[Congressional Record Volume 150, Number 26 (Wednesday, March 3, 2004)]
[House]
[Pages H762-H772]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
COPYRIGHT ROYALTY AND DISTRIBUTION REFORM ACT OF 2004
Mr. SENSENBRENNER. Mr. Speaker, I move to suspend the rules and pass
the bill (H.R. 1417) to amend title 17, United States Code, to replace
copyright arbitration royalty panels with a Copyright Royalty Judge,
and for other purposes, as amended.
The Clerk read as follows:
H.R. 1417
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Copyright Royalty and
Distribution Reform Act of 2004''.
SEC. 2. REFERENCE.
Except as otherwise expressly provided, whenever in this
Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the
reference shall be considered to be made to a section or
other provision of title 17, United States Code.
SEC. 3. COPYRIGHT ROYALTY JUDGE AND STAFF.
(a) In General.--Chapter 8 is amended to read as follows:
``CHAPTER 8--PROCEEDINGS BY COPYRIGHT ROYALTY JUDGES
``Sec.
``801. Copyright Royalty Judges; appointment and functions.
``802. Copyright Royalty Judgeships; staff.
``803. Proceedings of Copyright Royalty Judges.
``804. Institution of proceedings.
``805. General rule for voluntarily negotiated agreements.
``Sec. 801. Copyright Royalty Judges; appointment and
functions
``(a) Appointment.--The Librarian of Congress shall appoint
3 full-time Copyright Royalty Judges, and shall appoint one
of the three as the Chief Copyright Royalty Judge. In making
such appointments, the Librarian shall consult with the
Register of Copyrights.
``(b) Functions.--Subject to the provisions of this
chapter, the functions of the Copyright Royalty Judges shall
be as follows:
``(1) To make determinations and adjustments of reasonable
terms and rates of royalty payments as provided in sections
112(e), 114, 115, 116, 118, 119 and 1004. The rates
applicable under sections 114(f)(1)(B), 115, and 116 shall be
calculated to achieve the following objectives:
``(A) To maximize the availability of creative works to the
public.
``(B) To afford the copyright owner a fair return for his
or her creative work and the copyright user a fair income
under existing economic conditions.
``(C) To reflect the relative roles of the copyright owner
and the copyright user in the product made available to the
public with respect to relative creative contribution,
technological contribution, capital investment, cost, risk,
and contribution to the opening of new markets for creative
expression and media for their communication.
``(D) To minimize any disruptive impact on the structure of
the industries involved and on generally prevailing industry
practices.
``(2) To make determinations concerning the adjustment of
the copyright royalty rates under section 111 solely in
accordance with the following provisions:
``(A) The rates established by section 111(d)(1)(B) may be
adjusted to reflect--
``(i) national monetary inflation or deflation; or
``(ii) changes in the average rates charged cable
subscribers for the basic service of providing secondary
transmissions to maintain the real constant dollar level of
the royalty fee per subscriber which existed as of the date
of October 19, 1976,
except that--
``(I) if the average rates charged cable system subscribers
for the basic service of providing secondary transmissions
are changed so that the average rates exceed national
monetary inflation, no change in the rates established by
section 111(d)(1)(B) shall be permitted; and
``(II) no increase in the royalty fee shall be permitted
based on any reduction in the average number of distant
signal equivalents per subscriber.
The Copyright Royalty Judges may consider all factors
relating to the maintenance of such level of payments,
including, as an extenuating factor, whether the industry has
been restrained by subscriber rate regulating authorities
from increasing the rates for the basic service of providing
secondary transmissions.
``(B) In the event that the rules and regulations of the
Federal Communications Commission are amended at any time
after April 8, 1976, to permit the carriage by cable systems
of additional television broadcast signals beyond the local
service area of the primary transmitters of such signals, the
royalty rates established by section 111(d)(1)(B) may be
adjusted to insure that the rates for the additional distant
signal equivalents resulting from such carriage are
reasonable in the light of the changes effected by the
amendment to such rules and regulations. In determining the
reasonableness of rates proposed following an amendment of
Federal Communications Commission rules and regulations, the
Copyright Royalty Judges shall consider, among other factors,
the economic impact on copyright owners and users; except
that no adjustment in royalty rates shall be made under this
subparagraph with respect to any distant signal equivalent or
fraction thereof represented by--
``(i) carriage of any signal permitted under the rules and
regulations of the Federal Communications Commission in
effect on April 15, 1976, or the carriage of a signal of the
same type (that is, independent, network, or noncommercial
educational) substituted for such permitted signal; or
``(ii) a television broadcast signal first carried after
April 15, 1976, pursuant to an individual waiver of the rules
and regulations of the Federal Communications Commission, as
such rules and regulations were in effect on April 15, 1976.
``(C) In the event of any change in the rules and
regulations of the Federal Communications Commission with
respect to syndicated and sports program exclusivity after
April 15, 1976, the rates established by section 111(d)(1)(B)
may be adjusted to assure that such rates are reasonable in
light of the changes to such rules and regulations, but any
such adjustment shall apply only to the affected television
broadcast signals carried on those systems affected by the
change.
``(D) The gross receipts limitations established by section
111(d)(1)(C) and (D) shall be adjusted to reflect national
monetary inflation or deflation or changes in the average
rates charged cable system subscribers for the basic service
of providing secondary transmissions to maintain the real
constant dollar value of the exemption provided by such
section, and the royalty rate specified therein shall not be
subject to adjustment.
``(3)(A) To authorize the distribution, under sections 111,
119, and 1007, of those royalty fees collected under sections
111, 119, and 1005, as the case may be, to the extent that
the Copyright Royalty Judges have found that the distribution
of such fees is not subject to controversy.
``(B) In cases where the Copyright Royalty Judges determine
that controversy exists, the Copyright Royalty Judges shall
determine the distribution of such fees, including partial
distributions, in accordance with section 111, 119, or 1007,
as the case may be.
``(C) the Copyright Royalty Judges shall make a partial
distribution of such fees during the pendency of the
proceeding under subparagraph (B) if all participants under
section 803(b)(2) in the proceeding that are entitled to
receive those fees that are to be partially distributed--
``(i) agree to such partial distribution;
``(ii) sign an agreement obligating them to return any
excess amounts to the extent necessary to comply with the
final determination on the distribution of the fees made
under subparagraph (B); and
``(iii) file the agreement with the Copyright Royalty
Judges.
``(D) The Copyright Royalty Judges and any other officer or
employee acting in good faith in distributing funds under
subparagraph (C) shall not be held liable for the payment of
any excess fees under subparagraph (C). The Copyright Royalty
Judges shall, at the time the final determination is made,
calculate any such excess amounts.
``(4) To accept or reject royalty claims filed under
section 111, 119, and 1007, on the basis of timeliness or the
failure to establish the basis for a claim.
``(5) To accept or reject rate adjustment petitions as
provided in section 804 and petitions to participate as
provided in section 803(b)(1) and (2).
``(6) To determine the status of a digital audio recording
device or a digital audio interface device under sections
1002 and 1003, as provided in section 1010.
``(7)(A) To adopt as the basis for statutory terms and
rates or as a basis for the distribution of statutory royalty
payments, an agreement concerning such matters reached among
some or all of the participants in a proceeding at any time
during the proceeding, except that--
``(i) the Copyright Royalty Judges shall provide to the
other participants in the proceeding under section 803(b)(2)
that would be bound by the terms, rates, distribution, or
other determination set by the agreement an opportunity to
comment on the agreement and object to its adoption as the
basis for statutory terms and rates or as a basis for the
distribution of statutory royalty payments, as the case may
be; and
``(ii) the Copyright Royalty Judges may decline to adopt
the agreement as the basis for statutory terms and rates or
as the basis
[[Page H763]]
for the distribution of statutory royalty payments, as the
case may be, if any other participant described in
subparagraph (A) objects to the agreement and the Copyright
Royalty Judges find, based on the record before them, that
the agreement is not likely to meet the statutory standard
for setting the terms and rates, or for distributing the
royalty payments, as the case may be.
``(B) License agreements voluntarily negotiated pursuant to
section 112(e)(5), 114(f)(3), 115(c)(3)(E)(i), 116(c), or
118(b)(2) that do not result in statutory terms and rates
shall not be subject to clauses (i) and (ii) of subparagraph
(A).
``(c) Rulings.--The Copyright Royalty Judges may make any
necessary procedural or evidentiary rulings in any proceeding
under this chapter and may, before commencing a proceeding
under this chapter, make any such rulings that would apply to
the proceedings conducted by the Copyright Royalty Judges.
The Copyright Royalty Judges may consult with the Register of
Copyrights in making any rulings under section 802(f)(1).
``(d) Administrative Support.--The Librarian of Congress
shall provide the Copyright Royalty Judges with the necessary
administrative services related to proceedings under this
chapter.
``(e) Location in Library of Congress.--The offices of the
Copyright Royalty Judges and staff shall be in the Library of
Congress.
``Sec. 802. Copyright Royalty Judgeships; staff
``(a) Qualifications of Copyright Royalty Judges.--Each
Copyright Royalty Judge shall be an attorney who has at least
7 years of legal experience. The Chief Copyright Royalty
Judge shall have at least 5 years of experience in
adjudications, arbitrations, or court trials. Of the other
two Copyright Royalty Judges, one shall have significant
knowledge of copyright law, and the other shall have
significant knowledge of economics. An individual may serve
as a Copyright Royalty Judge only if the individual is free
of any financial conflict of interest under subsection (h).
In this subsection, `adjudication' has the meaning given that
term in section 551 of title 5, but does not include
mediation.
``(b) Staff.--The Chief Copyright Royalty Judge shall hire
3 full-time staff members to assist the Copyright Royalty
Judges in performing their functions.
``(c) Terms.--The terms of the Copyright Royalty Judges
shall each be 6 years, except of the individuals first
appointed, the Chief Copyright Royalty Judge shall be
appointed to a term of 6 years, and of the remaining
Copyright Royalty Judges, one shall be appointed to a term of
2 years, and the other shall be appointed to a term of 4
years. An individual serving as a Copyright Royalty Judge may
be reappointed to subsequent terms. The term of a Copyright
Royalty Judge shall begin when the term of the predecessor of
that Copyright Royalty Judge ends. When the term of office of
a Copyright Royalty Judge ends, the individual serving that
term may continue to serve until a successor is selected.
``(d) Vacancies or Incapacity.--
``(1) Vacancies.--If a vacancy should occur in the position
of Copyright Royalty Judge, the Librarian of Congress shall
act expeditiously to fill the vacancy, and may appoint an
interim Copyright Royalty Judge to serve until another
Copyright Royalty Judge is appointed under this section. An
individual appointed to fill the vacancy occurring before the
expiration of the term for which the predecessor of that
individual was appointed shall be appointed for the remainder
of that term.
``(2) Incapacity.--In the case in which a Copyright Royalty
Judge is temporarily unable to perform his or her duties, the
Librarian of Congress may appoint an interim Copyright
Royalty Judge to perform such duties during the period of
such incapacity.
``(e) Compensation.--
``(1) Judges.--The Chief Copyright Royalty Judge shall
receive compensation at the rate of basic pay payable for
level AL-1 for administrative law judges pursuant to section
5372(b) of title 5, and each of the other two Copyright
Royalty Judges shall receive compensation at the rate of
basic pay payable for level AL-2 for administrative law
judges pursuant to such section. The compensation of the
Copyright Royalty Judges shall not be subject to any
regulations adopted by the Office of Personnel Management
pursuant to its authority under section 5376(b)(1) of title
5.
``(2) Staff members.--Of the staff members appointed under
subsection (b)--
``(A) the rate of pay of one staff member shall be not more
than the basic rate of pay payable for GS-15 of the General
Schedule;
``(B) the rate of pay of one staff member shall be not less
than the basic rate of pay payable for GS-13 of the General
Schedule and not more than the basic rate of pay payable for
GS-14 of such Schedule; and
``(C) the rate of pay for the third staff member shall be
not less than the basic rate of pay payable for GS-8 of the
General Schedule and not more than the basic rate of pay
payable for GS-11 of such Schedule.
``(f) Independence of Copyright Royalty Judge.--
``(1) In making determinations.--
``(A) In general.--Subject to subparagraph (B), the
Copyright Royalty Judges shall have full independence in
making determinations concerning adjustments and
determinations of copyright royalty rates and terms, the
distribution of copyright royalties, the acceptance or
rejection of royalty claims, rate adjustment petitions, and
petitions to participate, and in issuing other rulings under
this title, except that the Copyright Royalty Judges may
consult with the Register of Copyrights on any matter other
than a question of fact. Any such consultations between the
Copyright Royalty Judges and the Register of Copyright on any
question of law shall be in writing or on the record.
``(B) Novel questions.--(i) Notwithstanding the provisions
of subparagraph (A), in any case in which the Copyright
Royalty Judges in a proceeding under this title are presented
with a novel question of law concerning an interpretation of
those provisions of this title that are the subject of the
proceeding, the Copyright Royalty Judges shall request the
Register of Copyrights, in writing, to submit a written
opinion on the resolution of such novel question. The
Register shall submit and make public that opinion within
such time period as the Copyright Royalty Judges may
prescribe. Any consultations under this subparagraph between
the Copyright Royalty Judges and the Register of Copyrights
shall be in writing or on the record. The opinion of the
Register shall not be binding on the Copyright Royalty
Judges, but the Copyright Royalty Judges shall take the
opinion of the Register into account in making the judges'
determination on the question concerned.
``(ii) In clause (i), a `novel question of law' is a
question of law that has not been determined in prior
decisions, determinations, and rulings described in section
803(a).
``(2) Performance appraisals.--
``(A) In general.--Notwithstanding any other provision of
law or any regulation of the Library of Congress, and subject
to subparagraph (B), the Copyright Royalty Judges shall not
receive performance appraisals.
``(B) Relating to sanction or removal.--To the extent that
the Librarian of Congress adopts regulations under subsection
(h) relating to the sanction or removal of a Copyright
Royalty Judge and such regulations require documentation to
establish the cause of such sanction or removal, the
Copyright Royalty Judge may receive an appraisal related
specifically to the cause of the sanction or removal.
``(g) Inconsistent Duties Barred.--No Copyright Royalty
Judge may undertake duties inconsistent with his or her
duties and responsibilities as Copyright Royalty Judge.
``(h) Standards of Conduct.--The Librarian of Congress
shall adopt regulations regarding the standards of conduct,
including financial conflict of interest and restrictions
against ex parte communications, which shall govern the
Copyright Royalty Judges and the proceedings under this
chapter.
``(i) Removal or Sanction.--The Librarian of Congress may
sanction or remove a Copyright Royalty Judge for violation of
the standards of conduct adopted under subsection (h),
misconduct, neglect of duty, or any disqualifying physical or
mental disability. Any such sanction or removal may be made
only after notice and opportunity for a hearing, but the
Librarian of Congress may suspend the Copyright Royalty Judge
during the pendency of such hearing. The Librarian shall
appoint an interim Copyright Royalty Judge during the period
of any such suspension.
``Sec. 803. Proceedings of Copyright Royalty Judges
``(a) Proceedings.--
``(1) In general.--The Copyright Royalty Judges shall act
in accordance with this title, and to the extent not
inconsistent with this title, in accordance with subchapter
II of chapter 5 of title 5, in carrying out the purposes set
forth in section 801. The Copyright Royalty Judges shall act
in accordance with regulations issued by the Copyright
Royalty Judges and on the basis of a fully documented written
record, prior decisions of the Copyright Royalty Tribunal,
prior copyright arbitration royalty panel determinations,
rulings by the Librarian of Congress before the effective
date of the Copyright Royalty and Distribution Reform Act of
2004, prior determinations of Copyright Royalty Judges under
this chapter, and decisions of the court in appeals under
this chapter before, on, or after such effective date. Any
participant in a proceeding under subsection (b)(2) may
submit relevant information and proposals to the Copyright
Royalty Judges.
``(2) Judges acting as panel and individually.--The
Copyright Royalty Judges shall preside over hearings in
proceedings under this chapter en banc. The Chief Copyright
Royalty Judge may designate a Copyright Royalty Judge to
preside individually over such collateral and administrative
proceedings, and over such proceedings under paragraphs (1)
through (5) of subsection (b), as the Chief Judge considers
appropriate.
``(3) Determinations.--Final determinations of the
Copyright Royalty Judges in proceedings under this chapter
shall be made by majority vote. A Copyright Royalty Judge
dissenting from the majority on any determination under this
chapter may issue his or her dissenting opinion, which shall
be included with the determination.
``(b) Procedures.--
``(1) Initiation.--
``(A) Call for petitions to participate.--(i) Promptly upon
the filing of a petition for a rate adjustment or
determination under section 804(a) or 804(b)(8), or by no
later than January 5 of a year specified in section 804 for
the commencement of a proceeding if a petition has not been
filed by that date, the Copyright Royalty Judges shall cause
to be
[[Page H764]]
published in the Federal Register notice of commencement of
proceedings under this chapter calling for the filing of
petitions to participate in a proceeding under this chapter
for the purpose of making the relevant determination under
section 111, 112, 114, 115, 116, 118, 119, 1004 or 1007, as
the case may be.
``(ii) Petitions to participate shall be filed by no later
than 30 days after publication of notice of commencement of a
proceeding, under clause (i), except that the Copyright
Royalty Judges may, for substantial good cause shown and if
there is no prejudice to the participants that have already
filed petitions, accept late petitions to participate at any
time up to the date that is 90 days before the date on which
participants in the proceeding are to file their written
direct statements.
``(B) Petitions to participate.--Each petition to
participate in a proceeding shall describe the petitioner's
interest in the subject matter of the proceeding. Parties
with similar interests may file a single petition to
participate.
``(2) Participation in general.--Subject to paragraph (4),
a person may participate in a proceeding under this chapter,
including through the submission of briefs or other
information, only if--
``(A) that person has filed a petition to participate in
accordance with paragraph (1) (either individually or as a
group under paragraph (1)(B)), together with a filing fee of
$150;
``(B) the Copyright Royalty Judges have not determined that
the petition to participate is facially invalid; and
``(C) the Copyright Royalty Judges have not determined, sua
sponte or on the motion of another participant in the
proceeding, that the person lacks a significant interest in
the proceeding.
``(3) Voluntary negotiation period.--
``(A) In general.--Promptly after the date for filing of
petitions to participate in a proceeding, the Copyright
Royalty Judges shall make available to all participants in
the proceeding a list of such participants and shall initiate
a voluntary negotiation period among the participants.
``(B) Length of proceedings.--The voluntary negotiation
period initiated under subparagraph (A) shall be 3 months.
``(C) Determination of subsequent proceedings.--At the
close of the voluntary negotiation proceedings, the Copyright
Royalty Judges shall, if further proceedings under this
chapter are necessary, determine whether and to what extent
paragraphs (4) and (5) will apply to the parties.
``(4) Small claims procedure in distribution proceedings.--
``(A) In general.--If, in a proceeding under this chapter
to determine the distribution of royalties, a participant in
the proceeding asserts that the contested amount of the claim
is $10,000 or less, the Copyright Royalty Judges shall decide
the controversy on the basis of the filing in writing of the
initial claim, the initial response by any opposing
participant, and one additional response by each such party.
The participant asserting the claim shall not be required to
pay the filing fee under paragraph (2).
``(B) Bad faith inflation of claim.--If the Copyright
Royalty Judges determine that a participant asserts in bad
faith an amount in controversy in excess of $10,000 for the
purpose of avoiding a determination under the procedure set
forth in subparagraph (A), the Copyright Royalty Judges shall
impose a fine on that participant in an amount not to exceed
the difference between the actual amount distributed and the
amount asserted by the participant.
``(5) Paper proceedings in ratemaking proceedings.--The
Copyright Royalty Judges in proceedings under this chapter to
determine royalty rates may decide, sua sponte or upon motion
of a participant, to determine issues on the basis of initial
filings in writing, initial responses by any opposing
participant, and one additional response by each such
participant. Prior to making such decision to proceed on such
a paper record only, the Copyright Royalty Judges shall offer
to all parties to the proceeding the opportunity to comment
on the decision. The procedure under this paragraph--
``(A) shall be applied in cases in which there is no
genuine issue of material fact, there is no need for
evidentiary hearings, and all participants in the proceeding
agree in writing to the procedure; and
``(B) may be applied under such other circumstances as the
Copyright Royalty Judges consider appropriate.
``(6) Regulations.--
``(A) In general.--The Copyright Royalty Judges may issue
regulations to carry out their functions under this title.
Not later than 120 days after Copyright Royalty Judges or
interim Copyright Royalty Judges, as the case may be, are
first appointed after the enactment of the Copyright Royalty
and Distribution Reform Act of 2004, such judges shall issue
regulations to govern proceedings under this chapter.
``(B) Interim regulations.--Until regulations are adopted
under subparagraph (A), the Copyright Royalty Judges shall
apply the regulations in effect under this chapter on the day
before the effective date of the Copyright Royalty and
Distribution Reform Act of 2004, to the extent such
regulations are not inconsistent with this chapter, except
that functions carried out under such regulations by the
Librarian of Congress, the Register of Copyrights, or
copyright arbitration royalty panels that, as of such date of
enactment, are to be carried out by the Copyright Royalty
Judges under this chapter, shall be carried out by the
Copyright Royalty Judges under such regulations.
``(C) Requirements.--Regulations issued under subparagraph
(A) shall include the following:
``(i) The written direct statements of all participants in
a proceeding under paragraph (2) shall be filed by a date
specified by the Copyright Royalty Judges, which may be no
earlier than four months, and no later than five months,
after the end of the voluntary negotiation period under
paragraph (3). Notwithstanding the preceding sentence, a
participant in a proceeding may, within 15 days after the end
of the discovery period specified in clause (iii), file an
amended written direct statement based on new information
received during the discovery process.
``(ii)(I) Following the submission to the Copyright Royalty
Judges of written direct statements by the participants in a
proceeding under paragraph (2), the judges shall meet with
the participants for the purpose of setting a schedule for
conducting and completing discovery. Such schedule shall be
determined by the Copyright Royalty Judges.
``(II) In this chapter, the term `written direct
statements' means witness statements, testimony, and exhibits
to be presented in the proceedings, and such other
information that is necessary to establish terms and rates,
or the distribution of royalty payments, as the case may be,
as set forth in regulations issued by the Copyright Royalty
Judges.
``(iii) Hearsay may be admitted in proceedings under this
chapter to the extent deemed appropriate by the Copyright
Royalty Judges.
``(iv) Discovery in such proceedings shall be permitted for
a period of 60 days, except for discovery ordered by the
Copyright Royalty Judges in connection with the resolution of
motions, orders and disputes pending at the end of such
period.
``(v) Any participant under paragraph (2) in a proceeding
under this chapter to determine royalty rates may, upon
written notice, seek discovery of information and materials
relevant and material to the proceeding. Any objection to any
such discovery request shall be resolved by a motion or
request to compel discovery made to the Copyright Royalty
Judges. Each motion or request to compel discovery shall be
determined by the Copyright Royalty Judges, or by a Copyright
Royalty Judge when permitted under subsection (a)(2), who may
approve the request only if the evidence that would be
produced is relevant and material. A Copyright Royalty Judge
may refuse a request to compel discovery of evidence that has
been found to be relevant and material, only upon good cause
shown. For purposes of the preceding sentence, the basis for
`good cause' may only be that--
``(I) the discovery sought is unreasonably cumulative or
duplicative, or is obtainable from another source that is
more convenient, less burdensome, or less expensive;
``(II) the participant seeking discovery has had ample
opportunity by discovery in the action to obtain the
information sought; or
``(III) the burden or expense of the proposed discovery
outweighs its likely benefit, taking into account the needs
and resources of the participants, the importance of the
issues at stake, and the importance of the proposed discovery
in resolving the issues.
``(vi) The rules in effect on the day before the effective
date of the Copyright Royalty and Distribution Reform Act of
2004, relating to discovery in proceedings under this title
to determine the distribution of royalty fees, shall continue
to apply to such proceedings on and after such effective
date.
``(vii) The Copyright Royalty Judges may issue subpoenas
requiring the production of evidence or witnesses, but only
if the evidence requested to be produced or that would be
proffered by the witness is relevant and material.
``(viii) The Copyright Royalty Judges shall order a
settlement conference among the participants in the
proceeding to facilitate the presentation of offers of
settlement among the participants. The settlement conference
shall be held during a 21-day period following the end of the
discovery period.
``(c) Determination of Copyright Royalty Judges.--
``(1) Timing.--The Copyright Royalty Judges shall issue
their determination in a proceeding not later than 11 months
after the conclusion of the 21-day settlement conference
period under subsection (b)(3)(C)(vi), but, in the case of a
proceeding to determine successors to rates or terms that
expire on a specified date, in no event later than 15 days
before the expiration of the then current statutory rates and
terms.
``(2) Rehearings.--
``(A) In general.--The Copyright Royalty Judges may, in
exceptional cases, upon motion of a participant under
subsection (b)(2), order a rehearing, after the determination
in a proceeding is issued under paragraph (1), on such
matters as the Copyright Royalty Judges determine to be
appropriate.
``(B) Timing for filing motion.--Any motion for a rehearing
under subparagraph (A) may only be filed within 15 days after
the date on which the Copyright Royalty Judges deliver their
initial determination concerning rates and terms to the
participants in the proceeding.
``(C) Participation by opposing party not required.--In any
case in which a rehearing is ordered, any opposing party
shall not be required to participate in the rehearing.
[[Page H765]]
``(D) No negative inference.--No negative inference shall
be drawn from lack of participation in a rehearing.
``(E) Continuity of rates and terms.--(i) If the decision
of the Copyright Royalty Judges on any motion for a rehearing
is not rendered before the expiration of the statutory rates
and terms that were previously in effect, in the case of a
proceeding to determine successors to rates and terms that
expire on a specified date, then--
``(I) the initial determination of the Copyright Royalty
Judges that is the subject of the rehearing motion shall be
effective as of the day following the date on which the rates
and terms that were previously in effect expire; and
``(II) in the case of a proceeding under section
114(f)(1)(C) or 114(f)(2)(C), royalty rates and terms shall,
for purposes of section 114(f)(4)(B), be deemed to have been
set at those rates and terms contained in the initial
determination of the Copyright Royalty Judges that is the
subject of the rehearing motion, as of the date of that
determination.
``(ii) The pendency of a motion for a rehearing under this
paragraph shall not relieve persons obligated to make royalty
payments who would be affected by the determination on that
motion from providing the statements of account and any
reports of use, to the extent required, and paying the
royalties required under the relevant determination or
regulations.
``(iii) Notwithstanding clause (ii), whenever royalties
described in clause (ii) are paid to a person other than the
Copyright Office, the entity designated by the Copyright
Royalty Judges to which such royalties are paid by the
copyright user (and any successor thereto) shall, within 60
days after the motion for rehearing is resolved or, if the
motion is granted, within 60 days after the rehearing is
concluded, return any excess amounts previously paid to the
extent necessary to comply with the final determination of
royalty rates by the Copyright Royalty Judges.
``(3) Contents of determination.--A determination of the
Copyright Royalty Judges shall be accompanied by the written
record, and shall set forth the facts that the Copyright
Royalty Judges found relevant to their determination. Among
other terms adopted in a determination, the Copyright Royalty
Judges may specify notice and recordkeeping requirements of
users of the copyrights at issue that apply in lieu of those
that would otherwise apply under regulations.
``(4) Continuing jurisdiction.--The Copyright Royalty
Judges may amend the determination or the regulations issued
pursuant to the determination in order to correct any
technical errors in the determination or to respond to
unforeseen circumstances that preclude the proper
effectuation of the determination.
``(5) Protective order.--The Copyright Royalty Judges may
issue such orders as may be appropriate to protect
confidential information, including orders excluding
confidential information from the record of the determination
that is published or made available to the public, except
that any terms or rates of royalty payments or distributions
may not be excluded.
``(6) Publication of determination.--The Librarian of
Congress shall cause the determination, and any corrections
thereto, to be published in the Federal Register. The
Librarian of Congress shall also publicize the determination
and corrections in such other manner as the Librarian
considers appropriate, including, but not limited to,
publication on the Internet. The Librarian of Congress shall
also make the determination, corrections, and the
accompanying record available for public inspection and
copying.
``(d) Judicial Review.--
``(1) Appeal.--Any determination of the Copyright Royalty
Judges under subsection (c) may, within 30 days after the
publication of the determination in the Federal Register, be
appealed, to the United States Court of Appeals for the
District of Columbia Circuit, by any aggrieved participant in
the proceeding under subsection (b)(2) who fully participated
in the proceeding and who would be bound by the
determination. If no appeal is brought within that 30-day
period, the determination of the Copyright Royalty Judges
shall be final, and the royalty fee or determination with
respect to the distribution of fees, as the case may be,
shall take effect as set forth in paragraph (2).
``(2) Effect of rates.--
``(A) Expiration on specified date.--When this title
provides that the royalty rates and terms that were
previously in effect are to expire on a specified date, any
adjustment or determination by the Copyright Royalty Judges
of successor rates and terms for an ensuing statutory license
period shall be effective as of the day following the date of
expiration of the rates and terms that were previously in
effect, even if the determination of the Copyright Royalty
Judges is rendered on a later date.
``(B) Other cases.--In cases where rates and terms do not
expire on a specified date or have not yet been established,
successor or new rates or terms shall take effect on the
first day of the second month that begins after the
publication of the determination of the Copyright Royalty
Judges in the Federal Register, except as otherwise provided
in this title, and the rates and terms previously in effect,
to the extent applicable, shall remain in effect until such
successor rates and terms become effective.
``(C) Obligation to make payments.--(i) The pendency of an
appeal under this subsection shall not relieve persons
obligated to make royalty payments under section 111, 112,
114, 115, 116, 118, 119, or 1003, who would be affected by
the determination on appeal, from providing the statements of
account (and any report of use, to the extent required) and
paying the royalties required under the relevant
determination or regulations.
``(ii) Notwithstanding clause (i), whenever royalties
described in clause (i) are paid to a person other than the
Copyright Office, the entity designated by the Copyright
Royalty Judges to which such royalties are paid by the
copyright user (and any successor thereto) shall, within 60
days after the final resolution of the appeal, return any
excess amounts previously paid (and interest thereon, if
ordered pursuant to paragraph (3)) to the extent necessary to
comply with the final determination of royalty rates on
appeal.
``(3) Jurisdiction of court.--If the court, pursuant to
section 706 of title 5, modifies or vacates a determination
of the Copyright Royalty Judges, the court may enter its own
determination with respect to the amount or distribution of
royalty fees and costs, and order the repayment of any excess
fees, the payment of any underpaid fees, and the payment of
interest pertaining respectively thereto, in accordance with
its final judgment. The court may also vacate the
determination of the Copyright Royalty Judges and remand the
case to the Copyright Royalty Judges for further proceedings
in accordance with subsection (a).
``(e) Administrative Matters.--
``(1) Deduction of costs of library of congress and
copyright office from filing fees.--
``(A) Deduction from filing fees.--The Librarian of
Congress may, to the extent not otherwise provided under this
title, deduct from the filing fees collected under subsection
(b) for a particular proceeding under this chapter the
reasonable costs incurred by the Librarian of Congress, the
Copyright Office, and the Copyright Royalty Judges in
conducting that proceeding, other than the salaries of the
Copyright Royalty Judges and the 3 staff members appointed
under section 802(b).
``(B) Authorization of appropriations.--There are
authorized to be appropriated such sums as may be necessary
to pay the costs of proceedings under this chapter not
covered by the filing fees collected under subsection (b).
All funds made available pursuant to this subparagraph shall
remain available until expended.
``(2) Positions required for administration of compulsory
licensing.--Section 307 of the Legislative Branch
Appropriations Act, 1994, shall not apply to employee
positions in the Library of Congress that are required to be
filled in order to carry out section 111, 112, 114, 115, 116,
118, or 119 or chapter 10.
``Sec. 804. Institution of proceedings
``(a) Filing of Petition.--With respect to proceedings
referred to in paragraphs (1) and (2) of section 801(b)
concerning the determination or adjustment of royalty rates
as provided in sections 111, 112, 114, 115, 116, 118, and
1004, during the calendar years specified in the schedule set
forth in subsection (b), any owner or user of a copyrighted
work whose royalty rates are specified by this title, or are
established under this chapter before or after the enactment
of the Copyright Royalty and Distribution Reform Act of 2004,
may file a petition with the Copyright Royalty Judges
declaring that the petitioner requests a determination or
adjustment of the rate. The Copyright Royalty Judges shall
make a determination as to whether the petitioner has such a
significant interest in the royalty rate in which a
determination or adjustment is requested. If the Copyright
Royalty Judges determine that the petitioner has such a
significant interest, the Copyright Royalty Judges shall
cause notice of this determination, with the reasons
therefor, to be published in the Federal Register, together
with the notice of commencement of proceedings under this
chapter. With respect to proceedings under paragraph (1) of
section 801(b) concerning the determination or adjustment of
royalty rates as provided in sections 112 and 114, during the
calendar years specified in the schedule set forth in
subsection (b), the Copyright Royalty Judges shall cause
notice of commencement of proceedings under this chapter to
be published in the Federal Register as provided in section
803(b)(1)(A).
``(b) Timing of Proceedings.--
``(1) Section 111 proceedings.--(A) A petition described in
subsection (a) to initiate proceedings under section
801(b)(2) concerning the adjustment of royalty rates under
section 111 to which subparagraph (A) or (D) of section
801(b)(2) applies may be filed during the year 2005 and in
each subsequent fifth calendar year.
``(B) In order to initiate proceedings under section
801(b)(2) concerning the adjustment of royalty rates under
section 111 to which subparagraph (B) or (C) of section
801(b)(2) applies, within 12 months after an event described
in either of those subsections, any owner or user of a
copyrighted work whose royalty rates are specified by section
111, or by a rate established under this chapter before or
after the enactment of the Copyright Royalty and Distribution
Reform Act of 2004, may file a petition with the Copyright
Royalty Judges declaring that the petitioner requests an
adjustment of the rate. The Copyright Royalty Judges shall
then proceed as
[[Page H766]]
set forth in subsection (a) of this section. Any change in
royalty rates made under this chapter pursuant to this
subparagraph may be reconsidered in the year 2005, and each
fifth calendar year thereafter, in accordance with the
provisions in section 801(b)(3)(B) or (C), as the case may
be. A petition for adjustment of rates under section
11(d)(1)(B) as a result of a change is the rules and
regulations of the Federal Communications Commission shall
set forth the change on which the petition is based.
``(C) Any adjustment of royalty rates under section 111
shall take effect as of the first accounting period
commencing after the publication of the determination of the
Copyright Royalty Judges in the Federal Register, or on such
other date as is specified in that determination.
``(2) Certain section 112 proceedings.--Proceedings under
this chapter shall be commenced in the year 2007 to determine
reasonable terms and rates of royalty payments for the
activities described in section 112(e)(1) relating to the
limitation on exclusive rights specified by section
114(d)(1)(C)(iv), to become effective on January 1, 2009.
Such proceedings shall be repeated in each subsequent fifth
calendar year.
``(3) Section 114 and corresponding 112 proceedings.--
``(A) For eligible nonsubscription services and new
subscription services.--Proceedings under this chapter shall
be commenced as soon as practicable after the effective date
of the Copyright Royalty and Distribution Reform Act of 2004
to determine reasonable terms and rates of royalty payments
under sections 114 and 112 for the activities of eligible
nonsubscription transmission services and new subscription
services, to be effective for the period beginning on January
1, 2006, and ending on December 31, 2010. Such proceedings
shall next be commenced in January 2009 to determine
reasonable terms and rates of royalty payments, to become
effective on January 1, 2011. Thereafter, such proceedings
shall be repeated in each subsequent fifth calendar year.
``(B) For preexisting subscription and satellite digital
audio radio services.--Proceedings under this chapter shall
be commenced in January 2006 to determine reasonable terms
and rates of royalty payments under sections 114 and 112 for
the activities of preexisting subscription services, to be
effective during the period beginning on January 1, 2008, and
ending on December 31, 2012, and preexisting satellite
digital audio radio services, to be effective during the
period beginning on January 1, 2007, and ending on December
31, 2012. Such proceedings shall next be commenced in 2011 to
determine reasonable terms and rates of royalty payments, to
become effective on January 1, 2013. Thereafter, such
proceedings shall be repeated in each subsequent fifth
calendar year.
``(C)(i) Notwithstanding any other provision of this
chapter, this subparagraph shall govern proceedings commenced
pursuant to sections 114(f)(1)(C) and 114(f)(2)(C) concerning
new types of services.
``(ii) Not later than 30 days after a petition to determine
rates and terms for a new type of service that is filed by
any copyright owner of sound recordings, or such new type of
service, indicating that such new type of service is or is
about to become operational, the Copyright Royalty Judges
shall issue a notice for a proceeding to determine rates and
terms for such service.
``(iii) The proceeding shall follow the schedule set forth
in such subsections (b), (c), and (d) of section 803, except
that--
``(I) the determination shall be issued by not later than
24 months after the publication of the notice under clause
(ii); and
``(II) the decision shall take effect as provided in
subsections (c)(2) and (d)(2) of section 803 and section
114(f)(4)(B)(ii) and (C).
``(iv) The rates and terms shall remain in effect for the
period set forth in section 114(f)(1)(C) or 114(f)(2)(C), as
the case may be.
``(4) Section 115 proceedings.--A petition described in
subsection (a) to initiate proceedings under section
801(b)(1) concerning the adjustment or determination of
royalty rates as provided in section 115 may be filed in the
year 2006 and in each subsequent fifth calendar year, or at
such other times as the parties have agreed under section
115(c)(3)(B) and (C).
``(5) Section 116 proceedings.--(A) A petition described in
subsection (a) to initiate proceedings under section 801(b)
concerning the determination of royalty rates and terms as
provided in section 116 may be filed at any time within 1
year after negotiated licenses authorized by section 116 are
terminated or expire and are not replaced by subsequent
agreements.
``(B) If a negotiated license authorized by section 116 is
terminated or expires and is not replaced by another such
license agreement which provides permission to use a quantity
of musical works not substantially smaller than the quantity
of such works performed on coin-operated phonorecord players
during the 1-year period ending March 1, 1989, the Copyright
Royalty Judges shall, upon petition filed under paragraph (1)
within 1 year after such termination or expiration, commence
a proceeding to promptly establish an interim royalty rate or
rates for the public performance by means of a coin-operated
phonorecord player of nondramatic musical works embodied in
phonorecords which had been subject to the terminated or
expired negotiated license agreement. Such rate or rates
shall be the same as the last such rate or rates and shall
remain in force until the conclusion of proceedings by the
Copyright Royalty Judges, in accordance with section 803, to
adjust the royalty rates applicable to such works, or until
superseded by a new negotiated license agreement, as provided
in section 116(b).
``(6) Section 118 proceedings.--A petition described in
subsection (a) to initiate proceedings under section
801(b)(1) concerning the determination of reasonable terms
and rates of royalty payments as provided in section 118 may
be filed in the year 2006 and in each subsequent fifth
calendar year.
``(7) Section 1004 proceedings.--A petition described in
subsection (a) to initiate proceedings under section
801(b)(1) concerning the adjustment of reasonable royalty
rates under section 1004 may be filed as provided in section
1004(a)(3).
``(8) Proceedings concerning distribution of royalty
fees.--With respect to proceedings under section 801(b)(3)
concerning the distribution of royalty fees in certain
circumstances under section 111, 116, 119, or 1007, the
Copyright Royalty Judges shall, upon a determination that a
controversy exists concerning such distribution, cause to be
published in the Federal Register notice of commencement of
proceedings under this chapter.
``Sec. 805. General rule for voluntarily negotiated
agreements
``Any rates or terms under this title that--
``(1) are agreed to by participants to a proceeding under
section 803(b)(2),
``(2) are adopted by the Copyright Royalty Judges as part
of a determination under this chapter, and
``(3) are in effect for a period shorter than would
otherwise apply under a determination pursuant to this
chapter,
shall remain in effect for such period of time as would
otherwise apply under such determination, except that the
Copyright Royalty Judges shall adjust the rates pursuant to
the voluntary negotiations to reflect national monetary
inflation during the additional period the rates remain in
effect.''.
(b) Conforming Amendment.--The table of chapters for title
17, United States Code, is amended by striking the item
relating to chapter 8 and inserting the following:
``8. Proceedings by Copyright Royalty Judges.................801''.....
SEC. 4. DEFINITION.
Section 101 is amended by inserting after the definition of
``copies'' the following:
``A `Copyright Royalty Judge' is a Copyright Royalty Judge
appointed under section 802 of this title, and includes any
individual serving as an interim Copyright Royalty Judge
under such section.''.
SEC. 5. TECHNICAL AMENDMENTS.
(a) Cable Rates.--Section 111(d) is amended--
(1) in paragraph (2), in the second sentence, by striking
``a copyright arbitration royalty panel'' and inserting ``the
Copyright Royalty Judges.''; and
(2) in paragraph (4)--
(A) in subparagraph (A), by striking ``Librarian of
Congress'' each place it appears and inserting ``Copyright
Royalty Judges'';
(B) in subparagraph (B)--
(i) in the first sentence, by striking ``Librarian of
Congress shall, upon the recommendation of the Register of
Copyrights,'' and inserting ``Copyright Royalty Judges
shall'';
(ii) in the second sentence, by striking ``Librarian
determines'' and inserting ``Copyright Royalty Judges
determine''; and
(iii) in the third sentence--
(I) by striking ``Librarian'' each place it appears and
inserting ``Copyright Royalty Judges''; and
(II) by striking ``convene a copyright arbitration royalty
panel'' and inserting ``conduct a proceeding''; and
(C) in subparagraph (C), by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges''.
(b) Ephemeral Recordings.--Section 112(e) is amended--
(1) in paragraph (3)--
(A) by amending the first sentence to read as follows:
``Voluntary negotiation proceedings initiated pursuant to
section 804(a) for the purpose of determining reasonable
terms and rates of royalty payments for the activities
specified by paragraph (1) shall cover the 5-year period
beginning on January 1 of the second year following the year
in which the proceedings are commenced, or such other period
as the parties may agree.''; and
(B) in the third sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(2) in paragraph (4)--
(A) by amending the first sentence to read as follows: ``In
the absence of license agreements negotiated under paragraphs
(2) and (3), the Copyright Royalty Judges shall commence a
proceeding pursuant to chapter 8 to determine and publish in
the Federal Register a schedule of reasonable rates and terms
which, subject to paragraph (5), shall be binding on all
copyright owners of sound recordings and transmitting
organizations entitled to a statutory license under this
subsection during the 5-year period specified in paragraph
(3), or such other period as the parties may agree.'';
(B) by striking ``copyright arbitration royalty panel''
each subsequent place it appears and inserting ``Copyright
Royalty Judges'';
(C) in the fourth sentence, by striking ``its decision''
and inserting ``their decision''; and
[[Page H767]]
(D) in the last sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(3) in paragraph (5), by striking ``or decision by the
Librarian of Congress'' and inserting ``, decision by the
Librarian of Congress, or determination by the Copyright
Royalty Judges'';
(4) by striking paragraph (6) and redesignating paragraphs
(7), (8), and (9), as paragraphs (6), (7), and (8),
respectively; and
(5) in paragraph (6)(A), as so redesignated, by striking
``Librarian of Congress'' and inserting ``Copyright Royalty
Judges''.
(c) Scope of Exclusive Rights in Sound Recordings.--Section
114(f) is amended--
(1) in paragraph (1)--
(A) in subparagraph (A)--
(i) by amending the first sentence to read as follows:
``Voluntary negotiation proceedings initiated pursuant to
section 804(a) for the purpose of determining reasonable
terms and rates of royalty payments for subscription
transmissions by preexisting subscription services and
transmissions by preexisting satellite digital audio radio
services shall cover the 5-year period beginning on January 1
of the year following the second year in which the
proceedings are commenced, except where differential
transitional periods are provided in section 804(b)(3), or
such other period as the parties may agree.''; and
(ii) in the third sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) by amending the first sentence to read as follows: ``In
the absence of license agreements negotiated under
subparagraph (A), the Copyright Royalty Judges shall commence
a proceeding pursuant to chapter 8 to determine and publish
in the Federal Register a schedule of rates and terms which,
subject to paragraph (3), shall be binding on all copyright
owners of sound recordings and entities performing sound
recordings affected by this paragraph during the 5-year
period specified in subparagraph (A), or such other date as
the parties may agree.''; and
(ii) in the second sentence, by striking ``copyright
arbitration royalty panel'' and inserting ``Copyright Royalty
Judges''; and
(C) by amending subparagraph (C) to read as follows:
``(C) The procedures under subparagraphs (A) and (B) also
shall be initiated pursuant to a petition filed by any
copyright owners of sound recordings, any preexisting
subscription services, or any preexisting satellite digital
audio radio services indicating that a new type of
subscription digital audio transmission service on which
sound recordings are performed is or is about to become
operational, for the purpose of determining reasonable terms
and rates of royalty payments with respect to such new type
of transmission service for the period beginning with the
inception of such new type of service and ending on the date
on which the royalty rates and terms for subscription digital
audio transmission services most recently determined under
subparagraph (A) or (B) and chapter 8 expire, or such other
period as the parties may agree.'';
(2) in paragraph (2)--
(A) in subparagraph (A)--
(i) by amending the first sentence to read as follows:
``Voluntary negotiation proceedings initiated pursuant to
section 804(a) for the purpose of determining reasonable
terms and rates of royalty payments for public performances
of sound recordings by means of eligible nonsubscription
transmissions and transmissions by new subscription services
specified by subsection (d)(2) shall cover the 5-year period
beginning on January 1 of the second year following the year
in which the proceedings are commenced, except where
different transitional periods are provided in section
804(b)(3)(A), or such other period as the parties may
agree.''; and
(ii) in the third sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) by amending the first sentence to read as follows: ``In
the absence of license agreements negotiated under
subparagraph (A), the Copyright Royalty Judges shall commence
a proceeding pursuant to chapter 8 to determine and publish
in the Federal Register a schedule of rates and terms which,
subject to paragraph (3), shall be binding on all copyright
owners of sound recordings and entities performing sound
recordings affected by this paragraph during the period
specified in subparagraph (A), or such other period as the
parties may agree.''; and
(ii) by striking ``copyright arbitration royalty panel''
each subsequent place it appears and inserting ``Copyright
Royalty Judges''; and
(C) by amending subparagraph (C) to read as follows:
``(C) The procedures under subparagraphs (A) and (B) shall
also be initiated pursuant to a petition filed by any
copyright owners of sound recordings or any eligible
nonsubscription service or new subscription service
indicating that a new type of eligible nonsubscription
service or new subscription service on which sound recordings
are performed is or is about to become operational, for the
purpose of determining reasonable terms and rates of royalty
payments with respect to such new type of service for the
period beginning with the inception of such new type of
service and ending on the date on which the royalty rates and
terms for preexisting subscription digital audio transmission
services or preexisting satellite digital radio audio
services, as the case may be, most recently determined under
subparagraph (A) or (B) and chapter 8 expire, or such other
period as the parties may agree.'';
(3) in paragraph (3), by striking ``or decision by the
Librarian of Congress'' and inserting ``, decision by the
Librarian of Congress, or determination by the Copyright
Royalty Judges''; and
(4) in paragraph (4), by striking ``Librarian of Congress''
each place it appears and inserting ``Copyright Royalty
Judges''.
(d) Phonorecords of Nondramatic Musical Works.--Section
115(c)(3) is amended--
(1) in subparagraph (A)(ii), by striking ``(F)'' and
inserting ``(E)'';
(2) in subparagraph (B)--
(A) by striking ``under this paragraph'' and inserting
``under this section''; and
(B) by striking ``subparagraphs (B) through (F)'' and
inserting ``this subparagraph and subparagraphs (B) through
(E)'';
(3) in subparagraph (C)--
(A) by amending the first sentence to read as follows:
``Voluntary negotiation proceedings initiated pursuant to a
petition filed under section 804(a) for the purpose of
determining reasonable terms and rates of royalty payments
for the activities specified by this section shall cover the
period beginning with the effective date of such terms and
rates, but not earlier than January 1 of the second year
following the year in which the petition is filed, and ending
on the effective date of successor terms and rates, or such
other period as the parties may agree.''; and
(B) in the third sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(4) in subparagraph (D)--
(A) by amending the first sentence to read as follows: ``In
the absence of license agreements negotiated under
subparagraphs (B) and (C), the Copyright Royalty Judges shall
commence proceedings pursuant to chapter 8 to determine and
publish in the Federal Register a schedule of rates and terms
which, subject to subparagraph (E), shall be binding on all
copyright owners of nondramatic musical works and persons
entitled to obtain a compulsory license under subsection
(a)(1) during the period specified in subparagraph (C) or
such other period as may be determined pursuant to
subparagraphs (B) and (C), or such other period as the
parties may agree.'';
(B) in the third sentence, by striking ``copyright
arbitration royalty panel'' and inserting ``Copyright Royalty
Judges''; and
(C) in the last sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(5) in subparagraph (E)--
(A) in clause (i)--
(i) in the first sentence, by striking ``the Librarian of
Congress'' and inserting ``a copyright arbitration royalty
panel, the Librarian of Congress, or the Copyright Royalty
Judges''; and
(ii) in the second sentence, by striking ``(C), (D) or (F)
shall be given effect'' and inserting ``(C) or (D) shall be
given effect as to digital phonorecord deliveries''; and
(B) in clause (ii)(I), by striking ``(C), (D) or (F)'' each
place it appears and inserting ``(C) or (D)''; and
(6) by striking subparagraph (F) and redesignating
subparagraphs (G) through (L) as subparagraphs (F) through
(K), respectively.
(e) Coin-Operated Phonorecord Players.--Section 116 is
amended--
(1) in subsection (b), by amending paragraph (2) to read as
follows:
``(2) Chapter 8 proceeding.--Parties not subject to such a
negotiation may have the terms and rates and the division of
fees described in paragraph (1) determined in a proceeding in
accordance with the provisions of chapter 8.''; and
(2) in subsection (c)--
(A) in the subsection heading, by striking ``Copyright
Arbitration Royalty Panel Determinations'' and inserting
``Determinations by Copyright Royalty Judges''; and
(B) by striking ``a copyright arbitration royalty panel''
and inserting ``the Copyright Royalty Judges''.
(f) Use of Certain Works in Connection With Noncommercial
Broadcasting.--Section 118 is amended--
(1) in subsection (b)--
(A) in paragraph (1)--
(i) in the first sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges''; and
(ii) by striking the second and third sentences;
(B) in paragraph (2), by striking ``the Librarian of
Congress:'' and all that follows through the end of the
sentence and inserting ``a copyright arbitration royalty
panel, the Librarian of Congress, or the Copyright Royalty
Judge, if copies of such agreements are filed with the
Copyright Royalty Judges within 30 days of execution in
accordance with regulations that the Copyright Royalty Judges
shall issue.''; and
(C) in paragraph (3)--
(i) in the second sentence--
(I) by striking ``copyright arbitration royalty panel'' and
inserting ``Copyright Royalty Judges''; and
(II) by striking ``paragraph (2).'' and inserting
``paragraph (2) or (3).'';
(ii) in the last sentence, by striking ```Librarian of
Congress'' and inserting ``Copyright Royalty Judges''; and
[[Page H768]]
(iii) by striking ``(3) In'' and all that follows through
the end of the first sentence and inserting the following:
``(3) Voluntary negotiation proceedings initiated pursuant
to a petition filed under section 804(a) for the purpose of
determining a schedule of terms and rates of royalty payments
by public broadcasting entities to copyright owners in works
specified by this subsection and the proportionate division
of fees paid among various copyright owners shall cover the
5-year period beginning on January 1 of the second year
following the year in which the petition is filed. The
parties to each negotiation proceeding shall bear their own
costs.
``(4) In the absence of license agreements negotiated under
paragraph (2) or (3), the Copyright Royalty Judges shall,
pursuant to chapter 8, conduct a proceeding to determine and
publish in the Federal Register a schedule of rates and terms
which, subject to paragraph (2), shall be binding on all
owners of copyright in works specified by this subsection and
public broadcasting entities, regardless of whether such
copyright owners have submitted proposals to the Copyright
Royalty Judges.'';
(2) by striking subsection (c) and redesignating
subsections (d) through (g) as subsections (c) through (f),
respectively;
(3) in subsection (c), as so redesignated, in the matter
preceding paragraph (1)--
(A) by striking ``(b)(2)'' and inserting ``(b)(2) or (3)'';
(B) by striking ``(b)(3)'' and inserting ``(b)(4)''; and
(C) by striking ``a copyright arbitration royalty panel''
and inserting ``the Copyright Royalty Judges'';
(4) in subsection (d), as so redesignated--
(A) by striking ``in the Copyright Office'' and inserting
``with the Copyright Royalty Judges''; and
(B) by striking ``Register of Copyrights'' and inserting
``Copyright Royalty Judges''; and
(5) in subsection (f), as so redesignated, by striking
``(d)'' and inserting ``(c)''.
(g) Secondary Transmissions by Satellite Carriers.--Section
119(b) is amended--
(1) in paragraph (3), by striking ``Librarian of Congress''
and inserting ``Copyright Royalty Judges''; and
(2) in paragraph (4)--
(A) in subparagraph (A), by striking ``Librarian of
Congress'' each place it appears and inserting ``Copyright
Royalty Judges''; and
(B) by amending subparagraphs (B) and (C) to read as
follows:
``(B) Determination of controversy; distributions.--After
the first day of August of each year, the Copyright Royalty
Judges shall determine whether there exists a controversy
concerning the distribution of royalty fees. If the Copyright
Royalty Judges determine that no such controversy exists, the
Librarian of Congress shall, after deducting reasonable
administrative costs under this paragraph, distribute such
fees to the copyright owners entitled to receive them, or to
their designated agents. If the Copyright Royalty Judges find
the existence of a controversy, the Copyright Royalty Judges
shall, pursuant to chapter 8 of this title, conduct a
proceeding to determine the distribution of royalty fees.
``(C) Withholding of fees during controversy.--During the
pendency of any proceeding under this subsection, the
Copyright Royalty Judges shall withhold from distribution an
amount sufficient to satisfy all claims with respect to which
a controversy exists, subject to any distributions made under
section 801(b)(3).''.
(h) Digital Audio Recording Devices.--
(1) Royalty payments.--Section 1004(a)(3) is amended by
striking ``Librarian of Congress'' each place it appears and
inserting ``Copyright Royalty Judges''.
(2) Entitlement to royalty payments.--Section 1006(c) is
amended by striking ``Librarian of Congress shall convene a
copyright arbitration royalty panel which'' and inserting
``Copyright Royalty Judges''.
(3) Procedures for distributing royalty payments.--Section
1007 is amended--
(A) in subsection (a), by amending paragraph (1) to read as
follows:
``(1) Filing of claims.--During the first 2 months of each
calendar year, every interested copyright party seeking to
receive royalty payments to which such party is entitled
under section 1006 shall file with the Copyright Royalty
Judges a claim for payments collected during the preceding
year in such form and manner as the Copyright Royalty Judges
shall prescribe by regulation.''; and
(B) by amending subsections (b) and (c) to read as follows:
``(b) Distribution of Payments in the Absence of a
Dispute.--After the period established for the filing of
claims under subsection (a), in each year, the Copyright
Royalty Judges shall determine whether there exists a
controversy concerning the distribution of royalty payments
under section 1006(c). If the Copyright Royalty Judges
determine that no such controversy exists, the Librarian of
Congress shall, within 30 days after such determination,
authorize the distribution of the royalty payments as set
forth in the agreements regarding the distribution of royalty
payments entered into pursuant to subsection (a). The
Librarian of Congress shall, before such royalty payments are
distributed, deduct the reasonable administrative costs
incurred by the Librarian under this section.
``(c) Resolution of Disputes.--If the Copyright Royalty
Judges find the existence of a controversy, the Copyright
Royalty Judges shall, pursuant to chapter 8 of this title,
conduct a proceeding to determine the distribution of royalty
payments. During the pendency of such a proceeding, the
Copyright Royalty Judges shall withhold from distribution an
amount sufficient to satisfy all claims with respect to which
a controversy exists, but shall, to the extent feasible,
authorize the distribution of any amounts that are not in
controversy. The Librarian of Congress shall, before such
royalty payments are distributed, deduct the reasonable
administrative costs incurred by the Librarian under this
section.''.
(4) Determination of certain disputes.--(A) Section 1010 is
amended to read as follows:
``Sec. 1010. Determination of certain disputes
``(a) Scope of Determination.--Before the date of first
distribution in the United States of a digital audio
recording device or a digital audio interface device, any
party manufacturing, importing, or distributing such device,
and any interested copyright party may mutually agree to
petition the Copyright Royalty Judges to determine whether
such device is subject to section 1002, or the basis on which
royalty payments for such device are to be made under section
1003.
``(b) Initiation of Proceedings.--The parties under
subsection (a) shall file the petition with the Copyright
Royalty Judges requesting the commencement of a proceeding.
Within 2 weeks after receiving such a petition, the Chief
Copyright Royalty Judge shall cause notice to be published in
the Federal Register of the initiation of the proceeding.
``(c) Stay of Judicial Proceedings.--Any civil action
brought under section 1009 against a party to a proceeding
under this section shall, on application of one of the
parties to the proceeding, be stayed until completion of the
proceeding.
``(d) Proceeding.--The Copyright Royalty Judges shall
conduct a proceeding with respect to the matter concerned, in
accordance with such procedures as the Copyright Royalty
Judges may adopt. The Copyright Royalty Judges shall act on
the basis of a fully documented written record. Any party to
the proceeding may submit relevant information and proposals
to the Copyright Royalty Judges. The parties to the
proceeding shall each bear their respective costs of
participation.
``(e) Judicial Review.--Any determination of the Copyright
Royalty Judges under subsection (d) may be appealed, by a
party to the proceeding, in accordance with section 803(d) of
this title. The pendency of an appeal under this subsection
shall not stay the determination of the Copyright Royalty
Judges. If the court modifies the determination of the
Copyright Royalty Judges, the court shall have jurisdiction
to enter its own decision in accordance with its final
judgment. The court may further vacate the determination of
the Copyright Royalty Judges and remand the case for
proceedings as provided in this section.''.
(B) The item relating to section 1010 in the table of
sections for chapter 10 is amended to read as follows:
``1010. Determination of certain disputes.''.
SEC. 6. EFFECTIVE DATE AND TRANSITION PROVISIONS.
(a) Effective Date.--This Act and the amendments made by
this Act shall take effect 6 months after the date of the
enactment of this Act, except that the Librarian of Congress
shall appoint interim Copyright Royalty Judges under section
802(d) of title 17, United States Code, as amended by this
Act, within 90 days after such date of enactment to carry out
the functions of the Copyright Royalty Judges under title 17,
United States Code, to the extent that Copyright Royalty
Judges provided for in section 801(a) of title 17, United
States Code, as amended by this Act, have not been appointed
before the end of that 90-day period.
(b) Transition Provisions.--
(1) In general.--Subject to paragraph (2), the amendments
made by this Act shall not affect any proceedings commenced,
petitions filed, or voluntary agreements entered into before
the enactment of this Act under the provisions of title 17,
United States Code, amended by this Act, and pending on such
date of enactment. Such proceedings shall continue,
determinations made in such proceedings, and appeals taken
therefrom, as if this Act had not been enacted, and shall
continue in effect until modified under title 17, United
States Code, as amended by this Act. Such petitions filed and
voluntary agreements entered into shall remain in effect as
if this Act had not been enacted.
(2) Effective periods for certain ratemaking proceedings.--
Notwithstanding paragraph (1), terms and rates in effect
under section 114(f)(2) or 112(e) of title 17, United States
Code, for new subscription services, eligible nonsubscription
services, and services exempt under section 114(d)(1)(C)(iv)
of such title for the period 2003 through 2004, and any rates
published in the Federal Register under the authority of the
Small Webcaster Settlement Act of 2002 for the years 2003
through 2004, shall be effective until the first applicable
effective date for successor terms and rates specified in
section 804(b)(2) or (3)(A) of title 17, United States Code,
or until such later date as the parties may agree. Any
proceeding commenced before the enactment of this Act
[[Page H769]]
pursuant to section 114(f)(2) and chapter 8 of title 17,
United States Code, to adjust or determine such rates and
terms for periods following 2004 shall be terminated upon the
enactment of this Act and shall be null and void.
(c) Existing Appropriations.--Any funds made available in
an appropriations Act before the date of the enactment of
this Act to carry out chapter 8 of title 17, United States
Code, shall be available to the extent necessary to carry out
this section.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Wisconsin (Mr. Sensenbrenner) and the gentleman from California (Mr.
Berman) 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 within which to revise and extend
their remarks and include extraneous material on H.R. 1417.
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.
Mr. Speaker, I rise in strong support of H.R. 1417, legislation to
reform the rate-making and royalty distribution system for compulsory
and statutory licenses.
Mr. Speaker, I would like to take this time to thank the ranking
member of the Committee on the Judiciary, the gentleman from Michigan
(Mr. Conyers), as well as the gentleman from Texas (Mr. Smith) and the
gentleman from California (Mr. Berman), the chairman and ranking
minority member of the Subcommittee on the Courts, the Internet and
Intellectual Property, for their support in making CARP reform a
priority.
By way of background, with the creation of three copyright compulsory
licenses in 1976, Congress contemplated the need for an administrative
body that would be responsible for adjusting the rates of the statutory
licenses from time to time, as well as acting as the distributors of
the royalties subject to these licenses.
The resulting entity was the Copyright Royalty Tribunal or the CRT.
In 1993, in response to criticisms voiced against the CRT, Congress
reassessed the rate-making and royalty distribution system and created
the current system, the Copyright Royalty Arbitration Panel, otherwise
known as CARPs.
Among other things, H.R. 1417 addresses the uniform complaints that
the CARP decisions are unpredictable and inconsistent by changing the
structure from ad hoc arbitration panels to three permanent copyright
royalty judges. To justify the need for these full-time judges, as well
as to alleviate the overwhelming workloads at given periods of time,
the bill staggers the timing at which the three various statutory
licenses can be heard.
The bill also addresses the complaint that the process is
unnecessarily expensive by eliminating the costs of arbitration upon
private parties. It does so by creating a specific process designed to
give small claimants a more balanced ability to participate. The bill
discourages persons or entities from disrupting the process at the 11th
hour by requiring potential participants to show that they have a
significant interest in the proceedings. In furtherance of marketplace
negotiations, the measure establishes a cooling-off period during which
time parties are to focus on reaching their own agreements.
Finally, Mr. Speaker, the substitute before us incorporates certain
noncontroversial amendments written to accommodate legitimate concerns
that evolve after our committee reported the bill out.
Mr. Speaker, H.R. 1417 was painstakingly negotiated among the various
congressional, executive, and industry stakeholders. We worked in a
bipartisan manner and developed a consensus product that will
effectively address an arcane, but important, manner. I urge its
adoption.
Mr. Speaker, I reserve the balance of my time.
Mr. BERMAN. Mr. Speaker, I yield myself such time as I may consume.
(Mr. BERMAN asked and was given permission to revise and extend his
remarks.)
Mr. BERMAN. Mr. Speaker, I rise in strong support of H.R. 1417, and I
ask all of my colleagues to support what I think is fundamentally
noncontroversial legislation.
H.R. 1417 has been subjected to an exhaustive review process. It
emerged from a hearing before the Subcommittee on the Courts, the
Internet, and Intellectual Property during the 107th Congress and from
a series of open roundtable discussions convened at the U.S. Copyright
Office. Early drafts were shaped by several rounds of written comments
from all affected stakeholders.
After introduction of H.R. 1417 early this Congress, the subcommittee
held another hearing. The subcommittee then reported by voice vote a
substantially refined amendment, and the full Committee on the
Judiciary made further significant revisions before also reporting its
amendment by voice vote. Thus, the version of H.R. 1417 before us today
has been forged through an extensive and open process.
Both the chairman of the Committee on the Judiciary, the gentleman
from Wisconsin (Mr. Sensenbrenner), and the chairman of the
Subcommittee on the Courts, the Internet, and Intellectual Property,
the gentleman from Texas (Mr. Smith), are to be commended for pushing
H.R. 1417 forward. They have devoted significant time and energy to
crafting both the substance of this bill and organizing the widespread
support behind it. I thank both of them for working so closely with me
and my staff, Alec French, in drafting this bill and its various
iterations.
The chairmen are also to be commended for ensuring that the bill
remedies the procedural effects of the CARP process without straining
into substantive copyright law issues that would surely doom its
prospects for passage.
H.R. 1417 focuses on a narrow, but complex, goal. It significantly
reforms the system for copyright arbitration royalty panels. The U.S.
copyright law contains a half dozen statutory licenses that require
copyright owners to make their works available to certain users under
government-set rates and terms. For instance, the section 114 statutory
license allows Webcasters to perform sound recordings under government-
set rates and terms. The royalty rates and terms are established by
CARPs, which also determine the appropriate distribution of royalties
among copyright owners.
There is widespread agreement among copyright owners and users alike
that the CARP process is broken. The costs involved are often so high
that parties cannot either afford to participate or find that the costs
outweigh any potential royalties or efficiencies. The decisions often
take too long to issue and thus create uncertainty and confusion among
licensers and licensees alike. Finally, even when decisions do issue,
they are often overturned or modified, are inconsistent with
precedents, and cannot be effectively implemented until corresponding
rule-makings are completed.
{time} 1100
H.R. 1417 will go a long way to remedying the defects of the CARP
process. While the changes are too copious to list in total, I would
like to highlight a few of the improvements made by the bill.
The primary flaw of the CARPs is they are conducted by private
arbitrators who often have no prior experience in conducting a
statutory license rate-setting or distribution, much less any prior
familiarity with the substantive law or industry economics involved.
Because the CARP arbitrators have neither the experience nor authority
to do so, the Copyright Office is often called on to issue regulations
resolving substantive legal issues that arise during CARPs, and all too
often, as we saw in the 2002 webcasting CARP, the Copyright Office is
called upon to overturn a CARP decision.
H.R. 1417 replaces the part-time arbitrators with a panel of three
full-time copyright royalty judges. These three CRJs will be appointed
by the Librarian of Congress to serve staggered 6-year terms. Each
panel will bring at least 6 years of experience to every rate-setting
and distribution proceeding. Further, the Librarian is required to
appoint CRJs with a breadth of experience in copyright law, economics
and adjudications.
[[Page H770]]
Mr. Speaker, rather than list a number of the key changes in this
bill, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I yield such time as he may consume
to the gentleman from Texas (Mr. Smith), the chairman of the
subcommittee.
Mr. SMITH of Texas. Mr. Speaker, I thank the gentleman from
Wisconsin, the chairman of the Committee on the Judiciary, for yielding
time.
Mr. Speaker, our country has long worked to support and protect
copyright holders to ensure they receive fair compensation for their
creative works.
Over the last 20 years, Congress has attempted to develop the
appropriate mechanism to govern royalties; that is, how to distribute
royalties to those who create and how to adjust royalties when
necessary. In other words, we have tried to find a compromise that
allows for the fair distribution of royalties when two parties cannot
agree on the value of a creative work.
When I say ``fair distribution of royalties'' that could mean many
things to different parties, particularly the creators of copyrighted
works themselves. It is a major reason why this issue is again before
Congress.
Congress established the first entity to deal with this in 1976. Ten
years ago, that system was abolished to create the current Copyright
Arbitration Royalty Panel, or CARP, system.
This legislation that I authored addresses the main problem:
frivolous royalty claims, which is a growing trend, as well as
decisions made by the copyright panel that are unpredictable and
inconsistent.
Much like another intellectual property rights bill that reforms the
Patent and Trademark Office, this legislation is critical to the
entertainment industry and a growing economy. It is of great importance
to artists, songwriters, music publishers and webcasters.
For example, take the case of a songwriter and a webcaster. If a
songwriter cannot reach an agreement with a webcaster about the value
of a song in the marketplace, the matter is brought to the copyright
royalty and distribution system. The private parties involved, of
course, pay for the process.
What happens now is the songwriter or the webcaster, or both, often
are not left with much of a royalty payment because the process is too
lengthy and too costly. If the songwriter cannot make enough on his
creations to support himself, then he will no longer be able to create,
and our economy and our society will be the loser.
This is the central reason why we are here today: to ensure that the
songwriter has the incentive to create and the webcaster has the
benefit of distributing enjoyable musical creations.
Unfortunately, American songwriters and webcasters today are caught
up in a royalty system that is anything but fair. The current
proceedings to establish royalty rates are long, laborious and costly.
They harm our economy and take a tremendous toll on the businesses and
persons involved. Congress must reform this broken system, which is
exactly what this bill does.
I urge my colleagues to support a balanced and fair process that
will, for example, help songwriters and bring a little more melody into
the lives of the American people.
Mr. BERMAN. Mr. Speaker, I yield myself such time as I may consume.
(Mr. BERMAN asked and was given permission to revise and extend his
remarks.)
Mr. BERMAN. Mr. Speaker, I am not going to detail all the different
provisions contained in this bill. There are many and they are
important. They deal with a problem in the past of setting rates
retroactively and how under these reforms rates will be set
prospectively, and they deal with the integration of the Copyright
Office and its role in providing advice and opinions on matters of law
into the process.
They create mechanisms for small participants to participate at much
less cost than they now participate through all paper rate-setting
proceedings, make some changes in evidentiary rules and discovery
rules, and at the same time, they enable the copyright owners to
negotiate voluntary agreements rather than go through the whole full
blown rate-setting and distribution proceedings.
I do want to call the attention of the body to one particular
provision which I think is very important. We rationalize in this bill,
H.R. 1417, the ability of the parties to engage in voluntary
negotiations in the context of the Section 115 statutory license for
reproductions of musical compositions. The Section 115 license
currently provides copyright owners and users a limited antitrust
exemption to collectively negotiate rates and terms for Digital
Phonorecord Deliveries of musical compositions. With the acquiescence
of the Justice Department, H.R. 1417 extends this narrow antitrust
exemption to all of Section 115, so that it now covers similar
negotiations for mechanical reproductions of musical compositions, as
well as the digital deliveries.
Mr. Speaker, I rise in strong support of H.R. 1417. I ask all my
colleagues to support this non-controversial legislation.
H.R. 1417 has received exhaustive process. It emerged from a hearing
before the Intellectual Property Subcommittee during the 107th
Congress, and from series of open roundtable discussions convened at
the U.S. Copyright Office. Early drafts were shaped by several rounds
of written comments from all affected stakeholders. After introduction
of H.R. 1417 early this Congress, the subcommittee held another
hearing. The subcommittee then reported by voice vote a substantially
refined amendment, and the full Judiciary Committee made further
significant revisions before also reporting its amendment by voice
vote. Thus, the version of H.R. 1417 before us today has been forged
through an extensive and open process.
Both the chairman of the Judiciary Committee and the chairman of the
Intellectual Property Subcommittee are to be commended for pushing H.R.
1417 forward. They have devoted significant time and energy to crafting
both the substance of this bill and the widespread support behind it. I
thank them both for working so closely with me in drafting this bill
and its various iterations.
The chairmen are also to be commended for ensuring that the bill
remedies the procedural defects of the CARP process without straying
into substantive copyright law issues that would surely doom its
prospects for passage.
H.R. 1417 focuses on a narrow but complex goal: It significantly
reforms the system for Copyright Arbitration Royalty Panels--or CARP.
U.S. copyright law contains a half-dozen statutory licenses that
require copyright owners to make their works available to certain users
under Government-set rates and terms. For instance, the section 114
statutory license allows webcasters to perform sound recordings under
Government-set rates and terms. The royalty rates and terms are
established by CARPs, which also determine the appropriate distribution
of royalties among copyright owners.
There is widespread agreement among copyright owners and users alike
that the CARP process is broken. The costs involved are often so high
that parties either cannot afford to participate, or find that the
costs outweigh any potential royalties or efficiencies. The decisions
often take too long to issue, and thus create uncertainty and confusion
among licensors and licensees alike. Finally, even when decisions do
issue, they are often overturned or modified, are inconsistent with
precedents, and cannot be effectively implemented until corresponding
rule-makings are completed.
H.R. 1417 will go a long way to remedying the defects of the CARP
process. While the changes are too copious to list in total, I would
like to highlight a few of the improvements made by this bill.
The primary flaw with CARPs is that they are conducted by private
arbitrators who often have no prior experience in conducting a
statutory license rate-setting or distribution, much less any prior
familiarity with the substantive law or industry economics involved.
Because the CARP arbitrators have neither the expertise nor authority
to do so, the Copyright Office is often called on to issue regulations
resolving substantive legal issue that arise during CARPs. And all too
often, as we saw in the 2002 webcasting CARP, the Copyright Office is
called upon to overturn a CARP decision.
H.R. 1417 replaces the part-time arbitrators with a panel of three
full-time Copyright Royalty Judges. These three CRJs will be appointed
by the Librarian of Congress to serve staggered 6-year terms. Thus,
each panel will bring at least 6 years of collective experience to
every rate-setting and distribution proceeding. Further, the Librarian
is required to appoint CRJs with a breadth of experience in copyright
law, economics, and adjudications.
The bill contains a number of other provisions that further
consolidate and strength the authority of the CRJs. For instance, the
bill gives CRJs continuing jurisdiction to ensure
[[Page H771]]
that they have the ability ``to respond to unforeseen circumstances
that preclude the proper effectuation of the determination.''
The continuity, experience, and enhanced authority of the CRJs should
lead to decisions that are quicker, more consistent, more likely to
withstand appeal, and in the long run, far less expensive to secure.
While the new CRJs will have requisite authority and expertise to
make good decisions, H.R. 1417 ensures they will be able to draw on,
and benefit from, from the substantial expertise of the Copyright
Office in this area. H.R. 1417 requires that the Librarian consult with
the Register of Copyrights when appointing CRJs. Furthermore, the bill
requires the CRJs to solicit the written opinion of the Copyright
Office on novel questions of law, and allows the CRJs to consult--on
the record--with the Register of Copyrights on all matters other than
questions of fact.
H.R. 1417 addresses another major flaw of the current CARP process--
the fact that the rates for several statutory licenses are set
retroactively. The webcasting CARP concluded in 2002 demonstrates the
problems with retroactive rate-setting. When rates were set in 2002 for
webcasting that occurred between 1998 and 2002, many small webcasters
found their viability threatened because they had not set aside enough
money to defray the royalty obligations they had already incurred.
H.R. 1417 addresses this problem through a series of interrelated
changes to the various statutory licenses. H.R. 1417 ensures that all
rates and terms for statutory licenses will be set prospectively, and
eliminates the possibility that a time period covered by a statutory
license will commence before the establishment of rates and terms.
H.R. 1417 also addresses a variety of concerns about how CARPs gather
evidence, conduct hearings, determine participation, requires parties
to present their cases, and treat negotiated settlements. In addressing
these concerns, H.R. 1417 hews closely to the overall objective of
promoting expeditious, well-reasoned, and widely-supported outcomes.
The bill substantially improves the CARP process from the perspective
of small participants. H.R. 1417 allows CRJs to conduct an all-paper,
rate-setting proceeding, which in many circumstances, should
substantially reduce the barriers to participation for small copyright
owners and users. H.R. 1417 also creates an expedited small-claims
process to facilitate the distribution of royalties to small claimants.
The bill substantially alters some evidentiary rules, while retaining
others used by previous CARPs. It allows admission of hearsay ``to the
extent deemed appropriate'' by the CRJs, rather than according to the
Federal Rules of Evidence, and allows CRJs to issue subpoenas for
relevant and material information. It directs the CRJs to conduct
discovery conferences for the purpose of setting a schedule for
completing discovery.
The bill retains the discovery rules currently used in CARP
distribution proceedings because distribution participants expressed
general satisfaction with those rules. In rate-setting proceedings, the
amendment limits discovery to relevant and material information, and
allows the CRJs to deny discovery for good cause. The circumstances
that constitute ``good cause'' include where the discovery requests are
unreasonably cumulative or duplicative, easily obtainable from another
source, the burden or expense outweighs its likely benefit, and other
circumstances.
H.R. 1417 clarifies the rules regarding participation on CARP
proceedings. It also ensures that only parties who have fully
participated in the proceeding, and are bound by its determination,
will have the right to appeal that determination.
H.R. 1417 also retains the ability of copyright owners and users,
under a number of statutory licenses, to negotiate voluntary agreements
rather than suffer through full-blown rate-setting and distribution
proceedings. While H.R. 1417 maintains the ability of various statutory
licensors and licensees to agree to out-of-cycle rate determinations
through voluntary agreements adopted by the CRJs, it allows the CRJs to
reject such out-of-cycle determinations if workload concerns so merit.
H.R. 1417 also rationalizes the ability to engage in voluntary
negotiations in the context of the section 115 statutory license for
reproductions of musical compositions. The section 115 license
currently provides copyright owners and users a limited antitrust
exemption to collectively negotiate rates and terms for Digital
Phonorecord Deliveries of musical compositions. With the acquiescence
of the Justice Department, H.R. 1417 extends this narrow antitrust
exemption to all of section 115, so that it now covers similar
negotiations for mechanical reproductions of musical compositions.
A comprehensive description of this seventy-page bill would take more
time than I am allotted, so I will leave off there. However, I will
note that adoption of the CARP reform bill is not the end of the story
for reforming the CARP system.
Unlike the current CARP system, the bill requires appropriated funds
to pay for the new CRJ process. Since Congress has decided the public
interest is served by the creation of compulsory licenses in certain
instances, it is entirely appropriate that Congress should provide the
funds necessary to make the licenses work. CARP costs should not
dissipate the meager Government-set royalties received by copyright
owners, nor make participation by licensees uneconomical. However, if
adequate appropriations are not secured, this legislation will only
create further chaos. In this time of record budget deficits, it will
take a concerted effort by all interested parties to ensure sufficient
appropriations are forthcoming.
In conclusion, Mr. Speaker, I think H.R. 1417 will substantially
improve the CARP process, and I ask my colleagues to support it.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of this
legislation, H.R. 1417, the Copyright Royalty and Distribution Reform
Act. In September 2003, I offered my support during a full Judiciary
Committee markup hearing. Mr. Smith, Mr. Berman, and Ranking Member
Conyers are to be commended for their hard work in crafting this
legislation.
The bill would replace the existing administrative procedures within
the U.S. Copyright Office that determine copyright royalty rates and
the distribution of related royalties under various compulsory
licenses.
Under the Copyright Royalty Tribunal Reform Act of 1993, the
Librarian of Congress has the authority to convene Copyright
Arbitration Royalty Panels, or ``CARPs,'' to resolve failed private
negotiations between parties that fail to establish rates or to
distribute royalties regarding the commercial use of movies, music and
other specified copyrighted works.
For years, the CARP system has been criticized for rendering
unpredictable and inconsistent decisions, employing arbitrators lacking
the expertise to render sound decisions, and for being unnecessarily
expensive.
H.R. 1417 is a reasonable bill to cure these concerns and is based on
the input and recommendations of Government and industry experts.
H.R. 1417 addresses the problem of lack of arbitrator expertise by
appointing a ``Copyright Judge'' to preside over the new process. The
Copyright Judge will be appointed by the Librarian of Congress, have
full adjudicatory responsibility, and have the authority to make
rulings on both the law and rates. The Copyright Judge will select two
professional staff members with knowledge of economics, business, and
finance. These staff qualifications will also improve the quality of
the decisions rendered.
H.R. 1417 redefines the role of the Copyright Office. Presently, acts
as an intake agency answering initial case intake questions, as well as
an appellate court for CARP decisions by advising the Librarian on
cases. This dual role forces the Copyright Office to often decline to
answer threshold intake questions for fear of having to review its own
decisions at the appellate stage. Under H.R. 1417, the Copyright
Office's appellate responsibilities will be removed and the Office will
only act in an administrative and advisory capacity by counseling the
Copyright Judge on substantive issues as requested.
For small claimants who participate in the CARP process, the
substantial expenses are practically preclusive. H.R. 1417 contains
provisions to make the process more accessible. First, claimants must
declare an ``amount in controversy'' during a distribution
determination phase of the proceedings. If the dollar figure is $500 or
less, the claimant will be assigned to the small claims process which
is a less expensive, ``all-paper'' claim resolution method.
Another provision of H.R. 1417, that benefits both large and small
claimants requires the filing of a ``notice of intent to participate''
in either a rate-making or distribution proceeding. This notice
requirement will discourage entities from disrupting the process by
participating at the last minute. If a party failure to file in a
timely manner or fails to pay the required fee, they will be an
exclusion of either written or oral participation in that
determination. Those exempted as small claimants would not be affected
by this requirement.
H.R. contains several procedural changes to make the claim resolution
process more convenient for the parties. H.R. 1417 expands the duration
of the discovery phase from 45 to 60 days to give parties more time to
file their claims. Additionally, the 180-day time-frame for completing
the CARP hearing process is amended to require parties complete the
hearing phase of a rate-making or distribution determination in six
months. The Copyright Judge, at their discretion, could extend this
period up to a maximum of 6 additional months.
Mr. Speaker, H.R. 1417 will make changes to the CARP system that
promise to benefit
[[Page H772]]
the parties as well as the agents of the copyright adjudication system.
I support H.R. 1417, and I urge my colleagues to do likewise.
Mr. CONYERS. Mr. Speaker, I rise in support of this legislation. In
the past 2 years, the Committee has held two hearings on concerns with
the CARP, the system that sets royalty rates for copyrighted content.
People on both sides, the owners and buyers, agree that the current
system needs changes. Based on that, subcommittee Chairman Smith,
subcommittee Ranking Member Berman, and I introduced legislation, H.R.
1417, that would make substantial procedural changes.
We heard the current system is costly because the copyright owners
and users have to pay for the arbitrators. Because copyright law
subjects copyright owners and users to a compulsory process, we believe
the law should not place this additional financial burden on them. Our
bill creates three Copyright Royalty Judges who would be paid from
appropriated funds to set royalty rates and distribute royalty fees.
Another complaint was that the CARP does not have adequate rules on
how to address hearsay evidence. This bill explicitly requires that the
Judges treat hearsay evidence in the same manner that it is treated in
Federal court. This will bring uniformity to the proceedings for
parties on both sides of royalty disputes.
This bill also alters the terms for which certain royalty rates are
in effect. Rates that are determined by the Judges will be in effect
for 5 years. This should create some predictability and uniformity for
those who rely on the Judges' determinations.
Finally, parties on both sides argued that the substantive standards
that the CARP uses to set royalty rates should be changed somehow. In
an effort to reach a compromise and pass a bill that does not alter any
substantive rights, this bill changes only the procedure for rate
settings and distributions.
There will be a substitute amendment to the bill that was worked out
by the majority, minority, and all groups interested in the CARP
process. I hope we can continue to work on resolving any outstanding
issues and moving this bill through the other body.
I urge my colleagues to vote ``yes'' on this bill as amended.
Mr. BERMAN. Mr. Speaker, seeing no other speakers seeking recognition
on my side of the aisle, I yield back the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I have no further requests for time,
and I yield back the balance of my time as well.
The SPEAKER pro tempore (Mr. Shaw). The question is on the motion
offered by the gentleman from Wisconsin (Mr. Sensenbrenner) that the
House suspend the rules and pass the bill, H.R. 1417, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of
those present have voted in the affirmative.
Mr. SENSENBRENNER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
____________________