[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--

       ``(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;

       ``(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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