Congressional Record, Volume 144 Issue 139 (Wednesday, October 7, 1998)

[Congressional Record Volume 144, Number 139 (Wednesday, October 7, 1998)]
[House]
[Pages H9946-H9954]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

SONNY BONO COPYRIGHT TERM EXTENSION ACT

Mr. SENSENBRENNER. Mr. Speaker, I move to suspend the rules and pass
the Senate bill (S. 505) to amend

[[Page H9947]]

the provisions of title 17, United States Code, with respect to the
duration of copyright, and for other purposes.
The Clerk read as follows:

S. 505

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
TITLE I--COPYRIGHT TERM EXTENSION

SEC. 101. SHORT TITLE.

This title may be referred to as the ``Sonny Bono Copyright
Term Extension Act''.

SEC. 102. DURATION OF COPYRIGHT PROVISIONS.

(a) Preemption With Respect to Other Laws.--Section 301(c)
of title 17, United States Code, is amended by striking
``February 15, 2047'' each place it appears and inserting
``February 15, 2067''.
(b) Duration of Copyright: Works Created on or After
January 1, 1978.--Section 302 of title 17, United States
Code, is amended--
(1) in subsection (a) by striking ``fifty'' and inserting
``70'';
(2) in subsection (b) by striking ``fifty'' and inserting
``70'';
(3) in subsection (c) in the first sentence--
(A) by striking ``seventy-five'' and inserting ``95''; and
(B) by striking ``one hundred'' and inserting ``120''; and
(4) in subsection (e) in the first sentence--
(A) by striking ``seventy-five'' and inserting ``95'';
(B) by striking ``one hundred'' and inserting ``120''; and
(C) by striking ``fifty'' each place it appears and
inserting ``70''.
(c) Duration of Copyright: Works Created but Not Published
or Copyrighted Before January 1, 1978.--Section 303 of title
17, United States Code, is amended in the second sentence by
striking ``December 31, 2027'' and inserting ``December 31,
2047''.
(d) Duration of Copyright: Subsisting Copyrights.--
(1) In general.--Section 304 of title 17, United States
Code, is amended--
(A) in subsection (a)--
(i) in paragraph (1)--

(I) in subparagraph (B) by striking ``47'' and inserting
``67''; and
(II) in subparagraph (C) by striking ``47'' and inserting
``67'';

(ii) in paragraph (2)--

(I) in subparagraph (A) by striking ``47'' and inserting
``67''; and
(II) in subparagraph (B) by striking ``47'' and inserting
``67''; and

(iii) in paragraph (3)--

(I) in subparagraph (A)(i) by striking ``47'' and inserting
``67''; and
(II) in subparagraph (B) by striking ``47'' and inserting
``67'';

(B) by amending subsection (b) to read as follows:
``(b) Copyrights in Their Renewal Term at the Time of the
Effective Date of the Sonny Bono Copyright Term Extension
Act.--Any copyright still in its renewal term at the time
that the Sonny Bono Copyright Term Extension Act becomes
effective shall have a copyright term of 95 years from the
date copyright was originally secured.'';
(C) in subsection (c)(4)(A) in the first sentence by
inserting ``or, in the case of a termination under subsection
(d), within the five-year period specified by subsection
(d)(2),'' after ``specified by clause (3) of this
subsection,''; and
(D) by adding at the end the following new subsection:
``(d) Termination Rights Provided in Subsection (c) Which
Have Expired on or Before the Effective Date of the Sonny
Bono Copyright Term Extension Act.--In the case of any
copyright other than a work made for hire, subsisting in its
renewal term on the effective date of the Sonny Bono
Copyright Term Extension Act for which the termination right
provided in subsection (c) has expired by such date, where
the author or owner of the termination right has not
previously exercised such termination right, the exclusive or
nonexclusive grant of a transfer or license of the renewal
copyright or any right under it, executed before January 1,
1978, by any of the persons designated in subsection
(a)(1)(C) of this section, other than by will, is subject to
termination under the following conditions:
``(1) The conditions specified in subsection (c)(1), (2),
(4), (5), and (6) of this section apply to terminations of
the last 20 years of copyright term as provided by the
amendments made by the Sonny Bono Copyright Term Extension
Act.
``(2) Termination of the grant may be effected at any time
during a period of 5 years beginning at the end of 75 years
from the date copyright was originally secured.''.
(2) Copyright amendments act of 1992.--Section 102 of the
Copyright Amendments Act of 1992 (Public Law 102-307; 106
Stat. 266; 17 U.S.C. 304 note) is amended--
(A) in subsection (c)--
(i) by striking ``47'' and inserting ``67'';
(ii) by striking ``(as amended by subsection (a) of this
section)''; and
(iii) by striking ``effective date of this section'' each
place it appears and inserting ``effective date of the Sonny
Bono Copyright Term Extension Act''; and
(B) in subsection (g)(2) in the second sentence by
inserting before the period the following: ``, except each
reference to forty-seven years in such provisions shall be
deemed to be 67 years''.

SEC. 103. TERMINATION OF TRANSFERS AND LICENSES COVERING
EXTENDED RENEWAL TERM.

Sections 203(a)(2) and 304(c)(2) of title 17, United States
Code, are each amended--
(1) by striking ``by his widow or her widower and his or
her children or grandchildren''; and
(2) by inserting after subparagraph (C) the following:
``(D) In the event that the author's widow or widower,
children, and grandchildren are not living, the author's
executor, administrator, personal representative, or trustee
shall own the author's entire termination interest.''.

SEC. 104. REPRODUCTION BY LIBRARIES AND ARCHIVES.

Section 108 of title 17, United States Code, is amended--
(1) by redesignating subsection (h) as subsection (i); and
(2) by inserting after subsection (g) the following:
``(h)(1) For purposes of this section, during the last 20
years of any term of copyright of a published work, a library
or archives, including a nonprofit educational institution
that functions as such, may reproduce, distribute, display,
or perform in facsimile or digital form a copy or phonorecord
of such work, or portions thereof, for purposes of
preservation, scholarship, or research, if such library or
archives has first determined, on the basis of a reasonable
investigation, that none of the conditions set forth in
subparagraphs (A), (B), and (C) of paragraph (2) apply.
``(2) No reproduction, distribution, display, or
performance is authorized under this subsection if--
``(A) the work is subject to normal commercial
exploitation;
``(B) a copy or phonorecord of the work can be obtained at
a reasonable price; or
``(C) the copyright owner or its agent provides notice
pursuant to regulations promulgated by the Register of
Copyrights that either of the conditions set forth in
subparagraphs (A) and (B) applies.
``(3) The exemption provided in this subsection does not
apply to any subsequent uses by users other than such library
or archives.''.

SEC. 105. VOLUNTARY NEGOTIATION REGARDING DIVISION OF
ROYALTIES.

It is the sense of the Congress that copyright owners of
audiovisual works for which the term of copyright protection
is extended by the amendments made by this title, and the
screenwriters, directors, and performers of those audiovisual
works, should negotiate in good faith in an effort to reach a
voluntary agreement or voluntary agreements with respect to
the establishment of a fund or other mechanism for the amount
of remuneration to be divided among the parties for the
exploitation of those audiovisual works.

SEC. 106. EFFECTIVE DATE.

This title and the amendments made by this title shall take
effect on the date of the enactment of this Act.
TITLE II--MUSIC LICENSING EXEMPTION FOR FOOD SERVICE OR DRINKING
ESTABLISHMENTS

SEC. 201. SHORT TITLE.

This title may be cited as the ``Fairness In Music
Licensing Act of 1998.''

SEC. 202. EXEMPTIONS.

(a) Exemptions for Certain Establishments.--Section 110 of
title 17, United States Code is amended--
(1) in paragraph (5)--
(A) by striking ``(5)'' and inserting ``(5)(A) except as
provided in subparagraph (B),''; and
(B) by adding at the end the following:
``(B) communication by an establishment of a transmission
or retransmission embodying a performance or display of a
nondramatic musical work intended to be received by the
general public, originated by a radio or television broadcast
station licensed as such by the Federal Communications
Commission, or, if an audiovisual transmission, by a cable
system or satellite carrier, if--
``(i) in the case of an establishment other than a food
service or drinking establishment, either the establishment
in which the communication occurs has less than 2000 gross
square feet of space (excluding space used for customer
parking and for no other purpose), or the establishment in
which the communication occurs has 2000 or more gross square
feet of space (excluding space used for customer parking and
for no other purpose) and--

``(I) if the performance is by audio means only, the
performance is communicated by means of a total of not more
than 6 loudspeakers, of which not more than 4 loudspeakers
are located in any 1 room or adjoining outdoor space; or
``(II) if the performance or display is by audiovisual
means, any visual portion of the performance or display is
communicated by means of a total of not more than 4
audiovisual devices, of which not more than one audiovisual
device is located in any 1 room, and no such audiovisual
device has a diagonal screen size greater than 55 inches, and
any audio portion of the performance or display is
communicated by means of a total of not more than 6
loudspeakers, of which not more than 4 loudspeakers are
located in any 1 room or adjoining outdoor space;

``(ii) in the case of a food service or drinking
establishment, either the establishment in which the
communication occurs has less than 3750 gross square feet of
space (excluding space used for customer parking and for no
other purpose), or the establishment in which the
communication occurs has 3750

[[Page H9948]]

gross square feet of space or more (excluding space used for
customer parking and for no other purpose) and--

``(iii) no direct charge is made to see or hear the
transmission or retransmission;
``(iv) the transmission or retransmission is not further
transmitted beyond the establishment where it is received;
and
``(v) the transmission or retransmission is licensed by the
copyright owner of the work so publicly performed or
displayed;''; and
(2) by adding after paragraph (10) the following:

``The exemptions provided under paragraph (5) shall not be
taken into account in any administrative, judicial, or other
governmental proceeding to set or adjust the royalties
payable to copyright owners for the public performance or
display of their works. Royalties payable to copyright owners
for any public performance or display of their works other
than such performances or displays as are exempted under
paragraph (5) shall not be diminished in any respect as a
result of such exemption''.
(b) Exemption Relating to Promotion.--Section 110(7) of
title 17, United States Code, is amended by inserting ``or of
the audiovisual or other devices utilized in such
performance,'' after ``phonorecords of the work,''.

SEC. 203. LICENSING BY PERFORMING RIGHTS SOCIETIES.

(a) In General.--Chapter 5 of title 17, United States Code,
is amended by adding at the end the following:

``Sec. 512. Determination of reasonable license fees for
individual proprietors

``In the case of any performing rights society subject to a
consent decree which provides for the determination of
reasonable license rates or fees to be charged by the
performing rights society, notwithstanding the provisions of
that consent decree, an individual proprietor who owns or
operates fewer than 7 non-publicly traded establishments in
which nondramatic musical works are performed publicly and
who claims that any license agreement offered by that
performing rights society is unreasonable in its license rate
or fee as to that individual proprietor, shall be entitled to
determination of a reasonable license rate or fee as follows:
``(1) The individual proprietor may commence such
proceeding for determination of a reasonable license rate or
fee by filing an application in the applicable district court
under paragraph (2) that a rate disagreement exists and by
serving a copy of the application on the performing rights
society. Such proceeding shall commence in the applicable
district court within 90 days after the service of such copy,
except that such 90-day requirement shall be subject to the
administrative requirements of the court.
``(2) The proceeding under paragraph (1) shall be held, at
the individual proprietor's election, in the judicial
district of the district court with jurisdiction over the
applicable consent decree or in that place of holding court
of a district court that is the seat of the Federal circuit
(other than the Court of Appeals for the Federal Circuit) in
which the proprietor's establishment is located.
``(3) Such proceeding shall be held before the judge of the
court with jurisdiction over the consent decree governing the
performing rights society. At the discretion of the court,
the proceeding shall be held before a special master or
magistrate judge appointed by such judge. Should that consent
decree provide for the appointment of an advisor or advisors
to the court for any purpose, any such advisor shall be the
special master so named by the court.
``(4) In any such proceeding, the industry rate shall be
presumed to have been reasonable at the time it was agreed to
or determined by the court. Such presumption shall in no way
affect a determination of whether the rate is being correctly
applied to the individual proprietor.
``(5) Pending the completion of such proceeding, the
individual proprietor shall have the right to perform
publicly the copyrighted musical compositions in the
repertoire of the performing rights society by paying an
interim license rate or fee into an interest bearing escrow
account with the clerk of the court, subject to retroactive
adjustment when a final rate or fee has been determined, in
an amount equal to the industry rate, or, in the absence of
an industry rate, the amount of the most recent license rate
or fee agreed to by the parties.
``(6) Any decision rendered in such proceeding by a special
master or magistrate judge named under paragraph (3) shall be
reviewed by the judge of the court with jurisdiction over the
consent decree governing the performing rights society. Such
proceeding, including such review, shall be concluded within
6 months after its commencement.
``(7) Any such final determination shall be binding only as
to the individual proprietor commencing the proceeding, and
shall not be applicable to any other proprietor or any other
performing rights society, and the performing rights society
shall be relieved of any obligation of nondiscrimination
among similarly situated music users that may be imposed by
the consent decree governing its operations.
``(8) An individual proprietor may not bring more than one
proceeding provided for in this section for the determination
of a reasonable license rate or fee under any license
agreement with respect to any one performing rights society.
``(9) For purposes of this section, the term `industry
rate' means the license fee a performing rights society has
agreed to with, or which has been determined by the court
for, a significant segment of the music user industry to
which the individual proprietor belongs.''.
(b) Technical and Conforming Amendment.--The table of
sections for chapter 5 of title 17, United States Code, is
amended by adding after the item relating to section 511 the
following:

``512. Determination of reasonable license fees for individual
proprietors.''.

SEC. 204. PENALTIES.

Section 504 of title 17, United States Code, is amended by
adding at the end the following:
``(d) Additional Damages in Certain Cases.--In any case in
which the court finds that a defendant proprietor of an
establishment who claims as a defense that its activities
were exempt under section 110(5) did not have reasonable
grounds to believe that its use of a copyrighted work was
exempt under such section, the plaintiff shall be entitled
to, in addition to any award of damages under this section,
an additional award of two times the amount of the license
fee that the proprietor of the establishment concerned should
have paid the plaintiff for such use during the preceding
period of up to 3 years.''.

SEC. 205. DEFINITIONS.

Section 101 of title 17, United States Code, is amended--
(1) by inserting after the definition of ``display'' the
following:
``An `establishment' is a store, shop, or any similar place
of business open to the general public for the primary
purpose of selling goods or services in which the majority of
the gross square feet of space that is nonresidential is used
for that purpose, and in which nondramatic musical works are
performed publicly.
``A `food service or drinking establishment' is a
restaurant, inn, bar, tavern, or any other similar place of
business in which the public or patrons assemble for the
primary purpose of being served food or drink, in which the
majority of the gross square feet of space that is
nonresidential is used for that purpose, and in which
nondramatic musical works are performed publicly.'';
(2) by inserting after the definition of ``fixed'' the
following:
``The `gross square feet of space' of an establishment
means the entire interior space of that establishment, and
any adjoining outdoor space used to serve patrons, whether on
a seasonal basis or otherwise.'';
(3) by inserting after the definition of ``perform'' the
following:
``A `performing rights society' is an association,
corporation, or other entity that licenses the public
performance of nondramatic musical works on behalf of
copyright owners of such works, such as the American Society
of Composers, Authors and Publishers (ASCAP), Broadcast
Music, Inc. (BMI), and SESAC, Inc.''; and
(4) by inserting after the definition of ``pictorial,
graphic and sculptural works'' the following:
``A `proprietor' is an individual, corporation,
partnership, or other entity, as the case may be, that owns
an establishment or a food service or drinking establishment,
except that no owner or operator of a radio or television
station licensed by the Federal Communications Commission,
cable system or satellite carrier, cable or satellite carrier
service or programmer, provider of online services or network
access or the operator of facilities therefor,
telecommunications company, or any other such audio or
audiovisual service or programmer now known or as may be
developed in the future, commercial subscription music
service, or owner or operator of any other transmission
service, shall under any circumstances be deemed to be a
proprietor.''.

SEC. 206. CONSTRUCTION OF TITLE.

Except as otherwise provided in this title, nothing in this
title shall be construed to relieve any performing rights
society of any obligation under any State or local statute,
ordinance, or law, or consent decree or other court order
governing its operation, as such statute, ordinance, law,
decree, or order is in effect on the date of the enactment of
this Act, as it may be amended after such date, or as it may
be issued or agreed to after such date.

SEC. 207. EFFECTIVE DATE.

This title and the amendments made by this title shall take
effect 90 days after the date of the enactment of this Act.

The SPEAKER pro tempore. Pursuant to the rule, the gentleman from

[[Page H9949]]

Wisconsin (Mr. Sensenbrenner) and the gentlewoman from Texas (Ms.
Jackson-Lee) each will control 20 minutes.
The Chair recognizes the gentleman from Wisconsin (Mr.
Sensenbrenner).

General Leave

Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days in which to revise and extend their
remarks on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may
consume. S. 505 contains two important provisions and is substantially
identical to H.R. 4712 which the gentleman from Florida (Mr. McCollum)
and I introduced earlier today. It adopts the Sonny Bono Copyright Term
Extension Act identical to the language the House passed by an
overwhelming margin in March. This section of the bill is a fitting
tribute to our departed colleague Sonny Bono. The second part of the
bill adopts an agreement on the issue of fairness in music licensing
issue. This agreement is the product of grueling and ofttimes
contentious negotiations. I am proud of the final product and am
pleased that all sides were able to work together to bridge their
differences. This bill is a victory for small business and a tribute to
the commitment of its supporters. In March, the House overwhelmingly
passed the Sensenbrenner amendment to the Copyright Term Extension bill
by a 297-112 vote. That amendment reflected the core principles of my
legislation, the Fairness in Music Licensing Act, and had the strong
endorsement of groups, including the National Federation of Independent
Business and the National Restaurant Association. Since that time, we
have been working to strike an agreement with the other body over this
language. I am pleased to report we have arrived at a compromise that
is supported by the same groups and is acceptable to the opponents of
the original Sensenbrenner amendment. In short, passage of this bill
today will allow the Sonny Bono Copyright Term Extension Act and the
Fairness in Music Licensing Act to become law in very short course.
Under the music licensing compromise, restaurants and bars with 3,750
gross square feet or less will be exempt from paying music licensing
fees for playing the radio or television in their establishments.
Retail businesses will benefit from a 2,000 gross square foot exemption
for radio and television. Importantly, both types of establishments,
regardless of size, will be exempt if they have six or fewer external
speakers or four televisions measuring 55 inches or less. Secondly, the
bill contains a ``circuit rider'' provision that will provide small
businesses an alternative to the existing system of dispute resolution
which requires businesses to challenge ASCAP and BMI in a New York rate
court. Under the provision in this bill, the existing New York rate
court maintains jurisdiction over those cases but will hear them at the
circuit court level. Lastly, the bill provides an exemption from
licensing fees for television and stereo equipment retailers so that
these businesses are not required to pay a fee simply to demonstrate to
a potential customer that a product works. At this point in my
statement, I would like to engage in a colloquy with the gentleman from
Florida (Mr. McCollum).
Mr. Speaker, I want to make certain that the critically important
provision concerning the burden of proof is clearly understood in the
license fee determination provision, Section 512(4). Nothing in Section
512(4) shall change the burden of proof with respect to the rates or
fees under the consent decrees, which places the burden of showing a
reasonable rate or fee on the performing rights society.
Does the preceding statement reflect the gentleman's understanding of
the provisions stated above?
I yield to the gentleman from Florida.
Mr. McCOLLUM. Madam Speaker, yes, it does. I thank the gentleman for
asking that question. I most certainly agree that is correct.
Mr. SENSENBRENNER. I thank the gentleman for his answer.
Madam Speaker, the legislation before us today demonstrates that the
system works. Title I of the legislation satisfies a top priority for
the entertainment industry and ensures that one of America's most
valuable assets will continue to dominate in global markets. Title II
of the bill brings to a close a 4-year effort to bring common sense,
fairness and clarity to the copyright music licensing system. This
victory for small business should make Congress proud. I urge a
unanimous vote in favor of this agreement and this bill.
Madam Speaker, I include in this part of the Record an exchange of
correspondence between the gentleman from North Carolina (Mr. Coble)
who is the chairman of the Subcommittee on Courts and Intellectual
Property and myself.
The correspondence referred to is as follows:
Congress of the United States

House of Representatives

Washington, DC, October 7, 1998.
Hon. Howard Coble,
Chairman, Subcommittee on Courts and Intellectual Property.
Dear Mr. Chairman: I am writing to you regarding the
upcoming floor action on S. 505, a bill to amend title 17,
United States Code, to extend the term of copyright, to
provide for a music licensing exemption, and for other
purposes.
Among the negotiated portions included in the final version
was a provision concerning the burden of proof in determining
reasonableness of the license rate. I want to make certain
that this critically important provision concerning the
burden of proof is clearly understood in the license fee
determination provision, Section 512(4). Nothing in Section
512(4) shall change the burden of proof with respect to the
rates or fees under the consent decrees, which places the
burden of showing a reasonable rate or fee on the performing
rights society.
Mr. Chairman, I respectfully request your affirmation of
this understanding be included in the record for purposes of
providing legislative history on this subject.
Sincerely,
F. James Sensenbrenner, Jr.,
Member of Congress.
____

Congress of the United States,

House of Representatives,

Washington, DC, October 7, 1998.
Hon. F. James Sensenbrenner, Jr.,
U.S. Representative for the 9th District of Wisconsin,
Rayburn House Office Building, Washington, DC.
Dear Representative Sensenbrenner: Thank you for your
letter of October 7, 1998, regarding the upcoming floor
action on S. 505, a bill to amend title 17, United States
Code, to extend the term of copyright, to provide for a music
licensing exemption, and for other purposes.
This letter is to affirm your understanding that nothing in
section 512(4) of the Copyright Act, as amended by the bill,
is intended to change the burden of proof with respect to
rates or fees under applicable consent decrees, which places
the burden of showing a reasonable rate or fee on the
performing rights society.
This letter, along with your letter, will be placed in the
Record for purposes of providing legislative history on this
subject.
Sincerely,

Howard Coble,

Chairman, Subcommittee on Courts
and Intellectual Property.

Madam Speaker, I reserve the balance of my time.
Ms. JACKSON-LEE of Texas. Madam Speaker, I yield myself such time as
I may consume.
Madam Speaker, I am delighted to rise in strong support of the
Copyright Term Extension Act before us this evening, the passage of
which marks an important moment for those of us who support strong
copyright and specifically our domestic copyright and creative
industries. The enactment of this legislation will bring United States
copyright creators and owners into full citizenship with respect to the
international community and finally permit us to enjoy the full and
appropriate term that European copyright owners have enjoyed for some
time now.
There is a provision in the legislation which I am especially happy
to see, and that is the resolution of the long-simmering dispute
between copyright owners and restaurants and other small businesses. I
have always said, Madam Speaker, that small businesses like restaurants
are the backbone of America. They create job opportunities, they
provide entertainment and enjoyment. The latter of whom have sought and
argued for a fair exemption from music licensing fees for some time. I
am sorry that the dispute was so protracted and difficult, but I am, as
I have said, delighted that we have reached a workable compromise on
this difficult legislation. Sometimes the most difficult

[[Page H9950]]

struggles bring about the fairest resolutions, and I think we may have
achieved such a result tonight.
I appreciate the work of the gentleman from North Carolina (Mr.
Coble) and certainly the gentleman from Wisconsin (Mr. Sensenbrenner)
who I know has worked on this issue for a very long time, the ranking
minority member the gentleman from Massachusetts (Mr. Frank) and the
gentleman from Michigan (Mr. Conyers) who have worked on this issue as
well. I know that there has been some disagreement and may still
continue to be. But I think we have come to a point in this legislation
that we have recognized the importance of our small businesses like
restaurants, like various other centers who need to have the ability to
create and improve their enjoyment. Again I commend all of those who
have been working on this matter for their hard work and I am very
pleased to have seen this come to a good end. I am asking my colleagues
to support this legislation.
I rise today in strong support of the Copyright Term Extension Act
before us this evening, the passage of which marks an important moment
for those of us who support copyright, and specifically our domestic
copyright and creative industries. The enactment of this legislation
will bring United States copyright creators and owners into full
citizenship with respect to the international community, and finally
permit us to enjoy the full and appropriate term that European
copyright owners have enjoyed for some time now.
There is a provision in this legislation which I am especially happy
to see, and that is the resolution of the long simmering dispute
between copyright owners and restaurants and other small businesses,
the latter of whom have sought and argued for a fair exemption from
music licensing fees for some time. I am sorry that the dispute was so
protracted, and difficult, but I am as I say delighted that we have
reached a workable compromise on this difficult legislation. Sometimes
the most difficult struggles bring about the fairest resolutions, and I
think we may have achieved such a result tonight.
I commend those in the majority and the minority who worked hard to
get to this day. I commend Chairman Coble, ranking member Conyers, and
Mr. Sensenbrenner for their hard work and efforts on this important
bill, and I am pleased to support it strongly.
Madam Speaker, I reserve the balance of my time.
Mr. SENSENBRENNER. Madam Speaker, I yield 4 minutes to the gentleman
from North Carolina (Mr. Coble).
Mr. COBLE. I thank the gentleman for yielding me this time, Madam
Speaker. This has been a long, extended journey that we have traveled.
The gentleman from Wisconsin and I have slugged it out literally as
well as figuratively on this matter, but I think tonight we are finally
in the position to maybe put it to bed.
I rise in support of the bill, S. 505, Madam Speaker. Copyright
extension is essential legislation that will ensure that the United
States will continue to receive the enormous export revenues that it
does today from the sale of its copyrighted works abroad. At the same
time, S. 505 resolves the question of music licensing fees for
restaurants and small businesses.
I want to applaud the efforts of the parties and Members involved in
negotiating the music licensing agreement. This legislation is the
result of much hard work and diligent negotiation. I want to express my
thanks to the Speaker the gentleman from Georgia (Mr. Gingrich) for his
efforts in bringing the parties together. I also want to express my
thanks to the gentleman from Wisconsin (Mr. Sensenbrenner) and the
gentleman from Florida (Mr. McCollum) for their work in bringing about
a fair resolution. It was no small task. Of course, I would be remiss
if I did not mention the late Mr. Bono, the gentleman from California,
regarding his work and interest in the copyright extension feature of
this.
S. 505 will give the United States economy 20 more years of foreign
sales revenue from movies, books, records and software products sold
abroad. We are by far the world's largest producer of copyrighted works
and the copyright industries give us one of our most significant trade
surpluses. The European Union countries, pursuant to a directive, have
adopted domestic laws which would protect their own works for 20 years
more than they protect American works. This bill would correct that by
granting to the United States works the same amount of protection which
under international agreements requires reciprocity.
This bill is also good for consumers, Madam Speaker. When works are
protected by copyright, they attract investors who can exploit the work
for profit. That in turn brings the work to the consumer who may enjoy
it at the movie theater, in a home, in an automobile, or in a retail
establishment.
Finally, the bill addresses the concern of restaurants and small
businesses regarding the payment of licensing fees for the use of music
broadcasts over the radio or television. It gives qualifying
establishments an exemption from paying music licensing fees and forums
in addition to the Southern District of New York which the gentleman
from Wisconsin previously mentioned in which to challenge the
reasonableness of the fees charged. I believe this bill protects small
business interests which represent a key sector of our society.
This bill, Madam Speaker, recognizes the importance of the business
community, the small business community in particular. That is, the
entrepreneurs who operate restaurants across our land but at the same
time recognizes the importance and the obvious significance of our
maintaining a sound copyright system.
I urge Members to vote ``yes'' on S. 505.
Ms. JACKSON-LEE of Texas. Madam Speaker, I yield 3 minutes to the
distinguished gentleman from New York (Mr. Nadler), a member of the
Committee on the Judiciary.
Mr. NADLER. Madam Speaker, I thank the distinguished gentlewoman for
yielding me this time. I want to rise in opposition to that portion of
the bill regulating music licensing fees. This is a very interesting
occasion. Here we have under the leadership of the party that believes
preeminently in the free enterprise system that government should not
intervene against the operation of the free market advancing a bill
that would interfere between an arm's length relationship between two
different business interests.
Now, I do not agree with most of my friends on the other side of the
aisle in as great a degree of the sanctity of the free market system as
they might. I probably support more government regulation than they
would. I probably think the government should intervene in the free
market more often. But I do think that before you have the government
intervene in the free market, you have to have a showing of necessity.
What showing of necessity have we here? Restaurants that pay an
average of $400 a year in music licensing fees, a rather small, I would
say minute percentage of the revenues of an average restaurant, do not
want to pay the $400 a year to the songwriters. Well, that is
interesting. Let them try to negotiate a different deal. Or let them
not use the music. But what necessity, what public interest is served
by the government coming in and making a decision and saying, ``Thou
shalt not pay the $400; you shall get it free''?
Is there a great housing shortage that necessitates rent control? Is
there a great shortage of restaurant musicians or of restaurant radios
that necessitates that, my God, if we do not pass this bill, people are
not going to be able to eat because they will be so nervous without the
radio music as to justify the government intervention in the free
market here, to come in and say, ``We're not going to let you make this
deal, we're going to upset the licensing arrangements''?

{time} 2215

I do not see the point. Why is government intervening in the free
market here? Point One.
Point Two: Assuming we want the government to intervene in the free
market, assuming that we should arrogate to ourselves the power of
determining what the deal should be, the deal should be very different.
We are saying that the restaurant that pays a average of $400 a year
for these licensing fees, a minute part of its expenses to the
restaurant to which it makes virtually no difference, that is the one
interest. The other interest is the song writer to whom this revenue
may be a very large part of their income.
So let us take the song writer for whom this may be a very large part
of their income and say, ``You can't get that income because the
restaurants

[[Page H9951]]

for whom this is a minute expense, we don't want them to have this
expense.''
So if government should make this decision, I would make it the other
way around and leave the situation as it is, but why should government
make this decision? Government should intervene in the free market when
there is a real public policy purpose only, when there is a necessity,
when the free market is not working right, when there is not an arm's
length relationship, when consumers have to be protected, when the
antitrust has to be promoted, when the free market is leading to
exploitation of wages, when some real public policy purpose necessities
the intervention.
What is the public policy purpose? I have been asking that question
for 2 years. I have never heard any answer suggested. So I would hope
that this part of this bill, which I otherwise support, would not be
adopted.
Mr. SENSENBRENNER. Madam Speaker, I yield 3 minutes to the gentleman
from Florida (Mr. McCollum).
Mr. McCOLLUM. Madam Speaker, I thank the gentleman from Wisconsin for
yielding this time to me.
Madam Speaker, I am pleased to support S. 505 which will extend
copyright protection and resolve a long standing issue concerning music
licensing. I am also pleased to be joined by my colleague, the
gentleman from Wisconsin (Mr. Sensenbrenner) who has devoted extensive
time and energy to reaching the solution on this issue. It is clear to
me that today we would not be here if it were not for Mr.
Sensenbrenner's committed effort, and I believe that that deserves
recognition, and I want to thank him personally for the time he has put
in on it. I also wanted to express my gratitude to the gentleman from
Illinois (Mr. Hyde) and to the gentleman from North Carolina (Mr.
Coble) and to Senator Hatch for their dedicated commitment to copyright
protection.
Extending the term of copyright protection by 20 years will ensure
that the American public continues to enjoy the contributions made by
our creative community. In addition, it would eliminate harmful
discrimination against American works abroad. Copyright protection
benefits the public. It promotes the creation of educational materials,
widens the dissemination of information and provides countless hours of
entertainment. Copyright products such as movies, software, music and
books contributed more than $275 billion to the U.S. economy in 1996
and employed more than 6\1/2\ million workers.
It is clear that we must be as vigilant in protecting intellectual
property as we are protecting physical property. Unfortunately, without
the enactment of this legislation, U.S. copyright owners would continue
to be at a critical disadvantage in overseas markets. The European
Union, which is the largest market for U.S. copyrighted products
protects its own products for 20 years longer than it protects American
works. This is due to the fact that foreign countries only protect U.S.
works for as long as the U.S. itself protects its own works. Enactment
of S. 505 would eliminate this extreme economic disadvantage and
contribute to America's balance of trade.
With S. 505 we will no longer be abandoning 20 years worth of
copyright protection for our creative community. In addition, we will
be promoting the creation of new copyrighted works for the American
public and strengthening our international trading position abroad.
Also, S. 505 resolves the longstanding dispute between song writers,
music publishers and the performing rights societies on the side, one
side, and the restaurants and the other, and commercial users of music
on still the other. The compromise provides certain exemptions from
copyright infringement for the limited commercial use of radios and
televisions. It also provides for additional forums for individuals to
be heard in court concerning music licensing rates and fees.
This fair and balanced compromise is the result of years of work, and
I am pleased to be joined by the gentleman from Wisconsin (Mr.
Sensenbrenner) in urging my colleagues to support the passage of this
resolution and the resolution of this matter by the adoption of S. 505
which I certainly encourage tonight.
Ms. JACKSON-LEE of Texas. Madam Speaker, I yield myself such time as
I may consume.
Let me conclude by adding again my emphasis on the importance of the
compromise and resolution of this bill that brings the restaurants and
copyright entities together. It is important that we do recognize that
this was a very vital part of the economic structure of these
businesses, and it is our responsibility to ensure their viability as
well as the fair treatment of those in the copyright industry.
With that I would ask my colleagues to support this legislation.
Madam Speaker, I yield back the balance of my time.
Mr. SENSENBRENNER. Madam Speaker, I yield 2 minutes to the gentleman
from Florida (Mr. Foley).
(Mr. FOLEY asked and was given permission to revise and extend his
remarks.)
Mr. FOLEY. Madam Speaker, I want to take a moment to thank the
gentleman from Wisconsin (Mr. Sensenbrenner), the gentleman from
Florida (Mr. McCollum), the gentleman from North Carolina (Mr. Coble)
and, of course, the House leadership for bringing this important
measure to the floor tonight and spend a moment of special tribute to
our good friend Sonny Bono who was basically the one that brought this
bill to the attention of the floor. Sonny, as many of my colleagues
know, was a song writer and cared deeply about the rights of performers
like himself who had created music and wanted that protection under law
as other nations have recognized. The gentleman from Florida (Mr.
McCollum) eloquently laid out that European nations protect their
copyrighted materials, and we should do no less for our artists.
I also want, as Chairman of the House Entertainment Task Force, to
thank all parties for recognizing the importance of this issue to
America's creative community. Whether it is Sony, BMI, Disney or any of
the multitude of companies that make up the fabric of our entertainment
community, as the gentleman from Florida (Mr. McCollum) clearly stated,
6\1/2\ million workers make up the work force of the entertainment
industry in America. It is a thriving business, it is an important
business, but, more importantly, it is a business that needs protection
so that the works of these creative artists, the works they have
struggled to produce, the works that have now reached critical acclaim
are not stolen and pirated.
When we were in China with the Speaker last year we noticed that
there were CDs for sale in the streets of China for a $1.25 and $2,
American currency. That record cost $14 here in the United States, but
it was being bootlegged by foreign sources, if my colleagues will, and
sold under market, under value and no attribution to the recording
label or the artist.
So, again I want to take a moment because I know it has been
difficult, and I know it has been stressful to reach a compromise. But
thanks to the leadership of the gentleman from Wisconsin (Mr.
Sensenbrenner) bringing all parties together, we were able to really
produce what this House is all about. Comity. And I would also like to
thank the minority and certainly those that have worked so hard at
this, the gentlewoman from Texas (Ms. Jackson-Lee), the gentleman from
Massachusetts (Mr. Frank) in the Committee on the Judiciary for their
hard work in this effort because they too recognize the importance of
the artistic community.
So really this is a spirit of bipartisanship, this is a good bill,
and I urge all Members to support it as it reaches the floor tonight.
Mrs. BONO. Mr. Speaker, I rise to extend my deep appreciation to my
colleagues, including the gentleman from Florida, for honoring Sonny
with the legislation before us today. I support this bill and ask my
colleagues to do the same.
Copyright term extension is a very fitting memorial for Sonny. This
is not only because of his experience as a pioneer in the music and
television industries. The most important reason for me was that he was
a legislator who understood the delicate balance of the constitutional
interests at stake. Last year he sponsored the term extension bill,
H.R. 1621, in conjunction with Sen. Hatch. He was active on
intellectual property issues because he truly understood the goals of
Framers of the Constitution: that by maximizing the incentives for
original creation, we help expand the public store-house of art, films
music, books and now

[[Page H9952]]

also, software. It is said that ``it all starts with a song,'' and
these works have defined our culture to audiences world-wide.
Actually, Sonny wanted the term of copyright protection to last
forever. I am informed by staff that such a change would violate the
Constitution. I invite all of you to work with me to strengthen our
copyright laws in all of the ways available to us. As you know, there
is also Jack Valenti's proposal for term to last forever less one day.
Perhaps the Committee may look at that next Congress.
In addition, this bill also presents a significant change in the
music licensing system. Everyone must remember that I was a small
business woman before I came to Washington. I am sympathetic to the
concerns raised by many industries. Unfortunately the generous
exemption included in this bill tests my patience because it comes at
the expense of songwriters. The current system has worked for decades,
and in my view serves the public well.
Yet, we must bring this bill forward today. Our inaction risks a
response from the international community. While one of the goals of
term extension is having our system conform to a strong international
standard, I am troubled to learn that with the music licensing section,
we risk violating our international treaty obligations. These treaties
protect American property overseas, for example under the Berne
Convention and the TRIPS agreement. I ask that the Record include the
following letters from the U.S. Trade Representative, the Patent and
Trademark Office, the Department of Commerce, and the Register of
Copyrights concerning the possible serious international consequences
of this portion of the bill.
I am hopeful that we in the House Judiciary Committee will have the
chance to revisit this issue, and pursuant to our oversight powers,
review its effect on American songwriters and our multi-lateral trade
obligations. Further, this may be an unconstitutional taking of
property. The talented men and women who write our music may rest
assured that I will continue to be their advocate in the House.
Again, I truly thank all of my colleagues for this tribute to Sonny.

The U.S. Trade Representative,

Washington, DC, August 26, 1998.
Hon. Mary Bono,
U.S. House of Representatives, Washington, DC.
Dear Congresswoman Bono: Thank you for your recent letter
regarding the Fairness in Musical Licensing Act. As you note
in your letter, Administration officials have expressed
serious concerns about this legislation on a number of
occasions. If this legislation is passed, we believe that our
trading partners will argue that it violates our
international obligations under the WTO Agreement on Trade-
Related Aspects of Intellectual Property Rights.
You have asked whether it is fair to conclude that there
would be repercussions in the global community if Congress
passed legislation that violated U.S. multilateral treaty
obligations. Your question is phrased as a hypothetical one
and we assume that it is not limited to the music licensing
context. In general, we would expect that our relations with
our trading partners would be impaired if the United States
enacted legislation that was inconsistent with its previous
commitments. In response to your second question--again, as a
general matter--we would also expect that our trading
partners might pursue action in the World Trade Organization
(WTO) if the United States enacted legislation that those
countries believed violated our WTO obligations and impaired
their interests.
You have also asked whether our trading partners could
respond to the passage of music licensing legislation in a
manner that would compromise the integrity of the copyright
sectors and other sectors of the U.S. economy. It is
difficult to predict exactly how our trading partners would
react to the passage of legislation resembling the Fairness
in Musical Licensing Act. We are certain, however, that the
reaction would be a strong negative one. One of our most
important trading partners, the European Union (EU), has
already expressed significant concern about the pending
legislation, and we know that EU officials are following its
progress in Congress very closely. The EU is currently
threatening to bring dispute settlement proceedings in the
WTO challenging the existing ``home style'' exception in U.S.
copyright law as overly broad. The pending legislation, as
you know, would expand that exception, and thus would likely
elicit a strong reaction.
Finally, you have asked whether it is the policy of the
Administration to oppose a legislative package that violates
our multilateral trade obligations. We cannot generalize
about the Administration's likely position on legislation in
the abstract, but can reiterate the seriousness with which we
take all of our international commitments. With respect to
music licensing, the Administration has opposed the pending
legislation for a wide variety of policy reasons.
I appreciate this opportunity to reiterate the
Administration's concerns regarding the pending legislation
and would be pleased to respond to any further questions that
you might have.
Sincerely,
Richard W. Fisher,
Acting.
____

The Secretary of Commerce,

Washington, DC, March 20, 1998.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
Dear Mr. Speaker: The House may consider H.R. 2589, the
``Copyright Term Extension Act,'' next week. The
Administration supports passage of this bill, as reported by
the House Judiciary Committee, and urges favorable
consideration. I have been informed, however, that there also
may be an attempt by supporters of H.R. 789, the ``Fairness
in Musical Licensing Act of 1997,'' to add the provisions of
that bill to H.R. 2589. The Administration strongly opposes
the provisions of H.R. 789 and urges that any such amendment
be rejected.
The Administration strongly opposes H.R. 789 because it
would amend section 110 of the Copyright Act of 1976 in ways
that effectively strip music copyright owners of one of their
fundamental rights under the Copyright Act--the right of
copyright owners of literary, musical, dramatic, audiovisual
and other works to publicly perform their copyrighted work or
to authorize the performance by others. For example, the bill
replaces the limited ``small business'' or ``home style''
exemptions of current law, which provide for minimal public
use of a private-type radio or television under section
110(5) of the Copyright Act, with a much broader exemption
based on whether an ``admission fee'' is charged or the
transmission is otherwise not licensed. This change would
thereby expand the limited ``home style'' exemption to
encompass profitable restaurants and bars and would favor
these establishments at the expense of the copyright owner
and his or her Constitutionally granted rights.
If the amendment were adopted, we know that our trading
partners will claim that it is an overly broad exception that
violates our obligations under the Berne Convention for the
Protection of Literary Works and the Agreement on the Trade-
Related Aspects of Intellectual Property Rights (TRIPs
Agreement). We are equally concerned that enactment could
sacrifice the interests of U.S. music copyright owners abroad
to satisfy the demands of those domestic interests that seek
uncompensated use of their music. The American music industry
is the most successful in the world, and royalties from
foreign performances are an important source of income for
U.S. artists and composers. If we expand the exemptions in
our law as contemplated in H.R. 789, other countries may use
that as an excuse to adopt this or other exemptions in their
copyright laws, thereby leading to economic losses to U.S.
music copyright owners in hundreds of millions of dollars.
Accordingly, the Administration strongly urges the House to
reject any attempt to attach the provisions of H.R. 789 to
H.R. 2589. Thank you for your consideration.
Sincerely,
William M. Daley.
____

Patent and Trademark Office

Washington, DC, January 16, 1998.
Hon. Howard Coble,
Chairman, Subcommittee on Courts and Intellectual Property,
Committee on the Judiciary, House of Representatives,
Washington, DC.
Dear Mr. Chairman: We received the attached letter from the
late Representative Sonny Bono raising issues concerned with
certain provisions in H.R. 789, the ``Fairness in Music
Licensing Act.'' In view of the tragic and untimely death of
Mr. Bono and the importance of these issues, I thought we
should send this response to you so that the Committee could
be made aware of the depth of his concerns. I am pleased to
share the Administration's views on this issue with you.
As we testified last summer, the Administration is
concerned that the United States maintain its role as the
world's leader in ensuring adequate and effective
intellectual property protection. We are seriously concerned,
as are you, that, if enacted, section 110(5) of H.R. 789,
could be challenged by our trading partners, who could argue
that it is an overly broad exception that would violate our
obligations under the Berne Convention for the Protection of
Literary and Artistic Works.
We are also concerned that we should not sacrifice the
interests of U.S. music copyright owners--authors, composers
and publishers--abroad to satisfy the demands of those
domestic interests who would seek to permit uncompensated use
of their music. The American music industry is the most
successful in the world, and American popular music is
publicly performed widely in virtually every country on the
planet. Royalties from those foreign performances is an
important part of the income for U.S. artists and composers.
Creating in our own copyright law anything more than a de
minimus exception to the public performance right will be
used against us internationally, when other countries seek to
enact similar limitations. If put in place, such limitations
would keep U.S. music copyright owners from collecting
royalties for the public performance of their works in those
countries which would cause hundreds of millions of dollars
in losses to U.S. music copyright owners.
As you have noted in your letter, the current ``home style
exception'' has been applied by the courts to exempt
establishments of approximately 1000 square feet. The Irish
Performing Rights Organization has requested the Commission
of the European

[[Page H9953]]

Communities to investigate the consistency of the ``home
style exception'' with the Berne Convention. We believe that
this request is groundless. We believe that the courts'
ability to apply the ``home style exception'' on a case-by-
case basis is appropriate and that legislating a specific
size exemption would be problematic. If there are to be
further limitations on the public performance right, such
limitations should be the subject of private agreements and
not set in legislation.
We share your concern that, if it is determined that there
must be specific guidance in the copyright law, an exception
tailored to the kind of equipment used might be more
appropriate, but even in this case, we are concerned that it
could lead to substantial erosion of the public performance
right, and could lead to the erosion of other rights. As we
continue to urge other countries to improve their
intellectual property protection, we should not be weakening
our own laws by the imposition of additional limitations on
the rights of copyright owners. As we noted in our earlier
testimony, we believe that private negotiations to exempt
certain performances or size of establishments are the
appropriate solution, consistent with our treaty obligations.
Sincerely,
Bruce A. Lehmann,
Assistant Secretary of Commerce and Commissioner of Patents
and Trademarks.
____

The Register of Copyrights,

Washington, DC, Sept. 28, 1994.
Hon. William J. Hughes,
Chairman, House Subcommittee on Intellectual Property and
Judicial Administration, Washington, DC.
Dear Chairman Hughes: I would like to comment on H.R. 4936,
the ``Fairness in Musical Licensing Act of 1994,'' which was
introduced on August 10, 1994. I have a number of concerns
that I would like to share with you.

amendment to section 110(5)

My first concern is with the proposed amendments to 17 USC
Sec. 110(5); that section represents a narrowly crafted
exemption to the copyright owner's exclusive right of public
performance under section 106(4). I believe that H.R. 4936
would make major changes and would violate our treaty
obligations.
At the time section 110(5) was enacted into law the United
States was not a member of the Berne Convention. The United
States became a signatory to the Berne Convention on March 1,
1989. In joining the Berne Convention the United States
reviewed its copyright law to make sure that it was
consistent with the requirements of Berne. For the most part
deficiencies in our law were corrected in the Berne
Convention Implementation Act of 1988; P.L. 100-568, 102
Stat. 2853 (1988). One of the sections reviewed was section
110(5). An Ad Hoc Working Group on U.S. Adherence to the
Berne Convention noted that section 110(5) was an extremely
narrow exemption to the public performance right and that the
case law interpreting that section had not broadened the
exemption beyond Congress' intent. The Working Group noted
that the exemption did not extend to the use of loudspeakers
or any sort of speaker arrangement which was the
characteristics of a commercial sound system and therefore
found section 110(5) compatible with the provisions of the
Convention.
Let me quickly review part of the legislative history of
section 110(5). The 1965 Supplementary Report of the Register
on the General Revision of the Copyright Law stated:
``The intention behind this exception is to make clear that
it is not an infringement of copyright merely to turn on, in
a public place, an ordinary radio or television receiving
apparatus of a type commonly sold to members of the public
for private use. This exception would apply for the most part
to the incidental entertainment of small public audiences
(patrons in a bar, customers getting a shoeshine, patients
waiting in a doctor's office, etc.). It is not intended to
exempt larger establishments, such as supermarkets, bus
stations, factories, etc., in which broadcasts are not merely
received in the usual manner of a private reception, but are
transmitted to substantial audiences by means of a receiving
system connected with a number of loudspeakers spread over a
wide area. The exemption would also not apply in any case
where the public is charged directly to see or hear the
broadcast.'' Id. at 44.
The legislative history shows that the rationale for the
subsection was that the secondary use of the transmission by
turning on an ordinary receiver in public is so remote and
minimal that no further liability should be imposed.
During the revision process the Supreme Court decided
Twentieth Century Music Corp. v. Aiken, 422 U.S. 151 (1975)
which, though addressing the issue of what constituted a
performance under the 1909 law, raised questions about the
proper interpretation of section 110(5). The Senate, House
and Conference Committee Reports all written after Aiken
indicate how that case would be decided under the 1976
Copyright Act. The House Report states that Aiken represented
the outer limit of the exemption; (Aiken operated a small
fast-food restaurant which had a radio with four ordinary
speakers in the ceiling.) That report states that the line
should be drawn here. It goes on to say ``the clause would
exempt small commercial establishments whose proprietors
merely bring onto their premises standard radio or television
equipment and turn it on for their customers' enjoyment.'' H.
Rep. No. 1476, 94th Cong., 2d Sess. 87 (1976).
The House Report also suggests some of the factors to
consider in particular cases--the size, physical arrangement,
and noise level of areas within the establishment where the
transmissions are made audible or visible. The Conference
Committee Report states that the establishment involved is
``of sufficient size to justify, as a practical matter, a
subscription to a commercial background music service.'' H.R.
Conf. Rept. No. 1733, 94th Cong., 2d Sess. 75 (1976).''
It is true that there has been litigation on the scope of
section 110(5) exemption; some courts have relied on the
legislative history while others have refused to go beyond
the plain language of the statute.
At the time that the United States joined the Berne
Convention courts had consistently held that the Sec. 110(5)
exemption was not available to businesses financially capable
of paying reasonable licensing fees for the use of music.
However, since that time two decisions have significantly
expanded scope of the exemption. Broadcast Music, Inc. v.
Claire's Boutiques, 949 F.2d 1482 (7th Cir. 1991) and Edison
Brothers Stores, Inc. v. Broadcast Music, Inc., 954 F.2d 1419
(8th Cir. 1992). It can be argued that the holding in these
cases violate the spirit, if not the letter, of the Berne
Convention.
My concern is that the proposed amendment to section 110(5)
would do further violence to our Berne Convention
obligations.
Berne allows only narrow exemptions to the author's
exclusive right to authorize public performance. Thus, only
in rare instances may third parties use a broadcast without a
license and without remuneration to the author. Article 11
bis (1) (iii) establishes the exclusive right of the author
to authorize the ``public communication by loudspeaker or any
other analogous instrument transmitting by signs, sounds, or
images, the broadcast of the work.'' The World Intellectual
Property Organization Guide to the Berne Convention (Paris
Act 1971) (1978) states:
``Finally, the third case dealt with in this paragraph is
that in which the work which has been broadcast is publicly
communicated e.g., by loudspeaker, or otherwise, to the
public. The case is becoming more common. In places where
people gather (cafes, restaurants, tea-rooms, hotels, large
shops, trains, aircraft, etc.) the practice is growing of
providing broadcast programs . . . The question is whether
the license given by the author to the broadcasting station
covers, in addition, all the use made of the broadcast which
may or may not be for commercial ends.'' Id. notes 11 and 12
at 68. The Convention's answer is no. Id. note 12.
In 1988 Congress decided to adhere to the Berne Convention
to increase protection for United States' interests in the
international copyright arena. The House Report on the
implementing legislation states:
``. . . the relationship of Berne adherence to promotion of
U.S. trade is clear. American popular culture and information
products have become precious export commodities of immense
economic value. That value is badly eroded by low
international copyright standards. Berne standards are both
high, reasonable and widely accepted internationally. Lending
our prestige and power to the international credibility of
those standards will promote development of acceptable
copyright regimes in bilateral and multilateral contexts.''
H.R. Rep. No. 609, 100th Cong., 2d Sess. 19-20 (1988).
To expand the section 110(5) exemption would send the wrong
signal. Moreover, I am not aware of any new or unusual
difficulties with respect to the licensing of music in
commercial establishments. I urge you to reconsider this
amendment.
With respect to the particular language in the proposed
amendment to section 110(5), let me raise some additional
questions. The proposed language contains no limitation on
the type of equipment, and it could permit businesses to use
sophisticated equipment with no limitation on the number of
speakers or the size of a television screen.
The Copyright Office also wonders about the interpretation
of ``indirect charge.'' There is no indication on how this is
to be interpreted. Entertainment and background music is
frequently part of the overhead cost of running an
establishment. Would overhead costs built into the price of
food, for example, make this exception unavailable?

choral group exemption

This proposal exemption would eliminate liability for
public performance of a ``nondramatic musical work by a
choral group of a nonprofit educational institution choral
group, unless a direct or indirect charge is made to hear the
performance.'' I understand that this change was suggested in
response to complaints that performing rights organizations
were attempting to require school groups to pay license fees
for performing seasonal musical compositions.
The Copyright Act of 1976 already covers most situations in
which a choral group connected with a non-profit institution
may be permitted to perform works freely. Section 110(4)
contains a nonprofit exemption for performance of nondramatic
literary and musical works if the performance is ``without
any purpose of direct or indirect commercial advantage and
without payment of any fee or other compensation for the
performance to any of its performers, promoters, organizers .
. .'' 17 U.S.C. Sec. 110(4). If there is a charge, the
exemption is still available if the net

[[Page H9954]]

proceeds are used exclusively for educational, charitable or
religious purposes. Although a copyright owner may prohibit
such a performance by serving the performing organization
with a signed written notice, this is rarely done. Thus, it
would seem that virtually all performances by such choral
groups are already covered either by existing licenses or
existing exemptions. I urge you to reconsider the
necessity for a further exemption.

ARBITRATION OF RATE DISPUTES

The proposed legislation allows a defendant in a copyright
infringement suit involving a licensed nondramatic musical
work to admit liability but contest the amount being charged
for the license. Either the defendant or the plaintiff in the
suit would be able to request arbitration of the licensing
fee under 28 U.S.C. 652(e).
This section would reconfigure the dispute resolution
process between the performing rights societies and their
licensees. Currently, ASCAP rates may be altered by the
federal district court of the Southern District of New York,
although this is far from a daily practice. Neither BMI nor
SESAC has such a mechanism; disputes about their rates must
be solved by means of negotiation. However, BMI has asked the
United States Department of Justice for permission to amend
its consent decree to provide for a rate court similar to
that now in place for ASCAP. The Justice Department has
agreed, and opened a public comment period on this matter.
BMI would like to designate the Southern District of New York
as its rate court. When the comment period closes, that court
may agree to BMI's requested changes, or may disagree and
suggest an alternative. We feel a trend may be developing
that would provide more efficient administration of rate
disputes and that amendment at this time is premature.
Furthermore, H.R. 4936 would allow any party who disagrees
with the licensing organization to demand arbitration
proceedings. This proposal may be a more cost effective
system for an individual defendant who admits liability, but
it could create a tremendous burden on the licensing
organizations to address each complaint individually. Even
arbitration proceedings are time-consuming and expensive, and
at the end of the day, may not result in an arrangement that
is any fairer to copyright owners or users than a negotiated
licensing agreement would have been. Such a result would make
it difficult for representatives of performers to set prices
for use consistently, as they are required to do now.
I am also troubled by the proposed conforming amendment to
Title 28 of the United States Code concerning civil actions
for copyright infringement. The proposed amendment says that
upon a request by either party for arbitration, as set out in
section 4 of H.R. 4936, a district court may refer the
dispute with respect to that defendant to arbitration. It
also says that ``[e]ach district court shall establish
procedures by local rule authorizing the use of arbitration
under this subsection.''
Should each district court be charged with creating a set
of rules and procedures regarding arbitration for public
performance of nondramatic musical works? Since courts have
extremely busy schedules, it does not appear to be judicially
efficient to impose new duties on all district courts.
Moreover, permitting each court to set its own rules would
likely result in an uneven, patchwork effect that is
undesirable as well as unpredictable. In addition, the
Southern District Court of New York and the legal
representatives of the private parties have developed a
certain expertise in music licensing matters that other
courts would take time to gain.

ACCESS TO REPERTOIRE

This proposed section mandates free access to critical
information about copyrighted works by those who wish to
license use of the works from performing rights
organizations. We think it is unwise to mandate provision of
this information at this time. Moreover, address and
telephone information about authors who no longer are
copyright owners seems unwarranted.
ASCAP is now providing information about its activities and
its membership via CompuServe's Entertainment Drive. In
addition, BMI recently launched its accessible database
containing information that more than satisfies the needs
evidenced by H.R. 4936's Sec. 5. The Library of Congress and
the Copyright Office are working with the Corporation for
National Research Initiative to develop an electronic
copyright management system; a key feature of this system
will make certain basic information about copyright owners
available to the public for licensing purposes.
In conclusion, I urge you to reconsider this legislation.
Many of the problems H.R. 4936 is attempting to resolve are
currently being addressed elsewhere; thus, the proposed
legislation seems premature. In at least one case, the new
exemption for choral groups, it is difficult to see where the
problem is, and finally, the proposed modification to
Sec. 110(5) seems unwise.
Sincerely,
Marybeth Peters,
Register of Copyrights.
Mr. SENSENBRENNER. Madam Speaker, I have no further requests for
time, and I yield back the balance of my time.
The SPEAKER pro tempore (Mrs. Wilson). The question is on the motion
offered by the gentleman from Wisconsin (Mr. Sensenbrenner) that the
House suspend the rules and pass the Senate bill, S. 505.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the Senate bill was passed.
A motion to reconsider was laid on the table.

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