable
contractual terms, but notwithstanding any
agreement to the contrary--
``(I) such payments and credits to
songwriters shall be allocated in
proportion to reported usage of
individual musical works by digital
music providers during the reporting
periods covered by the distribution
from the mechanical licensing
collective; and
``(II) in no case shall the payment
or credit to an individual songwriter
be less than 50 percent of the payment
received by the copyright owner
attributable to usage of musical works
(or shares of works) of that
songwriter.
``(K) Dispute resolution.--The dispute resolution
committee established under subparagraph (D)(vi) shall
establish policies and procedures--
``(i) for copyright owners to address in a
timely and equitable manner disputes relating
to ownership interests in musical works
licensed under this section and allocation and
distribution of royalties by the mechanical
licensing collective, subject to the approval
of the board of directors of the mechanical
licensing collective;
``(ii) that shall include a mechanism to
hold disputed funds in accordance with the
requirements described in subparagraph (H)(ii)
pending resolution of the dispute; and
``(iii) except as provided in paragraph
(11)(D), that shall not affect any legal or
equitable rights or remedies available to any
copyright owner or songwriter concerning
ownership of, and entitlement to royalties for,
a musical work.
``(L) Verification of payments by mechanical
licensing collective.--
``(i) Verification process.--A copyright
owner entitled to receive payments of royalties
for covered activities from the mechanical
licensing collective may, individually or with
other copyright owners, conduct an audit of the
mechanical licensing collective to verify the
accuracy of royalty payments by the mechanical
licensing collective to such copyright owner,
as follows:
``(I) A copyright owner may audit
the mechanical licensing collective
only once in a year for any or all of
the 3 calendar years preceding the year
in which the audit is commenced, and
may not audit records for any calendar
year more than once.
``(II) The audit shall be conducted
by a qualified auditor, who shall
perform the audit during the ordinary
course of business by examining the
books, records, and data of the
mechanical licensing collective,
according to generally accepted
auditing standards and subject to
applicable confidentiality requirements
prescribed by the Register of
Copyrights under paragraph (12)(C).
``(III) The mechanical licensing
collective shall make such books,
records, and data available to the
qualified auditor and respond to
reasonable requests for relevant
information, and shall use commercially
reasonable efforts to facilitate access
to relevant information maintained by
third parties.
``(IV) To commence the audit, any
copyright owner shall file with the
Copyright Office a notice of intent to
conduct an audit of the mechanical
licensing collective, identifying the
period of time to be audited, and shall
simultaneously deliver a copy of such
notice to the mechanical licensing
collective. The Register of Copyrights
shall cause the notice of audit to be
published in the Federal Register not
later than 45 calendar days after the
date on which the notice is received.
``(V) The qualified auditor shall
determine the accuracy of royalty
payments, including whether an
underpayment or overpayment of
royalties was made by the mechanical
licensing collective to each auditing
copyright owner, except that, before
providing a final audit report to any
such copyright owner, the qualified
auditor shall provide a tentative draft
of the report to the mechanical
licensing collective and allow the
mechanical licensing collective a
reasonable opportunity to respond to
the findings, including by clarifying
issues and correcting factual errors.
``(VI) The auditing copyright owner
or owners shall bear the cost of the
audit. In case of an underpayment to
any copyright owner, the mechanical
licensing collective shall pay the
amounts of any such underpayment to
such auditing copyright owner, as
appropriate. In case of an overpayment
by the mechanical licensing collective,
the mechanical licensing collective may
debit the account of the auditing
copyright owner or owners for such
overpaid amounts, or such owner or
owners shall refund overpaid amounts to
the mechanical licensing collective, as
appropriate.
``(ii) Alternative verification
procedures.--Nothing in this subparagraph shall
preclude a copyright owner and the mechanical
licensing collective from agreeing to audit
procedures different from those described in
this subparagraph, except that a notice of the
audit shall be provided to and published by the
Copyright Office as described in clause
(i)(IV).
``(M) Records of mechanical licensing collective.--
``(i) Records maintenance.--The mechanical
licensing collective shall ensure that all
material records of the operations of the
mechanical licensing collective, including
those relating to notices of license, the
administration of the claims process of the
mechanical licensing collective, reports of
usage, royalty payments, receipt and
maintenance of accrued royalties, royalty
distribution processes, and legal matters, are
preserved and maintained in a secure and
reliable manner, with appropriate commercially
reasonable safeguards against unauthorized
access, copying, and disclosure, and subject to
the confidentiality requirements prescribed by
the Register of Copyrights under paragraph
(12)(C) for a period of not less than 7 years
after the date of creation or receipt,
whichever occurs later.
``(ii) Records access.--The mechanical
licensing collective shall provide prompt
access to electronic and other records
pertaining to the administration of a copyright
owner's musical works upon reasonable written
request of the owner or the authorized
representative of the owner.
``(4) Terms and conditions of blanket license.--A blanket
license is subject to, and conditioned upon, the following
requirements:
``(A) Royalty reporting and payments.--
``(i) Monthly reports and payment.--A
digital music provider shall report and pay
royalties to the mechanical licensing
collective under the blanket license on a
monthly basis in accordance with clause (ii)
and subsection (c)(2)(I), except that the
monthly reporting shall be due on the date that
is 45 calendar days, rather than 20 calendar
days, after the end of the monthly reporting
period.
``(ii) Data to be reported.--In reporting
usage of musical works to the mechanical
licensing collective, a digital music provider
shall provide usage data for musical works used
under the blanket license and usage data for
musical works used in covered activities under
voluntary licenses and individual download
licenses. In the report of usage, the digital
music provider shall--
``(I) with respect to each sound
recording embodying a musical work--
``(aa) provide identifying
information for the sound
recording, including sound
recording name, featured
artist, and, to the extent
acquired by the digital music
provider in connection with its
use of sound recordings of
musical works to engage in
covered activities, including
pursuant to subparagraph (B),
sound recording copyright
owner, producer, international
standard recording code, and
other information commonly used
in the industry to identify
sound recordings and match them
to the musical works the sound
recordings embody;
``(bb) to the extent
acquired by the digital music
provider in the metadata
provided by sound recording
copyright owners or other
licensors of sound recordings
in connection with the use of
sound recordings of musical
works to engage in covered
activities, including pursuant
to subparagraph (B), provide
information concerning
authorship and ownership of the
applicable rights in the
musical work embodied in the
sound recording (including each
songwriter, publisher name, and
respective ownership share) and
the international standard
musical work code; and
``(cc) provide the number
of digital phonorecord
deliveries of the sound
recording, including limited
downloads and interactive
streams;
``(II) identify and provide contact
information for all musical work
copyright owners for works embodied in
sound recordings as to which a
voluntary license, rather than the
blanket license, is in effect with
respect to the uses being reported; and
``(III) provide such other
information as the Register of
Copyrights shall require by regulation.
``(iii) Format and maintenance of
reports.--Reports of usage provided by digital
music providers to the mechanical licensing
collective shall be in a machine-readable
format that is compatible with the information
technology systems of the mechanical licensing
collective and meets the requirements of
regulations adopted by the Register of
Copyrights. The Register shall also adopt
regulations setting forth requirements under
which records of use shall be maintained and
made available to the mechanical licensing
collective by digital music providers engaged
in covered activities under a blanket license.
``(iv) Adoption of regulations.--The
Register of Copyrights shall adopt
regulations--
``(I) setting forth requirements
under which records of use shall be
maintained and made available to the
mechanical licensing collective by
digital music providers engaged in
covered activities under a blanket
license; and
``(II) regarding adjustments to
reports of usage by digital music
providers, including mechanisms to
account for overpayment and
underpayment of royalties in prior
periods.
``(B) Collection of sound recording information.--A
digital music provider shall engage in good-faith,
commercially reasonable efforts to obtain from sound
recording copyright owners and other licensors of sound
recordings made available through the service of such
digital music provider information concerning--
``(i) sound recording copyright owners,
producers, international standard recording
codes, and other information commonly used in
the industry to identify sound recordings and
match them to the musical works the sound
recordings embody; and
``(ii) the authorship and ownership of
musical works, including songwriters, publisher
names, ownership shares, and international
standard musical work codes.
``(C) Payment of administrative assessment.--A
digital music provider and any significant nonblanket
licensee shall pay the administrative assessment
established under paragraph (7)(D) in accordance with
this subsection and applicable regulations.
``(D) Verification of payments by digital music
providers.--
``(i) Verification process.--The mechanical
licensing collective may conduct an audit of a
digital music provider operating under the
blanket license to verify the accuracy of
royalty payments by the digital music provider
to the mechanical licensing collective as
follows:
``(I) The mechanical licensing
collective may commence an audit of a
digital music provider not more
frequently than once in any 3-calendar-
year period to cover a verification
period of not more than the 3 full
calendar years preceding the date of
commencement of the audit, and such
audit may not audit records for any
such 3-year verification period more
than once.
``(II) The audit shall be conducted
by a qualified auditor, who shall
perform the audit during the ordinary
course of business by examining the
books, records, and data of the digital
music provider, according to generally
accepted auditing standards and subject
to applicable confidentiality
requirements prescribed by the Register
of Copyrights under paragraph (12)(C).
``(III) The digital music provider
shall make such books, records, and
data available to the qualified auditor
and respond to reasonable requests for
relevant information, and shall use
commercially reasonable efforts to
provide access to relevant information
maintained with respect to a digital
music provider by third parties.
``(IV) To commence the audit, the
mechanical licensing collective shall
file with the Copyright Office a notice
of intent to conduct an audit of the
digital music provider, identifying the
period of time to be audited, and shall
simultaneously deliver a copy of such
notice to the digital music provider.
The Register of Copyrights shall cause
the notice of audit to be published in
the Federal Register not later than 45
calendar days after the date on which
notice is received.
``(V) The qualified auditor shall
determine the accuracy of royalty
payments, including whether an
underpayment or overpayment of
royalties was made by the digital music
provider to the mechanical licensing
collective, except that, before
providing a final audit report to the
mechanical licensing collective, the
qualified auditor shall provide a
tentative draft of the report to the
digital music provider and allow the
digital music provider a reasonable
opportunity to respond to the findings,
including by clarifying issues and
correcting factual errors.
``(VI) The mechanical licensing
collective shall pay the cost of the
audit, unless the qualified auditor
determines that there was an
underpayment by the digital music
provider of not less than 10 percent,
in which case the digital music
provider shall bear the reasonable
costs of the audit, in addition to
paying the amount of any underpayment
to the mechanical licensing collective.
In case of an overpayment by the
digital music provider, the mechanical
licensing collective shall provide a
credit to the account of the digital
music provider.
``(VII) A digital music provider
may not assert section 507 or any other
Federal or State statute of
limitations, doctrine of laches or
estoppel, or similar provision as a
defense to a legal action arising from
an audit under this subparagraph if
such legal action is commenced not more
than 6 years after the commencement of
the audit that is the basis for such
action.
``(ii) Alternative verification
procedures.--Nothing in this subparagraph shall
preclude the mechanical licensing collective
and a digital music provider from agreeing to
audit procedures different from those described
in this subparagraph, except that a notice of
the audit shall be provided to and published by
the Copyright Office as described in clause
(i)(IV).
``(E) Default under blanket license.--
``(i) Conditions of default.--A digital
music provider shall be in default under a
blanket license if the digital music provider--
``(I) fails to provide 1 or more
monthly reports of usage to the
mechanical licensing collective when
due;
``(II) fails to make a monthly
royalty or late fee payment to the
mechanical licensing collective when
due, in all or material part;
``(III) provides 1 or more monthly
reports of usage to the mechanical
licensing collective that, on the
whole, is or are materially deficient
as a result of inaccurate, missing, or
unreadable data, where the correct data
was available to the digital music
provider and required to be reported
under this section and applicable
regulations;
``(IV) fails to pay the
administrative assessment as required
under this subsection and applicable
regulations; or
``(V) after being provided written
notice by the mechanical licensing
collective, refuses to comply with any
other material term or condition of the
blanket license under this section for
a period of not less than 60 calendar
days.
``(ii) Notice of default and termination.--
In case of a default by a digital music
provider, the mechanical licensing collective
may proceed to terminate the blanket license of
the digital music provider as follows:
``(I) The mechanical licensing
collective shall provide written notice
to the digital music provider
describing with reasonable
particularity the default and advising
that unless such default is cured not
later than 60 calendar days after the
date of the notice, the blanket license
will automatically terminate at the end
of that period.
``(II) If the digital music
provider fails to remedy the default
before the end of the 60-day period
described in subclause (I), the license
shall terminate without any further
action on the part of the mechanical
licensing collective. Such termination
renders the making of all digital
phonorecord deliveries of all musical
works (and shares thereof) covered by
the blanket license for which the
royalty or administrative assessment
has not been paid actionable as acts of
infringement under section 501 and
subject to the remedies provided by
sections 502 through 506.
``(iii) Notice to copyright owners.--The
mechanical licensing collective shall provide
written notice of any termination under this
subparagraph to copyright owners of affected
works.
``(iv) Review by federal district court.--A
digital music provider that believes a blanket
license was improperly terminated by the
mechanical licensing collective may seek review
of such termination in an appropriate district
court of the United States. The district court
shall determine the matter de novo based on the
record before the mechanical licensing
collective and any additional supporting
evidence presented by the parties.
``(5) Digital licensee coordinator.--
``(A) In general.--The digital licensee coordinator
shall be a single entity that--
``(i) is a nonprofit, not owned by any
other entity, that is created to carry out
responsibilities under this subsection;
``(ii) is endorsed by and enjoys
substantial support from digital music
providers and significant nonblanket licensees
that together represent the greatest percentage
of the licensee market for uses of musical
works in covered activities, as measured over
the preceding 3 calendar years;
``(iii) is able to demonstrate that it has,
or will have prior to the license availability
date, the administrative capabilities to
perform the required functions of the digital
licensee coordinator under this subsection; and
``(iv) has been designated by the Register
of Copyrights, with the approval of the
Librarian of Congress pursuant to section 702,
in accordance with subparagraph (B).
``(B) Designation of digital licensee
coordinator.--
``(i) Initial designation.--The Register of
Copyrights shall initially designate the
digital licensee coordinator not later than 270
days after the enactment date, in accordance
with the same procedure described for
designation of the mechanical licensing
collective in paragraph (3)(B)(i).
``(ii) Periodic review of designation.--
Following the initial designation of the
digital licensee coordinator, the Register of
Copyrights shall, every 5 years, beginning with
the fifth full calendar year to commence after
the initial designation, determine whether the
existing designation should be continued, or a
different entity meeting the criteria described
in clauses (i) through (iii) of subparagraph
(A) should be designated, in accordance with
the same procedure described for the mechanical
licensing collective in paragraph (3)(B)(ii).
``(iii) Inability to designate.--If the
Register of Copyrights is unable to identify an
entity that fulfills each of the qualifications
described in clauses (i) through (iii) of
subparagraph (A) to serve as the digital
licensee coordinator, the Register may decline
to designate a digital licensee coordinator.
The determination of the Register not to
designate a digital licensee coordinator shall
not negate or otherwise affect any provision of
this subsection except to the limited extent
that a provision references the digital
licensee coordinator. In such case, the
reference to the digital licensee coordinator
shall be without effect unless and until a new
digital licensee coordinator is designated.
``(C) Authorities and functions.--
``(i) In general.--The digital licensee
coordinator is authorized to perform the
following functions, subject to more particular
requirements as described in this subsection:
``(I) Establish a governance
structure, criteria for membership, and
any dues to be paid by its members.
``(II) Engage in efforts to enforce
notice and payment obligations with
respect to the administrative
assessment, including by receiving
information from and coordinating with
the mechanical licensing collective.
``(III) Initiate and participate in
proceedings before the Copyright
Royalty Judges to establish the
administrative assessment under this
subsection.
``(IV) Initiate and participate in
proceedings before the Copyright Office
with respect to activities under this
subsection.
``(V) Gather and provide
documentation for use in proceedings
before the Copyright Royalty Judges to
set rates and terms under this section.
``(VI) Maintain records of its
activities.
``(VII) Assist in publicizing the
existence of the mechanical licensing
collective and the ability of copyright
owners to claim royalties for unmatched
musical works (and shares of works)
through the collective.
``(VIII) Engage in such other
activities as may be necessary or
appropriate to fulfill its
responsibilities under this subsection.
``(ii) Restriction on lobbying.--The
digital licensee coordinator may not engage in
government lobbying activities, but may engage
in the activities described in subclauses
(III), (IV), and (V) of clause (i).
``(iii) Assistance with publicity for
unclaimed royalties.--The digital licensee
coordinator shall make reasonable, good-faith
efforts to assist the mechanical licensing
collective in the efforts of the collective to
locate and identify copyright owners of
unmatched musical works (and shares of such
works) by encouraging digital music providers
to publicize the existence of the collective
and the ability of copyright owners to claim
unclaimed accrued royalties, including by--
``(I) posting contact information
for the collective at reasonably
prominent locations on digital music
provider websites and applications; and
``(II) conducting in-person
outreach activities with songwriters.
``(6) Requirements for significant nonblanket licensees.--
``(A) In general.--
``(i) Notice of activity.--Not later than
45 calendar days after the license availability
date, or 45 calendar days after the end of the
first full calendar month in which an entity
initially qualifies as a significant nonblanket
licensee, whichever occurs later, a significant
nonblanket licensee shall submit a notice of
nonblanket activity to the mechanical licensing
collective. The notice of nonblanket activity
shall comply in form and substance with
requirements that the Register of Copyrights
shall establish by regulation, and a copy shall
be made available to the digital licensee
coordinator.
``(ii) Reporting and payment obligations.--
The notice of nonblanket activity submitted to
the mechanical licensing collective shall be
accompanied by a report of usage that contains
the information described in paragraph
(4)(A)(ii), as well as any payment of the
administrative assessment required under this
subsection and applicable regulations.
Thereafter, subject to clause (iii), a
significant nonblanket licensee shall continue
to provide monthly reports of usage,
accompanied by any required payment of the
administrative assessment, to the mechanical
licensing collective. Such reports and payments
shall be submitted not later than 45 calendar
days after the end of the calendar month being
reported.
``(iii) Discontinuation of obligations.--An
entity that has submitted a notice of
nonblanket activity to the mechanical licensing
collective that has ceased to qualify as a
significant nonblanket licensee may so notify
the collective in writing. In such case, as of
the calendar month in which such notice is
provided, such entity shall no longer be
required to provide reports of usage or pay the
administrative assessment, but if such entity
later qualifies as a significant nonblanket
licensee, such entity shall again be required
to comply with clauses (i) and (ii).
``(B) Reporting by mechanical licensing collective
to digital licensee coordinator.--
``(i) Monthly reports of noncompliant
licensees.--The mechanical licensing collective
shall provide monthly reports to the digital
licensee coordinator setting forth any
significant nonblanket licensees of which the
collective is aware that have failed to comply
with subparagraph (A).
``(ii) Treatment of confidential
information.--The mechanical licensing
collective and digital licensee coordinator
shall take appropriate steps to safeguard the
confidentiality and security of financial and
other sensitive data shared under this
subparagraph, in accordance with the
confidentiality requirements prescribed by the
Register of Copyrights under paragraph (12)(C).
``(C) Legal enforcement efforts.--
``(i) Federal court action.--Should the
mechanical licensing collective or digital
licensee coordinator become aware that a
significant nonblanket licensee has failed to
comply with subparagraph (A), either may
commence an action in an appropriate district
court of the United States for damages and
injunctive relief. If the significant
nonblanket licensee is found liable, the court
shall, absent a finding of excusable neglect,
award damages in an amount equal to three times
the total amount of the unpaid administrative
assessment and, notwithstanding anything to the
contrary in section 505, reasonable attorney's
fees and costs, as well as such other relief as
the court determines appropriate. In all other
cases, the court shall award relief as
appropriate. Any recovery of damages shall be
payable to the mechanical licensing collective
as an offset to the collective total costs.
``(ii) Statute of limitations for
enforcement action.--Any action described in
this subparagraph shall be commenced within the
time period described in section 507(b).
``(iii) Other rights and remedies
preserved.--The ability of the mechanical
licensing collective or digital licensee
coordinator to bring an action under this
subparagraph shall in no way alter, limit or
negate any other right or remedy that may be
available to any party at law or in equity.
``(7) Funding of mechanical licensing collective.--
``(A) In general.--The collective total costs shall
be funded by--
``(i) an administrative assessment, as such
assessment is established by the Copyright
Royalty Judges pursuant to subparagraph (D)
from time to time, to be paid by--
``(I) digital music providers that
are engaged, in all or in part, in
covered activities pursuant to a
blanket license; and
``(II) significant nonblanket
licensees; and
``(ii) voluntary contributions from digital
music providers and significant nonblanket
licensees as may be agreed with copyright
owners.
``(B) Voluntary contributions.--
``(i) Agreements concerning
contributions.--Except as provided in clause
(ii), voluntary contributions by digital music
providers and significant nonblanket licensees
shall be determined by private negotiation and
agreement, and the following conditions apply:
``(I) The date and amount of each
voluntary contribution to the
mechanical licensing collective shall
be documented in a writing signed by an
authorized agent of the mechanical
licensing collective and the
contributing party.
``(II) Such agreement shall be made
available as required in proceedings
before the Copyright Royalty Judges to
establish or adjust the administrative
assessment in accordance with
applicable statutory and regulatory
provisions and rulings of the Copyright
Royalty Judges.
``(ii) Treatment of contributions.--Each
voluntary contribution described in clause (i)
shall be treated for purposes of an
administrative assessment proceeding as an
offset to the collective total costs that would
otherwise be recovered through the
administrative assessment. Any allocation or
reallocation of voluntary contributions between
or among individual digital music providers or
significant nonblanket licensees shall be a
matter of private negotiation and agreement
among such parties and outside the scope of the
administrative assessment proceeding.
``(C) Interim application of accrued royalties.--In
the event that the administrative assessment, together
with any funding from voluntary contributions as
provided in subparagraphs (A) and (B), is inadequate to
cover current collective total costs, the collective,
with approval of its board of directors, may apply
unclaimed accrued royalties on an interim basis to
defray such costs, subject to future reimbursement of
such royalties from future collections of the
assessment.
``(D) Determination of administrative assessment.--
``(i) Administrative assessment to cover
collective total costs.--The administrative
assessment shall be used solely and exclusively
to fund the collective total costs.
``(ii) Separate proceeding before copyright
royalty judges.--The amount and terms of the
administrative assessment shall be determined
and established in a separate and independent
proceeding before the Copyright Royalty Judges,
according to the procedures described in
clauses (iii) and (iv). The administrative
assessment determined in such proceeding
shall--
``(I) be wholly independent of
royalty rates and terms applicable to
digital music providers, which shall
not be taken into consideration in any
manner in establishing the
administrative assessment;
``(II) be established by the
Copyright Royalty Judges in an amount
that is calculated to defray the
reasonable collective total costs;
``(III) be assessed based on usage
of musical works by digital music
providers and significant nonblanket
licensees in covered activities under
both compulsory and nonblanket
licenses;
``(IV) may be in the form of a
percentage of royalties payable under
this section for usage of musical works
in covered activities (regardless of
whether a different rate applies under
a voluntary license), or any other
usage-based metric reasonably
calculated to equitably allocate the
collective total costs across digital
music providers and significant
nonblanket licensees engaged in covered
activities, and shall include as a
component a minimum fee for all digital
music providers and significant
nonblanket licensees; and
``(V) take into consideration
anticipated future collective total
costs and collections of the
administrative assessment, including,
as applicable--
``(aa) any portion of past
actual collective total costs
of the mechanical licensing
collective not funded by
previous collections of the
administrative assessment or
voluntary contributions because
such collections or
contributions together were
insufficient to fund such
costs;
``(bb) any past collections
of the administrative
assessment and voluntary
contributions that exceeded
past actual collective total
costs, resulting in a surplus;
and
``(cc) the amount of any
voluntary contributions by
digital music providers or
significant nonblanket
licensees in relevant periods,
described in subparagraphs (A)
and (B) of paragraph (7).
``(iii) Initial administrative
assessment.--The procedure for establishing the
initial administrative assessment shall be as
follows:
``(I) Not later than 270 days after
the enactment date, the Copyright
Royalty Judges shall commence a
proceeding to establish the initial
administrative assessment by publishing
a notice in the Federal Register
seeking petitions to participate.
``(II) The mechanical licensing
collective and digital licensee
coordinator shall participate in the
proceeding described in subclause (I),
along with any interested copyright
owners, digital music providers or
significant nonblanket licensees that
have notified the Copyright Royalty
Judges of their desire to participate.
``(III) The Copyright Royalty
Judges shall establish a schedule for
submission by the parties of
information that may be relevant to
establishing the administrative
assessment, including actual and
anticipated collective total costs of
the mechanical licensing collective,
actual and anticipated collections from
digital music providers and significant
nonblanket licensees, and documentation
of voluntary contributions, as well as
a schedule for further proceedings,
which shall include a hearing, as the
Copyright Royalty Judges determine
appropriate.
``(IV) The initial administrative
assessment shall be determined, and
such determination shall be published
in the Federal Register by the
Copyright Royalty Judges, not later
than 1 year after commencement of the
proceeding described in this clause.
The determination shall be supported by
a written record. The initial
administrative assessment shall be
effective as of the license
availability date, and shall continue
in effect unless and until an adjusted
administrative assessment is
established pursuant to an adjustment
proceeding under clause (iv).
``(iv) Adjustment of administrative
assessment.--The administrative assessment may
be adjusted by the Copyright Royalty Judges
periodically, in accordance with the following
procedures:
``(I) Not earlier than 1 year after
the most recent publication of a
determination of the administrative
assessment by the Copyright Royalty
Judges, the mechanical licensing
collective, the digital licensee
coordinator, or one or more interested
copyright owners, digital music
providers, or significant nonblanket
licensees, may file a petition with the
Copyright Royalty Judges in the month
of May to commence a proceeding to
adjust the administrative assessment.
``(II) Notice of the commencement
of such proceeding shall be published
in the Federal Register in the month of
June following the filing of any
petition, with a schedule of requested
information and additional proceedings,
as described in clause (iii)(III). The
mechanical licensing collective and
digital licensee coordinator shall
participate in such proceeding, along
with any interested copyright owners,
digital music providers, or significant
nonblanket licensees that have notified
the Copyright Royalty Judges of their
desire to participate.
``(III) The determination of the
adjusted administrative assessment,
which shall be supported by a written
record, shall be published in the
Federal Register during June of the
calendar year following the
commencement of the proceeding. The
adjusted administrative assessment
shall take effect January 1 of the year
following such publication.
``(v) Adoption of voluntary agreements.--In
lieu of reaching their own determination based
on evaluation of relevant data, the Copyright
Royalty Judges shall approve and adopt a
negotiated agreement to establish the amount
and terms of the administrative assessment that
has been agreed to by the mechanical licensing
collective and the digital licensee coordinator
(or if none has been designated, interested
digital music providers and significant
nonblanket licensees representing more than
half of the market for uses of musical works in
covered activities), except that the Copyright
Royalty Judges shall have the discretion to
reject any such agreement for good cause shown.
An administrative assessment adopted under this
clause shall apply to all digital music
providers and significant nonblanket licensees
engaged in covered activities during the period
the administrative assessment is in effect.
``(vi) Continuing authority to amend.--The
Copyright Royalty Judges shall retain
continuing authority to amend a determination
of an administrative assessment to correct
technical or clerical errors, or modify the
terms of implementation, for good cause, with
any such amendment to be published in the
Federal Register.
``(vii) Appeal of administrative
assessment.--The determination of an
administrative assessment by the Copyright
Royalty Judges shall be appealable, not later
than 30 calendar days after publication in the
Federal Register, to the Court of Appeals for
the District of Columbia Circuit by any party
that fully participated in the proceeding. The
administrative assessment as established by the
Copyright Royalty Judges shall remain in effect
pending the final outcome of any such appeal,
and the mechanical licensing collective,
digital licensee coordinator, digital music
providers, and significant nonblanket licensees
shall implement appropriate financial or other
measures not later than 90 days after any
modification of the assessment to reflect and
account for such outcome.
``(viii) Regulations.--The Copyright
Royalty Judges may adopt regulations to govern
the conduct of proceedings under this
paragraph.
``(8) Establishment of rates and terms under blanket
license.--
``(A) Restrictions on ratesetting participation.--
Neither the mechanical licensing collective nor the
digital licensee coordinator shall be a party to a
proceeding described in subsection (c)(1)(E), except
that the mechanical licensing collective or the digital
licensee coordinator may gather and provide financial
and other information for the use of a party to such a
proceeding and comply with requests for information as
required under applicable statutory and regulatory
provisions and rulings of the Copyright Royalty Judges.
``(B) Application of late fees.--In any proceeding
described in subparagraph (A) in which the Copyright
Royalty Judges establish a late fee for late payment of
royalties for uses of musical works under this section,
such fee shall apply to covered activities under
blanket licenses, as follows:
``(i) Late fees for past due royalty
payments shall accrue from the due date for
payment until payment is received by the
mechanical licensing collective.
``(ii) The availability of late fees shall
in no way prevent a copyright owner or the
mechanical licensing collective from asserting
any other rights or remedies to which such
copyright owner or the mechanical licensing
collective may be entitled under this title.
``(C) Interim rate agreements in general.--For any
covered activity for which no rate or terms have been
established by the Copyright Royalty Judges, the
mechanical licensing collective and any digital music
provider may agree to an interim rate and terms for
such activity under the blanket license, and any such
rate and terms--
``(i) shall be treated as nonprecedential
and not cited or relied upon in any ratesetting
proceeding before the Copyright Royalty Judges
or any other tribunal; and
``(ii) shall automatically expire upon the
establishment of a rate and terms for such
covered activity by the Copyright Royalty
Judges, under subsection (c)(1)(E).
``(D) Adjustments for interim rates.--The rate and
terms established by the Copyright Royalty Judges for a
covered activity to which an interim rate and terms
have been agreed under subparagraph (C) shall supersede
the interim rate and terms and apply retroactively to
the inception of the activity under the blanket
license. In such case, not later than 90 days after the
effective date of the rate and terms established by the
Copyright Royalty Judges--
``(i) if the rate established by the
Copyright Royalty Judges exceeds the interim
rate, the digital music provider shall pay to
the mechanical licensing collective the amount
of any underpayment of royalties due; or
``(ii) if the interim rate exceeds the rate
established by the Copyright Royalty Judges,
the mechanical licensing collective shall
credit the account of the digital music
provider for the amount of any overpayment of
royalties due.
``(9) Transition to blanket licenses.--
``(A) Substitution of blanket license.--On the
license availability date, a blanket license shall,
without any interruption in license authority enjoyed
by such digital music provider, be automatically
substituted for and supersede any existing compulsory
license previously obtained under this section by the
digital music provider from a copyright owner to engage
in 1 or more covered activities with respect to a
musical work, except that such substitution shall not
apply to any authority obtained from a record company
pursuant to a compulsory license to make and distribute
permanent downloads unless and until such record
company terminates such authority in writing to take
effect at the end of a monthly reporting period, with a
copy to the mechanical licensing collective.
``(B) Expiration of existing licenses.--Except to
the extent provided in subparagraph (A), on and after
the license availability date, licenses other than
individual download licenses obtained under this
section for covered activities prior to the license
availability date shall no longer continue in effect.
``(C) Treatment of voluntary licenses.--A voluntary
license for a covered activity in effect on the license
availability date will remain in effect unless and
until the voluntary license expires according to the
terms of the voluntary license, or the parties agree to
amend or terminate the voluntary license. In a case
where a voluntary license for a covered activity
entered into before the license availability date
incorporates the terms of this section by reference,
the terms so incorporated (but not the rates) shall be
those in effect immediately prior to the license
availability date, and those terms shall continue to
apply unless and until such voluntary license is
terminated or amended, or the parties enter into a new
voluntary license.
``(D) Further acceptance of notices for covered
activities by copyright office.--On and after the
enactment date--
``(i) the Copyright Office shall no longer
accept notices of intention with respect to
covered activities; and
``(ii) notices of intention filed before
the enactment date will no longer be effective
or provide license authority with respect to
covered activities, except that, before the
license availability date, there shall be no
liability under section 501 for the
reproduction or distribution of a musical work
(or share thereof) in covered activities if a
valid notice of intention was filed for such
work (or share) before the enactment date.
``(10) Prior unlicensed uses.--
``(A) Limitation on liability in general.--A
copyright owner that commences an action under section
501 on or after January 1, 2018, against a digital
music provider for the infringement of the exclusive
rights provided by paragraph (1) or (3) of section 106
arising from the unauthorized reproduction or
distribution of a musical work by such digital music
provider in the course of engaging in covered
activities prior to the license availability date,
shall, as the copyright owner's sole and exclusive
remedy against the digital music provider, be eligible
to recover the royalty prescribed under subsection
(c)(1)(C) and chapter 8, from the digital music
provider, provided that such digital music provider can
demonstrate compliance with the requirements of
subparagraph (B), as applicable. In all other cases the
limitation on liability under this subparagraph shall
not apply.
``(B) Requirements for limitation on liability.--
The following requirements shall apply on the enactment
date and through the end of the period that expires 90
days after the license availability date to digital
music providers seeking to avail themselves of the
limitation on liability described in subparagraph (A):
``(i) Not later than 30 calendar days after
first making a particular sound recording of a
musical work available through its service via
one or more covered activities, or 30 calendar
days after the enactment date, whichever occurs
later, a digital music provider shall engage in
good-faith, commercially reasonable efforts to
identify and locate each copyright owner of
such musical work (or share thereof). Such
required matching efforts shall include the
following:
``(I) Good-faith, commercially
reasonable efforts to obtain from the
owner of the corresponding sound
recording made available through the
digital music provider's service the
following information:
``(aa) Sound recording
name, featured artist, sound
recording copyright owner,
producer, international
standard recording code, and
other information commonly used
in the industry to identify
sound recordings and match them
to the musical works they
embody.
``(bb) Any available
musical work ownership
information, including each
songwriter and publisher name,
percentage ownership share, and
international standard musical
work code.
``(II) Employment of 1 or more bulk
electronic matching processes that are
available to the digital music provider
through a third-party vendor on
commercially reasonable terms, except
that a digital music provider may rely
on its own bulk electronic matching
process if that process has
capabilities comparable to or better
than those available from a third-party
vendor on commercially reasonable
terms.
``(ii) The required matching efforts shall
be repeated by the digital music provider not
less than once per month for so long as the
copyright owner remains unidentified or has not
been located.
``(iii) If the required matching efforts
are successful in identifying and locating a
copyright owner of a musical work (or share
thereof) by the end of the calendar month in
which the digital music provider first makes
use of the work, the digital music provider
shall provide statements of account and pay
royalties to such copyright owner in accordance
with this section and applicable regulations.
``(iv) If the copyright owner is not
identified or located by the end of the
calendar month in which the digital music
provider first makes use of the work, the
digital music provider shall accrue and hold
royalties calculated under the applicable
statutory rate in accordance with usage of the
work, from initial use of the work until the
accrued royalties can be paid to the copyright
owner or are required to be transferred to the
mechanical licensing collective, as follows:
``(I) Accrued royalties shall be
maintained by the digital music
provider in accordance with generally
accepted accounting principles.
``(II) If a copyright owner of an
unmatched musical work (or share
thereof) is identified and located by
or to the digital music provider before
the license availability date, the
digital music provider shall--
``(aa) not later than 45
calendar days after the end of
the calendar month during which
the copyright owner was
identified and located, pay the
copyright owner all accrued
royalties, such payment to be
accompanied by a cumulative
statement of account that
includes all of the information
that would have been provided
to the copyright owner had the
digital music provider been
providing monthly statements of
account to the copyright owner
from initial use of the work in
accordance with this section
and applicable regulations,
including the requisite
certification under subsection
(c)(2)(I);
``(bb) beginning with the
accounting period following the
calendar month in which the
copyright owner was identified
and located, and for all other
accounting periods prior to the
license availability date,
provide monthly statements of
account and pay royalties to
the copyright owner as required
under this section and
applicable regulations; and
``(cc) beginning with the
monthly royalty reporting
period commencing on the
license availability date,
report usage and pay royalties
for such musical work (or share
thereof) for such reporting
period and reporting periods
thereafter to the mechanical
licensing collective, as
required under this subsection
and applicable regulations.
``(III) If a copyright owner of an
unmatched musical work (or share
thereof) is not identified and located
by the license availability date, the
digital music provider shall--
``(aa) not later than 45
calendar days after the license
availability date, transfer all
accrued royalties to the
mechanical licensing
collective, such payment to be
accompanied by a cumulative
statement of account that
includes all of the information
that would have been provided
to the copyright owner had the
digital music provider been
serving monthly statements of
account on the copyright owner
from initial use of the work in
accordance with this section
and applicable regulations,
including the requisite
certification under subsection
(c)(2)(I), and accompanied by
an additional certification by
a duly authorized officer of
the digital music provider that
the digital music provider has
fulfilled the requirements of
clauses (i) and (ii) of
subparagraph (B) but has not
been successful in locating or
identifying the copyright
owner; and
``(bb) beginning with the
monthly royalty reporting
period commencing on the
license availability date,
report usage and pay royalties
for such musical work (or share
thereof) for such period and
reporting periods thereafter to
the mechanical licensing
collective, as required under
this subsection and applicable
regulations.
``(v) A digital music provider that
complies with the requirements of this
subparagraph with respect to unmatched musical
works (or shares of works) shall not be liable
for or accrue late fees for late payments of
royalties for such works until such time as the
digital music provider is required to begin
paying monthly royalties to the copyright owner
or the mechanical licensing collective, as
applicable.
``(C) Adjusted statute of limitations.--
Notwithstanding anything to the contrary in section
507(b), with respect to any claim of infringement of
the exclusive rights provided by paragraphs (1) and (3)
of section 106 against a digital music provider arising
from the unauthorized reproduction or distribution of a
musical work by such digital music provider in the
course of engaging in covered activities that accrued
not more than 3 years prior to the license availability
date, such action may be commenced not later than the
later of--
``(i) 3 years after the date on which the
claim accrued; or
``(ii) 2 years after the license
availability date.
``(D) Other rights and remedies preserved.--Except
as expressly provided in this paragraph, nothing in
this paragraph shall be construed to alter, limit, or
negate any right or remedy of a copyright owner with
respect to unauthorized use of a musical work.
``(11) Legal protections for licensing activities.--
``(A) Exemption for compulsory license
activities.--The antitrust exemption described in
subsection (c)(1)(D) shall apply to negotiations and
agreements between and among copyright owners and
persons entitled to obtain a compulsory license for
covered activities, and common agents acting on behalf
of such copyright owners or persons, including with
respect to the administrative assessment established
under this subsection.
``(B) Limitation on common agent exemption.--
Notwithstanding the antitrust exemption provided in
subsection (c)(1)(D) and subparagraph (A) of this
paragraph (except for the administrative assessment
referenced in such subparagraph (A) and except as
provided in paragraph (8)(C)), neither the mechanical
licensing collective nor the digital licensee
coordinator shall serve as a common agent with respect
to the establishment of royalty rates or terms under
this section.
``(C) Antitrust exemption for administrative
activities.--Notwithstanding any provision of the
antitrust laws, copyright owners and persons entitled
to obtain a compulsory license under this section may
designate the mechanical licensing collective to
administer voluntary licenses for the reproduction or
distribution of musical works in covered activities on
behalf of such copyright owners and persons, subject to
the following conditions:
``(i) Each copyright owner shall establish
the royalty rates and material terms of any
such voluntary license individually and not in
agreement, combination, or concert with any
other copyright owner.
``(ii) Each person entitled to obtain a
compulsory license under this section shall
establish the royalty rates and material terms
of any such voluntary license individually and
not in agreement, combination, or concert with
any other digital music provider.
``(iii) The mechanical licensing collective
shall maintain the confidentiality of the
voluntary licenses in accordance with the
confidentiality provisions prescribed by the
Register of Copyrights under paragraph (12)(C).
``(D) Liability for good-faith activities.--The
mechanical licensing collective shall not be liable to
any person or entity based on a claim arising from its
good-faith administration of policies and procedures
adopted and implemented to carry out the
responsibilities described in subparagraphs (J) and (K)
of paragraph (3), except to the extent of correcting an
underpayment or overpayment of royalties as provided in
paragraph (3)(L)(i)(VI), but the collective may
participate in a legal proceeding as a stakeholder
party if the collective is holding funds that are the
subject of a dispute between copyright owners. For
purposes of this subparagraph, the term `good-faith
administration' means administration in a manner that
is not grossly negligent.
``(E) Preemption of state property laws.--The
holding and distribution of funds by the mechanical
licensing collective in accordance with this subsection
shall supersede and preempt any State law (including
common law) concerning escheatment or abandoned
property, or any analogous provision, that might
otherwise apply.
``(F) Rule of construction.--Except as expressly
provided in this subsection, nothing in this subsection
shall negate or limit the ability of any person to
pursue an action in Federal court against the
mechanical licensing collective or any other person
based upon a claim arising under this title or other
applicable law.
``(12) Regulations.--
``(A) Adoption by register of copyrights and
copyright royalty judges.--The Register of Copyrights
may conduct such proceedings and adopt such regulations
as may be necessary or appropriate to effectuate the
provisions of this subsection, except for regulations
concerning proceedings before the Copyright Royalty
Judges to establish the administrative assessment,
which shall be adopted by the Copyright Royalty Judges.
``(B) Judicial review of regulations.--Except as
provided in paragraph (7)(D)(vii), regulations adopted
under this subsection shall be subject to judicial
review pursuant to chapter 7 of title 5.
``(C) Protection of confidential information.--The
Register of Copyrights shall adopt regulations to
provide for the appropriate procedures to ensure that
confidential, private, proprietary, or privileged
information contained in the records of the mechanical
licensing collective and digital licensee coordinator
is not improperly disclosed or used, including through
any disclosure or use by the board of directors or
personnel of either entity, and specifically including
the unclaimed royalties oversight committee and the
dispute resolution committee of the mechanical
licensing collective.
``(13) Savings clauses.--
``(A) Limitation on activities and rights
covered.--This subsection applies solely to uses of
musical works subject to licensing under this section.
The blanket license shall not be construed to extend or
apply to activities other than covered activities or to
rights other than the exclusive rights of reproduction
and distribution licensed under this section, or serve
or act as the basis to extend or expand the compulsory
license under this section to activities and rights not
covered by this section on the day before the enactment
date.
``(B) Rights of public performance not affected.--
The rights, protections, and immunities granted under
this subsection, the data concerning musical works
collected and made available under this subsection, and
the definitions under subsection (e) shall not extend
to, limit, or otherwise affect any right of public
performance in a musical work.''; and
(5) by adding at the end the following:
``(e) Definitions.--As used in this section:
``(1) Accrued interest.--The term `accrued interest' means
interest accrued on accrued royalties, as described in
subsection (d)(3)(H)(ii).
``(2) Accrued royalties.--The term `accrued royalties'
means royalties accrued for the reproduction or distribution of
a musical work (or share thereof) in a covered activity,
calculated in accordance with the applicable royalty rate under
this section.
``(3) Administrative assessment.--The term `administrative
assessment' means the fee established pursuant to subsection
(d)(7)(D).
``(4) Audit.--The term `audit' means a royalty compliance
examination to verify the accuracy of royalty payments, or the
conduct of such an examination, as applicable.
``(5) Blanket license.--The term `blanket license' means a
compulsory license described in subsection (d)(1)(A) to engage
in covered activities.
``(6) Collective total costs.--The term `collective total
costs'--
``(A) means the total costs of establishing,
maintaining, and operating the mechanical licensing
collective to fulfill its statutory functions,
including--
``(i) startup costs;
``(ii) financing, legal, audit, and
insurance costs;
``(iii) investments in information
technology, infrastructure, and other long-term
resources;
``(iv) outside vendor costs;
``(v) costs of licensing, royalty
administration, and enforcement of rights;
``(vi) costs of bad debt; and
``(vii) costs of automated and manual
efforts to identify and locate copyright owners
of musical works (and shares of such musical
works) and match sound recordings to the
musical works the sound recordings embody; and
``(B) does not include any added costs incurred by
the mechanical licensing collective to provide services
under voluntary licenses.
``(7) Covered activity.--The term `covered activity' means
the activity of making a digital phonorecord delivery of a
musical work, including in the form of a permanent download,
limited download, or interactive stream, where such activity
qualifies for a compulsory license under this section.
``(8) Digital music provider.--The term `digital music
provider' means a person (or persons operating under the
authority of that person) that, with respect to a service
engaged in covered activities--
``(A) has a direct contractual, subscription, or
other economic relationship with end users of the
service, or, if no such relationship with end users
exists, exercises direct control over the provision of
the service to end users;
``(B) is able to fully report on any revenues and
consideration generated by the service; and
``(C) is able to fully report on usage of sound
recordings of musical works by the service (or procure
such reporting).
``(9) Digital licensee coordinator.--The term `digital
licensee coordinator' means the entity most recently designated
pursuant to subsection (d)(5).
``(10) Digital phonorecord delivery.--The term `digital
phonorecord delivery' means each individual delivery of a
phonorecord by digital transmission of a sound recording that
results in a specifically identifiable reproduction by or for
any transmission recipient of a phonorecord of that sound
recording, regardless of whether the digital transmission is
also a public performance of the sound recording or any musical
work embodied therein, and includes a permanent download, a
limited download, or an interactive stream. A digital
phonorecord delivery does not result from a real-time,
noninteractive subscription transmission of a sound recording
where no reproduction of the sound recording or the musical
work embodied therein is made from the inception of the
transmission through to its receipt by the transmission
recipient in order to make the sound recording audible. A
digital phonorecord delivery does not include the digital
transmission of sounds accompanying a motion picture or other
audiovisual work as defined in section 101.
``(11) Enactment date.--The term `enactment date' means the
date of the enactment of the Musical Works Modernization Act.
``(12) Individual download license.--The term `individual
download license' means a compulsory license obtained by a
record company to make and distribute, or authorize the making
and distribution of, permanent downloads embodying a specific
individual musical work.
``(13) Interactive stream.--The term `interactive stream'
means a digital transmission of a sound recording of a musical
work in the form of a stream, where the performance of the
sound recording by means of such transmission is not exempt
under section 114(d)(1) and does not in itself, or as a result
of a program in which it is included, qualify for statutory
licensing under section 114(d)(2). An interactive stream is a
digital phonorecord delivery.
``(14) Interested.--The term `interested', as applied to a
party seeking to participate in a proceeding under subsection
(d)(7)(D), is a party as to which the Copyright Royalty Judges
have not determined that the party lacks a significant interest
in such proceeding.
``(15) License availability date.--The term `license
availability date' means January 1 following the expiration of
the 2-year period beginning on the enactment date.
``(16) Limited download.--The term `limited download' means
a digital transmission of a sound recording of a musical work
in the form of a download, where such sound recording is
accessible for listening only for a limited amount of time or
specified number of times.
``(17) Matched.--The term `matched', as applied to a
musical work (or share thereof), means that the copyright owner
of such work (or share thereof) has been identified and
located.
``(18) Mechanical licensing collective.--The term
`mechanical licensing collective' means the entity most
recently designated as such by the Register of Copyrights under
subsection (d)(3).
``(19) Mechanical licensing collective budget.--The term
`mechanical licensing collective budget' means a statement of
the financial position of the mechanical licensing collective
for a fiscal year or quarter thereof based on estimates of
expenditures during the period and proposals for financing
those expenditures, including a calculation of the collective
total costs.
``(20) Musical works database.--The term `musical works
database' means the database described in subsection (d)(3)(E).
``(21) Nonprofit.--The term `nonprofit' means a nonprofit
created or organized in a State.
``(22) Notice of license.--The term `notice of license'
means a notice from a digital music provider provided under
subsection (d)(2)(A) for purposes of obtaining a blanket
license.
``(23) Notice of nonblanket activity.--The term `notice of
nonblanket activity' means a notice from a significant
nonblanket licensee provided under subsection (d)(6)(A) for
purposes of notifying the mechanical licensing collective that
the licensee has been engaging in covered activities.
``(24) Permanent download.--The term `permanent download'
means a digital transmission of a sound recording of a musical
work in the form of a download, where such sound recording is
accessible for listening without restriction as to the amount
of time or number of times it may be accessed.
``(25) Qualified auditor.--The term `qualified auditor'
means an independent, certified public accountant with
experience performing music royalty audits.
``(26) Record company.--The term `record company' means an
entity that invests in, produces, and markets sound recordings
of musical works, and distributes such sound recordings for
remuneration through multiple sales channels, including a
corporate affiliate of such an entity engaged in distribution
of sound recordings.
``(27) Report of usage.--The term `report of usage' means a
report reflecting an entity's usage of musical works in covered
activities described in subsection (d)(4)(A).
``(28) Required matching efforts.--The term `required
matching efforts' means efforts to identify and locate
copyright owners of musical works as described in subsection
(d)(10)(B)(i).
``(29) Service.--The term `service', as used in relation to
covered activities, means any site, facility, or offering by or
through which sound recordings of musical works are digitally
transmitted to members of the public.
``(30) Share.--The term `share', as applied to a musical
work, means a fractional ownership interest in such work.
``(31) Significant nonblanket licensee.--The term
`significant nonblanket licensee'--
``(A) means an entity, including a group of
entities under common ownership or control that, acting
under the authority of one or more voluntary licenses
or individual download licenses, offers a service
engaged in covered activities, and such entity or group
of entities--
``(i) is not currently operating under a
blanket license and is not obligated to provide
reports of usage reflecting covered activities
under subsection (d)(4)(A);
``(ii) has a direct contractual,
subscription, or other economic relationship
with end users of the service or, if no such
relationship with end users exists, exercises
direct control over the provision of the
service to end users; and
``(iii) either--
``(I) on any day in a calendar
month, makes more than 5,000 different
sound recordings of musical works
available through such service; or
``(II) derives revenue or other
consideration in connection with such
covered activities greater than $50,000
in a calendar month, or total revenue
or other consideration greater than
$500,000 during the preceding 12
calendar months; and
``(B) does not include--
``(i) an entity whose covered activity
consists solely of free-to-the-user streams of
segments of sound recordings of musical works
that do not exceed 90 seconds in length, are
offered only to facilitate a licensed use of
musical works that is not a covered activity,
and have no revenue directly attributable to
such streams constituting the covered activity;
or
``(ii) a `public broadcasting entity' as
defined in section 118(f).
``(32) Songwriter.--The term `songwriter' means the author
of all or part of a musical work, including a composer or
lyricist.
``(33) State.--The term `State' means each State of the
United States, the District of Columbia, and each territory or
possession of the United States.
``(34) Unclaimed accrued royalties.--The term `unclaimed
accrued royalties' means accrued royalties eligible for
distribution under subsection (d)(3)(J).
``(35) Unmatched.--The term `unmatched', as applied to a
musical work (or share thereof), means that the copyright owner
of such work (or share thereof) has not been identified or
located.
``(36) Voluntary license.--The term `voluntary license'
means a license for use of a musical work (or share thereof)
other than a compulsory license obtained under this section.''.
(b) Technical and Conforming Amendments to Section 801.--Section
801(b) of title 17, United States Code, is amended--
(1) by redesignating paragraph (8) as paragraph (9); and
(2) by inserting after paragraph (7) the following:
``(8) To determine the administrative assessment to be paid
by digital music providers under section 115(d). The provisions
of section 115(d) shall apply to the conduct of proceedings by
the Copyright Royalty Judges under section 115(d) and not the
procedures described in this section, or section 803, 804, or
805.''.
(c) Effective Date of Amended Rate Setting Standard.--The
amendments made by subsection (a)(3) and section 103(g)(2) shall apply
to any proceeding before the Copyright Royalty Judges that is commenced
on or after the date of the enactment of this Act.
(d) Technical and Conforming Amendments to Title 37, Part 385 of
the Code of Federal Regulations.--Not later than 270 days after the
date of enactment of this Act, the Copyright Royalty Judges shall amend
the regulations for section 115 of title 17, United States Code, in
part 385 of title 37, Code of Federal Regulations, to conform the
definitions used in such part to the definitions of the same terms
described in section 115(e) of title 17, United States Code, as added
by subsection (a). In so doing, the Copyright Royalty Judges shall make
adjustments to the language of the regulations as necessary to achieve
the same purpose and effect as the original regulations with respect to
the rates and terms previously adopted by the Copyright Royalty Judges.
(e) Copyright Office Activities.--The Register of Copyrights shall
engage in public outreach and educational activities--
(1) regarding the amendments made by subsection (a) to
section 115 of title 17, United States Code, including the
responsibilities of the mechanical licensing collective
designated under those amendments;
(2) which shall include educating songwriters and other
interested parties with respect to the process established
under section 115(d)(3)(C)(i)(V) of title 17, United States
Code, as added by subsection (a), by which--
(A) a copyright owner may claim ownership of
musical works (and shares of such works); and
(B) royalties for works for which the owner is not
identified or located shall be equitably distributed to
known copyright owners; and
(3) which the Register shall make available online.
(f) Unclaimed Royalties Study and Recommendations.--
(1) In general.--Not later than 2 years after the date on
which the Register of Copyrights initially designates the
mechanical licensing collective under section 115(d)(3)(B)(i)
of title 17, United States Code, as added by subsection (a)(4),
the Register, in consultation with the Comptroller General of
the United States, and after soliciting and reviewing comments
and relevant information from music industry participants and
other interested parties, shall submit to the Committee on the
Judiciary of the Senate and the Committee on the Judiciary of
the House of Representatives a report that recommends best
practices that the collective may implement in order to--
(A) identify and locate musical work copyright
owners with unclaimed accrued royalties held by the
collective;
(B) encourage musical work copyright owners to
claim the royalties of those owners; and
(C) reduce the incidence of unclaimed royalties.
(2) Consideration of recommendations.--The mechanical
licensing collective shall carefully consider, and give
substantial weight to, the recommendations submitted by the
Register of Copyrights under paragraph (1) when establishing
the procedures of the collective with respect to the--
(A) identification and location of musical work
copyright owners; and
(B) distribution of unclaimed royalties.
SEC. 103. AMENDMENTS TO SECTION 114.
(a) Uniform Rate Standard.--Section 114(f) of title 17, United
States Code, is amended--
(1) by striking paragraphs (1) and (2) and inserting the
following:
``(1)(A) Proceedings under chapter 8 shall determine
reasonable rates and terms of royalty payments for
transmissions subject to statutory licensing under subsection
(d)(2) during the 5-year period beginning on January 1 of the
second year following the year in which the proceedings are to
be commenced pursuant to subparagraph (A) or (B) of section
804(b)(3), as the case may be, or such other period as the
parties may agree. The parties to each proceeding shall bear
their own costs.
``(B) The schedule of reasonable rates and terms determined
by the Copyright Royalty Judges shall, subject to paragraph
(2), 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 period as the parties may agree. Such rates and terms
shall distinguish among the different types of services then in
operation and shall include a minimum fee for each such type of
service, such differences to be based on criteria including the
quantity and nature of the use of sound recordings and the
degree to which use of the service may substitute for or may
promote the purchase of phonorecords by consumers. The
Copyright Royalty Judges shall establish rates and terms that
most clearly represent the rates and terms that would have been
negotiated in the marketplace between a willing buyer and a
willing seller. In determining such rates and terms, the
Copyright Royalty Judges--
``(i) shall base their decision on economic,
competitive, and programming information presented by
the parties, including--
``(I) whether use of the service may
substitute for or may promote the sales of
phonorecords or otherwise may interfere with or
may enhance the sound recording copyright
owner's other streams of revenue from the
copyright owner's sound recordings; and
``(II) the relative roles of the copyright
owner and the transmitting entity in the
copyrighted work and the service made available
to the public with respect to relative creative
contribution, technological contribution,
capital investment, cost, and risk; and
``(ii) may consider the rates and terms for
comparable types of audio transmission services and
comparable circumstances under voluntary license
agreements.
``(C) The procedures under subparagraphs (A) and (B) shall
also be initiated pursuant to a petition filed by any sound
recording copyright owner or any transmitting entity indicating
that a new type of 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
eligible nonsubscription services and new subscription
services, or preexisting subscription services and preexisting
satellite digital audio radio 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.''; and
(2) by redesignating paragraphs (3), (4), and (5) as
paragraphs (2), (3), and (4), respectively.
(b) Repeal.--Subsection (i) of section 114 of title 17, United
States Code, is repealed.
(c) Use in Musical Work Proceedings.--
(1) In general.--License fees payable for the public
performance of sound recordings under section 106(6) of title
17, United States Code, shall not be taken into account in any
administrative, judicial, or other governmental proceeding to
set or adjust the royalties payable to musical work copyright
owners for the public performance of their works except in such
a proceeding to set or adjust royalties for the public
performance of musical works by means of a digital audio
transmission other than a transmission by a broadcaster, and
may be taken into account only with respect to such digital
audio transmission.
(2) Definitions.--In this subsection:
(A) Transmission by a broadcaster.--The term
``transmission by a broadcaster'' means a
nonsubscription digital transmission made by a
terrestrial broadcast station on its own behalf, or on
the behalf of a terrestrial broadcast station under
common ownership or control, that is not part of an
interactive service or a music-intensive service
comprising the transmission of sound recordings
customized for or customizable by recipients or service
users.
(B) Terrestrial broadcast station.--The term
``terrestrial broadcast station'' means a terrestrial,
over-the-air radio or television broadcast station,
including an FM translator (as defined in section
74.1201 of title 47, Code of Federal Regulations, and
licensed as such by the Federal Communications
Commission) whose primary business activities are
comprised of, and whose revenues are generated through,
terrestrial, over-the-air broadcast transmissions, or
the simultaneous or substantially-simultaneous digital
retransmission by the terrestrial, over-the-air
broadcast station of its over-the-air broadcast
transmissions.
(d) Rule of Construction.--Subsection (c)(2) shall not be given
effect in interpreting provisions of title 17, United States Code.
(e) Use in Sound Recording Proceedings.--The repeal of section
114(i) of title 17, United States Code, by subsection (b) shall not be
taken into account in any proceeding to set or adjust the rates and
fees payable for the use of sound recordings under section 112(e) or
114(f) of such title that is pending on, or commenced on or after, the
date of enactment of this Act.
(f) Decisions and Precedents Not Affected.--The repeal of section
114(i) of title 17, United States Code, by subsection (b) shall not
have any effect upon the decisions, or the precedents established or
relied upon, in any proceeding to set or adjust the rates and fees
payable for the use of sound recordings under section 112(e) or 114(f)
of such title before the date of enactment of this Act.
(g) Technical and Conforming Amendments.--
(1) Section 114.--Section 114(f) of title 17, United States
Code, as amended by subsection (a), is further amended in
paragraph (4)(C), as so redesignated, in the first sentence, by
striking ``under paragraph (4)'' and inserting ``under
paragraph (3)''.
(2) Section 801.--Section 801(b) of title 17, United States
Code, is amended--
(A) in paragraph (1), by striking ``The rates
applicable'' and all that follows though ``prevailing
industry practices.''; and
(B) in paragraph (7)(B), by striking ``114(f)(3)''
and inserting ``114(f)(2)''.
(3) Section 803.--Section 803(c)(2)(E)(i)(II) of title 17,
United States Code, is amended--
(A) by striking ``or 114(f)(2)(C)''; and
(B) by striking ``114(f)(4)(B)'' and inserting
``114(f)(3)(B)''.
(4) Section 804.--Section 804(b)(3)(C) of title 17, United
States Code, is amended--
(A) in clause (i), by striking ``and
114(f)(2)(C)'';
(B) in clause (iii)(II), by striking
``114(f)(4)(B)(ii)'' and inserting
``114(f)(3)(B)(ii)''; and
(C) in clause (iv), by striking ``or 114(f)(2)(C),
as the case may be''.
(h) Effective Date of Amended Rate Setting Standard.--The
amendments made by subsection (a)(1) shall apply to any proceeding
before the Copyright Royalty Judges that is commenced on or after the
date of the enactment of this Act.
(i) Timing of Rate Determinations.--Section 804(b)(3)(B) of title
17, United States Code, is amended, in the third sentence, by inserting
the following after ``fifth calendar year'': ``, except that--(i) with
respect to preexisting subscription services, the terms and rates
finally determined for the rate period ending on December 31, 2022,
shall remain in effect through December 31, 2027, and there shall be no
proceeding to determine terms and rates for preexisting subscription
services for the period beginning on January 1, 2023, and ending on
December 31, 2027; and'' ``(ii) with respect to pre-existing satellite
digital audio radio services, the terms and rates set forth by the
Copyright Royalty Judges on December 14, 2017, in their initial
determination for the rate period ending on December 31, 2022, shall be
in effect through December 31, 2027, without any change based on a
rehearing under section 803(c)(2) and without the possibility of appeal
under section 803(d), and there shall be no proceeding to determine
terms and rates for preexisting satellite digital audio radio services
for the period beginning on January 1, 2023, and ending on December 31,
2027''.
SEC. 104. RANDOM ASSIGNMENT OF RATE COURT PROCEEDINGS.
Section 137 of title 28, United States Code, is amended--
(1) by striking ``The business'' and inserting ``(a) In
General.--The business''; and
(2) by adding at the end the following:
``(b) Random Assignment of Rate Court Proceedings.--
``(1) In general.--
``(A) Definition.--In this paragraph, the term
`performing rights society' has the meaning given the
term in section 101 of title 17.
``(B) Determination of license fee.--Except as
provided in subparagraph (C), in the case of any
performing rights society subject to a consent decree,
any application for the determination of a license fee
for the public performance of music in accordance with
the applicable consent decree shall be made in the
district court with jurisdiction over that consent
decree and randomly assigned to a judge of that
district court according to the rules of that court for
the division of business among district judges,
provided that any such application shall not be
assigned to--
``(i) a judge to whom continuing
jurisdiction over any performing rights society
for any performing rights society consent
decree is assigned or has previously been
assigned; or
``(ii) a judge to whom another proceeding
concerning an application for the determination
of a reasonable license fee is assigned at the
time of the filing of the application.
``(C) Exception.--Subparagraph (B) does not apply
to an application to determine reasonable license fees
made by individual proprietors under section 513 of
title 17.
``(2) Rule of construction.--Nothing in paragraph (1) shall
modify the rights of any party to a consent decree or to a
proceeding to determine reasonable license fees, to make an
application for the construction of any provision of the
applicable consent decree. Such application shall be referred
to the judge to whom continuing jurisdiction over the
applicable consent decree is currently assigned. If any such
application is made in connection with a rate proceeding, such
rate proceeding shall be stayed until the final determination
of the construction application. Disputes in connection with a
rate proceeding about whether a licensee is similarly situated
to another licensee shall not be subject to referral to the
judge with continuing jurisdiction over the applicable consent
decree.''.
SEC. 105. PERFORMING RIGHTS SOCIETY CONSENT DECREES.
(a) Definition.--In this section, the term ``performing rights
society'' has the meaning given the term in section 101 of title 17,
United States Code.
(b) Notification of Review.--
(1) In general.--The Department of Justice shall provide
timely briefings upon request of any Member of the Committee on
the Judiciary of the Senate and the Committee on the Judiciary
of the House of Representatives regarding the status of a
review in progress of a consent decree between the United
States and a performing rights society.
(2) Confidentiality and deliberative process.--In
accordance with applicable rules relating to confidentiality
and agency deliberative process, the Department of Justice
shall share with such Members of Congress detailed and timely
information and pertinent documents related to the consent
decree review.
(c) Action Before Motion to Terminate.--
(1) In general.--Before filing with the appropriate
district court of the United States a motion to terminate a
consent decree between the United States and a performing
rights society, including a motion to terminate a consent
decree after the passage of a specified period of time, the
Department of Justice shall--
(A) notify Members of Congress and committees of
Congress described in subsection (b); and
(B) provide to such Members of Congress and
committees information regarding the impact of the
proposed termination on the market for licensing the
public performance of musical works should the motion
be granted.
(2) Notification.--
(A) In general.--During the notification described
in paragraph (1), and not later than a reasonable time
before the date on which the Department of Justice
files with the appropriate district court of the United
States a motion to terminate a consent decree between
the United States and a performing rights society, the
Department of Justice should submit to the chairmen and
ranking members of the Committee on the Judiciary of
the Senate and the Committee on the Judiciary of the
House of Representatives a written notification of the
intent of the Department of Justice to file the motion.
(B) Contents.--The notification provided in
subparagraph (A) shall include a written report to the
chairmen and ranking members of the Committee on the
Judiciary of Senate and the Committee on the Judiciary
of the House of Representatives setting forth--
(i) an explanation of the process used by
the Department of Justice to review the consent
decree;
(ii) a summary of the public comments
received by the Department of Justice during
the review by the Department; and
(iii) other information provided to
Congress under paragraph (1)(B).
(d) Scope.--This section applies only to a consent decree between
the United States and a performing rights society.
SEC. 106. EFFECTIVE DATE.
This title, and the amendments made by this title, shall take
effect on the date of enactment of this Act.
TITLE II--CLASSICS PROTECTION AND ACCESS
SEC. 201. SHORT TITLE.
This title may be cited as the ``Classics Protection and Access
Act''.
SEC. 202. UNAUTHORIZED USE OF PRE-1972 SOUND RECORDINGS.
(a) Preemption of State Law Rights; Protection for Unauthorized
Use.--Title 17, United States Code, is amended--
(1) in section 301, by striking subsection (c) and
inserting the following:
``(c) Notwithstanding the provisions of section 303, and in
accordance with chapter 14, no sound recording fixed before February
15, 1972, shall be subject to copyright under this title. With respect
to sound recordings fixed before February 15, 1972, the preemptive
provisions of subsection (a) shall apply to activities that are
commenced on and after the date of enactment of the Classics Protection
and Access Act. Nothing in this subsection may be construed to affirm
or negate the preemption of rights and remedies pertaining to any cause
of action arising from the nonsubscription broadcast transmission of
sound recordings under the common law or statutes of any State for
activities that do not qualify as covered activities under chapter 14
undertaken during the period between the date of enactment of the
Classics Protection and Access Act and the date on which the term of
prohibition on unauthorized acts under section 1401(a)(2) expires for
such sound recordings. Any potential preemption of rights and remedies
related to such activities undertaken during that period shall apply in
all respects as it did the day before the date of enactment of the
Classics Protection and Access Act.''; and
(2) by adding at the end the following:
``CHAPTER 14--UNAUTHORIZED USE OF PRE-1972 SOUND RECORDINGS
``Sec.
``1401. Unauthorized use of pre-1972 sound recordings.
``Sec. 1401. Unauthorized use of pre-1972 sound recordings
``(a) In General.--
``(1) Unauthorized acts.--Anyone who, on or before the last
day of the applicable transition period under paragraph (2),
and without the consent of the rights owner, engages in covered
activity with respect to a sound recording fixed before
February 15, 1972, shall be subject to the remedies provided in
sections 502 through 505 and 1203 to the same extent as an
infringer of copyright or a person that engages in unauthorized
activity under chapter 12.
``(2) Term of prohibition.--
``(A) In general.--The prohibition under paragraph
(1)--
``(i) subject to clause (ii), shall apply
to a sound recording described in that
paragraph--
``(I) through December 31 of the
year that is 95 years after the year of
first publication; and
``(II) for a further transition
period as prescribed under subparagraph
(B) of this paragraph; and
``(ii) shall not apply to any sound
recording after February 15, 2067.
``(B) Transition periods.--
``(i) Pre-1923 recordings.--In the case of
a sound recording first published before
January 1, 1923, the transition period
described in subparagraph (A)(i)(II) shall end
on December 31 of the year that is 3 years
after the date of enactment of this section.
``(ii) 1923-1946 recordings.--In the case
of a sound recording first published during the
period beginning on January 1, 1923, and ending
on December 31, 1946, the transition period
described in subparagraph (A)(i)(II) shall end
on the date that is 5 years after the last day
of the period described in subparagraph
(A)(i)(I).
``(iii) 1947-1956 recordings.--In the case
of a sound recording first published during the
period beginning on January 1, 1947, and ending
on December 31, 1956, the transition period
described in subparagraph (A)(i)(II) shall end
on the date that is 15 years after the last day
of the period described in subparagraph
(A)(i)(I).
``(iv) Post-1956 recordings.--In the case
of a sound recording fixed before February 15,
1972, that is not described in clause (i),
(ii), or (iii), the transition period described
in subparagraph (A)(i)(II) shall end on
February 15, 2067.
``(3) Rule of construction.--For the purposes of this
subsection, the term `anyone' includes any State, any
instrumentality of a State, and any officer or employee of a
State or instrumentality of a State acting in the official
capacity of the officer or employee, as applicable.
``(b) Certain Authorized Transmissions and Reproductions.--A public
performance by means of a digital audio transmission of a sound
recording fixed before February 15, 1972, or a reproduction in an
ephemeral phonorecord or copy of a sound recording fixed before
February 15, 1972, shall, for purposes of subsection (a), be considered
to be authorized and made with the consent of the rights owner if--
``(1) the transmission or reproduction would satisfy the
requirements for statutory licensing under section 112(e)(1) or
section 114(d)(2), or would be exempt under section 114(d)(1),
as the case may be, if the sound recording were fixed on or
after February 15, 1972; and
``(2) the transmitting entity pays the statutory royalty
for the transmission or reproduction pursuant to the rates and
terms adopted under sections 112(e) and 114(f), and complies
with other obligations, in the same manner as required by
regulations adopted by the Copyright Royalty Judges under
sections 112(e) and 114(f) for sound recordings that are fixed
on or after February 15, 1972, except in the case of a
transmission that would be exempt under section 114(d)(1).
``(c) Certain Noncommercial Uses of Sound Recordings That Are Not
Being Commercially Exploited.--
``(1) In general.--Noncommercial use of a sound recording
fixed before February 15, 1972, that is not being commercially
exploited by or under the authority of the rights owner shall
not violate subsection (a) if--
``(A) the person engaging in the noncommercial use,
in order to determine whether the sound recording is
being commercially exploited by or under the authority
of the rights owner, makes a good faith, reasonable
search for, but does not find, the sound recording--
``(i) in the records of schedules filed in
the Copyright Office as described in subsection
(f)(5)(A); and
``(ii) on services offering a comprehensive
set of sound recordings for sale or streaming;
``(B) the person engaging in the noncommercial use
files a notice identifying the sound recording and the
nature of the use in the Copyright Office in accordance
with the regulations issued under paragraph (3)(B); and
``(C) during the 90-day period beginning on the
date on which the notice described in subparagraph (B)
is indexed into the public records of the Copyright
Office, the rights owner of the sound recording does
not, in its discretion, opt out of the noncommercial
use by filing notice thereof in the Copyright Office in
accordance with the regulations issued under paragraph
(5).
``(2) Rules of construction.--For purposes of this
subsection--
``(A) merely recovering costs of production and
distribution of a sound recording resulting from a use
otherwise permitted under this subsection does not
itself necessarily constitute a commercial use of the
sound recording;
``(B) the fact that a person engaging in the use of
a sound recording also engages in commercial activities
does not itself necessarily render the use commercial;
and
``(C) the fact that a person files notice of a
noncommercial use of a sound recording in accordance
with the regulations issued under paragraph (3)(B) does
not itself affect any limitation on the exclusive
rights of a copyright owner described in section 107,
108, 109, 110, or 112(f) as applied to a claim under
subsection (a) of this section pursuant to subsection
(f)(1)(A) of this section.
``(3) Notice of covered activity.--Not later than 180 days
after the date of enactment of this section, the Register of
Copyrights shall issue regulations that--
``(A) provide specific, reasonable steps that, if
taken by a filer, are sufficient to constitute a good
faith, reasonable search under paragraph (1)(A) to
determine whether a recording is being commercially
exploited, including the services that satisfy the good
faith, reasonable search requirement under paragraph
(1)(A) for purposes of the safe harbor described in
paragraph (4)(A); and
``(B) establish the form, content, and procedures
for the filing of notices under paragraph (1)(B).
``(4) Safe harbor.--
``(A) In general.--A person engaging in a
noncommercial use of a sound recording otherwise
permitted under this subsection who establishes that
the person made a good faith, reasonable search under
paragraph (1)(A) without finding commercial
exploitation of the sound recording by or under the
authority of the rights owner shall not be found to be
in violation of subsection (a).
``(B) Steps sufficient but not necessary.--Taking
the specific, reasonable steps identified by the
Register of Copyrights in the regulations issued under
paragraph (3)(A) shall be sufficient, but not
necessary, for a filer to satisfy the requirement to
conduct a good faith, reasonable search under paragraph
(1)(A) for purposes of subparagraph (A) of this
paragraph.
``(5) Opting out of covered activity.--
``(A) In general.--Not later than 180 days after
the date of enactment of this section, the Register of
Copyrights shall issue regulations establishing the
form, content, and procedures for the rights owner of a
sound recording that is the subject of a notice under
paragraph (1)(B) to, in its discretion, file notice
opting out of the covered activity described in the
notice under paragraph (1)(B) during the 90-day period
beginning on the date on which the notice under
paragraph (1)(B) is indexed into the public records of
the Copyright Office.
``(B) Rule of construction.--The fact that a rights
holder opts out of a noncommercial use of a sound
recording by filing notice thereof in the Copyright
Office in accordance with the regulations issued under
subparagraph (A) does not itself enlarge or diminish
any limitation on the exclusive rights of a copyright
owner described in section 107, 108, 109, 110, or
112(f) as applied to a claim under subsection (a) of
this section pursuant to subsection (f)(1)(A) of this
section.
``(6) Civil penalties for certain acts.--
``(A) Filing of notices of noncommercial use.--Any
person who willfully engages in a pattern or practice
of filing a notice of noncommercial use of a sound
recording as described in paragraph (1)(B) fraudulently
describing the use proposed, or knowing that the use
proposed is not permitted under this subsection, shall
be assessed a civil penalty in an amount that is not
less than $250, and not more than $1000, for each such
notice, in addition to any other remedies that may be
available under this title based on the actual use
made.
``(B) Filing of opt-out notices.--
``(i) In general.--Any person who files an
opt-out notice as described in paragraph
(1)(C), knowing that the person is not the
rights owner or authorized to act on behalf of
the rights owner of the sound recording to
which the notice pertains, shall be assessed a
civil penalty in an amount not less than $250,
and not more than $1,000, for each such notice.
``(ii) Pattern or practice.--Any person who
engages in a pattern or practice of making
filings as described in clause (i) shall be
assessed a civil penalty in an amount not less
than $10,000 for each such filing.
``(C) Definition.--For purposes of this paragraph,
the term `knowing'--
``(i) does not require specific intent to
defraud; and
``(ii) with respect to information about
ownership of the sound recording in question,
means that the person--
``(I) has actual knowledge of the
information;
``(II) acts in deliberate ignorance
of the truth or falsity of the
information; or
``(III) acts in grossly negligent
disregard of the truth or falsity of
the information.
``(d) Payment of Royalties for Transmissions of Performances by
Direct Licensing of Statutory Services.--
``(1) In general.--A public performance by means of a
digital audio transmission of a sound recording fixed before
February 15, 1972, shall, for purposes of subsection (a), be
considered to be authorized and made with the consent of the
rights owner if the transmission is made pursuant to a license
agreement voluntarily negotiated at any time between the rights
owner and the entity performing the sound recording.
``(2) Payment of royalties to nonprofit collective under
certain license agreements.--
``(A) Licenses entered into on or after date of
enactment.--To the extent that a license agreement
described in paragraph (1) entered into on or after the
date of enactment of this section extends to a public
performance by means of a digital audio transmission of
a sound recording fixed before February 15, 1972, that
meets the conditions of subsection (b)--
``(i) the licensee shall, with respect to
such transmission, pay to the collective
designated to distribute receipts from the
licensing of transmissions in accordance with
section 114(f), 50 percent of the performance
royalties for that transmission due under the
license; and
``(ii) the royalties paid under clause (i)
shall be fully credited as payments due under
the license.
``(B) Certain agreements entered into before
enactment.--To the extent that a license agreement
described in paragraph (1), entered into during the
period beginning on January 1 of the year in which this
section is enacted and ending on the day before the
date of enactment of this section, or a settlement
agreement with a preexisting satellite digital audio
radio service (as defined in section 114(j)) entered
into during the period beginning on January 1, 2015,
and ending on the day before the date of enactment of
this section, extends to a public performance by means
of a digital audio transmission of a sound recording
fixed before February 15, 1972, that meets the
conditions of subsection (b)--
``(i) the rights owner shall, with respect
to such transmission, pay to the collective
designated to distribute receipts from the
licensing of transmissions in accordance with
section 114(f) an amount that is equal to the
difference between--
``(I) 50 percent of the difference
between--
``(aa) the rights owner's
total gross performance royalty
fee receipts or settlement
monies received for all such
transmissions covered under the
license or settlement
agreement, as applicable; and
``(bb) the rights owner's
total payments for outside
legal expenses, including any
payments of third-party claims,
that are directly attributable
to the license or settlement
agreement, as applicable; and
``(II) the amount of any royalty
receipts or settlement monies under the
agreement that are distributed by the
rights owner to featured and
nonfeatured artists before the date of
enactment of this section; and
``(ii) the royalties paid under clause (i)
shall be fully credited as payments due under
the license or settlement agreement, as
applicable.
``(3) Distribution of royalties and settlement monies by
collective.--The collective described in paragraph (2) shall,
in accordance with subparagraphs (B) through (D) of section
114(g)(2), and paragraphs (5) and (6) of section 114(g),
distribute the royalties or settlement monies received under
paragraph (2) under a license or settlement described in
paragraph (2), which shall be the only payments to which
featured and nonfeatured artists are entitled by virtue of the
transmissions described in paragraph (2), except for settlement
monies described in paragraph (2) that are distributed by the
rights owner to featured and nonfeatured artists before the
date of enactment of this section.
``(4) Payment of royalties under license agreements entered
before enactment or not otherwise described in paragraph (2).--
``(A) In general.--To the extent that a license
agreement described in paragraph (1) entered into
before the date of enactment of this section, or any
other license agreement not as described in paragraph
(2), extends to a public performance by means of a
digital audio transmission of a sound recording fixed
before February 15, 1972, that meets the conditions of
subsection (b), the payments made by the licensee
pursuant to the license shall be made in accordance
with the agreement.
``(B) Additional payments not required.--To the
extent that a licensee has made, or will make in the
future, payments pursuant to a license as described in
subparagraph (A), the provisions of paragraphs (2) and
(3) shall not require any additional payments from, or
additional financial obligations on the part of, the
licensee.
``(C) Rule of construction.--Nothing in this
subsection may be construed to prohibit the collective
designated to distribute receipts from the licensing of
transmissions in accordance with section 114(f) from
administering royalty payments under any license not
described in paragraph (2).
``(e) Preemption With Respect to Certain Past Acts.--
``(1) In general.--This section preempts any claim of
common law copyright or equivalent right under the laws of any
State arising from a digital audio transmission or reproduction
that is made before the date of enactment of this section of a
sound recording fixed before February 15, 1972, if--
``(A) the digital audio transmission would have
satisfied the requirements for statutory licensing
under section 114(d)(2) or been exempt under section
114(d)(1), or the reproduction would have satisfied the
requirements of section 112(e)(1), as the case may be,
if the sound recording were fixed on or after February
15, 1972; and
``(B) either--
``(i) except in the case of a transmission
that would have been exempt under section
114(d)(1), not later than 270 days after the
date of enactment of this section, the
transmitting entity pays statutory royalties
and provides notice of the use of the relevant
sound recordings in the same manner as required
by regulations adopted by the Copyright Royalty
Judges for sound recordings that are fixed on
or after February 15, 1972, for all the digital
audio transmissions and reproductions
satisfying the requirements for statutory
licensing under sections 112(e)(1) and
114(d)(2) during the 3 years before that date
of enactment; or
``(ii) an agreement voluntarily negotiated
between the rights owner and the entity
performing the sound recording (including a
litigation settlement agreement entered into
before the date of enactment of this section)
authorizes or waives liability for any such
transmission or reproduction and the
transmitting entity has paid for and reported
such digital audio transmission under that
agreement.
``(2) Rule of construction for common law copyright.--For
purposes of paragraph (1), a claim of common law copyright or
equivalent right under the laws of any State includes a claim
that characterizes conduct subject to that paragraph as an
unlawful distribution, act of record piracy, or similar
violation.
``(3) Rule of construction for public performance rights.--
Nothing in this section may be construed to recognize or negate
the existence of public performance rights in sound recordings
under the laws of any State.
``(f) Limitations on Remedies.--
``(1) Fair use; uses by libraries, archives, and
educational institutions.--
``(A) In general.--The limitations on the exclusive
rights of a copyright owner described in sections 107,
108, 109, 110, and 112(f) shall apply to a claim under
subsection (a) with respect to a sound recording fixed
before February 15, 1972.
``(B) Rule of construction for section 108(h).--
With respect to the application of section 108(h) to a
claim under subsection (a) with respect to a sound
recording fixed before February 15, 1972, the phrase
`during the last 20 years of any term of copyright of a
published work' in such section 108(h) shall be
construed to mean at any time after the date of
enactment of this section.
``(2) Actions.--The limitations on actions described in
section 507 shall apply to a claim under subsection (a) with
respect to a sound recording fixed before February 15, 1972.
``(3) Material online.--Section 512 shall apply to a claim
under subsection (a) with respect to a sound recording fixed
before February 15, 1972.
``(4) Principles of equity.--Principles of equity apply to
remedies for a violation of this section to the same extent as
such principles apply to remedies for infringement of
copyright.
``(5) Filing requirement for statutory damages and
attorneys' fees.--
``(A) Filing of information on sound recordings.--
``(i) Filing requirement.--Except in the
case of a transmitting entity that has filed
contact information for that transmitting
entity under subparagraph (B), in any action
under this section, an award of statutory
damages or of attorneys' fees under section 504
or 505 may be made with respect to an
unauthorized use of a sound recording under
subsection (a) only if--
``(I) the rights owner has filed
with the Copyright Office a schedule
that specifies the title, artist, and
rights owner of the sound recording and
contains such other information, as
practicable, as the Register of
Copyrights prescribes by regulation;
and
``(II) the use occurs after the end
of the 90-day period beginning on the
date on which the information described
in subclause (I) is indexed into the
public records of the Copyright Office.
``(ii) Regulations.--Not later than 180
days after the date of enactment of this
section, the Register of Copyrights shall issue
regulations that--
``(I) establish the form, content,
and procedures for the filing of
schedules under clause (i);
``(II) provide that a person may
request that the person receive timely
notification of a filing described in
subclause (I); and
``(III) set forth the manner in
which a person may make a request under
subclause (II).
``(B) Filing of contact information for
transmitting entities.--
``(i) Filing requirement.--Not later than
30 days after the date of enactment of this
section, the Register of Copyrights shall issue
regulations establishing the form, content, and
procedures for the filing of contact
information by any entity that, as of the date
of enactment of this section, performs a sound
recording fixed before February 15, 1972, by
means of a digital audio transmission.
``(ii) Time limit on filings.--The Register
of Copyrights may accept filings under clause
(i) only until the 180th day after the date of
enactment of this section.
``(iii) Limitation on statutory damages and
attorneys' fees.--
``(I) Limitation.--An award of
statutory damages or of attorneys' fees
under section 504 or 505 may not be
made against an entity that has filed
contact information for that entity
under clause (i) with respect to an
unauthorized use by that entity of a
sound recording under subsection (a) if
the use occurs before the end of the
90-day period beginning on the date on
which the entity receives a notice
that--
``(aa) is sent by or on
behalf of the rights owner of
the sound recording;
``(bb) states that the
entity is not legally
authorized to use that sound
recording under subsection (a);
and
``(cc) identifies the sound
recording in a schedule
conforming to the requirements
prescribed by the regulations
issued under subparagraph
(A)(ii).
``(II) Undeliverable notices.--In
any case in which a notice under
subclause (I) is sent to an entity by
mail or courier service and the notice
is returned to the sender because the
entity either is no longer located at
the address provided in the contact
information filed under clause (i) or
has refused to accept delivery, or the
notice is sent by electronic mail and
is undeliverable, the 90-day period
under subclause (I) shall begin on the
date of the attempted delivery.
``(C) Section 412.--Section 412 shall not limit an
award of statutory damages under section 504(c) or
attorneys' fees under section 505 with respect to a
covered activity in violation of subsection (a).
``(6) Applicability of other provisions.--
``(A) In general.--Subject to subparagraph (B), no
provision of this title shall apply to or limit the
remedies available under this section except as
otherwise provided in this section.
``(B) Applicability of definitions.--Any term used
in this section that is defined in section 101 shall
have the meaning given that term in section 101.
``(g) Application of Section 230 Safe Harbor.--For purposes of
section 230 of the Communications Act of 1934 (47 U.S.C. 230),
subsection (a) shall be considered to be a `law pertaining to
intellectual property' under subsection (e)(2) of such section 230.
``(h) Application to Rights Owners.--
``(1) Transfers.--With respect to a rights owner described
in subsection (l)(2)(B)--
``(A) subsections (d) and (e) of section 201 and
section 204 shall apply to a transfer described in
subsection (l)(2)(B) to the same extent as with respect
to a transfer of copyright ownership; and
``(B) notwithstanding section 411, that rights
owner may institute an action with respect to a
violation of this section to the same extent as the
owner of an exclusive right under a copyright may
institute an action under section 501(b).
``(2) Application of other provisions.--The following
provisions shall apply to a rights owner under this section to
the same extent as any copyright owner:
``(A) Section 112(e)(2).
``(B) Section 112(e)(7).
``(C) Section 114(e).
``(D) Section 114(h).
``(i) Ephemeral Recordings.--An authorized reproduction made under
this section shall be subject to section 112(g) to the same extent as a
reproduction of a sound recording fixed on or after February 15, 1972.
``(j) Rule of Construction.--A rights owner of, or featured
recording artist who performs on, a sound recording under this chapter
shall be deemed to be an interested copyright party, as defined in
section 1001, to the same extent as a copyright owner or featured
recording artist under chapter 10.
``(k) Treatment of States and State Instrumentalities, Officers,
and Employees.--Any State, and any instrumentality, officer, or
employee described in subsection (a)(3), shall be subject to the
provisions of this section in the same manner and to the same extent as
any nongovernmental entity.
``(l) Definitions.--In this section:
``(1) Covered activity.--The term `covered activity' means
any activity that the copyright owner of a sound recording
would have the exclusive right to do or authorize under section
106 or 602, or that would violate section 1201 or 1202, if the
sound recording were fixed on or after February 15, 1972.
``(2) Rights owner.--The term `rights owner' means--
``(A) the person that has the exclusive right to
reproduce a sound recording under the laws of any
State, as of the day before the date of enactment of
this section; or
``(B) any person to which a right to enforce a
violation of this section may be transferred, in whole
or in part, after the date of enactment of this
section, under--
``(i) subsections (d) and (e) of section
201; and
``(ii) section 204.''.
(b) Conforming Amendment.--The table of chapters for title 17,
United States Code, is amended by adding at the end the following:
``14. Unauthorized use of pre-1972 sound recordings........ 1401''.
TITLE III--ALLOCATION FOR MUSIC PRODUCERS
SEC. 301. SHORT TITLE.
This title may be cited as the ``Allocation for Music Producers
Act'' or the ``AMP Act''.
SEC. 302. PAYMENT OF STATUTORY PERFORMANCE ROYALTIES.
(a) Letter of Direction.--Section 114(g) of title 17, United States
Code, is amended by adding at the end the following:
``(5) Letter of direction.--
``(A) In general.--A nonprofit collective
designated by the Copyright Royalty Judges to
distribute receipts from the licensing of transmissions
in accordance with subsection (f) shall adopt and
reasonably implement a policy that provides, in
circumstances determined by the collective to be
appropriate, for acceptance of instructions from a
payee identified under subparagraph (A) or (D) of
paragraph (2) to distribute, to a producer, mixer, or
sound engineer who was part of the creative process
that created a sound recording, a portion of the
payments to which the payee would otherwise be entitled
from the licensing of transmissions of the sound
recording. In this section, such instructions shall be
referred to as a `letter of direction'.
``(B) Acceptance of letter.--To the extent that a
collective described in subparagraph (A) accepts a
letter of direction under that subparagraph, the person
entitled to payment pursuant to the letter of direction
shall, during the period in which the letter of
direction is in effect and carried out by the
collective, be treated for all purposes as the owner of
the right to receive such payment, and the payee
providing the letter of direction to the collective
shall be treated as having no interest in such payment.
``(C) Authority of collective.--This paragraph
shall not be construed in such a manner so that the
collective is not authorized to accept or act upon
payment instructions in circumstances other than those
to which this paragraph applies.''.
(b) Additional Provisions for Recordings Fixed Before November 1,
1995.--Section 114(g) of title 17, United States Code, as amended by
subsection (a), is further amended by adding at the end the following:
``(6) Sound recordings fixed before november 1, 1995.--
``(A) Payment absent letter of direction.--A
nonprofit collective designated by the Copyright
Royalty Judges to distribute receipts from the
licensing of transmissions in accordance with
subsection (f) (in this paragraph referred to as the
`collective') shall adopt and reasonably implement a
policy that provides, in circumstances determined by
the collective to be appropriate, for the deduction of
2 percent of all the receipts that are collected from
the licensing of transmissions of a sound recording
fixed before November 1, 1995, but which is withdrawn
from the amount otherwise payable under paragraph
(2)(D) to the recording artist or artists featured on
the sound recording (or the persons conveying rights in
the artists' performance in the sound recording), and
the distribution of such amount to 1 or more persons
described in subparagraph (B) of this paragraph, after
deduction of costs described in paragraph (3) or (4),
as applicable, if each of the following requirements is
met:
``(i) Certification of attempt to obtain a
letter of direction.--The person described in
subparagraph (B) who is to receive the
distribution has certified to the collective,
under penalty of perjury, that--
``(I) for a period of not less than
120 days, that person made reasonable
efforts to contact the artist payee for
such sound recording to request and
obtain a letter of direction
instructing the collective to pay to
that person a portion of the royalties
payable to the featured recording
artist or artists; and
``(II) during the period beginning
on the date on which that person began
the reasonable efforts described in
subclause (I) and ending on the date of
that person's certification to the
collective, the artist payee did not
affirm or deny in writing the request
for a letter of direction.
``(ii) Collective attempt to contact
artist.--After receipt of the certification
described in clause (i) and for a period of not
less than 120 days before the first
distribution by the collective to the person
described in subparagraph (B), the collective
attempts, in a reasonable manner as determined
by the collective, to notify the artist payee
of the certification made by the person
described in subparagraph (B).
``(iii) No objection received.--The artist
payee does not, as of the date that was 10
business days before the date on which the
first distribution is made, submit to the
collective in writing an objection to the
distribution.
``(B) Eligibility for payment.--A person shall be
eligible for payment under subparagraph (A) if the
person--
``(i) is a producer, mixer, or sound
engineer of the sound recording;
``(ii) has entered into a written contract
with a record company involved in the creation
or lawful exploitation of the sound recording,
or with the recording artist or artists
featured on the sound recording (or the persons
conveying rights in the artists' performance in
the sound recording), under which the person
seeking payment is entitled to participate in
royalty payments that are based on the
exploitation of the sound recording and are
payable from royalties otherwise payable to the
recording artist or artists featured on the
sound recording (or the persons conveying
rights in the artists' performance in the sound
recording);
``(iii) made a creative contribution to the
creation of the sound recording; and
``(iv) submits to the collective--
``(I) a written certification
stating, under penalty of perjury, that
the person meets the requirements in
clauses (i) through (iii); and
``(II) a true copy of the contract
described in clause (ii).
``(C) Multiple certifications.--Subject to
subparagraph (D), in a case in which more than 1 person
described in subparagraph (B) has met the requirements
for a distribution under subparagraph (A) with respect
to a sound recording as of the date that is 10 business
days before the date on which the distribution is made,
the collective shall divide the 2 percent distribution
equally among all such persons.
``(D) Objection to payment.--Not later than 10
business days after the date on which the collective
receives from the artist payee a written objection to a
distribution made pursuant to subparagraph (A), the
collective shall cease making any further payment
relating to such distribution. In any case in which the
collective has made 1 or more distributions pursuant to
subparagraph (A) to a person described in subparagraph
(B) before the date that is 10 business days after the
date on which the collective receives from the artist
payee an objection to such distribution, the objection
shall not affect that person's entitlement to any
distribution made before the collective ceases such
distribution under this subparagraph.
``(E) Ownership of the right to receive payments.--
To the extent that the collective determines that a
distribution will be made under subparagraph (A) to a
person described in subparagraph (B), such person
shall, during the period covered by such distribution,
be treated for all purposes as the owner of the right
to receive such payments, and the artist payee to whom
such payments would otherwise be payable shall be
treated as having no interest in such payments.
``(F) Artist payee defined.--In this paragraph, the
term `artist payee' means a person, other than a person
described in subparagraph (B), who owns the right to
receive all or part of the receipts payable under
paragraph (2)(D) with respect to a sound recording. In
a case in which there are multiple artist payees with
respect to a sound recording, an objection by 1 such
payee shall apply only to that payee's share of the
receipts payable under paragraph (2)(D), and shall not
preclude payment under subparagraph (A) from the share
of an artist payee that does not so object.''.
(c) Technical and Conforming Amendments.--Section 114(g) of title
17, United States Code, as amended by subsections (a) and (b), is
further amended--
(1) in paragraph (2), by striking ``An agent designated''
and inserting ``Except as provided for in paragraph (6), a
nonprofit collective designated by the Copyright Royalty
Judges'';
(2) in paragraph (3)--
(A) by striking ``nonprofit agent designated'' and
inserting ``nonprofit collective designated by the
Copyright Royalty Judges'';
(B) by striking ``another designated agent'' and
inserting ``another designated nonprofit collective'';
and
(C) by striking ``agent'' and inserting
``collective'' each subsequent place it appears;
(3) in paragraph (4)--
(A) by striking ``designated agent'' and inserting
``nonprofit collective''; and
(B) by striking ``agent'' and inserting
``collective'' each subsequent place it appears; and
(4) by adding at the end the following:
``(7) Preemption of state property laws.--The holding and
distribution of receipts under section 112 and this section by
a nonprofit collective designated by the Copyright Royalty
Judges in accordance with this subsection and regulations
adopted by the Copyright Royalty Judges, or by an independent
administrator pursuant to subparagraphs (B) and (C) of section
114(g)(2), shall supersede and preempt any State law (including
common law) concerning escheatment or abandoned property, or
any analogous provision, that might otherwise apply.''.
SEC. 303. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this title
and the amendments made by this title shall take effect on the date of
enactment of this Act.
(b) Delayed Effective Date.--Paragraphs (5)(B) and (6)(E) of
section 114(g) of title 17, United States Code, as added by section
302, shall take effect on January 1, 2020.
TITLE IV--SEVERABILITY
SEC. 401. SEVERABILITY.
If any provision of this Act or any amendment made by this Act, or
any application of such provision or amendment to any person or
circumstance, is held to be unconstitutional, the remainder of the
provisions of this Act and the amendments made by this Act, and the
application of the provision or amendment to any other person or
circumstance, shall not be affected.
Attest:
Secretary.
115th CONGRESS
2d Session
H.R. 1551
_______________________________________________________________________
AMENDMENT