[Congressional Record Volume 164, Number 155 (Tuesday, September 18, 2018)]
[Senate]
[Pages S6237-S6254]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 4022. Mr. HATCH (for himself, Mr. Grassley, Mrs. Feinstein, Mr.
Alexander, Mr. Whitehouse, Mr. Coons, and Mr. Wyden) proposed an
amendment to the bill H.R. 1551, to amend the Internal Revenue Code of
1986 to modify the credit for production from advanced nuclear power
facilities; as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Music
Modernization Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Customs user fees.
TITLE I--MUSIC LICENSING MODERNIZATION
Sec. 101. Short title.
Sec. 102. Blanket license for digital uses and mechanical licensing
collective.
Sec. 103. Amendments to section 114.
Sec. 104. Random assignment of rate court proceedings.
Sec. 105. Performing rights society consent decrees.
Sec. 106. Effective date.
TITLE II--CLASSICS PROTECTION AND ACCESS
Sec. 201. Short title.
Sec. 202. Unauthorized use of pre-1972 sound recordings.
TITLE III--ALLOCATION FOR MUSIC PRODUCERS
Sec. 301. Short title.
Sec. 302. Payment of statutory performance royalties.
Sec. 303. Effective date.
TITLE IV--SEVERABILITY
Sec. 401. Severability.
SEC. 2. CUSTOMS USER FEES.
Section 13031(j)(3)(A) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)(A)) is
amended by striking ``October 13, 2027'' and inserting
``October 20, 2027''.
TITLE I--MUSIC LICENSING MODERNIZATION
SEC. 101. SHORT TITLE.
This title may be cited as the ``Musical Works
Modernization Act''.
SEC. 102. BLANKET LICENSE FOR DIGITAL USES AND MECHANICAL
LICENSING COLLECTIVE.
(a) Amendment.--Section 115 of title 17, United States
Code, is amended--
(1) in subsection (a)--
(A) in the subsection heading, by inserting ``in General''
after ``Availability and Scope of Compulsory License'';
(B) by striking paragraph (1) and inserting the following:
``(1) Eligibility for compulsory license.--
``(A) Conditions for compulsory license.--A person may by
complying with the provisions of this section obtain a
compulsory license to make and distribute phonorecords of a
nondramatic musical work, including by means of digital
phonorecord delivery. A person may obtain a compulsory
license only if the primary purpose in making phonorecords of
the musical work is to distribute them to the public for
private use, including by means of digital phonorecord
delivery, and--
``(i) phonorecords of such musical work have previously
been distributed to the public in the United States under the
authority of the copyright owner of the work, including by
means of digital phonorecord delivery; or
``(ii) in the case of a digital music provider seeking to
make and distribute digital phonorecord deliveries of a sound
recording embodying a musical work under a compulsory license
for which clause (i) does not apply--
``(I) the first fixation of such sound recording was made
under the authority of the musical work copyright owner, and
the sound recording copyright owner has the authority of the
musical work copyright owner to make and distribute digital
phonorecord deliveries embodying such work to the public in
the United States; and
``(II) the sound recording copyright owner, or the
authorized distributor of the sound recording copyright
owner, has authorized the digital music provider to make and
distribute digital phonorecord deliveries of the sound
recording to the public in the United States.
``(B) Duplication of sound recording.--A person may not
obtain a compulsory license for the use of the work in the
making of phonorecords duplicating a sound recording fixed by
another, including by means of digital phonorecord delivery,
unless--
``(i) such sound recording was fixed lawfully; and
``(ii) the making of the phonorecords was authorized by the
owner of the copyright in the sound recording or, if the
sound recording was fixed before February 15, 1972, by any
person who fixed the sound recording pursuant to an express
license from the owner of the copyright in the musical work
or pursuant to a valid compulsory license for use of such
work in a sound recording.''; and
(C) in paragraph (2), by striking ``A compulsory license''
and inserting ``Musical arrangement.--A compulsory license'';
(2) by striking subsection (b) and inserting the following:
``(b) Procedures To Obtain a Compulsory License.--
``(1) Phonorecords other than digital phonorecord
deliveries.--A person who seeks to obtain a compulsory
license under subsection (a) to make and distribute
phonorecords of a musical work other than by means of digital
phonorecord delivery shall, before, or not later than 30
calendar days after, making, and before distributing, any
phonorecord of the work, serve notice of intention to do so
on the copyright owner. If the registration or other public
records of the Copyright Office do not identify the copyright
owner and include an address at which notice can be served,
it shall be sufficient to file the notice of intention with
the Copyright Office. The notice shall comply, in form,
content, and manner of service, with requirements that the
Register of Copyrights shall prescribe by regulation.
``(2) Digital phonorecord deliveries.--A person who seeks
to obtain a compulsory license under subsection (a) to make
and distribute phonorecords of a musical work by means of
digital phonorecord delivery--
``(A) prior to the license availability date, shall,
before, or not later than 30 calendar days after, first
making any such digital phonorecord delivery, serve a notice
of intention to do so on the copyright owner (but may not
file the notice with the Copyright Office, even if the public
records of the Office do not identify the owner or the
owner's address), and such notice shall comply, in form,
content, and manner of service, with requirements that the
Register of Copyrights shall prescribe by regulation; or
``(B) on or after the license availability date, shall,
before making any such digital phonorecord delivery, follow
the procedure described in subsection (d)(2), except as
provided in paragraph (3).
``(3) Record company individual download licenses.--
Notwithstanding paragraph (2)(B), a record company may, on or
after the license availability date, obtain an individual
download license in accordance with the notice requirements
described in paragraph (2)(A) (except for the requirement
that notice occur prior to the license availability date). A
record company that obtains an individual download license as
permitted under this paragraph shall provide statements of
account and pay royalties as provided in subsection
(c)(2)(I).
``(4) Failure to obtain license.--
``(A) Phonorecords other than digital phonorecord
deliveries.--In the case of phonorecords made and distributed
other than by means of digital phonorecord delivery, the
failure to serve or file the notice of intention required by
paragraph (1) forecloses the possibility of a compulsory
license under paragraph (1). In the absence of a voluntary
license, the failure to obtain a compulsory license renders
the making and distribution of phonorecords actionable as
acts of infringement under section 501 and subject to the
remedies provided by sections 502 through 506.
``(B) Digital phonorecord deliveries.--
``(i) In general.--In the case of phonorecords made and
distributed by means of digital phonorecord delivery:
``(I) The failure to serve the notice of intention required
by paragraph (2)(A) or paragraph (3), as applicable,
forecloses the possibility of a compulsory license under such
paragraph.
``(II) The failure to comply with paragraph (2)(B)
forecloses the possibility of a blanket license for a period
of 3 years after the last calendar day on which the notice of
license was required to be submitted to the mechanical
licensing collective under such paragraph.
``(ii) Effect of failure.--In either case described in
subclause (I) or (II) of clause (i), in the absence of a
voluntary license, the failure to obtain a compulsory license
renders the making and distribution of phonorecords by means
of digital phonorecord delivery actionable as acts of
infringement under section 501 and subject to the remedies
provided by sections 502 through 506.'';
(3) by amending subsection (c) to read as follows:
``(c) General Conditions Applicable to Compulsory
License.--
``(1) Royalty payable under compulsory license.--
``(A) Identification requirement.--To be entitled to
receive royalties under a compulsory license obtained under
subsection (b)(1) the copyright owner must be identified in
[[Page S6238]]
the registration or other public records of the Copyright
Office. The owner is entitled to royalties for phonorecords
made and distributed after being so identified, but is not
entitled to recover for any phonorecords previously made and
distributed.
``(B) Royalty for phonorecords other than digital
phonorecord deliveries.--Except as provided by subparagraph
(A), for every phonorecord made and distributed under a
compulsory license under subsection (a) other than by means
of digital phonorecord delivery, with respect to each work
embodied in the phonorecord, the royalty shall be the royalty
prescribed under subparagraphs (D) through (F), paragraph
(2)(A), and chapter 8. For purposes of this subparagraph, a
phonorecord is considered `distributed' if the person
exercising the compulsory license has voluntarily and
permanently parted with its possession.
``(C) Royalty for digital phonorecord deliveries.--For
every digital phonorecord delivery of a musical work made
under a compulsory license under this section, the royalty
payable shall be the royalty prescribed under subparagraphs
(D) through (F), paragraph (2)(A), and chapter 8.
``(D) Authority to negotiate.--Notwithstanding any
provision of the antitrust laws, any copyright owners of
nondramatic musical works and any persons entitled to obtain
a compulsory license under subsection (a) may negotiate and
agree upon the terms and rates of royalty payments under this
section and the proportionate division of fees paid among
copyright owners, and may designate common agents on a
nonexclusive basis to negotiate, agree to, pay or receive
such royalty payments. Such authority to negotiate the terms
and rates of royalty payments includes, but is not limited
to, the authority to negotiate the year during which the
royalty rates prescribed under this subparagraph,
subparagraphs (E) and (F), paragraph (2)(A), and chapter 8
shall next be determined.
``(E) Determination of reasonable rates and terms.--
Proceedings under chapter 8 shall determine reasonable rates
and terms of royalty payments for the activities specified by
this section during the period beginning with the effective
date of such rates and terms, but not earlier than January 1
of the second year following the year in which the petition
requesting the proceeding is filed, and ending on the
effective date of successor rates and terms, or such other
period as the parties may agree. Any copyright owners of
nondramatic musical works and any persons entitled to obtain
a compulsory license under subsection (a) may submit to the
Copyright Royalty Judges licenses covering such activities.
The parties to each proceeding shall bear their own costs.
``(F) Schedule of reasonable rates.--The schedule of
reasonable rates and terms determined by the Copyright
Royalty Judges shall, subject to paragraph (2)(A), be binding
on all copyright owners of nondramatic musical works and
persons entitled to obtain a compulsory license under
subsection (a) during the period specified in subparagraph
(E), such other period as may be determined pursuant to
subparagraphs (D) and (E), or such other period as the
parties may agree. The Copyright Royalty Judges shall
establish rates and terms that most clearly represent the
rates and terms that would have been negotiated in the
marketplace between a willing buyer and a willing seller. In
determining such rates and terms for digital phonorecord
deliveries, the Copyright Royalty Judges shall base their
decision on economic, competitive, and programming
information presented by the parties, including--
``(i) whether use of the compulsory licensee's service may
substitute for or may promote the sales of phonorecords or
otherwise may interfere with or may enhance the musical work
copyright owner's other streams of revenue from its musical
works; and
``(ii) the relative roles of the copyright owner and the
compulsory licensee in the copyrighted work and the service
made available to the public with respect to the relative
creative contribution, technological contribution, capital
investment, cost, and risk.
``(2) Additional terms and conditions.--
``(A) Voluntary licenses and contractual royalty rates.--
``(i) In general.--License agreements voluntarily
negotiated at any time between one or more copyright owners
of nondramatic musical works and one or more persons entitled
to obtain a compulsory license under subsection (a) shall be
given effect in lieu of any determination by the Copyright
Royalty Judges. Subject to clause (ii), the royalty rates
determined pursuant to subparagraphs (E) and (F) of paragraph
(1) shall be given effect as to digital phonorecord
deliveries in lieu of any contrary royalty rates specified in
a contract pursuant to which a recording artist who is the
author of a nondramatic musical work grants a license under
that person's exclusive rights in the musical work under
paragraphs (1) and (3) of section 106 or commits another
person to grant a license in that musical work under
paragraphs (1) and (3) of section 106, to a person desiring
to fix in a tangible medium of expression a sound recording
embodying the musical work.
``(ii) Applicability.--The second sentence of clause (i)
shall not apply to--
``(I) a contract entered into on or before June 22, 1995,
and not modified thereafter for the purpose of reducing the
royalty rates determined pursuant to subparagraphs (E) and
(F) of paragraph (1) or of increasing the number of musical
works within the scope of the contract covered by the reduced
rates, except if a contract entered into on or before June
22, 1995, is modified thereafter for the purpose of
increasing the number of musical works within the scope of
the contract, any contrary royalty rates specified in the
contract shall be given effect in lieu of royalty rates
determined pursuant to subparagraphs (E) and (F) of paragraph
(1) for the number of musical works within the scope of the
contract as of June 22, 1995; and
``(II) a contract entered into after the date that the
sound recording is fixed in a tangible medium of expression
substantially in a form intended for commercial release, if
at the time the contract is entered into, the recording
artist retains the right to grant licenses as to the musical
work under paragraphs (1) and (3) of section 106.
``(B) Sound recording information.--Except as provided in
section 1002(e), a digital phonorecord delivery licensed
under this paragraph shall be accompanied by the information
encoded in the sound recording, if any, by or under the
authority of the copyright owner of that sound recording,
that identifies the title of the sound recording, the
featured recording artist who performs on the sound
recording, and related information, including information
concerning the underlying musical work and its writer.
``(C) Infringement remedies.--
``(i) In general.--A digital phonorecord delivery of a
sound recording is actionable as an act of infringement under
section 501, and is fully subject to the remedies provided by
sections 502 through 506, unless--
``(I) the digital phonorecord delivery has been authorized
by the sound recording copyright owner; and
``(II) the entity making the digital phonorecord delivery
has obtained a compulsory license under subsection (a) or has
otherwise been authorized by the musical work copyright
owner, or by a record company pursuant to an individual
download license, to make and distribute phonorecords of each
musical work embodied in the sound recording by means of
digital phonorecord delivery.
``(ii) Other remedies.--Any cause of action under this
subparagraph shall be in addition to those available to the
owner of the copyright in the nondramatic musical work under
subparagraph (J) and section 106(4) and the owner of the
copyright in the sound recording under section 106(6).
``(D) Liability of sound recording owners.--The liability
of the copyright owner of a sound recording for infringement
of the copyright in a nondramatic musical work embodied in
the sound recording shall be determined in accordance with
applicable law, except that the owner of a copyright in a
sound recording shall not be liable for a digital phonorecord
delivery by a third party if the owner of the copyright in
the sound recording does not license the distribution of a
phonorecord of the nondramatic musical work.
``(E) Recording devices and media.--Nothing in section 1008
shall be construed to prevent the exercise of the rights and
remedies allowed by this paragraph, subparagraph (J), and
chapter 5 in the event of a digital phonorecord delivery,
except that no action alleging infringement of copyright may
be brought under this title against a manufacturer, importer
or distributor of a digital audio recording device, a digital
audio recording medium, an analog recording device, or an
analog recording medium, or against a consumer, based on the
actions described in such section.
``(F) Preservation of rights.--Nothing in this section
annuls or limits--
``(i) the exclusive right to publicly perform a sound
recording or the musical work embodied therein, including by
means of a digital transmission, under paragraphs (4) and (6)
of section 106;
``(ii) except for compulsory licensing under the conditions
specified by this section, the exclusive rights to reproduce
and distribute the sound recording and the musical work
embodied therein under paragraphs (1) and (3) of section 106,
including by means of a digital phonorecord delivery; or
``(iii) any other rights under any other provision of
section 106, or remedies available under this title, as such
rights or remedies exist before, on, or after the date of
enactment of the Digital Performance Right in Sound
Recordings Act of 1995.
``(G) Exempt transmissions and retransmissions.--The
provisions of this section concerning digital phonorecord
deliveries shall not apply to any exempt transmissions or
retransmissions under section 114(d)(1). The exemptions
created in section 114(d)(1) do not expand or reduce the
rights of copyright owners under paragraphs (1) through (5)
of section 106 with respect to such transmissions and
retransmissions.
``(H) Distribution by rental, lease, or lending.--A
compulsory license obtained under subsection (b)(1) to make
and distribute phonorecords includes the right of the maker
of such a phonorecord to distribute or authorize distribution
of such phonorecord, other than by means of a digital
phonorecord delivery, by rental, lease, or lending (or by
acts or practices in the nature of rental, lease, or
lending). With respect to each nondramatic musical work
embodied in the phonorecord, the royalty shall be a
proportion of the revenue received by the compulsory licensee
from every such act of distribution of the phonorecord under
this clause equal to the proportion of the revenue received
by the compulsory licensee from
[[Page S6239]]
distribution of the phonorecord under subsection
(a)(1)(A)(ii)(II) that is payable by a compulsory licensee
under that clause and under chapter 8. The Register of
Copyrights shall issue regulations to carry out the purpose
of this subparagraph.
``(I) Payment of royalties and statements of account.--
Except as provided in paragraphs (4)(A)(i) and (10)(B) of
subsection (d), royalty payments shall be made on or before
the twentieth day of each month and shall include all
royalties for the month next preceding. Each monthly payment
shall be made under oath and shall comply with requirements
that the Register of Copyrights shall prescribe by
regulation. The Register shall also prescribe regulations
under which detailed cumulative annual statements of account,
certified by a certified public accountant, shall be filed
for every compulsory license under subsection (a). The
regulations covering both the monthly and the annual
statements of account shall prescribe the form, content, and
manner of certification with respect to the number of records
made and the number of records distributed.
``(J) Notice of default and termination of compulsory
license.--In the case of a license obtained under paragraph
(1), (2)(A), or (3) of subsection (b), if the copyright owner
does not receive the monthly payment and the monthly and
annual statements of account when due, the owner may give
written notice to the licensee that, unless the default is
remedied not later than 30 days after the date on which the
notice is sent, the compulsory license will be automatically
terminated. Such termination renders either the making or the
distribution, or both, of all phonorecords for which the
royalty has not been paid, actionable as acts of infringement
under section 501 and fully subject to the remedies provided
by sections 502 through 506. In the case of a license
obtained under subsection (b)(2)(B), license authority under
the compulsory license may be terminated as provided in
subsection (d)(4)(E).'';
(4) by amending subsection (d) to read as follows:
``(d) Blanket License for Digital Uses, Mechanical
Licensing Collective, and Digital Licensee Coordinator.--
``(1) Blanket license for digital uses.--
``(A) In general.--A digital music provider that qualifies
for a compulsory license under subsection (a) may, by
complying with the terms and conditions of this subsection,
obtain a blanket license from copyright owners through the
mechanical licensing collective to make and distribute
digital phonorecord deliveries of musical works through one
or more covered activities.
``(B) Included activities.--A blanket license--
``(i) covers all musical works (or shares of such works)
available for compulsory licensing under this section for
purposes of engaging in covered activities, except as
provided in subparagraph (C);
``(ii) includes the making and distribution of server,
intermediate, archival, and incidental reproductions of
musical works that are reasonable and necessary for the
digital music provider to engage in covered activities
licensed under this subsection, solely for the purpose of
engaging in such covered activities; and
``(iii) does not cover or include any rights or uses other
than those described in clauses (i) and (ii).
``(C) Other licenses.--A voluntary license for covered
activities entered into by or under the authority of 1 or
more copyright owners and 1 or more digital music providers,
or authority to make and distribute permanent downloads of a
musical work obtained by a digital music provider from a
sound recording copyright owner pursuant to an individual
download license, shall be given effect in lieu of a blanket
license under this subsection with respect to the musical
works (or shares thereof) covered by such voluntary license
or individual download authority and the following conditions
apply:
``(i) Where a voluntary license or individual download
license applies, the license authority provided under the
blanket license shall exclude any musical works (or shares
thereof) subject to the voluntary license or individual
download license.
``(ii) An entity engaged in covered activities under a
voluntary license or authority obtained pursuant to an
individual download license that is a significant nonblanket
licensee shall comply with paragraph (6)(A).
``(iii) The rates and terms of any voluntary license shall
be subject to the second sentence of clause (i) and clause
(ii) of subsection (c)(2)(A) and paragraph (9)(C), as
applicable.
``(D) Protection against infringement actions.--A digital
music provider that obtains and complies with the terms of a
valid blanket license under this subsection shall not be
subject to an action for infringement of the exclusive rights
provided by paragraphs (1) and (3) of section 106 under this
title arising from use of a musical work (or share thereof)
to engage in covered activities authorized by such license,
subject to paragraph (4)(E).
``(E) Other requirements and conditions apply.--Except as
expressly provided in this subsection, each requirement,
limitation, condition, privilege, right, and remedy otherwise
applicable to compulsory licenses under this section shall
apply to compulsory blanket licenses under this subsection.
``(2) Availability of blanket license.--
``(A) Procedure for obtaining license.--A digital music
provider may obtain a blanket license by submitting a notice
of license to the mechanical licensing collective that
specifies the particular covered activities in which the
digital music provider seeks to engage, as follows:
``(i) The notice of license shall comply in form and
substance with requirements that the Register of Copyrights
shall establish by regulation.
``(ii) Unless rejected in writing by the mechanical
licensing collective not later than 30 calendar days after
the date on which the mechanical licensing collective
receives the notice, the blanket license shall be effective
as of the date on which the notice of license was sent by the
digital music provider, as shown by a physical or electronic
record.
``(iii) A notice of license may only be rejected by the
mechanical licensing collective if--
``(I) the digital music provider or notice of license does
not meet the requirements of this section or applicable
regulations, in which case the requirements at issue shall be
specified with reasonable particularity in the notice of
rejection; or
``(II) the digital music provider has had a blanket license
terminated by the mechanical licensing collective during the
3-year period preceding the date on which the mechanical
licensing collective receives the notice pursuant to
paragraph (4)(E).
``(iv) If a notice of license is rejected under clause
(iii)(I), the digital music provider shall have 30 calendar
days after receipt of the notice of rejection to cure any
deficiency and submit an amended notice of license to the
mechanical licensing collective. If the deficiency has been
cured, the mechanical licensing collective shall so confirm
in writing, and the license shall be effective as of the date
that the original notice of license was provided by the
digital music provider.
``(v) A digital music provider that believes a notice of
license was improperly rejected by the mechanical licensing
collective may seek review of such rejection in an
appropriate district court of the United States. The district
court shall determine the matter de novo based on the record
before the mechanical licensing collective and any additional
evidence presented by the parties.
``(B) Blanket license effective date.--Blanket licenses
shall be made available by the mechanical licensing
collective on and after the license availability date. No
such license shall be effective prior to the license
availability date.
``(3) Mechanical licensing collective.--
``(A) In general.--The mechanical licensing collective
shall be a single entity that--
``(i) is a nonprofit entity, not owned by any other entity,
that is created by copyright owners to carry out
responsibilities under this subsection;
``(ii) is endorsed by, and enjoys substantial support from,
musical work copyright owners that together represent the
greatest percentage of the licensor market for uses of such
works in covered activities, as measured over the preceding 3
full calendar years;
``(iii) is able to demonstrate to the Register of
Copyrights that the entity has, or will have prior to the
license availability date, the administrative and
technological capabilities to perform the required functions
of the mechanical licensing collective under this subsection
and that is governed by a board of directors in accordance
with subparagraph (D)(i); and
``(iv) has been designated by the Register of Copyrights,
with the approval of the Librarian of Congress pursuant to
section 702, in accordance with subparagraph (B).
``(B) Designation of mechanical licensing collective.--
``(i) Initial designation.--Not later than 270 days after
the enactment date, the Register of Copyrights shall
initially designate the mechanical licensing collective as
follows:
``(I) Not later than 90 calendar days after the enactment
date, the Register shall publish notice in the Federal
Register soliciting information to assist in identifying the
appropriate entity to serve as the mechanical licensing
collective, including the name and affiliation of each member
of the board of directors described under subparagraph (D)(i)
and each committee established pursuant to clauses (iii),
(iv), and (v) of subparagraph (D).
``(II) After reviewing the information requested under
subclause (I) and making a designation, the Register shall
publish notice in the Federal Register setting forth--
``(aa) the identity of and contact information for the
mechanical licensing collective; and
``(bb) the reasons for the designation.
``(ii) Periodic review of designation.--Following the
initial designation of the mechanical licensing collective,
the Register shall, every 5 years, beginning with the fifth
full calendar year to commence after the initial designation,
publish notice in the Federal Register in the month of
January soliciting information concerning whether the
existing designation should be continued, or a different
entity meeting the criteria described in clauses (i) through
(iii) of subparagraph (A) shall be designated. Following
publication of such notice, the Register shall--
``(I) after reviewing the information submitted and
conducting additional proceedings as appropriate, publish
notice in the Federal Register of a continuing designation or
new designation of the mechanical licensing collective, as
the case may be, and the reasons for such a designation, with
any new designation to be effective as of the first day of a
month that is not less than 6 months and not longer than 9
months after the date
[[Page S6240]]
on which the Register publishes the notice, as specified by
the Register; and
``(II) if a new entity is designated as the mechanical
licensing collective, adopt regulations to govern the
transfer of licenses, funds, records, data, and
administrative responsibilities from the existing mechanical
licensing collective to the new entity.
``(iii) Closest alternative designation.--If the Register
is unable to identify an entity that fulfills each of the
qualifications set forth in clauses (i) through (iii) of
subparagraph (A), the Register shall designate the entity
that most nearly fulfills such qualifications for purposes of
carrying out the responsibilities of the mechanical licensing
collective.
``(C) Authorities and functions.--
``(i) In general.--The mechanical licensing collective is
authorized to perform the following functions, subject to
more particular requirements as described in this subsection:
``(I) Offer and administer blanket licenses, including
receipt of notices of license and reports of usage from
digital music providers.
``(II) Collect and distribute royalties from digital music
providers for covered activities.
``(III) Engage in efforts to identify musical works (and
shares of such works) embodied in particular sound
recordings, and to identify and locate the copyright owners
of such musical works (and shares of such works).
``(IV) Maintain the musical works database and other
information relevant to the administration of licensing
activities under this section.
``(V) Administer a process by which copyright owners can
claim ownership of musical works (and shares of such works),
and a process by which royalties for works for which the
owner is not identified or located are equitably distributed
to known copyright owners.
``(VI) Administer collections of the administrative
assessment from digital music providers and significant
nonblanket licensees, including receipt of notices of
nonblanket activity.
``(VII) Invest in relevant resources, and arrange for
services of outside vendors and others, to support the
activities of the mechanical licensing collective.
``(VIII) Engage in legal and other efforts to enforce
rights and obligations under this subsection, including by
filing bankruptcy proofs of claims for amounts owed under
licenses, and acting in coordination with the digital
licensee coordinator.
``(IX) Initiate and participate in proceedings before the
Copyright Royalty Judges to establish the administrative
assessment under this subsection.
``(X) Initiate and participate in proceedings before the
Copyright Office with respect to activities under this
subsection.
``(XI) Gather and provide documentation for use in
proceedings before the Copyright Royalty Judges to set rates
and terms under this section.
``(XII) Maintain records of the activities of the
mechanical licensing collective and engage in and respond to
audits described in this subsection.
``(XIII) Engage in such other activities as may be
necessary or appropriate to fulfill the responsibilities of
the mechanical licensing collective under this subsection.
``(ii) Restrictions concerning licensing and administrative
activities.--With respect to the administration of licenses,
except as provided in clauses (i) and (iii) and subparagraph
(E)(v), the mechanical licensing collective may only--
``(I) issue blanket licenses pursuant to subsection (d)(1);
and
``(II) administer blanket licenses for reproduction or
distribution rights in musical works for covered activities,
including collecting and distributing royalties, pursuant to
blanket licenses.
``(iii) Additional administrative activities.--Subject to
paragraph (11)(C), the mechanical licensing collective may
also administer, including by collecting and distributing
royalties, voluntary licenses issued by, or individual
download licenses obtained from, copyright owners only for
reproduction or distribution rights in musical works for
covered activities, for which the mechanical licensing
collective shall charge reasonable fees for such services.
``(iv) Restriction on lobbying.--The mechanical licensing
collective may not engage in government lobbying activities,
but may engage in the activities described in subclauses
(IX), (X), and (XI) of clause (i).
``(D) Governance.--
``(i) Board of directors.--The mechanical licensing
collective shall have a board of directors consisting of 14
voting members and 3 nonvoting members, as follows:
``(I) Ten voting members shall be representatives of music
publishers--
``(aa) to which songwriters have assigned exclusive rights
of reproduction and distribution of musical works with
respect to covered activities; and
``(bb) none of which may be owned by, or under common
control with, any other board member.
``(II) Four voting members shall be professional
songwriters who have retained and exercise exclusive rights
of reproduction and distribution with respect to covered
activities with respect to musical works they have authored.
``(III) One nonvoting member shall be a representative of
the nonprofit trade association of music publishers that
represents the greatest percentage of the licensor market for
uses of musical works in covered activities, as measured for
the 3-year period preceding the date on which the member is
appointed.
``(IV) One nonvoting member shall be a representative of
the digital licensee coordinator, provided that a digital
licensee coordinator has been designated pursuant to
paragraph (5)(B). Otherwise, the nonvoting member shall be
the nonprofit trade association of digital licensees that
represents the greatest percentage of the licensee market for
uses of musical works in covered activities, as measured over
the preceding 3 full calendar years.
``(V) One nonvoting member shall be a representative of a
nationally recognized nonprofit trade association whose
primary mission is advocacy on behalf of songwriters in the
United States.
``(ii) Bylaws.--
``(I) Establishment.--Not later than 1 year after the date
on which the mechanical licensing collective is initially
designated by the Register of Copyrights under subparagraph
(B)(i), the collective shall establish bylaws to determine
issues relating to the governance of the collective,
including, but not limited to--
``(aa) the length of the term for each member of the board
of directors;
``(bb) the staggering of the terms of the members of the
board of directors;
``(cc) a process for filling a seat on the board of
directors that is vacated before the end of the term with
respect to that seat;
``(dd) a process for electing a member to the board of
directors; and
``(ee) a management structure for daily operation of the
collective.
``(II) Public availability.--The mechanical licensing
collective shall make the bylaws established under subclause
(I) available to the public.
``(iii) Board meetings.--The board of directors shall meet
not less frequently than biannually and discuss matters
pertinent to the operations of the mechanical licensing
collective, including the mechanical licensing collective
budget.
``(iv) Operations advisory committee.--The board of
directors of the mechanical licensing collective shall
establish an operations advisory committee consisting of not
fewer than 6 members to make recommendations to the board of
directors concerning the operations of the mechanical
licensing collective, including the efficient investment in
and deployment of information technology and data resources.
Such committee shall have an equal number of members of the
committee who are--
``(I) musical work copyright owners who are appointed by
the board of directors of the mechanical licensing
collective; and
``(II) representatives of digital music providers who are
appointed by the digital licensee coordinator.
``(v) Unclaimed royalties oversight committee.--The board
of directors of the mechanical licensing collective shall
establish and appoint an unclaimed royalties oversight
committee consisting of 10 members, 5 of which shall be
musical work copyright owners and 5 of which shall be
professional songwriters whose works are used in covered
activities.
``(vi) Dispute resolution committee.--The board of
directors of the mechanical licensing collective shall
establish and appoint a dispute resolution committee that
shall--
``(I) consist of not fewer than 6 members; and
``(II) include an equal number of representatives of
musical work copyright owners and professional songwriters.
``(vii) Mechanical licensing collective annual report.--
``(I) In general.--Not later than June 30 of each year
commencing after the license availability date, the
mechanical licensing collective shall post, and make
available online for a period of not less than 3 years, an
annual report that sets forth information regarding--
``(aa) the operational and licensing practices of the
collective;
``(bb) how royalties are collected and distributed;
``(cc) budgeting and expenditures;
``(dd) the collective total costs for the preceding
calendar year;
``(ee) the projected annual mechanical licensing collective
budget;
``(ff) aggregated royalty receipts and payments;
``(gg) expenses that are more than 10 percent of the annual
mechanical licensing collective budget; and
``(hh) the efforts of the collective to locate and identify
copyright owners of unmatched musical works (and shares of
works).
``(II) Submission.--On the date on which the mechanical
licensing collective posts each report required under
subclause (I), the collective shall provide a copy of the
report to the Register of Copyrights.
``(viii) Independent officers.--An individual serving as an
officer of the mechanical licensing collective may not, at
the same time, also be an employee or agent of any member of
the board of directors of the collective or any entity
represented by a member of the board of directors, as
described in clause (i).
``(ix) Oversight and accountability.--
``(I) In general.--The mechanical licensing collective
shall--
``(aa) ensure that the policies and practices of the
collective are transparent and accountable;
[[Page S6241]]
``(bb) identify a point of contact for publisher inquiries
and complaints with timely redress; and
``(cc) establish an anti-comingling policy for funds not
collected under this section and royalties collected under
this section.
``(II) Audits.--
``(aa) In general.--Beginning in the fourth full calendar
year that begins after the initial designation of the
mechanical licensing collective by the Register of Copyrights
under subparagraph (B)(i), and in every fifth calendar year
thereafter, the collective shall retain a qualified auditor
that shall--
``(AA) examine the books, records, and operations of the
collective;
``(BB) prepare a report for the board of directors of the
collective with respect to the matters described in item
(bb); and
``(CC) not later than December 31 of the year in which the
qualified auditor is retained, deliver the report described
in subitem (BB) to the board of directors of the collective.
``(bb) Matters addressed.--Each report prepared under item
(aa) shall address the implementation and efficacy of
procedures of the mechanical licensing collective--
``(AA) for the receipt, handling, and distribution of
royalty funds, including any amounts held as unclaimed
royalties;
``(BB) to guard against fraud, abuse, waste, and the
unreasonable use of funds; and
``(CC) to protect the confidentiality of financial,
proprietary, and other sensitive information.
``(cc) Public availability.--With respect to each report
prepared under item (aa), the mechanical licensing collective
shall--
``(AA) submit the report to the Register of Copyrights; and
``(BB) make the report available to the public.
``(E) Musical works database.--
``(i) Establishment and maintenance of database.--The
mechanical licensing collective shall establish and maintain
a database containing information relating to musical works
(and shares of such works) and, to the extent known, the
identity and location of the copyright owners of such works
(and shares thereof) and the sound recordings in which the
musical works are embodied. In furtherance of maintaining
such database, the mechanical licensing collective shall
engage in efforts to identify the musical works embodied in
particular sound recordings, as well as to identify and
locate the copyright owners of such works (and shares
thereof), and update such data as appropriate.
``(ii) Matched works.--With respect to musical works (and
shares thereof) that have been matched to copyright owners,
the musical works database shall include--
``(I) the title of the musical work;
``(II) the copyright owner of the work (or share thereof),
and the ownership percentage of that owner;
``(III) contact information for such copyright owner;
``(IV) to the extent reasonably available to the mechanical
licensing collective--
``(aa) the international standard musical work code for the
work; and
``(bb) identifying information for sound recordings in
which the musical work is embodied, including the name of the
sound recording, featured artist, sound recording copyright
owner, producer, international standard recording code, and
other information commonly used to assist in associating
sound recordings with musical works; and
``(V) such other information as the Register of Copyrights
may prescribe by regulation.
``(iii) Unmatched works.--With respect to unmatched musical
works (and shares of works) in the database, the musical
works database shall include--
``(I) to the extent reasonably available to the mechanical
licensing collective--
``(aa) the title of the musical work;
``(bb) the ownership percentage for which an owner has not
been identified;
``(cc) if a copyright owner has been identified but not
located, the identity of such owner and the ownership
percentage of that owner;
``(dd) identifying information for sound recordings in
which the work is embodied, including sound recording name,
featured artist, sound recording copyright owner, producer,
international standard recording code, and other information
commonly used to assist in associating sound recordings with
musical works; and
``(ee) any additional information reported to the
mechanical licensing collective that may assist in
identifying the work; and
``(II) such other information relating to the identity and
ownership of musical works (and shares of such works) as the
Register of Copyrights may prescribe by regulation.
``(iv) Sound recording information.--Each musical work
copyright owner with any musical work listed in the musical
works database shall engage in commercially reasonable
efforts to deliver to the mechanical licensing collective,
including for use in the musical works database, to the
extent such information is not then available in the
database, information regarding the names of the sound
recordings in which that copyright owner's musical works (or
shares thereof) are embodied, to the extent practicable.
``(v) Accessibility of database.--The musical works
database shall be made available to members of the public in
a searchable, online format, free of charge. The mechanical
licensing collective shall make such database available in a
bulk, machine-readable format, through a widely available
software application, to the following entities:
``(I) Digital music providers operating under the authority
of valid notices of license, free of charge.
``(II) Significant nonblanket licensees in compliance with
their obligations under paragraph (6), free of charge.
``(III) Authorized vendors of the entities described in
subclauses (I) and (II), free of charge.
``(IV) The Register of Copyrights, free of charge (but the
Register shall not treat such database or any information
therein as a Government record).
``(V) Any other person or entity for a fee not to exceed
the marginal cost to the mechanical licensing collective of
providing the database to such person or entity.
``(vi) Additional requirements.--The Register of Copyrights
shall establish requirements by regulations to ensure the
usability, interoperability, and usage restrictions of the
musical works database.
``(F) Notices of license and nonblanket activity.--
``(i) Notices of licenses.--The mechanical licensing
collective shall receive, review, and confirm or reject
notices of license from digital music providers, as provided
in paragraph (2)(A). The collective shall maintain a current,
publicly accessible list of blanket licenses that includes
contact information for the licensees and the effective dates
of such licenses.
``(ii) Notices of nonblanket activity.--The mechanical
licensing collective shall receive notices of nonblanket
activity from significant nonblanket licensees, as provided
in paragraph (6)(A). The collective shall maintain a current,
publicly accessible list of notices of nonblanket activity
that includes contact information for significant nonblanket
licensees and the dates of receipt of such notices.
``(G) Collection and distribution of royalties.--
``(i) In general.--Upon receiving reports of usage and
payments of royalties from digital music providers for
covered activities, the mechanical licensing collective
shall--
``(I) engage in efforts to--
``(aa) identify the musical works embodied in sound
recordings reflected in such reports, and the copyright
owners of such musical works (and shares thereof);
``(bb) confirm uses of musical works subject to voluntary
licenses and individual download licenses, and the
corresponding pro rata amounts to be deducted from royalties
that would otherwise be due under the blanket license; and
``(cc) confirm proper payment of royalties due;
``(II) distribute royalties to copyright owners in
accordance with the usage and other information contained in
such reports, as well as the ownership and other information
contained in the records of the collective; and
``(III) deposit into an interest-bearing account, as
provided in subparagraph (H)(ii), royalties that cannot be
distributed due to--
``(aa) an inability to identify or locate a copyright owner
of a musical work (or share thereof); or
``(bb) a pending dispute before the dispute resolution
committee of the mechanical licensing collective.
``(ii) Other collection efforts.--Any royalties recovered
by the mechanical licensing collective as a result of efforts
to enforce rights or obligations under a blanket license,
including through a bankruptcy proceeding or other legal
action, shall be distributed to copyright owners based on
available usage information and in accordance with the
procedures described in subclauses (I) and (II) of clause
(i), on a pro rata basis in proportion to the overall
percentage recovery of the total royalties owed, with any pro
rata share of royalties that cannot be distributed deposited
in an interest-bearing account as provided in subparagraph
(H)(ii).
``(H) Holding of accrued royalties.--
``(i) Holding period.--The mechanical licensing collective
shall hold accrued royalties associated with particular
musical works (and shares of works) that remain unmatched for
a period of not less than 3 years after the date on which the
funds were received by the mechanical licensing collective,
or not less than 3 years after the date on which the funds
were accrued by a digital music provider that subsequently
transferred such funds to the mechanical licensing collective
pursuant to paragraph (10)(B), whichever period expires
sooner.
``(ii) Interest-bearing account.--Accrued royalties for
unmatched works (and shares thereof) shall be maintained by
the mechanical licensing collective in an interest-bearing
account that earns monthly interest--
``(I) at the Federal, short-term rate; and
``(II) that accrues for the benefit of copyright owners
entitled to payment of such accrued royalties.
``(I) Musical works claiming process.--When a copyright
owner of an unmatched work (or share of a work) has been
identified and located in accordance with the procedures of
the mechanical licensing collective, the collective shall--
``(i) update the musical works database and the other
records of the collective accordingly; and
``(ii) provided that accrued royalties for the musical work
(or share thereof) have not yet been included in a
distribution pursuant to subparagraph (J)(i), pay such
accrued royalties and a proportionate amount of accrued
[[Page S6242]]
interest associated with that work (or share thereof) to the
copyright owner, accompanied by a cumulative statement of
account reflecting usage of such work and accrued royalties
based on information provided by digital music providers to
the mechanical licensing collective.
``(J) Distribution of unclaimed accrued royalties.--
``(i) Distribution procedures.--After the expiration of the
prescribed holding period for accrued royalties provided in
subparagraph (H)(i), the mechanical licensing collective
shall distribute such accrued royalties, along with a
proportionate share of accrued interest, to copyright owners
identified in the records of the collective, subject to the
following requirements, and in accordance with the policies
and procedures established under clause (ii):
``(I) The first such distribution shall occur on or after
January 1 of the second full calendar year to commence after
the license availability date, with not less than 1 such
distribution to take place during each calendar year
thereafter.
``(II) Copyright owners' payment shares for unclaimed
accrued royalties for particular reporting periods shall be
determined in a transparent and equitable manner based on
data indicating the relative market shares of such copyright
owners as reflected in reports of usage provided by digital
music providers for covered activities for the periods in
question, including, in addition to usage data provided to
the mechanical licensing collective, usage data provided to
copyright owners under voluntary licenses and individual
download licenses for covered activities, to the extent such
information is available to the mechanical licensing
collective. In furtherance of the determination of equitable
market shares under this subparagraph--
``(aa) the mechanical licensing collective may require
copyright owners seeking distributions of unclaimed accrued
royalties to provide, or direct the provision of, information
concerning the usage of musical works under voluntary
licenses and individual download licenses for covered
activities; and
``(bb) the mechanical licensing collective shall take
appropriate steps to safeguard the confidentiality and
security of usage, financial, and other sensitive data used
to compute market shares in accordance with the
confidentiality provisions prescribed by the Register of
Copyrights under paragraph (12)(C).
``(ii) Establishment of distribution policies.--The
unclaimed royalties oversight committee established under
subparagraph (D)(v) shall establish policies and procedures
for the distribution of unclaimed accrued royalties and
accrued interest in accordance with this subparagraph,
including the provision of usage data to copyright owners to
allocate payments and credits to songwriters pursuant to
clause (iv), subject to the approval of the board of
directors of the mechanical licensing collective.
``(iii) Public notice of unclaimed accrued royalties.--The
mechanical licensing collective shall--
``(I) maintain a publicly accessible online facility with
contact information for the collective that lists unmatched
musical works (and shares of works), through which a
copyright owner may assert an ownership claim with respect to
such a work (and a share of such a work);
``(II) engage in diligent, good-faith efforts to publicize,
throughout the music industry--
``(aa) the existence of the collective and the ability to
claim unclaimed accrued royalties for unmatched musical works
(and shares of such works) held by the collective;
``(bb) the procedures by which copyright owners may
identify themselves and provide contact, ownership, and other
relevant information to the collective in order to receive
payments of accrued royalties;
``(cc) any transfer of accrued royalties for musical works
under paragraph (10)(B), not later than 180 days after the
date on which the transfer is received; and
``(dd) any pending distribution of unclaimed accrued
royalties and accrued interest, not less than 90 days before
the date on which the distribution is made; and
``(III) as appropriate, participate in music industry
conferences and events for the purpose of publicizing the
matters described in subclause (II).
``(iv) Songwriter payments.--Copyright owners that receive
a distribution of unclaimed accrued royalties and accrued
interest shall pay or credit a portion to songwriters (or the
authorized agents of songwriters) on whose behalf the
copyright owners license or administer musical works for
covered activities, in accordance with applicable contractual
terms, but notwithstanding any agreement to the contrary--
``(I) such payments and credits to songwriters shall be
allocated in proportion to reported usage of individual
musical works by digital music providers during the reporting
periods covered by the distribution from the mechanical
licensing collective; and
``(II) in no case shall the payment or credit to an
individual songwriter be less than 50 percent of the payment
received by the copyright owner attributable to usage of
musical works (or shares of works) of that songwriter.
``(K) Dispute resolution.--The dispute resolution committee
established under subparagraph (D)(vi) shall establish
policies and procedures--
``(i) for copyright owners to address in a timely and
equitable manner disputes relating to ownership interests in
musical works licensed under this section and allocation and
distribution of royalties by the mechanical licensing
collective, subject to the approval of the board of directors
of the mechanical licensing collective;
``(ii) that shall include a mechanism to hold disputed
funds in accordance with the requirements described in
subparagraph (H)(ii) pending resolution of the dispute; and
``(iii) except as provided in paragraph (11)(D), that shall
not affect any legal or equitable rights or remedies
available to any copyright owner or songwriter concerning
ownership of, and entitlement to royalties for, a musical
work.
``(L) Verification of payments by mechanical licensing
collective.--
``(i) Verification process.--A copyright owner entitled to
receive payments of royalties for covered activities from the
mechanical licensing collective may, individually or with
other copyright owners, conduct an audit of the mechanical
licensing collective to verify the accuracy of royalty
payments by the mechanical licensing collective to such
copyright owner, as follows:
``(I) A copyright owner may audit the mechanical licensing
collective only once in a year for any or all of the 3
calendar years preceding the year in which the audit is
commenced, and may not audit records for any calendar year
more than once.
``(II) The audit shall be conducted by a qualified auditor,
who shall perform the audit during the ordinary course of
business by examining the books, records, and data of the
mechanical licensing collective, according to generally
accepted auditing standards and subject to applicable
confidentiality requirements prescribed by the Register of
Copyrights under paragraph (12)(C).
``(III) The mechanical licensing collective shall make such
books, records, and data available to the qualified auditor
and respond to reasonable requests for relevant information,
and shall use commercially reasonable efforts to facilitate
access to relevant information maintained by third parties.
``(IV) To commence the audit, any copyright owner shall
file with the Copyright Office a notice of intent to conduct
an audit of the mechanical licensing collective, identifying
the period of time to be audited, and shall simultaneously
deliver a copy of such notice to the mechanical licensing
collective. The Register of Copyrights shall cause the notice
of audit to be published in the Federal Register not later
than 45 calendar days after the date on which the notice is
received.
``(V) The qualified auditor shall determine the accuracy of
royalty payments, including whether an underpayment or
overpayment of royalties was made by the mechanical licensing
collective to each auditing copyright owner, except that,
before providing a final audit report to any such copyright
owner, the qualified auditor shall provide a tentative draft
of the report to the mechanical licensing collective and
allow the mechanical licensing collective a reasonable
opportunity to respond to the findings, including by
clarifying issues and correcting factual errors.
``(VI) The auditing copyright owner or owners shall bear
the cost of the audit. In case of an underpayment to any
copyright owner, the mechanical licensing collective shall
pay the amounts of any such underpayment to such auditing
copyright owner, as appropriate. In case of an overpayment by
the mechanical licensing collective, the mechanical licensing
collective may debit the account of the auditing copyright
owner or owners for such overpaid amounts, or such owner or
owners shall refund overpaid amounts to the mechanical
licensing collective, as appropriate.
``(ii) Alternative verification procedures.--Nothing in
this subparagraph shall preclude a copyright owner and the
mechanical licensing collective from agreeing to audit
procedures different from those described in this
subparagraph, except that a notice of the audit shall be
provided to and published by the Copyright Office as
described in clause (i)(IV).
``(M) Records of mechanical licensing collective.--
``(i) Records maintenance.--The mechanical licensing
collective shall ensure that all material records of the
operations of the mechanical licensing collective, including
those relating to notices of license, the administration of
the claims process of the mechanical licensing collective,
reports of usage, royalty payments, receipt and maintenance
of accrued royalties, royalty distribution processes, and
legal matters, are preserved and maintained in a secure and
reliable manner, with appropriate commercially reasonable
safeguards against unauthorized access, copying, and
disclosure, and subject to the confidentiality requirements
prescribed by the Register of Copyrights under paragraph
(12)(C) for a period of not less than 7 years after the date
of creation or receipt, whichever occurs later.
``(ii) Records access.--The mechanical licensing collective
shall provide prompt access to electronic and other records
pertaining to the administration of a copyright owner's
musical works upon reasonable written request of the owner or
the authorized representative of the owner.
``(4) Terms and conditions of blanket license.--A blanket
license is subject to, and
[[Page S6243]]
conditioned upon, the following requirements:
``(A) Royalty reporting and payments.--
``(i) Monthly reports and payment.--A digital music
provider shall report and pay royalties to the mechanical
licensing collective under the blanket license on a monthly
basis in accordance with clause (ii) and subsection
(c)(2)(I), except that the monthly reporting shall be due on
the date that is 45 calendar days, rather than 20 calendar
days, after the end of the monthly reporting period.
``(ii) Data to be reported.--In reporting usage of musical
works to the mechanical licensing collective, a digital music
provider shall provide usage data for musical works used
under the blanket license and usage data for musical works
used in covered activities under voluntary licenses and
individual download licenses. In the report of usage, the
digital music provider shall--
``(I) with respect to each sound recording embodying a
musical work--
``(aa) provide identifying information for the sound
recording, including sound recording name, featured artist,
and, to the extent acquired by the digital music provider in
connection with its use of sound recordings of musical works
to engage in covered activities, including pursuant to
subparagraph (B), sound recording copyright owner, producer,
international standard recording code, and other information
commonly used in the industry to identify sound recordings
and match them to the musical works the sound recordings
embody;
``(bb) to the extent acquired by the digital music provider
in the metadata provided by sound recording copyright owners
or other licensors of sound recordings in connection with the
use of sound recordings of musical works to engage in covered
activities, including pursuant to subparagraph (B), provide
information concerning authorship and ownership of the
applicable rights in the musical work embodied in the sound
recording (including each songwriter, publisher name, and
respective ownership share) and the international standard
musical work code; and
``(cc) provide the number of digital phonorecord deliveries
of the sound recording, including limited downloads and
interactive streams;
``(II) identify and provide contact information for all
musical work copyright owners for works embodied in sound
recordings as to which a voluntary license, rather than the
blanket license, is in effect with respect to the uses being
reported; and
``(III) provide such other information as the Register of
Copyrights shall require by regulation.
``(iii) Format and maintenance of reports.--Reports of
usage provided by digital music providers to the mechanical
licensing collective shall be in a machine-readable format
that is compatible with the information technology systems of
the mechanical licensing collective and meets the
requirements of regulations adopted by the Register of
Copyrights. The Register shall also adopt regulations setting
forth requirements under which records of use shall be
maintained and made available to the mechanical licensing
collective by digital music providers engaged in covered
activities under a blanket license.
``(iv) Adoption of regulations.--The Register of Copyrights
shall adopt regulations--
``(I) setting forth requirements under which records of use
shall be maintained and made available to the mechanical
licensing collective by digital music providers engaged in
covered activities under a blanket license; and
``(II) regarding adjustments to reports of usage by digital
music providers, including mechanisms to account for
overpayment and underpayment of royalties in prior periods.
``(B) Collection of sound recording information.--A digital
music provider shall engage in good-faith, commercially
reasonable efforts to obtain from sound recording copyright
owners and other licensors of sound recordings made available
through the service of such digital music provider
information concerning--
``(i) sound recording copyright owners, producers,
international standard recording codes, and other information
commonly used in the industry to identify sound recordings
and match them to the musical works the sound recordings
embody; and
``(ii) the authorship and ownership of musical works,
including songwriters, publisher names, ownership shares, and
international standard musical work codes.
``(C) Payment of administrative assessment.--A digital
music provider and any significant nonblanket licensee shall
pay the administrative assessment established under paragraph
(7)(D) in accordance with this subsection and applicable
regulations.
``(D) Verification of payments by digital music
providers.--
``(i) Verification process.--The mechanical licensing
collective may conduct an audit of a digital music provider
operating under the blanket license to verify the accuracy of
royalty payments by the digital music provider to the
mechanical licensing collective as follows:
``(I) The mechanical licensing collective may commence an
audit of a digital music provider not more frequently than
once in any 3-calendar-year period to cover a verification
period of not more than the 3 full calendar years preceding
the date of commencement of the audit, and such audit may not
audit records for any such 3-year verification period more
than once.
``(II) The audit shall be conducted by a qualified auditor,
who shall perform the audit during the ordinary course of
business by examining the books, records, and data of the
digital music provider, according to generally accepted
auditing standards and subject to applicable confidentiality
requirements prescribed by the Register of Copyrights under
paragraph (12)(C).
``(III) The digital music provider shall make such books,
records, and data available to the qualified auditor and
respond to reasonable requests for relevant information, and
shall use commercially reasonable efforts to provide access
to relevant information maintained with respect to a digital
music provider by third parties.
``(IV) To commence the audit, the mechanical licensing
collective shall file with the Copyright Office a notice of
intent to conduct an audit of the digital music provider,
identifying the period of time to be audited, and shall
simultaneously deliver a copy of such notice to the digital
music provider. The Register of Copyrights shall cause the
notice of audit to be published in the Federal Register not
later than 45 calendar days after the date on which notice is
received.
``(V) The qualified auditor shall determine the accuracy of
royalty payments, including whether an underpayment or
overpayment of royalties was made by the digital music
provider to the mechanical licensing collective, except that,
before providing a final audit report to the mechanical
licensing collective, the qualified auditor shall provide a
tentative draft of the report to the digital music provider
and allow the digital music provider a reasonable opportunity
to respond to the findings, including by clarifying issues
and correcting factual errors.
``(VI) The mechanical licensing collective shall pay the
cost of the audit, unless the qualified auditor determines
that there was an underpayment by the digital music provider
of not less than 10 percent, in which case the digital music
provider shall bear the reasonable costs of the audit, in
addition to paying the amount of any underpayment to the
mechanical licensing collective. In case of an overpayment by
the digital music provider, the mechanical licensing
collective shall provide a credit to the account of the
digital music provider.
``(VII) A digital music provider may not assert section 507
or any other Federal or State statute of limitations,
doctrine of laches or estoppel, or similar provision as a
defense to a legal action arising from an audit under this
subparagraph if such legal action is commenced not more than
6 years after the commencement of the audit that is the basis
for such action.
``(ii) Alternative verification procedures.--Nothing in
this subparagraph shall preclude the mechanical licensing
collective and a digital music provider from agreeing to
audit procedures different from those described in this
subparagraph, except that a notice of the audit shall be
provided to and published by the Copyright Office as
described in clause (i)(IV).
``(E) Default under blanket license.--
``(i) Conditions of default.--A digital music provider
shall be in default under a blanket license if the digital
music provider--
``(I) fails to provide 1 or more monthly reports of usage
to the mechanical licensing collective when due;
``(II) fails to make a monthly royalty or late fee payment
to the mechanical licensing collective when due, in all or
material part;
``(III) provides 1 or more monthly reports of usage to the
mechanical licensing collective that, on the whole, is or are
materially deficient as a result of inaccurate, missing, or
unreadable data, where the correct data was available to the
digital music provider and required to be reported under this
section and applicable regulations;
``(IV) fails to pay the administrative assessment as
required under this subsection and applicable regulations; or
``(V) after being provided written notice by the mechanical
licensing collective, refuses to comply with any other
material term or condition of the blanket license under this
section for a period of not less than 60 calendar days.
``(ii) Notice of default and termination.--In case of a
default by a digital music provider, the mechanical licensing
collective may proceed to terminate the blanket license of
the digital music provider as follows:
``(I) The mechanical licensing collective shall provide
written notice to the digital music provider describing with
reasonable particularity the default and advising that unless
such default is cured not later than 60 calendar days after
the date of the notice, the blanket license will
automatically terminate at the end of that period.
``(II) If the digital music provider fails to remedy the
default before the end of the 60-day period described in
subclause (I), the license shall terminate without any
further action on the part of the mechanical licensing
collective. Such termination renders the making of all
digital phonorecord deliveries of all musical works (and
shares thereof) covered by the blanket license for which the
royalty or administrative assessment has not been paid
actionable as acts of infringement under section 501 and
subject to the remedies provided by sections 502 through 506.
``(iii) Notice to copyright owners.--The mechanical
licensing collective shall provide written notice of any
termination under this
[[Page S6244]]
subparagraph to copyright owners of affected works.
``(iv) Review by federal district court.--A digital music
provider that believes a blanket license was improperly
terminated by the mechanical licensing collective may seek
review of such termination in an appropriate district court
of the United States. The district court shall determine the
matter de novo based on the record before the mechanical
licensing collective and any additional supporting evidence
presented by the parties.
``(5) Digital licensee coordinator.--
``(A) In general.--The digital licensee coordinator shall
be a single entity that--
``(i) is a nonprofit, not owned by any other entity, that
is created to carry out responsibilities under this
subsection;
``(ii) is endorsed by and enjoys substantial support from
digital music providers and significant nonblanket licensees
that together represent the greatest percentage of the
licensee market for uses of musical works in covered
activities, as measured over the preceding 3 calendar years;
``(iii) is able to demonstrate that it has, or will have
prior to the license availability date, the administrative
capabilities to perform the required functions of the digital
licensee coordinator under this subsection; and
``(iv) has been designated by the Register of Copyrights,
with the approval of the Librarian of Congress pursuant to
section 702, in accordance with subparagraph (B).
``(B) Designation of digital licensee coordinator.--
``(i) Initial designation.--The Register of Copyrights
shall initially designate the digital licensee coordinator
not later than 270 days after the enactment date, in
accordance with the same procedure described for designation
of the mechanical licensing collective in paragraph
(3)(B)(i).
``(ii) Periodic review of designation.--Following the
initial designation of the digital licensee coordinator, the
Register of Copyrights shall, every 5 years, beginning with
the fifth full calendar year to commence after the initial
designation, determine whether the existing designation
should be continued, or a different entity meeting the
criteria described in clauses (i) through (iii) of
subparagraph (A) should be designated, in accordance with the
same procedure described for the mechanical licensing
collective in paragraph (3)(B)(ii).
``(iii) Inability to designate.--If the Register of
Copyrights is unable to identify an entity that fulfills each
of the qualifications described in clauses (i) through (iii)
of subparagraph (A) to serve as the digital licensee
coordinator, the Register may decline to designate a digital
licensee coordinator. The determination of the Register not
to designate a digital licensee coordinator shall not negate
or otherwise affect any provision of this subsection except
to the limited extent that a provision references the digital
licensee coordinator. In such case, the reference to the
digital licensee coordinator shall be without effect unless
and until a new digital licensee coordinator is designated.
``(C) Authorities and functions.--
``(i) In general.--The digital licensee coordinator is
authorized to perform the following functions, subject to
more particular requirements as described in this subsection:
``(I) Establish a governance structure, criteria for
membership, and any dues to be paid by its members.
``(II) Engage in efforts to enforce notice and payment
obligations with respect to the administrative assessment,
including by receiving information from and coordinating with
the mechanical licensing collective.
``(III) Initiate and participate in proceedings before the
Copyright Royalty Judges to establish the administrative
assessment under this subsection.
``(IV) Initiate and participate in proceedings before the
Copyright Office with respect to activities under this
subsection.
``(V) Gather and provide documentation for use in
proceedings before the Copyright Royalty Judges to set rates
and terms under this section.
``(VI) Maintain records of its activities.
``(VII) Assist in publicizing the existence of the
mechanical licensing collective and the ability of copyright
owners to claim royalties for unmatched musical works (and
shares of works) through the collective.
``(VIII) Engage in such other activities as may be
necessary or appropriate to fulfill its responsibilities
under this subsection.
``(ii) Restriction on lobbying.--The digital licensee
coordinator may not engage in government lobbying activities,
but may engage in the activities described in subclauses
(III), (IV), and (V) of clause (i).
``(iii) Assistance with publicity for unclaimed
royalties.--The digital licensee coordinator shall make
reasonable, good-faith efforts to assist the mechanical
licensing collective in the efforts of the collective to
locate and identify copyright owners of unmatched musical
works (and shares of such works) by encouraging digital music
providers to publicize the existence of the collective and
the ability of copyright owners to claim unclaimed accrued
royalties, including by--
``(I) posting contact information for the collective at
reasonably prominent locations on digital music provider
websites and applications; and
``(II) conducting in-person outreach activities with
songwriters.
``(6) Requirements for significant nonblanket licensees.--
``(A) In general.--
``(i) Notice of activity.--Not later than 45 calendar days
after the license availability date, or 45 calendar days
after the end of the first full calendar month in which an
entity initially qualifies as a significant nonblanket
licensee, whichever occurs later, a significant nonblanket
licensee shall submit a notice of nonblanket activity to the
mechanical licensing collective. The notice of nonblanket
activity shall comply in form and substance with requirements
that the Register of Copyrights shall establish by
regulation, and a copy shall be made available to the digital
licensee coordinator.
``(ii) Reporting and payment obligations.--The notice of
nonblanket activity submitted to the mechanical licensing
collective shall be accompanied by a report of usage that
contains the information described in paragraph (4)(A)(ii),
as well as any payment of the administrative assessment
required under this subsection and applicable regulations.
Thereafter, subject to clause (iii), a significant nonblanket
licensee shall continue to provide monthly reports of usage,
accompanied by any required payment of the administrative
assessment, to the mechanical licensing collective. Such
reports and payments shall be submitted not later than 45
calendar days after the end of the calendar month being
reported.
``(iii) Discontinuation of obligations.--An entity that has
submitted a notice of nonblanket activity to the mechanical
licensing collective that has ceased to qualify as a
significant nonblanket licensee may so notify the collective
in writing. In such case, as of the calendar month in which
such notice is provided, such entity shall no longer be
required to provide reports of usage or pay the
administrative assessment, but if such entity later qualifies
as a significant nonblanket licensee, such entity shall again
be required to comply with clauses (i) and (ii).
``(B) Reporting by mechanical licensing collective to
digital licensee coordinator.--
``(i) Monthly reports of noncompliant licensees.--The
mechanical licensing collective shall provide monthly reports
to the digital licensee coordinator setting forth any
significant nonblanket licensees of which the collective is
aware that have failed to comply with subparagraph (A).
``(ii) Treatment of confidential information.--The
mechanical licensing collective and digital licensee
coordinator shall take appropriate steps to safeguard the
confidentiality and security of financial and other sensitive
data shared under this subparagraph, in accordance with the
confidentiality requirements prescribed by the Register of
Copyrights under paragraph (12)(C).
``(C) Legal enforcement efforts.--
``(i) Federal court action.--Should the mechanical
licensing collective or digital licensee coordinator become
aware that a significant nonblanket licensee has failed to
comply with subparagraph (A), either may commence an action
in an appropriate district court of the United States for
damages and injunctive relief. If the significant nonblanket
licensee is found liable, the court shall, absent a finding
of excusable neglect, award damages in an amount equal to
three times the total amount of the unpaid administrative
assessment and, notwithstanding anything to the contrary in
section 505, reasonable attorney's fees and costs, as well as
such other relief as the court determines appropriate. In all
other cases, the court shall award relief as appropriate. Any
recovery of damages shall be payable to the mechanical
licensing collective as an offset to the collective total
costs.
``(ii) Statute of limitations for enforcement action.--Any
action described in this subparagraph shall be commenced
within the time period described in section 507(b).
``(iii) Other rights and remedies preserved.--The ability
of the mechanical licensing collective or digital licensee
coordinator to bring an action under this subparagraph shall
in no way alter, limit or negate any other right or remedy
that may be available to any party at law or in equity.
``(7) Funding of mechanical licensing collective.--
``(A) In general.--The collective total costs shall be
funded by--
``(i) an administrative assessment, as such assessment is
established by the Copyright Royalty Judges pursuant to
subparagraph (D) from time to time, to be paid by--
``(I) digital music providers that are engaged, in all or
in part, in covered activities pursuant to a blanket license;
and
``(II) significant nonblanket licensees; and
``(ii) voluntary contributions from digital music providers
and significant nonblanket licensees as may be agreed with
copyright owners.
``(B) Voluntary contributions.--
``(i) Agreements concerning contributions.--Except as
provided in clause (ii), voluntary contributions by digital
music providers and significant nonblanket licensees shall be
determined by private negotiation and agreement, and the
following conditions apply:
``(I) The date and amount of each voluntary contribution to
the mechanical licensing collective shall be documented in a
writing signed by an authorized agent of the mechanical
licensing collective and the contributing party.
``(II) Such agreement shall be made available as required
in proceedings before the
[[Page S6245]]
Copyright Royalty Judges to establish or adjust the
administrative assessment in accordance with applicable
statutory and regulatory provisions and rulings of the
Copyright Royalty Judges.
``(ii) Treatment of contributions.--Each voluntary
contribution described in clause (i) shall be treated for
purposes of an administrative assessment proceeding as an
offset to the collective total costs that would otherwise be
recovered through the administrative assessment. Any
allocation or reallocation of voluntary contributions between
or among individual digital music providers or significant
nonblanket licensees shall be a matter of private negotiation
and agreement among such parties and outside the scope of the
administrative assessment proceeding.
``(C) Interim application of accrued royalties.--In the
event that the administrative assessment, together with any
funding from voluntary contributions as provided in
subparagraphs (A) and (B), is inadequate to cover current
collective total costs, the collective, with approval of its
board of directors, may apply unclaimed accrued royalties on
an interim basis to defray such costs, subject to future
reimbursement of such royalties from future collections of
the assessment.
``(D) Determination of administrative assessment.--
``(i) Administrative assessment to cover collective total
costs.--The administrative assessment shall be used solely
and exclusively to fund the collective total costs.
``(ii) Separate proceeding before copyright royalty
judges.--The amount and terms of the administrative
assessment shall be determined and established in a separate
and independent proceeding before the Copyright Royalty
Judges, according to the procedures described in clauses
(iii) and (iv). The administrative assessment determined in
such proceeding shall--
``(I) be wholly independent of royalty rates and terms
applicable to digital music providers, which shall not be
taken into consideration in any manner in establishing the
administrative assessment;
``(II) be established by the Copyright Royalty Judges in an
amount that is calculated to defray the reasonable collective
total costs;
``(III) be assessed based on usage of musical works by
digital music providers and significant nonblanket licensees
in covered activities under both compulsory and nonblanket
licenses;
``(IV) may be in the form of a percentage of royalties
payable under this section for usage of musical works in
covered activities (regardless of whether a different rate
applies under a voluntary license), or any other usage-based
metric reasonably calculated to equitably allocate the
collective total costs across digital music providers and
significant nonblanket licensees engaged in covered
activities, and shall include as a component a minimum fee
for all digital music providers and significant nonblanket
licensees; and
``(V) take into consideration anticipated future collective
total costs and collections of the administrative assessment,
including, as applicable--
``(aa) any portion of past actual collective total costs of
the mechanical licensing collective not funded by previous
collections of the administrative assessment or voluntary
contributions because such collections or contributions
together were insufficient to fund such costs;
``(bb) any past collections of the administrative
assessment and voluntary contributions that exceeded past
actual collective total costs, resulting in a surplus; and
``(cc) the amount of any voluntary contributions by digital
music providers or significant nonblanket licensees in
relevant periods, described in subparagraphs (A) and (B) of
paragraph (7).
``(iii) Initial administrative assessment.--The procedure
for establishing the initial administrative assessment shall
be as follows:
``(I) Not later than 270 days after the enactment date, the
Copyright Royalty Judges shall commence a proceeding to
establish the initial administrative assessment by publishing
a notice in the Federal Register seeking petitions to
participate.
``(II) The mechanical licensing collective and digital
licensee coordinator shall participate in the proceeding
described in subclause (I), along with any interested
copyright owners, digital music providers or significant
nonblanket licensees that have notified the Copyright Royalty
Judges of their desire to participate.
``(III) The Copyright Royalty Judges shall establish a
schedule for submission by the parties of information that
may be relevant to establishing the administrative
assessment, including actual and anticipated collective total
costs of the mechanical licensing collective, actual and
anticipated collections from digital music providers and
significant nonblanket licensees, and documentation of
voluntary contributions, as well as a schedule for further
proceedings, which shall include a hearing, as the Copyright
Royalty Judges determine appropriate.
``(IV) The initial administrative assessment shall be
determined, and such determination shall be published in the
Federal Register by the Copyright Royalty Judges, not later
than 1 year after commencement of the proceeding described in
this clause. The determination shall be supported by a
written record. The initial administrative assessment shall
be effective as of the license availability date, and shall
continue in effect unless and until an adjusted
administrative assessment is established pursuant to an
adjustment proceeding under clause (iv).
``(iv) Adjustment of administrative assessment.--The
administrative assessment may be adjusted by the Copyright
Royalty Judges periodically, in accordance with the following
procedures:
``(I) Not earlier than 1 year after the most recent
publication of a determination of the administrative
assessment by the Copyright Royalty Judges, the mechanical
licensing collective, the digital licensee coordinator, or
one or more interested copyright owners, digital music
providers, or significant nonblanket licensees, may file a
petition with the Copyright Royalty Judges in the month of
May to commence a proceeding to adjust the administrative
assessment.
``(II) Notice of the commencement of such proceeding shall
be published in the Federal Register in the month of June
following the filing of any petition, with a schedule of
requested information and additional proceedings, as
described in clause (iii)(III). The mechanical licensing
collective and digital licensee coordinator shall participate
in such proceeding, along with any interested copyright
owners, digital music providers, or significant nonblanket
licensees that have notified the Copyright Royalty Judges of
their desire to participate.
``(III) The determination of the adjusted administrative
assessment, which shall be supported by a written record,
shall be published in the Federal Register during June of the
calendar year following the commencement of the proceeding.
The adjusted administrative assessment shall take effect
January 1 of the year following such publication.
``(v) Adoption of voluntary agreements.--In lieu of
reaching their own determination based on evaluation of
relevant data, the Copyright Royalty Judges shall approve and
adopt a negotiated agreement to establish the amount and
terms of the administrative assessment that has been agreed
to by the mechanical licensing collective and the digital
licensee coordinator (or if none has been designated,
interested digital music providers and significant nonblanket
licensees representing more than half of the market for uses
of musical works in covered activities), except that the
Copyright Royalty Judges shall have the discretion to reject
any such agreement for good cause shown. An administrative
assessment adopted under this clause shall apply to all
digital music providers and significant nonblanket licensees
engaged in covered activities during the period the
administrative assessment is in effect.
``(vi) Continuing authority to amend.--The Copyright
Royalty Judges shall retain continuing authority to amend a
determination of an administrative assessment to correct
technical or clerical errors, or modify the terms of
implementation, for good cause, with any such amendment to be
published in the Federal Register.
``(vii) Appeal of administrative assessment.--The
determination of an administrative assessment by the
Copyright Royalty Judges shall be appealable, not later than
30 calendar days after publication in the Federal Register,
to the Court of Appeals for the District of Columbia Circuit
by any party that fully participated in the proceeding. The
administrative assessment as established by the Copyright
Royalty Judges shall remain in effect pending the final
outcome of any such appeal, and the mechanical licensing
collective, digital licensee coordinator, digital music
providers, and significant nonblanket licensees shall
implement appropriate financial or other measures not later
than 90 days after any modification of the assessment to
reflect and account for such outcome.
``(viii) Regulations.--The Copyright Royalty Judges may
adopt regulations to govern the conduct of proceedings under
this paragraph.
``(8) Establishment of rates and terms under blanket
license.--
``(A) Restrictions on ratesetting participation.--Neither
the mechanical licensing collective nor the digital licensee
coordinator shall be a party to a proceeding described in
subsection (c)(1)(E), except that the mechanical licensing
collective or the digital licensee coordinator may gather and
provide financial and other information for the use of a
party to such a proceeding and comply with requests for
information as required under applicable statutory and
regulatory provisions and rulings of the Copyright Royalty
Judges.
``(B) Application of late fees.--In any proceeding
described in subparagraph (A) in which the Copyright Royalty
Judges establish a late fee for late payment of royalties for
uses of musical works under this section, such fee shall
apply to covered activities under blanket licenses, as
follows:
``(i) Late fees for past due royalty payments shall accrue
from the due date for payment until payment is received by
the mechanical licensing collective.
``(ii) The availability of late fees shall in no way
prevent a copyright owner or the mechanical licensing
collective from asserting any other rights or remedies to
which such copyright owner or the mechanical licensing
collective may be entitled under this title.
``(C) Interim rate agreements in general.--For any covered
activity for which no rate or terms have been established by
the Copyright Royalty Judges, the mechanical licensing
collective and any digital music
[[Page S6246]]
provider may agree to an interim rate and terms for such
activity under the blanket license, and any such rate and
terms--
``(i) shall be treated as nonprecedential and not cited or
relied upon in any ratesetting proceeding before the
Copyright Royalty Judges or any other tribunal; and
``(ii) shall automatically expire upon the establishment of
a rate and terms for such covered activity by the Copyright
Royalty Judges, under subsection (c)(1)(E).
``(D) Adjustments for interim rates.--The rate and terms
established by the Copyright Royalty Judges for a covered
activity to which an interim rate and terms have been agreed
under subparagraph (C) shall supersede the interim rate and
terms and apply retroactively to the inception of the
activity under the blanket license. In such case, not later
than 90 days after the effective date of the rate and terms
established by the Copyright Royalty Judges--
``(i) if the rate established by the Copyright Royalty
Judges exceeds the interim rate, the digital music provider
shall pay to the mechanical licensing collective the amount
of any underpayment of royalties due; or
``(ii) if the interim rate exceeds the rate established by
the Copyright Royalty Judges, the mechanical licensing
collective shall credit the account of the digital music
provider for the amount of any overpayment of royalties due.
``(9) Transition to blanket licenses.--
``(A) Substitution of blanket license.--On the license
availability date, a blanket license shall, without any
interruption in license authority enjoyed by such digital
music provider, be automatically substituted for and
supersede any existing compulsory license previously obtained
under this section by the digital music provider from a
copyright owner to engage in 1 or more covered activities
with respect to a musical work, except that such substitution
shall not apply to any authority obtained from a record
company pursuant to a compulsory license to make and
distribute permanent downloads unless and until such record
company terminates such authority in writing to take effect
at the end of a monthly reporting period, with a copy to the
mechanical licensing collective.
``(B) Expiration of existing licenses.--Except to the
extent provided in subparagraph (A), on and after the license
availability date, licenses other than individual download
licenses obtained under this section for covered activities
prior to the license availability date shall no longer
continue in effect.
``(C) Treatment of voluntary licenses.--A voluntary license
for a covered activity in effect on the license availability
date will remain in effect unless and until the voluntary
license expires according to the terms of the voluntary
license, or the parties agree to amend or terminate the
voluntary license. In a case where a voluntary license for a
covered activity entered into before the license availability
date incorporates the terms of this section by reference, the
terms so incorporated (but not the rates) shall be those in
effect immediately prior to the license availability date,
and those terms shall continue to apply unless and until such
voluntary license is terminated or amended, or the parties
enter into a new voluntary license.
``(D) Further acceptance of notices for covered activities
by copyright office.--On and after the enactment date--
``(i) the Copyright Office shall no longer accept notices
of intention with respect to covered activities; and
``(ii) notices of intention filed before the enactment date
will no longer be effective or provide license authority with
respect to covered activities, except that, before the
license availability date, there shall be no liability under
section 501 for the reproduction or distribution of a musical
work (or share thereof) in covered activities if a valid
notice of intention was filed for such work (or share) before
the enactment date.
``(10) Prior unlicensed uses.--
``(A) Limitation on liability in general.--A copyright
owner that commences an action under section 501 on or after
January 1, 2018, against a digital music provider for the
infringement of the exclusive rights provided by paragraph
(1) or (3) of section 106 arising from the unauthorized
reproduction or distribution of a musical work by such
digital music provider in the course of engaging in covered
activities prior to the license availability date, shall, as
the copyright owner's sole and exclusive remedy against the
digital music provider, be eligible to recover the royalty
prescribed under subsection (c)(1)(C) and chapter 8, from the
digital music provider, provided that such digital music
provider can demonstrate compliance with the requirements of
subparagraph (B), as applicable. In all other cases the
limitation on liability under this subparagraph shall not
apply.
``(B) Requirements for limitation on liability.--The
following requirements shall apply on the enactment date and
through the end of the period that expires 90 days after the
license availability date to digital music providers seeking
to avail themselves of the limitation on liability described
in subparagraph (A):
``(i) Not later than 30 calendar days after first making a
particular sound recording of a musical work available
through its service via one or more covered activities, or 30
calendar days after the enactment date, whichever occurs
later, a digital music provider shall engage in good-faith,
commercially reasonable efforts to identify and locate each
copyright owner of such musical work (or share thereof). Such
required matching efforts shall include the following:
``(I) Good-faith, commercially reasonable efforts to obtain
from the owner of the corresponding sound recording made
available through the digital music provider's service the
following information:
``(aa) Sound recording name, featured artist, sound
recording copyright owner, producer, international standard
recording code, and other information commonly used in the
industry to identify sound recordings and match them to the
musical works they embody.
``(bb) Any available musical work ownership information,
including each songwriter and publisher name, percentage
ownership share, and international standard musical work
code.
``(II) Employment of 1 or more bulk electronic matching
processes that are available to the digital music provider
through a third-party vendor on commercially reasonable
terms, except that a digital music provider may rely on its
own bulk electronic matching process if that process has
capabilities comparable to or better than those available
from a third-party vendor on commercially reasonable terms.
``(ii) The required matching efforts shall be repeated by
the digital music provider not less than once per month for
so long as the copyright owner remains unidentified or has
not been located.
``(iii) If the required matching efforts are successful in
identifying and locating a copyright owner of a musical work
(or share thereof) by the end of the calendar month in which
the digital music provider first makes use of the work, the
digital music provider shall provide statements of account
and pay royalties to such copyright owner in accordance with
this section and applicable regulations.
``(iv) If the copyright owner is not identified or located
by the end of the calendar month in which the digital music
provider first makes use of the work, the digital music
provider shall accrue and hold royalties calculated under the
applicable statutory rate in accordance with usage of the
work, from initial use of the work until the accrued
royalties can be paid to the copyright owner or are required
to be transferred to the mechanical licensing collective, as
follows:
``(I) Accrued royalties shall be maintained by the digital
music provider in accordance with generally accepted
accounting principles.
``(II) If a copyright owner of an unmatched musical work
(or share thereof) is identified and located by or to the
digital music provider before the license availability date,
the digital music provider shall--
``(aa) not later than 45 calendar days after the end of the
calendar month during which the copyright owner was
identified and located, pay the copyright owner all accrued
royalties, such payment to be accompanied by a cumulative
statement of account that includes all of the information
that would have been provided to the copyright owner had the
digital music provider been providing monthly statements of
account to the copyright owner from initial use of the work
in accordance with this section and applicable regulations,
including the requisite certification under subsection
(c)(2)(I);
``(bb) beginning with the accounting period following the
calendar month in which the copyright owner was identified
and located, and for all other accounting periods prior to
the license availability date, provide monthly statements of
account and pay royalties to the copyright owner as required
under this section and applicable regulations; and
``(cc) beginning with the monthly royalty reporting period
commencing on the license availability date, report usage and
pay royalties for such musical work (or share thereof) for
such reporting period and reporting periods thereafter to the
mechanical licensing collective, as required under this
subsection and applicable regulations.
``(III) If a copyright owner of an unmatched musical work
(or share thereof) is not identified and located by the
license availability date, the digital music provider shall--
``(aa) not later than 45 calendar days after the license
availability date, transfer all accrued royalties to the
mechanical licensing collective, such payment to be
accompanied by a cumulative statement of account that
includes all of the information that would have been provided
to the copyright owner had the digital music provider been
serving monthly statements of account on the copyright owner
from initial use of the work in accordance with this section
and applicable regulations, including the requisite
certification under subsection (c)(2)(I), and accompanied by
an additional certification by a duly authorized officer of
the digital music provider that the digital music provider
has fulfilled the requirements of clauses (i) and (ii) of
subparagraph (B) but has not been successful in locating or
identifying the copyright owner; and
``(bb) beginning with the monthly royalty reporting period
commencing on the license availability date, report usage and
pay royalties for such musical work (or share thereof) for
such period and reporting periods thereafter to the
mechanical licensing collective, as required under this
subsection and applicable regulations.
``(v) A digital music provider that complies with the
requirements of this subparagraph
[[Page S6247]]
with respect to unmatched musical works (or shares of works)
shall not be liable for or accrue late fees for late payments
of royalties for such works until such time as the digital
music provider is required to begin paying monthly royalties
to the copyright owner or the mechanical licensing
collective, as applicable.
``(C) Adjusted statute of limitations.--Notwithstanding
anything to the contrary in section 507(b), with respect to
any claim of infringement of the exclusive rights provided by
paragraphs (1) and (3) of section 106 against a digital music
provider arising from the unauthorized reproduction or
distribution of a musical work by such digital music provider
in the course of engaging in covered activities that accrued
not more than 3 years prior to the license availability date,
such action may be commenced not later than the later of--
``(i) 3 years after the date on which the claim accrued; or
``(ii) 2 years after the license availability date.
``(D) Other rights and remedies preserved.--Except as
expressly provided in this paragraph, nothing in this
paragraph shall be construed to alter, limit, or negate any
right or remedy of a copyright owner with respect to
unauthorized use of a musical work.
``(11) Legal protections for licensing activities.--
``(A) Exemption for compulsory license activities.--The
antitrust exemption described in subsection (c)(1)(D) shall
apply to negotiations and agreements between and among
copyright owners and persons entitled to obtain a compulsory
license for covered activities, and common agents acting on
behalf of such copyright owners or persons, including with
respect to the administrative assessment established under
this subsection.
``(B) Limitation on common agent exemption.--
Notwithstanding the antitrust exemption provided in
subsection (c)(1)(D) and subparagraph (A) of this paragraph
(except for the administrative assessment referenced in such
subparagraph (A) and except as provided in paragraph (8)(C)),
neither the mechanical licensing collective nor the digital
licensee coordinator shall serve as a common agent with
respect to the establishment of royalty rates or terms under
this section.
``(C) Antitrust exemption for administrative activities.--
Notwithstanding any provision of the antitrust laws,
copyright owners and persons entitled to obtain a compulsory
license under this section may designate the mechanical
licensing collective to administer voluntary licenses for the
reproduction or distribution of musical works in covered
activities on behalf of such copyright owners and persons,
subject to the following conditions:
``(i) Each copyright owner shall establish the royalty
rates and material terms of any such voluntary license
individually and not in agreement, combination, or concert
with any other copyright owner.
``(ii) Each person entitled to obtain a compulsory license
under this section shall establish the royalty rates and
material terms of any such voluntary license individually and
not in agreement, combination, or concert with any other
digital music provider.
``(iii) The mechanical licensing collective shall maintain
the confidentiality of the voluntary licenses in accordance
with the confidentiality provisions prescribed by the
Register of Copyrights under paragraph (12)(C).
``(D) Liability for good-faith activities.--The mechanical
licensing collective shall not be liable to any person or
entity based on a claim arising from its good-faith
administration of policies and procedures adopted and
implemented to carry out the responsibilities described in
subparagraphs (J) and (K) of paragraph (3), except to the
extent of correcting an underpayment or overpayment of
royalties as provided in paragraph (3)(L)(i)(VI), but the
collective may participate in a legal proceeding as a
stakeholder party if the collective is holding funds that are
the subject of a dispute between copyright owners. For
purposes of this subparagraph, the term `good-faith
administration' means administration in a manner that is not
grossly negligent.
``(E) Preemption of state property laws.--The holding and
distribution of funds by the mechanical licensing collective
in accordance with this subsection shall supersede and
preempt any State law (including common law) concerning
escheatment or abandoned property, or any analogous
provision, that might otherwise apply.
``(F) Rule of construction.--Except as expressly provided
in this subsection, nothing in this subsection shall negate
or limit the ability of any person to pursue an action in
Federal court against the mechanical licensing collective or
any other person based upon a claim arising under this title
or other applicable law.
``(12) Regulations.--
``(A) Adoption by register of copyrights and copyright
royalty judges.--The Register of Copyrights may conduct such
proceedings and adopt such regulations as may be necessary or
appropriate to effectuate the provisions of this subsection,
except for regulations concerning proceedings before the
Copyright Royalty Judges to establish the administrative
assessment, which shall be adopted by the Copyright Royalty
Judges.
``(B) Judicial review of regulations.--Except as provided
in paragraph (7)(D)(vii), regulations adopted under this
subsection shall be subject to judicial review pursuant to
chapter 7 of title 5.
``(C) Protection of confidential information.--The Register
of Copyrights shall adopt regulations to provide for the
appropriate procedures to ensure that confidential, private,
proprietary, or privileged information contained in the
records of the mechanical licensing collective and digital
licensee coordinator is not improperly disclosed or used,
including through any disclosure or use by the board of
directors or personnel of either entity, and specifically
including the unclaimed royalties oversight committee and the
dispute resolution committee of the mechanical licensing
collective.
``(13) Savings clauses.--
``(A) Limitation on activities and rights covered.--This
subsection applies solely to uses of musical works subject to
licensing under this section. The blanket license shall not
be construed to extend or apply to activities other than
covered activities or to rights other than the exclusive
rights of reproduction and distribution licensed under this
section, or serve or act as the basis to extend or expand the
compulsory license under this section to activities and
rights not covered by this section on the day before the
enactment date.
``(B) Rights of public performance not affected.--The
rights, protections, and immunities granted under this
subsection, the data concerning musical works collected and
made available under this subsection, and the definitions
under subsection (e) shall not extend to, limit, or otherwise
affect any right of public performance in a musical work.'';
and
(5) by adding at the end the following:
``(e) Definitions.--As used in this section:
``(1) Accrued interest.--The term `accrued interest' means
interest accrued on accrued royalties, as described in
subsection (d)(3)(H)(ii).
``(2) Accrued royalties.--The term `accrued royalties'
means royalties accrued for the reproduction or distribution
of a musical work (or share thereof) in a covered activity,
calculated in accordance with the applicable royalty rate
under this section.
``(3) Administrative assessment.--The term `administrative
assessment' means the fee established pursuant to subsection
(d)(7)(D).
``(4) Audit.--The term `audit' means a royalty compliance
examination to verify the accuracy of royalty payments, or
the conduct of such an examination, as applicable.
``(5) Blanket license.--The term `blanket license' means a
compulsory license described in subsection (d)(1)(A) to
engage in covered activities.
``(6) Collective total costs.--The term `collective total
costs'--
``(A) means the total costs of establishing, maintaining,
and operating the mechanical licensing collective to fulfill
its statutory functions, including--
``(i) startup costs;
``(ii) financing, legal, audit, and insurance costs;
``(iii) investments in information technology,
infrastructure, and other long-term resources;
``(iv) outside vendor costs;
``(v) costs of licensing, royalty administration, and
enforcement of rights;
``(vi) costs of bad debt; and
``(vii) costs of automated and manual efforts to identify
and locate copyright owners of musical works (and shares of
such musical works) and match sound recordings to the musical
works the sound recordings embody; and
``(B) does not include any added costs incurred by the
mechanical licensing collective to provide services under
voluntary licenses.
``(7) Covered activity.--The term `covered activity' means
the activity of making a digital phonorecord delivery of a
musical work, including in the form of a permanent download,
limited download, or interactive stream, where such activity
qualifies for a compulsory license under this section.
``(8) Digital music provider.--The term `digital music
provider' means a person (or persons operating under the
authority of that person) that, with respect to a service
engaged in covered activities--
``(A) has a direct contractual, subscription, or other
economic relationship with end users of the service, or, if
no such relationship with end users exists, exercises direct
control over the provision of the service to end users;
``(B) is able to fully report on any revenues and
consideration generated by the service; and
``(C) is able to fully report on usage of sound recordings
of musical works by the service (or procure such reporting).
``(9) Digital licensee coordinator.--The term `digital
licensee coordinator' means the entity most recently
designated pursuant to subsection (d)(5).
``(10) Digital phonorecord delivery.--The term `digital
phonorecord delivery' means each individual delivery of a
phonorecord by digital transmission of a sound recording that
results in a specifically identifiable reproduction by or for
any transmission recipient of a phonorecord of that sound
recording, regardless of whether the digital transmission is
also a public performance of the sound recording or any
musical work embodied therein, and includes a permanent
[[Page S6248]]
download, a limited download, or an interactive stream. A
digital phonorecord delivery does not result from a real-
time, noninteractive subscription transmission of a sound
recording where no reproduction of the sound recording or the
musical work embodied therein is made from the inception of
the transmission through to its receipt by the transmission
recipient in order to make the sound recording audible. A
digital phonorecord delivery does not include the digital
transmission of sounds accompanying a motion picture or other
audiovisual work as defined in section 101.
``(11) Enactment date.--The term `enactment date' means the
date of the enactment of the Musical Works Modernization Act.
``(12) Individual download license.--The term `individual
download license' means a compulsory license obtained by a
record company to make and distribute, or authorize the
making and distribution of, permanent downloads embodying a
specific individual musical work.
``(13) Interactive stream.--The term `interactive stream'
means a digital transmission of a sound recording of a
musical work in the form of a stream, where the performance
of the sound recording by means of such transmission is not
exempt under section 114(d)(1) and does not in itself, or as
a result of a program in which it is included, qualify for
statutory licensing under section 114(d)(2). An interactive
stream is a digital phonorecord delivery.
``(14) Interested.--The term `interested', as applied to a
party seeking to participate in a proceeding under subsection
(d)(7)(D), is a party as to which the Copyright Royalty
Judges have not determined that the party lacks a significant
interest in such proceeding.
``(15) License availability date.--The term `license
availability date' means January 1 following the expiration
of the 2-year period beginning on the enactment date.
``(16) Limited download.--The term `limited download' means
a digital transmission of a sound recording of a musical work
in the form of a download, where such sound recording is
accessible for listening only for a limited amount of time or
specified number of times.
``(17) Matched.--The term `matched', as applied to a
musical work (or share thereof), means that the copyright
owner of such work (or share thereof) has been identified and
located.
``(18) Mechanical licensing collective.--The term
`mechanical licensing collective' means the entity most
recently designated as such by the Register of Copyrights
under subsection (d)(3).
``(19) Mechanical licensing collective budget.--The term
`mechanical licensing collective budget' means a statement of
the financial position of the mechanical licensing collective
for a fiscal year or quarter thereof based on estimates of
expenditures during the period and proposals for financing
those expenditures, including a calculation of the collective
total costs.
``(20) Musical works database.--The term `musical works
database' means the database described in subsection
(d)(3)(E).
``(21) Nonprofit.--The term `nonprofit' means a nonprofit
created or organized in a State.
``(22) Notice of license.--The term `notice of license'
means a notice from a digital music provider provided under
subsection (d)(2)(A) for purposes of obtaining a blanket
license.
``(23) Notice of nonblanket activity.--The term `notice of
nonblanket activity' means a notice from a significant
nonblanket licensee provided under subsection (d)(6)(A) for
purposes of notifying the mechanical licensing collective
that the licensee has been engaging in covered activities.
``(24) Permanent download.--The term `permanent download'
means a digital transmission of a sound recording of a
musical work in the form of a download, where such sound
recording is accessible for listening without restriction as
to the amount of time or number of times it may be accessed.
``(25) Qualified auditor.--The term `qualified auditor'
means an independent, certified public accountant with
experience performing music royalty audits.
``(26) Record company.--The term `record company' means an
entity that invests in, produces, and markets sound
recordings of musical works, and distributes such sound
recordings for remuneration through multiple sales channels,
including a corporate affiliate of such an entity engaged in
distribution of sound recordings.
``(27) Report of usage.--The term `report of usage' means a
report reflecting an entity's usage of musical works in
covered activities described in subsection (d)(4)(A).
``(28) Required matching efforts.--The term `required
matching efforts' means efforts to identify and locate
copyright owners of musical works as described in subsection
(d)(10)(B)(i).
``(29) Service.--The term `service', as used in relation to
covered activities, means any site, facility, or offering by
or through which sound recordings of musical works are
digitally transmitted to members of the public.
``(30) Share.--The term `share', as applied to a musical
work, means a fractional ownership interest in such work.
``(31) Significant nonblanket licensee.--The term
`significant nonblanket licensee'--
``(A) means an entity, including a group of entities under
common ownership or control that, acting under the authority
of one or more voluntary licenses or individual download
licenses, offers a service engaged in covered activities, and
such entity or group of entities--
``(i) is not currently operating under a blanket license
and is not obligated to provide reports of usage reflecting
covered activities under subsection (d)(4)(A);
``(ii) has a direct contractual, subscription, or other
economic relationship with end users of the service or, if no
such relationship with end users exists, exercises direct
control over the provision of the service to end users; and
``(iii) either--
``(I) on any day in a calendar month, makes more than 5,000
different sound recordings of musical works available through
such service; or
``(II) derives revenue or other consideration in connection
with such covered activities greater than $50,000 in a
calendar month, or total revenue or other consideration
greater than $500,000 during the preceding 12 calendar
months; and
``(B) does not include--
``(i) an entity whose covered activity consists solely of
free-to-the-user streams of segments of sound recordings of
musical works that do not exceed 90 seconds in length, are
offered only to facilitate a licensed use of musical works
that is not a covered activity, and have no revenue directly
attributable to such streams constituting the covered
activity; or
``(ii) a `public broadcasting entity' as defined in section
118(f).
``(32) Songwriter.--The term `songwriter' means the author
of all or part of a musical work, including a composer or
lyricist.
``(33) State.--The term `State' means each State of the
United States, the District of Columbia, and each territory
or possession of the United States.
``(34) Unclaimed accrued royalties.--The term `unclaimed
accrued royalties' means accrued royalties eligible for
distribution under subsection (d)(3)(J).
``(35) Unmatched.--The term `unmatched', as applied to a
musical work (or share thereof), means that the copyright
owner of such work (or share thereof) has not been identified
or located.
``(36) Voluntary license.--The term `voluntary license'
means a license for use of a musical work (or share thereof)
other than a compulsory license obtained under this
section.''.
(b) Technical and Conforming Amendments to Section 801.--
Section 801(b) of title 17, United States Code, is amended--
(1) by redesignating paragraph (8) as paragraph (9); and
(2) by inserting after paragraph (7) the following:
``(8) To determine the administrative assessment to be paid
by digital music providers under section 115(d). The
provisions of section 115(d) shall apply to the conduct of
proceedings by the Copyright Royalty Judges under section
115(d) and not the procedures described in this section, or
section 803, 804, or 805.''.
(c) Effective Date of Amended Rate Setting Standard.--The
amendments made by subsection (a)(3) and section 103(g)(2)
shall apply to any proceeding before the Copyright Royalty
Judges that is commenced on or after the date of the
enactment of this Act.
(d) Technical and Conforming Amendments to Title 37, Part
385 of the Code of Federal Regulations.--Not later than 270
days after the date of enactment of this Act, the Copyright
Royalty Judges shall amend the regulations for section 115 of
title 17, United States Code, in part 385 of title 37, Code
of Federal Regulations, to conform the definitions used in
such part to the definitions of the same terms described in
section 115(e) of title 17, United States Code, as added by
subsection (a). In so doing, the Copyright Royalty Judges
shall make adjustments to the language of the regulations as
necessary to achieve the same purpose and effect as the
original regulations with respect to the rates and terms
previously adopted by the Copyright Royalty Judges.
(e) Copyright Office Activities.--The Register of
Copyrights shall engage in public outreach and educational
activities--
(1) regarding the amendments made by subsection (a) to
section 115 of title 17, United States Code, including the
responsibilities of the mechanical licensing collective
designated under those amendments;
(2) which shall include educating songwriters and other
interested parties with respect to the process established
under section 115(d)(3)(C)(i)(V) of title 17, United States
Code, as added by subsection (a), by which--
(A) a copyright owner may claim ownership of musical works
(and shares of such works); and
(B) royalties for works for which the owner is not
identified or located shall be equitably distributed to known
copyright owners; and
(3) which the Register shall make available online.
(f) Unclaimed Royalties Study and Recommendations.--
(1) In general.--Not later than 2 years after the date on
which the Register of Copyrights initially designates the
mechanical licensing collective under section 115(d)(3)(B)(i)
of title 17, United States Code, as added by subsection
(a)(4), the Register, in consultation with the Comptroller
General of the United States, and after soliciting and
reviewing comments and relevant information from music
industry participants and
[[Page S6249]]
other interested parties, shall submit to the Committee on
the Judiciary of the Senate and the Committee on the
Judiciary of the House of Representatives a report that
recommends best practices that the collective may implement
in order to--
(A) identify and locate musical work copyright owners with
unclaimed accrued royalties held by the collective;
(B) encourage musical work copyright owners to claim the
royalties of those owners; and
(C) reduce the incidence of unclaimed royalties.
(2) Consideration of recommendations.--The mechanical
licensing collective shall carefully consider, and give
substantial weight to, the recommendations submitted by the
Register of Copyrights under paragraph (1) when establishing
the procedures of the collective with respect to the--
(A) identification and location of musical work copyright
owners; and
(B) distribution of unclaimed royalties.
SEC. 103. AMENDMENTS TO SECTION 114.
(a) Uniform Rate Standard.--Section 114(f) of title 17,
United States Code, is amended--
(1) by striking paragraphs (1) and (2) and inserting the
following:
``(1)(A) Proceedings under chapter 8 shall determine
reasonable rates and terms of royalty payments for
transmissions subject to statutory licensing under subsection
(d)(2) during the 5-year period beginning on January 1 of the
second year following the year in which the proceedings are
to be commenced pursuant to subparagraph (A) or (B) of
section 804(b)(3), as the case may be, or such other period
as the parties may agree. The parties to each proceeding
shall bear their own costs.
``(B) The schedule of reasonable rates and terms determined
by the Copyright Royalty Judges shall, subject to paragraph
(2), be binding on all copyright owners of sound recordings
and entities performing sound recordings affected by this
paragraph during the 5-year period specified in subparagraph
(A), or such other period as the parties may agree. Such
rates and terms shall distinguish among the different types
of services then in operation and shall include a minimum fee
for each such type of service, such differences to be based
on criteria including the quantity and nature of the use of
sound recordings and the degree to which use of the service
may substitute for or may promote the purchase of
phonorecords by consumers. The Copyright Royalty Judges shall
establish rates and terms that most clearly represent the
rates and terms that would have been negotiated in the
marketplace between a willing buyer and a willing seller. In
determining such rates and terms, the Copyright Royalty
Judges--
``(i) shall base their decision on economic, competitive,
and programming information presented by the parties,
including--
``(I) whether use of the service may substitute for or may
promote the sales of phonorecords or otherwise may interfere
with or may enhance the sound recording copyright owner's
other streams of revenue from the copyright owner's sound
recordings; and
``(II) the relative roles of the copyright owner and the
transmitting entity in the copyrighted work and the service
made available to the public with respect to relative
creative contribution, technological contribution, capital
investment, cost, and risk; and
``(ii) may consider the rates and terms for comparable
types of audio transmission services and comparable
circumstances under voluntary license agreements.
``(C) The procedures under subparagraphs (A) and (B) shall
also be initiated pursuant to a petition filed by any sound
recording copyright owner or any transmitting entity
indicating that a new type of service on which sound
recordings are performed is or is about to become
operational, for the purpose of determining reasonable terms
and rates of royalty payments with respect to such new type
of service for the period beginning with the inception of
such new type of service and ending on the date on which the
royalty rates and terms for eligible nonsubscription services
and new subscription services, or preexisting subscription
services and preexisting satellite digital audio radio
services, as the case may be, most recently determined under
subparagraph (A) or (B) and chapter 8 expire, or such other
period as the parties may agree.''; and
(2) by redesignating paragraphs (3), (4), and (5) as
paragraphs (2), (3), and (4), respectively.
(b) Repeal.--Subsection (i) of section 114 of title 17,
United States Code, is repealed.
(c) Use in Musical Work Proceedings.--
(1) In general.--License fees payable for the public
performance of sound recordings under section 106(6) of title
17, United States Code, shall not be taken into account in
any administrative, judicial, or other governmental
proceeding to set or adjust the royalties payable to musical
work copyright owners for the public performance of their
works except in such a proceeding to set or adjust royalties
for the public performance of musical works by means of a
digital audio transmission other than a transmission by a
broadcaster, and may be taken into account only with respect
to such digital audio transmission.
(2) Definitions.--In this subsection:
(A) Transmission by a broadcaster.--The term ``transmission
by a broadcaster'' means a nonsubscription digital
transmission made by a terrestrial broadcast station on its
own behalf, or on the behalf of a terrestrial broadcast
station under common ownership or control, that is not part
of an interactive service or a music-intensive service
comprising the transmission of sound recordings customized
for or customizable by recipients or service users.
(B) Terrestrial broadcast station.--The term ``terrestrial
broadcast station'' means a terrestrial, over-the-air radio
or television broadcast station, including an FM translator
(as defined in section 74.1201 of title 47, Code of Federal
Regulations, and licensed as such by the Federal
Communications Commission) whose primary business activities
are comprised of, and whose revenues are generated through,
terrestrial, over-the-air broadcast transmissions, or the
simultaneous or substantially-simultaneous digital
retransmission by the terrestrial, over-the-air broadcast
station of its over-the-air broadcast transmissions.
(d) Rule of Construction.--Subsection (c)(2) shall not be
given effect in interpreting provisions of title 17, United
States Code.
(e) Use in Sound Recording Proceedings.--The repeal of
section 114(i) of title 17, United States Code, by subsection
(b) shall not be taken into account in any proceeding to set
or adjust the rates and fees payable for the use of sound
recordings under section 112(e) or 114(f) of such title that
is pending on, or commenced on or after, the date of
enactment of this Act.
(f) Decisions and Precedents Not Affected.--The repeal of
section 114(i) of title 17, United States Code, by subsection
(b) shall not have any effect upon the decisions, or the
precedents established or relied upon, in any proceeding to
set or adjust the rates and fees payable for the use of sound
recordings under section 112(e) or 114(f) of such title
before the date of enactment of this Act.
(g) Technical and Conforming Amendments.--
(1) Section 114.--Section 114(f) of title 17, United States
Code, as amended by subsection (a), is further amended in
paragraph (4)(C), as so redesignated, in the first sentence,
by striking ``under paragraph (4)'' and inserting ``under
paragraph (3)''.
(2) Section 801.--Section 801(b) of title 17, United States
Code, is amended--
(A) in paragraph (1), by striking ``The rates applicable''
and all that follows though ``prevailing industry
practices.''; and
(B) in paragraph (7)(B), by striking ``114(f)(3)'' and
inserting ``114(f)(2)''.
(3) Section 803.--Section 803(c)(2)(E)(i)(II) of title 17,
United States Code, is amended--
(A) by striking ``or 114(f)(2)(C)''; and
(B) by striking ``114(f)(4)(B)'' and inserting
``114(f)(3)(B)''.
(4) Section 804.--Section 804(b)(3)(C) of title 17, United
States Code, is amended--
(A) in clause (i), by striking ``and 114(f)(2)(C)'';
(B) in clause (iii)(II), by striking ``114(f)(4)(B)(ii)''
and inserting ``114(f)(3)(B)(ii)''; and
(C) in clause (iv), by striking ``or 114(f)(2)(C), as the
case may be''.
(h) Effective Date of Amended Rate Setting Standard.--The
amendments made by subsection (a)(1) shall apply to any
proceeding before the Copyright Royalty Judges that is
commenced on or after the date of the enactment of this Act.
(i) Timing of Rate Determinations.--Section 804(b)(3)(B) of
title 17, United States Code, is amended, in the third
sentence, by inserting the following after ``fifth calendar
year'': ``, except that--
``(i) with respect to preexisting subscription services,
the terms and rates finally determined for the rate period
ending on December 31, 2022, shall remain in effect through
December 31, 2027, and there shall be no proceeding to
determine terms and rates for preexisting subscription
services for the period beginning on January 1, 2023, and
ending on December 31, 2027; and
``(ii) with respect to preexisting satellite digital audio
radio services, the terms and rates set forth by the
Copyright Royalty Judges on December 14, 2017, in their
initial determination for the rate period ending on December
31, 2022 shall be in effect through December 31, 2027,
without any change based on a rehearing under section
803(c)(2) and without the possibility of appeal under section
803(d), and there shall be no proceeding to determine terms
and rates for preexisting satellite digital audio radio
services for the period beginning on January 1, 2023, and''.
SEC. 104. RANDOM ASSIGNMENT OF RATE COURT PROCEEDINGS.
Section 137 of title 28, United States Code, is amended--
(1) by striking ``The business'' and inserting ``(a) In
General.--The business''; and
(2) by adding at the end the following:
``(b) Random Assignment of Rate Court Proceedings.--
``(1) In general.--
``(A) Definition.--In this paragraph, the term `performing
rights society' has the meaning given the term in section 101
of title 17.
``(B) Determination of license fee.--Except as provided in
subparagraph (C), in the case of any performing rights
society subject to a consent decree, any application for the
determination of a license fee for the public performance of
music in accordance with the applicable consent decree shall
be made in the district court with jurisdiction over that
consent decree and randomly assigned to a judge of that
district court according to the rules of that court for the
division of business among district judges, provided that
[[Page S6250]]
any such application shall not be assigned to--
``(i) a judge to whom continuing jurisdiction over any
performing rights society for any performing rights society
consent decree is assigned or has previously been assigned;
or
``(ii) a judge to whom another proceeding concerning an
application for the determination of a reasonable license fee
is assigned at the time of the filing of the application.
``(C) Exception.--Subparagraph (B) does not apply to an
application to determine reasonable license fees made by
individual proprietors under section 513 of title 17.
``(2) Rule of construction.--Nothing in paragraph (1) shall
modify the rights of any party to a consent decree or to a
proceeding to determine reasonable license fees, to make an
application for the construction of any provision of the
applicable consent decree. Such application shall be referred
to the judge to whom continuing jurisdiction over the
applicable consent decree is currently assigned. If any such
application is made in connection with a rate proceeding,
such rate proceeding shall be stayed until the final
determination of the construction application. Disputes in
connection with a rate proceeding about whether a licensee is
similarly situated to another licensee shall not be subject
to referral to the judge with continuing jurisdiction over
the applicable consent decree.''.
SEC. 105. PERFORMING RIGHTS SOCIETY CONSENT DECREES.
(a) Definition.--In this section, the term ``performing
rights society'' has the meaning given the term in section
101 of title 17, United States Code.
(b) Notification of Review.--
(1) In general.--The Department of Justice shall provide
timely briefings upon request of any Member of the Committee
on the Judiciary of the Senate and the Committee on the
Judiciary of the House of Representatives regarding the
status of a review in progress of a consent decree between
the United States and a performing rights society.
(2) Confidentiality and deliberative process.--In
accordance with applicable rules relating to confidentiality
and agency deliberative process, the Department of Justice
shall share with such Members of Congress detailed and timely
information and pertinent documents related to the consent
decree review.
(c) Action Before Motion to Terminate.--
(1) In general.--Before filing with the appropriate
district court of the United States a motion to terminate a
consent decree between the United States and a performing
rights society, including a motion to terminate a consent
decree after the passage of a specified period of time, the
Department of Justice shall--
(A) notify Members of Congress and committees of Congress
described in subsection (b); and
(B) provide to such Members of Congress and committees
information regarding the impact of the proposed termination
on the market for licensing the public performance of musical
works should the motion be granted.
(2) Notification.--
(A) In general.--During the notification described in
paragraph (1), and not later than a reasonable time before
the date on which the Department of Justice files with the
appropriate district court of the United States a motion to
terminate a consent decree between the United States and a
performing rights society, the Department of Justice should
submit to the chairmen and ranking members of the Committee
on the Judiciary of the Senate and the Committee on the
Judiciary of the House of Representatives a written
notification of the intent of the Department of Justice to
file the motion.
(B) Contents.--The notification provided in subparagraph
(A) shall include a written report to the chairmen and
ranking members of the Committee on the Judiciary of Senate
and the Committee on the Judiciary of the House of
Representatives setting forth--
(i) an explanation of the process used by the Department of
Justice to review the consent decree;
(ii) a summary of the public comments received by the
Department of Justice during the review by the Department;
and
(iii) other information provided to Congress under
paragraph (1)(B).
(d) Scope.--This section applies only to a consent decree
between the United States and a performing rights society.
SEC. 106. EFFECTIVE DATE.
This title, and the amendments made by this title, shall
take effect on the date of enactment of this Act.
TITLE II--CLASSICS PROTECTION AND ACCESS
SEC. 201. SHORT TITLE.
This title may be cited as the ``Classics Protection and
Access Act''.
SEC. 202. UNAUTHORIZED USE OF PRE-1972 SOUND RECORDINGS.
(a) Preemption of State Law Rights; Protection for
Unauthorized Use.--Title 17, United States Code, is amended--
(1) in section 301, by striking subsection (c) and
inserting the following:
``(c) Notwithstanding the provisions of section 303, and in
accordance with chapter 14, no sound recording fixed before
February 15, 1972, shall be subject to copyright under this
title. With respect to sound recordings fixed before February
15, 1972, the preemptive provisions of subsection (a) shall
apply to activities that are commenced on and after the date
of enactment of the Classics Protection and Access Act.
Nothing in this subsection may be construed to affirm or
negate the preemption of rights and remedies pertaining to
any cause of action arising from the nonsubscription
broadcast transmission of sound recordings under the common
law or statutes of any State for activities that do not
qualify as covered activities under chapter 14 undertaken
during the period between the date of enactment of the
Classics Protection and Access Act and the date on which the
term of prohibition on unauthorized acts under section
1401(a)(2) expires for such sound recordings. Any potential
preemption of rights and remedies related to such activities
undertaken during that period shall apply in all respects as
it did the day before the date of enactment of the Classics
Protection and Access Act.''; and
(2) by adding at the end the following:
``CHAPTER 14--UNAUTHORIZED USE OF PRE-1972 SOUND RECORDINGS
``Sec.
``1401. Unauthorized use of pre-1972 sound recordings.
``Sec. 1401. Unauthorized use of pre-1972 sound recordings
``(a) In General.--
``(1) Unauthorized acts.--Anyone who, on or before the last
day of the applicable transition period under paragraph (2),
and without the consent of the rights owner, engages in
covered activity with respect to a sound recording fixed
before February 15, 1972, shall be subject to the remedies
provided in sections 502 through 505 and 1203 to the same
extent as an infringer of copyright or a person that engages
in unauthorized activity under chapter 12.
``(2) Term of prohibition.--
``(A) In general.--The prohibition under paragraph (1)--
``(i) subject to clause (ii), shall apply to a sound
recording described in that paragraph--
``(I) through December 31 of the year that is 95 years
after the year of first publication; and
``(II) for a further transition period as prescribed under
subparagraph (B) of this paragraph; and
``(ii) shall not apply to any sound recording after
February 15, 2067.
``(B) Transition periods.--
``(i) Pre-1923 recordings.--In the case of a sound
recording first published before January 1, 1923, the
transition period described in subparagraph (A)(i)(II) shall
end on December 31 of the year that is 3 years after the date
of enactment of this section.
``(ii) 1923-1946 recordings.--In the case of a sound
recording first published during the period beginning on
January 1, 1923, and ending on December 31, 1946, the
transition period described in subparagraph (A)(i)(II) shall
end on the date that is 5 years after the last day of the
period described in subparagraph (A)(i)(I).
``(iii) 1947-1956 recordings.--In the case of a sound
recording first published during the period beginning on
January 1, 1947, and ending on December 31, 1956, the
transition period described in subparagraph (A)(i)(II) shall
end on the date that is 15 years after the last day of the
period described in subparagraph (A)(i)(I).
``(iv) Post-1956 recordings.--In the case of a sound
recording fixed before February 15, 1972, that is not
described in clause (i), (ii), or (iii), the transition
period described in subparagraph (A)(i)(II) shall end on
February 15, 2067.
``(3) Rule of construction.--For the purposes of this
subsection, the term `anyone' includes any State, any
instrumentality of a State, and any officer or employee of a
State or instrumentality of a State acting in the official
capacity of the officer or employee, as applicable.
``(b) Certain Authorized Transmissions and Reproductions.--
A public performance by means of a digital audio transmission
of a sound recording fixed before February 15, 1972, or a
reproduction in an ephemeral phonorecord or copy of a sound
recording fixed before February 15, 1972, shall, for purposes
of subsection (a), be considered to be authorized and made
with the consent of the rights owner if--
``(1) the transmission or reproduction would satisfy the
requirements for statutory licensing under section 112(e)(1)
or section 114(d)(2), or would be exempt under section
114(d)(1), as the case may be, if the sound recording were
fixed on or after February 15, 1972; and
``(2) the transmitting entity pays the statutory royalty
for the transmission or reproduction pursuant to the rates
and terms adopted under sections 112(e) and 114(f), and
complies with other obligations, in the same manner as
required by regulations adopted by the Copyright Royalty
Judges under sections 112(e) and 114(f) for sound recordings
that are fixed on or after February 15, 1972, except in the
case of a transmission that would be exempt under section
114(d)(1).
``(c) Certain Noncommercial Uses of Sound Recordings That
Are Not Being Commercially Exploited.--
``(1) In general.--Noncommercial use of a sound recording
fixed before February 15, 1972, that is not being
commercially exploited by or under the authority of the
rights owner shall not violate subsection (a) if--
``(A) the person engaging in the noncommercial use, in
order to determine
[[Page S6251]]
whether the sound recording is being commercially exploited
by or under the authority of the rights owner, makes a good
faith, reasonable search for, but does not find, the sound
recording--
``(i) in the records of schedules filed in the Copyright
Office as described in subsection (f)(5)(A); and
``(ii) on services offering a comprehensive set of sound
recordings for sale or streaming;
``(B) the person engaging in the noncommercial use files a
notice identifying the sound recording and the nature of the
use in the Copyright Office in accordance with the
regulations issued under paragraph (3)(B); and
``(C) during the 90-day period beginning on the date on
which the notice described in subparagraph (B) is indexed
into the public records of the Copyright Office, the rights
owner of the sound recording does not, in its discretion, opt
out of the noncommercial use by filing notice thereof in the
Copyright Office in accordance with the regulations issued
under paragraph (5).
``(2) Rules of construction.--For purposes of this
subsection--
``(A) merely recovering costs of production and
distribution of a sound recording resulting from a use
otherwise permitted under this subsection does not itself
necessarily constitute a commercial use of the sound
recording;
``(B) the fact that a person engaging in the use of a sound
recording also engages in commercial activities does not
itself necessarily render the use commercial; and
``(C) the fact that a person files notice of a
noncommercial use of a sound recording in accordance with the
regulations issued under paragraph (3)(B) does not itself
affect any limitation on the exclusive rights of a copyright
owner described in section 107, 108, 109, 110, or 112(f) as
applied to a claim under subsection (a) of this section
pursuant to subsection (f)(1)(A) of this section.
``(3) Notice of covered activity.--Not later than 180 days
after the date of enactment of this section, the Register of
Copyrights shall issue regulations that--
``(A) provide specific, reasonable steps that, if taken by
a filer, are sufficient to constitute a good faith,
reasonable search under paragraph (1)(A) to determine whether
a recording is being commercially exploited, including the
services that satisfy the good faith, reasonable search
requirement under paragraph (1)(A) for purposes of the safe
harbor described in paragraph (4)(A); and
``(B) establish the form, content, and procedures for the
filing of notices under paragraph (1)(B).
``(4) Safe harbor.--
``(A) In general.--A person engaging in a noncommercial use
of a sound recording otherwise permitted under this
subsection who establishes that the person made a good faith,
reasonable search under paragraph (1)(A) without finding
commercial exploitation of the sound recording by or under
the authority of the rights owner shall not be found to be in
violation of subsection (a).
``(B) Steps sufficient but not necessary.--Taking the
specific, reasonable steps identified by the Register of
Copyrights in the regulations issued under paragraph (3)(A)
shall be sufficient, but not necessary, for a filer to
satisfy the requirement to conduct a good faith, reasonable
search under paragraph (1)(A) for purposes of subparagraph
(A) of this paragraph.
``(5) Opting out of covered activity.--
``(A) In general.--Not later than 180 days after the date
of enactment of this section, the Register of Copyrights
shall issue regulations establishing the form, content, and
procedures for the rights owner of a sound recording that is
the subject of a notice under paragraph (1)(B) to, in its
discretion, file notice opting out of the covered activity
described in the notice under paragraph (1)(B) during the 90-
day period beginning on the date on which the notice under
paragraph (1)(B) is indexed into the public records of the
Copyright Office.
``(B) Rule of construction.--The fact that a rights holder
opts out of a noncommercial use of a sound recording by
filing notice thereof in the Copyright Office in accordance
with the regulations issued under subparagraph (A) does not
itself enlarge or diminish any limitation on the exclusive
rights of a copyright owner described in section 107, 108,
109, 110, or 112(f) as applied to a claim under subsection
(a) of this section pursuant to subsection (f)(1)(A) of this
section.
``(6) Civil penalties for certain acts.--
``(A) Filing of notices of noncommercial use.--Any person
who willfully engages in a pattern or practice of filing a
notice of noncommercial use of a sound recording as described
in paragraph (1)(B) fraudulently describing the use proposed,
or knowing that the use proposed is not permitted under this
subsection, shall be assessed a civil penalty in an amount
that is not less than $250, and not more than $1000, for each
such notice, in addition to any other remedies that may be
available under this title based on the actual use made.
``(B) Filing of opt-out notices.--
``(i) In general.--Any person who files an opt-out notice
as described in paragraph (1)(C), knowing that the person is
not the rights owner or authorized to act on behalf of the
rights owner of the sound recording to which the notice
pertains, shall be assessed a civil penalty in an amount not
less than $250, and not more than $1,000, for each such
notice.
``(ii) Pattern or practice.--Any person who engages in a
pattern or practice of making filings as described in clause
(i) shall be assessed a civil penalty in an amount not less
than $10,000 for each such filing.
``(C) Definition.--For purposes of this paragraph, the term
`knowing'--
``(i) does not require specific intent to defraud; and
``(ii) with respect to information about ownership of the
sound recording in question, means that the person--
``(I) has actual knowledge of the information;
``(II) acts in deliberate ignorance of the truth or falsity
of the information; or
``(III) acts in grossly negligent disregard of the truth or
falsity of the information.
``(d) Payment of Royalties for Transmissions of
Performances by Direct Licensing of Statutory Services.--
``(1) In general.--A public performance by means of a
digital audio transmission of a sound recording fixed before
February 15, 1972, shall, for purposes of subsection (a), be
considered to be authorized and made with the consent of the
rights owner if the transmission is made pursuant to a
license agreement voluntarily negotiated at any time between
the rights owner and the entity performing the sound
recording.
``(2) Payment of royalties to nonprofit collective under
certain license agreements.--
``(A) Licenses entered into on or after date of
enactment.--To the extent that a license agreement described
in paragraph (1) entered into on or after the date of
enactment of this section extends to a public performance by
means of a digital audio transmission of a sound recording
fixed before February 15, 1972, that meets the conditions of
subsection (b)--
``(i) the licensee shall, with respect to such
transmission, pay to the collective designated to distribute
receipts from the licensing of transmissions in accordance
with section 114(f), 50 percent of the performance royalties
for that transmission due under the license; and
``(ii) the royalties paid under clause (i) shall be fully
credited as payments due under the license.
``(B) Certain agreements entered into before enactment.--To
the extent that a license agreement described in paragraph
(1), entered into during the period beginning on January 1 of
the year in which this section is enacted and ending on the
day before the date of enactment of this section, or a
settlement agreement with a preexisting satellite digital
audio radio service (as defined in section 114(j)) entered
into during the period beginning on January 1, 2015, and
ending on the day before the date of enactment of this
section, extends to a public performance by means of a
digital audio transmission of a sound recording fixed before
February 15, 1972, that meets the conditions of subsection
(b)--
``(i) the rights owner shall, with respect to such
transmission, pay to the collective designated to distribute
receipts from the licensing of transmissions in accordance
with section 114(f) an amount that is equal to the difference
between--
``(I) 50 percent of the difference between--
``(aa) the rights owner's total gross performance royalty
fee receipts or settlement monies received for all such
transmissions covered under the license or settlement
agreement, as applicable; and
``(bb) the rights owner's total payments for outside legal
expenses, including any payments of third-party claims, that
are directly attributable to the license or settlement
agreement, as applicable; and
``(II) the amount of any royalty receipts or settlement
monies under the agreement that are distributed by the rights
owner to featured and nonfeatured artists before the date of
enactment of this section; and
``(ii) the royalties paid under clause (i) shall be fully
credited as payments due under the license or settlement
agreement, as applicable.
``(3) Distribution of royalties and settlement monies by
collective.--The collective described in paragraph (2) shall,
in accordance with subparagraphs (B) through (D) of section
114(g)(2), and paragraphs (5) and (6) of section 114(g),
distribute the royalties or settlement monies received under
paragraph (2) under a license or settlement described in
paragraph (2), which shall be the only payments to which
featured and nonfeatured artists are entitled by virtue of
the transmissions described in paragraph (2), except for
settlement monies described in paragraph (2) that are
distributed by the rights owner to featured and nonfeatured
artists before the date of enactment of this section.
``(4) Payment of royalties under license agreements entered
before enactment or not otherwise described in paragraph
(2).--
``(A) In general.--To the extent that a license agreement
described in paragraph (1) entered into before the date of
enactment of this section, or any other license agreement not
as described in paragraph (2), extends to a public
performance by means of a digital audio transmission of a
sound recording fixed before February 15, 1972, that meets
the conditions of subsection (b), the payments made by the
licensee pursuant to the license shall be made in accordance
with the agreement.
``(B) Additional payments not required.--To the extent that
a licensee has made, or will make in the future, payments
pursuant to a license as described in subparagraph (A), the
provisions of paragraphs (2) and (3) shall not require any
additional
[[Page S6252]]
payments from, or additional financial obligations on the
part of, the licensee.
``(C) Rule of construction.--Nothing in this subsection may
be construed to prohibit the collective designated to
distribute receipts from the licensing of transmissions in
accordance with section 114(f) from administering royalty
payments under any license not described in paragraph (2).
``(e) Preemption With Respect to Certain Past Acts.--
``(1) In general.--This section preempts any claim of
common law copyright or equivalent right under the laws of
any State arising from a digital audio transmission or
reproduction that is made before the date of enactment of
this section of a sound recording fixed before February 15,
1972, if--
``(A) the digital audio transmission would have satisfied
the requirements for statutory licensing under section
114(d)(2) or been exempt under section 114(d)(1), or the
reproduction would have satisfied the requirements of section
112(e)(1), as the case may be, if the sound recording were
fixed on or after February 15, 1972; and
``(B) either--
``(i) except in the case of a transmission that would have
been exempt under section 114(d)(1), not later than 270 days
after the date of enactment of this section, the transmitting
entity pays statutory royalties and provides notice of the
use of the relevant sound recordings in the same manner as
required by regulations adopted by the Copyright Royalty
Judges for sound recordings that are fixed on or after
February 15, 1972, for all the digital audio transmissions
and reproductions satisfying the requirements for statutory
licensing under sections 112(e)(1) and 114(d)(2) during the 3
years before that date of enactment; or
``(ii) an agreement voluntarily negotiated between the
rights owner and the entity performing the sound recording
(including a litigation settlement agreement entered into
before the date of enactment of this section) authorizes or
waives liability for any such transmission or reproduction
and the transmitting entity has paid for and reported such
digital audio transmission under that agreement.
``(2) Rule of construction for common law copyright.--For
purposes of paragraph (1), a claim of common law copyright or
equivalent right under the laws of any State includes a claim
that characterizes conduct subject to that paragraph as an
unlawful distribution, act of record piracy, or similar
violation.
``(3) Rule of construction for public performance rights.--
Nothing in this section may be construed to recognize or
negate the existence of public performance rights in sound
recordings under the laws of any State.
``(f) Limitations on Remedies.--
``(1) Fair use; uses by libraries, archives, and
educational institutions.--
``(A) In general.--The limitations on the exclusive rights
of a copyright owner described in sections 107, 108, 109,
110, and 112(f) shall apply to a claim under subsection (a)
with respect to a sound recording fixed before February 15,
1972.
``(B) Rule of construction for section 108(h).--With
respect to the application of section 108(h) to a claim under
subsection (a) with respect to a sound recording fixed before
February 15, 1972, the phrase `during the last 20 years of
any term of copyright of a published work' in such section
108(h) shall be construed to mean at any time after the date
of enactment of this section.
``(2) Actions.--The limitations on actions described in
section 507 shall apply to a claim under subsection (a) with
respect to a sound recording fixed before February 15, 1972.
``(3) Material online.--Section 512 shall apply to a claim
under subsection (a) with respect to a sound recording fixed
before February 15, 1972.
``(4) Principles of equity.--Principles of equity apply to
remedies for a violation of this section to the same extent
as such principles apply to remedies for infringement of
copyright.
``(5) Filing requirement for statutory damages and
attorneys' fees.--
``(A) Filing of information on sound recordings.--
``(i) Filing requirement.--Except in the case of a
transmitting entity that has filed contact information for
that transmitting entity under subparagraph (B), in any
action under this section, an award of statutory damages or
of attorneys' fees under section 504 or 505 may be made with
respect to an unauthorized use of a sound recording under
subsection (a) only if--
``(I) the rights owner has filed with the Copyright Office
a schedule that specifies the title, artist, and rights owner
of the sound recording and contains such other information,
as practicable, as the Register of Copyrights prescribes by
regulation; and
``(II) the use occurs after the end of the 90-day period
beginning on the date on which the information described in
subclause (I) is indexed into the public records of the
Copyright Office.
``(ii) Regulations.--Not later than 180 days after the date
of enactment of this section, the Register of Copyrights
shall issue regulations that--
``(I) establish the form, content, and procedures for the
filing of schedules under clause (i);
``(II) provide that a person may request that the person
receive timely notification of a filing described in
subclause (I); and
``(III) set forth the manner in which a person may make a
request under subclause (II).
``(B) Filing of contact information for transmitting
entities.--
``(i) Filing requirement.--Not later than 30 days after the
date of enactment of this section, the Register of Copyrights
shall issue regulations establishing the form, content, and
procedures for the filing of contact information by any
entity that, as of the date of enactment of this section,
performs a sound recording fixed before February 15, 1972, by
means of a digital audio transmission.
``(ii) Time limit on filings.--The Register of Copyrights
may accept filings under clause (i) only until the 180th day
after the date of enactment of this section.
``(iii) Limitation on statutory damages and attorneys'
fees.--
``(I) Limitation.--An award of statutory damages or of
attorneys' fees under section 504 or 505 may not be made
against an entity that has filed contact information for that
entity under clause (i) with respect to an unauthorized use
by that entity of a sound recording under subsection (a) if
the use occurs before the end of the 90-day period beginning
on the date on which the entity receives a notice that--
``(aa) is sent by or on behalf of the rights owner of the
sound recording;
``(bb) states that the entity is not legally authorized to
use that sound recording under subsection (a); and
``(cc) identifies the sound recording in a schedule
conforming to the requirements prescribed by the regulations
issued under subparagraph (A)(ii).
``(II) Undeliverable notices.--In any case in which a
notice under subclause (I) is sent to an entity by mail or
courier service and the notice is returned to the sender
because the entity either is no longer located at the address
provided in the contact information filed under clause (i) or
has refused to accept delivery, or the notice is sent by
electronic mail and is undeliverable, the 90-day period under
subclause (I) shall begin on the date of the attempted
delivery.
``(C) Section 412.--Section 412 shall not limit an award of
statutory damages under section 504(c) or attorneys' fees
under section 505 with respect to a covered activity in
violation of subsection (a).
``(6) Applicability of other provisions.--
``(A) In general.--Subject to subparagraph (B), no
provision of this title shall apply to or limit the remedies
available under this section except as otherwise provided in
this section.
``(B) Applicability of definitions.--Any term used in this
section that is defined in section 101 shall have the meaning
given that term in section 101.
``(g) Application of Section 230 Safe Harbor.--For purposes
of section 230 of the Communications Act of 1934 (47 U.S.C.
230), subsection (a) shall be considered to be a `law
pertaining to intellectual property' under subsection (e)(2)
of such section 230.
``(h) Application to Rights Owners.--
``(1) Transfers.--With respect to a rights owner described
in subsection (l)(2)(B)--
``(A) subsections (d) and (e) of section 201 and section
204 shall apply to a transfer described in subsection
(l)(2)(B) to the same extent as with respect to a transfer of
copyright ownership; and
``(B) notwithstanding section 411, that rights owner may
institute an action with respect to a violation of this
section to the same extent as the owner of an exclusive right
under a copyright may institute an action under section
501(b).
``(2) Application of other provisions.--The following
provisions shall apply to a rights owner under this section
to the same extent as any copyright owner:
``(A) Section 112(e)(2).
``(B) Section 112(e)(7).
``(C) Section 114(e).
``(D) Section 114(h).
``(i) Ephemeral Recordings.--An authorized reproduction
made under this section shall be subject to section 112(g) to
the same extent as a reproduction of a sound recording fixed
on or after February 15, 1972.
``(j) Rule of Construction.--A rights owner of, or featured
recording artist who performs on, a sound recording under
this chapter shall be deemed to be an interested copyright
party, as defined in section 1001, to the same extent as a
copyright owner or featured recording artist under chapter
10.
``(k) Treatment of States and State Instrumentalities,
Officers, and Employees.--Any State, and any instrumentality,
officer, or employee described in subsection (a)(3), shall be
subject to the provisions of this section in the same manner
and to the same extent as any nongovernmental entity.
``(l) Definitions.--In this section:
``(1) Covered activity.--The term `covered activity' means
any activity that the copyright owner of a sound recording
would have the exclusive right to do or authorize under
section 106 or 602, or that would violate section 1201 or
1202, if the sound recording were fixed on or after February
15, 1972.
``(2) Rights owner.--The term `rights owner' means--
``(A) the person that has the exclusive right to reproduce
a sound recording under the laws of any State, as of the day
before the date of enactment of this section; or
``(B) any person to which a right to enforce a violation of
this section may be transferred, in whole or in part, after
the date of enactment of this section, under--
``(i) subsections (d) and (e) of section 201; and
[[Page S6253]]
``(ii) section 204.''.
(b) Conforming Amendment.--The table of chapters for title
17, United States Code, is amended by adding at the end the
following:
``14. Unauthorized use of pre-1972 sound recordings........1401''.....
TITLE III--ALLOCATION FOR MUSIC PRODUCERS
SEC. 301. SHORT TITLE.
This title may be cited as the ``Allocation for Music
Producers Act'' or the ``AMP Act''.
SEC. 302. PAYMENT OF STATUTORY PERFORMANCE ROYALTIES.
(a) Letter of Direction.--Section 114(g) of title 17,
United States Code, is amended by adding at the end the
following:
``(5) Letter of direction.--
``(A) In general.--A nonprofit collective designated by the
Copyright Royalty Judges to distribute receipts from the
licensing of transmissions in accordance with subsection (f)
shall adopt and reasonably implement a policy that provides,
in circumstances determined by the collective to be
appropriate, for acceptance of instructions from a payee
identified under subparagraph (A) or (D) of paragraph (2) to
distribute, to a producer, mixer, or sound engineer who was
part of the creative process that created a sound recording,
a portion of the payments to which the payee would otherwise
be entitled from the licensing of transmissions of the sound
recording. In this section, such instructions shall be
referred to as a `letter of direction'.
``(B) Acceptance of letter.--To the extent that a
collective described in subparagraph (A) accepts a letter of
direction under that subparagraph, the person entitled to
payment pursuant to the letter of direction shall, during the
period in which the letter of direction is in effect and
carried out by the collective, be treated for all purposes as
the owner of the right to receive such payment, and the payee
providing the letter of direction to the collective shall be
treated as having no interest in such payment.
``(C) Authority of collective.--This paragraph shall not be
construed in such a manner so that the collective is not
authorized to accept or act upon payment instructions in
circumstances other than those to which this paragraph
applies.''.
(b) Additional Provisions for Recordings Fixed Before
November 1, 1995.--Section 114(g) of title 17, United States
Code, as amended by subsection (a), is further amended by
adding at the end the following:
``(6) Sound recordings fixed before november 1, 1995.--
``(A) Payment absent letter of direction.--A nonprofit
collective designated by the Copyright Royalty Judges to
distribute receipts from the licensing of transmissions in
accordance with subsection (f) (in this paragraph referred to
as the `collective') shall adopt and reasonably implement a
policy that provides, in circumstances determined by the
collective to be appropriate, for the deduction of 2 percent
of all the receipts that are collected from the licensing of
transmissions of a sound recording fixed before November 1,
1995, but which is withdrawn from the amount otherwise
payable under paragraph (2)(D) to the recording artist or
artists featured on the sound recording (or the persons
conveying rights in the artists' performance in the sound
recording), and the distribution of such amount to 1 or more
persons described in subparagraph (B) of this paragraph,
after deduction of costs described in paragraph (3) or (4),
as applicable, if each of the following requirements is met:
``(i) Certification of attempt to obtain a letter of
direction.--The person described in subparagraph (B) who is
to receive the distribution has certified to the collective,
under penalty of perjury, that--
``(I) for a period of not less than 120 days, that person
made reasonable efforts to contact the artist payee for such
sound recording to request and obtain a letter of direction
instructing the collective to pay to that person a portion of
the royalties payable to the featured recording artist or
artists; and
``(II) during the period beginning on the date on which
that person began the reasonable efforts described in
subclause (I) and ending on the date of that person's
certification to the collective, the artist payee did not
affirm or deny in writing the request for a letter of
direction.
``(ii) Collective attempt to contact artist.--After receipt
of the certification described in clause (i) and for a period
of not less than 120 days before the first distribution by
the collective to the person described in subparagraph (B),
the collective attempts, in a reasonable manner as determined
by the collective, to notify the artist payee of the
certification made by the person described in subparagraph
(B).
``(iii) No objection received.--The artist payee does not,
as of the date that was 10 business days before the date on
which the first distribution is made, submit to the
collective in writing an objection to the distribution.
``(B) Eligibility for payment.--A person shall be eligible
for payment under subparagraph (A) if the person--
``(i) is a producer, mixer, or sound engineer of the sound
recording;
``(ii) has entered into a written contract with a record
company involved in the creation or lawful exploitation of
the sound recording, or with the recording artist or artists
featured on the sound recording (or the persons conveying
rights in the artists' performance in the sound recording),
under which the person seeking payment is entitled to
participate in royalty payments that are based on the
exploitation of the sound recording and are payable from
royalties otherwise payable to the recording artist or
artists featured on the sound recording (or the persons
conveying rights in the artists' performance in the sound
recording);
``(iii) made a creative contribution to the creation of the
sound recording; and
``(iv) submits to the collective--
``(I) a written certification stating, under penalty of
perjury, that the person meets the requirements in clauses
(i) through (iii); and
``(II) a true copy of the contract described in clause
(ii).
``(C) Multiple certifications.--Subject to subparagraph
(D), in a case in which more than 1 person described in
subparagraph (B) has met the requirements for a distribution
under subparagraph (A) with respect to a sound recording as
of the date that is 10 business days before the date on which
the distribution is made, the collective shall divide the 2
percent distribution equally among all such persons.
``(D) Objection to payment.--Not later than 10 business
days after the date on which the collective receives from the
artist payee a written objection to a distribution made
pursuant to subparagraph (A), the collective shall cease
making any further payment relating to such distribution. In
any case in which the collective has made 1 or more
distributions pursuant to subparagraph (A) to a person
described in subparagraph (B) before the date that is 10
business days after the date on which the collective receives
from the artist payee an objection to such distribution, the
objection shall not affect that person's entitlement to any
distribution made before the collective ceases such
distribution under this subparagraph.
``(E) Ownership of the right to receive payments.--To the
extent that the collective determines that a distribution
will be made under subparagraph (A) to a person described in
subparagraph (B), such person shall, during the period
covered by such distribution, be treated for all purposes as
the owner of the right to receive such payments, and the
artist payee to whom such payments would otherwise be payable
shall be treated as having no interest in such payments.
``(F) Artist payee defined.--In this paragraph, the term
`artist payee' means a person, other than a person described
in subparagraph (B), who owns the right to receive all or
part of the receipts payable under paragraph (2)(D) with
respect to a sound recording. In a case in which there are
multiple artist payees with respect to a sound recording, an
objection by 1 such payee shall apply only to that payee's
share of the receipts payable under paragraph (2)(D), and
shall not preclude payment under subparagraph (A) from the
share of an artist payee that does not so object.''.
(c) Technical and Conforming Amendments.--Section 114(g) of
title 17, United States Code, as amended by subsections (a)
and (b), is further amended--
(1) in paragraph (2), by striking ``An agent designated''
and inserting ``Except as provided for in paragraph (6), a
nonprofit collective designated by the Copyright Royalty
Judges'';
(2) in paragraph (3)--
(A) by striking ``nonprofit agent designated'' and
inserting ``nonprofit collective designated by the Copyright
Royalty Judges'';
(B) by striking ``another designated agent'' and inserting
``another designated nonprofit collective''; and
(C) by striking ``agent'' and inserting ``collective'' each
subsequent place it appears;
(3) in paragraph (4)--
(A) by striking ``designated agent'' and inserting
``nonprofit collective''; and
(B) by striking ``agent'' and inserting ``collective'' each
subsequent place it appears; and
(4) by adding at the end the following:
``(7) Preemption of state property laws.--The holding and
distribution of receipts under section 112 and this section
by a nonprofit collective designated by the Copyright Royalty
Judges in accordance with this subsection and regulations
adopted by the Copyright Royalty Judges, or by an independent
administrator pursuant to subparagraphs (B) and (C) of
section 114(g)(2), shall supersede and preempt any State law
(including common law) concerning escheatment or abandoned
property, or any analogous provision, that might otherwise
apply.''.
SEC. 303. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this
title and the amendments made by this title shall take effect
on the date of enactment of this Act.
(b) Delayed Effective Date.--Paragraphs (5)(B) and (6)(E)
of section 114(g) of title 17, United States Code, as added
by section 302, shall take effect on January 1, 2020.
TITLE IV--SEVERABILITY
SEC. 401. SEVERABILITY.
If any provision of this Act or any amendment made by this
Act, or any application of such provision or amendment to any
person or circumstance, is held to be unconstitutional, the
remainder of the provisions of this Act and the amendments
made by this Act, and the application of the provision or
amendment to any other person or circumstance, shall not be
affected.
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