[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1551 Enrolled Bill (ENR)]
H.R.1551
One Hundred Fifteenth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Wednesday,
the third day of January, two thousand and eighteen
An Act
To modernize copyright law, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Orrin G. Hatch-Bob
Goodlatte 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.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.