[House Report 104-274]
[From the U.S. Government Publishing Office]
104th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 104-274
_______________________________________________________________________
DIGITAL PERFORMANCE RIGHT IN SOUND RECORDINGS ACT OF 1995
_______
October 11, 1995.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______________________________________________________________________
Mr. Moorhead, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 1506]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 1506) to amend title 17, United States Code, to
provide an exclusive right to perform sound recordings publicly
by means of digital transmissions, and for other purposes,
having considered the same, report favorably thereon with an
amendment and recommend that the bill as amended do pass.
CONTENTS
Page
The Amendment.................................................... 1
Purpose and Summary.............................................. 10
Background and Need for Legislation.............................. 10
Hearings......................................................... 15
Committee Consideration.......................................... 16
Vote of the Committee............................................ 16
Committee Oversight Findings..................................... 17
Committee on Government Reform and Oversight..................... 17
New Budget Authority and Tax Expenditures........................ 17
Congressional Budget Office Estimate............................. 17
Inflationary Impact Statement.................................... 19
Section-by-Section Analysis and Discussion....................... 19
Agency Views..................................................... 30
Changes in Existing Law Made by the Bill, as Reported............ 31
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Digital Performance Right in Sound
Recordings Act of 1995''.
SEC. 2. EXCLUSIVE RIGHTS IN COPYRIGHTED WORKS.
Section 106 of title 17, United States Code, is amended--
(1) in paragraph (4) by striking ``and'' after the semicolon;
(2) in paragraph (5) by striking the period and inserting ``;
and''; and
(3) by adding at the end the following:
``(6) in the case of sound recordings, to perform the
copyrighted work publicly by means of a digital audio
transmission.''.
SEC. 3. SCOPE OF EXCLUSIVE RIGHTS IN SOUND RECORDINGS.
Section 114 of title 17, United States Code, is amended--
(1) in subsection (a) by striking ``and (3)'' and inserting
``(3) and (6)'';
(2) in subsection (b) in the first sentence by striking
``phonorecords, or of copies of motion pictures and other
audiovisual works,'' and inserting ``phonorecords or copies'';
(3) by striking subsection (d) and inserting:
``(d) Limitations on Exclusive Right.--Notwithstanding the provisions
of section 106(6)--
``(1) Exempt transmissions and retransmissions.--The
performance of a sound recording publicly by means of a digital
audio transmission, other than as a part of an interactive
service, is not an infringement of section 106(6) if the
performance is part of--
``(A)(i) a nonsubscription transmission other than a
retransmission;
``(ii) an initial nonsubscription retransmission made
for direct reception by members of the public of a
prior or simultaneous incidental transmission that is
not made for direct reception by members of the public;
or
``(iii) a nonsubscription broadcast transmission;
``(B) a retransmission of a nonsubscription broadcast
transmission: Provided, That, in the case of a
retransmission of a radio station's broadcast
transmission--
``(i) the radio station's broadcast
transmission is not willfully or repeatedly
retransmitted more than a radius of 150 miles
from the site of the radio broadcast
transmitter, however--
``(I) the 150 mile limitation under
this clause shall not apply when a
nonsubscription broadcast transmission
by a radio station licensed by the
Federal Communications Commission is
retransmitted on a nonsubscription
basis by a terrestrial broadcast
station, terrestrial translator, or
terrestrial repeater licensed by the
Federal Communications Commission; and
``(II) in the case of a subscription
retransmission of a nonsubscription
broadcast retransmission covered by
subclause (I), the 150 mile radius
shall be measured from the transmitter
site of such broadcast retransmitter;
``(ii) the retransmission is of radio station
broadcast transmissions that are--
``(I) obtained by the retransmitter
over the air;
``(II) not electronically processed
by the retransmitter to deliver
separate and discrete signals; and
``(III) retransmitted only within the
local communities served by the
retransmitter;
``(iii) the radio station's broadcast
transmission was being retransmitted to cable
systems (as defined in section 111(f)) by a
satellite carrier on January 1, 1995, and that
retransmission was being retransmitted by cable
systems as a separate and discrete signal, and
the satellite carrier obtains the radio
station's broadcast transmission in an analog
format: Provided, That the broadcast
transmission being retransmitted may embody the
programming of no more than one radio station;
or
``(iv) the radio station's broadcast
transmission is made by a noncommercial
educational broadcast station funded on or
after January 1, 1995, under section 396(k) of
the Communications Act of 1934 (47 U.S.C.
396(k)), consists solely of noncommercial
educational and cultural radio programs, and
the retransmission, whether or not
simultaneous, is a nonsubscription terrestrial
broadcast retransmission; or
``(C) a transmission that comes within any of the
following categories:
``(i) a prior or simultaneous transmission
incidental to an exempt transmission, such as a
feed received by and then retransmitted by an
exempt transmitter: Provided, That such
incidental transmissions do not include any
subscription transmission directly for
reception by members of the public;
``(ii) a transmission within a business
establishment, confined to its premises or the
immediately surrounding vicinity;
``(iii) a retransmission by any
retransmitter, including a multichannel video
programming distributor as defined in section
602(12) of the Communications Act of 1934 (47
U.S.C. 522(12)), of a transmission by a
transmitter licensed to publicly perform the
sound recording as a part of that transmission,
if the retransmission is simultaneous with the
licensed transmission and authorized by the
transmitter; or
``(iv) a transmission to a business
establishment for use in the ordinary course of
its business: Provided, That the business
recipient does not retransmit the transmission
outside of its premises or the immediately
surrounding vicinity, and that the transmission
does not exceed the sound recording performance
complement. Nothing in this clause shall limit
the scope of the exemption in clause (ii).
``(2) Subscription transmissions.--In the case of a
subscription transmission not exempt under subsection (d)(1),
the performance of a sound recording publicly by means of a
digital audio transmission shall be subject to statutory
licensing, in accordance with subsection (f) of this section,
if--
``(A) the transmission is not part of an interactive
service;
``(B) the transmission does not exceed the sound
recording performance complement;
``(C) the transmitting entity does not cause to be
published by means of an advance program schedule or
prior announcement the titles of the specific sound
recordings or phonorecords embodying such sound
recordings to be transmitted;
``(D) except in the case of transmission to a
business establishment, the transmitting entity does
not automatically and intentionally cause any device
receiving the transmission to switch from one program
channel to another; and
``(E) except as provided in section 1002(e) of this
title, the transmission of the sound recording is
accompanied by the information encoded in that 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.
``(3) Licenses for transmissions by interactive services.--
``(A) No interactive service shall be granted an
exclusive license under section 106(6) for the
performance of a sound recording publicly by means of
digital audio transmission for a period in excess of 12
months, except that with respect to an exclusive
license granted to an interactive service by a licensor
that holds the copyright to 1,000 or fewer sound
recordings, the period of such license shall not exceed
24 months: Provided, however, That the grantee of such
exclusive license shall be ineligible to receive
another exclusive license for the performance of that
sound recording for a period of 13 months from the
expiration of the prior exclusive license.
``(B) The limitation set forth in subparagraph (A) of
this paragraph shall not apply if--
``(i) the licensor has granted and there
remain in effect licenses under section 106(6)
for the public performance of sound recordings
by means of digital audio transmission by at
least 5 different interactive services:
Provided, however, That each such license must
be for a minimum of 10 percent of the
copyrighted sound recordings owned by the
licensor that have been licensed to interactive
services, but in no event less than 50 sound
recordings; or
``(ii) the exclusive license is granted to
perform publicly up to 45 seconds of a sound
recording and the sole purpose of the
performance is to promote the distribution or
performance of that sound recording.
``(C) Notwithstanding the grant of an exclusive or
nonexclusive license of the right of public performance
under section 106(6), an interactive service may not
publicly perform a sound recording unless a license has
been granted for the public performance of any
copyrighted musical work contained in the sound
recording: Provided, That such license to publicly
perform the copyrighted musical work may be granted
either by a performing rights society representing the
copyright owner or by the copyright owner.
``(D) The performance of a sound recording by means
of a retransmission of a digital audio transmission is
not an infringement of section 106(6) if--
``(i) the retransmission is of a transmission
by an interactive service licensed to publicly
perform the sound recording to a particular
member of the public as part of that
transmission; and
``(ii) the retransmission is simultaneous
with the licensed transmission, authorized by
the transmitter, and limited to that particular
member of the public intended by the
interactive service to be the recipient of the
transmission.
``(E) For the purposes of this paragraph--
``(i) a `licensor' shall include the
licensing entity and any other entity under any
material degree of common ownership,
management, or control that owns copyrights in
sound recordings; and
``(ii) a `performing rights society' is an
association or corporation that licenses the
public performance of nondramatic musical works
on behalf of the copyright owner, such as the
American Society of Composers, Authors and
Publishers, Broadcast Music, Inc., and SESAC,
Inc.
``(4) Rights not otherwise limited.--
``(A) Except as expressly provided in this section,
this section does not limit or impair the exclusive
right to perform a sound recording publicly by means of
a digital audio transmission under section 106(6).
``(B) Nothing in this section annuls or limits in any
way--
``(i) the exclusive right to publicly perform
a musical work, including by means of a digital
audio transmission, under section 106(4);
``(ii) the exclusive rights in a sound
recording or the musical work embodied therein
under sections 106(1), 106(2) and 106(3); or
``(iii) any other rights under any other
clause of section 106, or remedies available
under this title, as such rights or remedies
exist either before or after the date of
enactment of the Digital Performance Right in
Sound Recordings Act of 1995.
``(C) Any limitations in this section on the
exclusive right under section 106(6) apply only to the
exclusive right under section 106(6) and not to any
other exclusive rights under section 106. Nothing in
this section shall be construed to annul, limit, impair
or otherwise affect in any way the ability of the owner
of a copyright in a sound recording to exercise the
rights under sections 106(1), 106(2) and 106(3), or to
obtain the remedies available under this title pursuant
to such rights, as such rights and remedies exist
either before or after the date of enactment of the
Digital Performance Right in Sound Recordings Act of
1995.''; and
(4) by adding after subsection (d) the following:
``(e) Authority for Negotiations.--
``(1) Notwithstanding any provision of the antitrust laws, in
negotiating statutory licenses in accordance with subsection
(f), any copyright owners of sound recordings and any entities
performing sound recordings affected by this section may
negotiate and agree upon the royalty rates and license terms
and conditions for the performance of such sound recordings 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 payments.
``(2) For licenses granted under section 106(6), other than
statutory licenses, such as for performances by interactive
services or performances that exceed the sound recording
performance complement--
``(A) copyright owners of sound recordings affected
by this section may designate common agents to act on
their behalf to grant licenses and receive and remit
royalty payments: Provided, That each copyright owner
shall establish the royalty rates and material license
terms and conditions unilaterally, that is, not in
agreement, combination, or concert with other copyright
owners of sound recordings; and
``(B) entities performing sound recordings affected
by this section may designate common agents to act on
their behalf to obtain licenses and collect and pay
royalty fees: Provided, That each entity performing
sound recordings shall determine the royalty rates and
material license terms and conditions unilaterally,
that is, not in agreement, combination, or concert with
other entities performing sound recordings.
``(f) Licenses for Nonexempt Subscription Transmissions.--
``(1) No later than 30 days after the enactment of the
Digital Performance Right in Sound Recordings Act of 1995, the
Librarian of Congress shall cause notice to be published in the
Federal Register of the initiation of voluntary negotiation
proceedings for the purpose of determining reasonable terms and
rates of royalty payments for the activities specified by
subsection (d)(2) of this section during the period beginning
on the effective date of such Act and ending on December 31,
2000. Such terms and rates shall distinguish among the
different types of digital audio transmission services then in
operation. Any copyright owners of sound recordings or any
entities performing sound recordings affected by this section
may submit to the Librarian of Congress licenses covering such
activities with respect to such sound recordings. The parties
to each negotiation proceeding shall bear their own costs.
``(2) In the absence of license agreements negotiated under
paragraph (1), during the 60-day period commencing 6 months
after publication of the notice specified in paragraph (1), and
upon the filing of a petition in accordance with section
803(a)(1), the Librarian of Congress shall, pursuant to chapter
8, convene a copyright arbitration royalty panel to determine
and publish in the Federal Register a schedule of rates and
terms which, subject to paragraph (3), shall be binding on all
copyright owners of sound recordings and entities performing
sound recordings. In addition to the objectives set forth in
section 801(b)(1), in establishing such rates and terms, the
copyright arbitration royalty panel may consider the rates and
terms for comparable types of digital audio transmission
services and comparable circumstances under voluntary license
agreements negotiated as provided in paragraph (1). The
Librarian of Congress shall also establish requirements by
which copyright owners may receive reasonable notice of the use
of their sound recordings under this section, and under which
records of such use shall be kept and made available by
entities performing sound recordings.
``(3) License agreements voluntarily negotiated at any time
between one or more copyright owners of sound recordings and
one or more entities performing sound recordings shall be given
effect in lieu of any determination by a copyright arbitration
royalty panel or decision by the Librarian of Congress.
``(4)(A) Publication of a notice of the initiation of
voluntary negotiation proceedings as specified in paragraph (1)
shall be repeated, in accordance with regulations that the
Librarian of Congress shall prescribe--
``(i) no later than 30 days after a petition is filed
by any copyright owners of sound recordings or any
entities performing sound recordings affected by this
section indicating that a new type of digital audio
transmission service on which sound recordings are
performed is or is about to become operational; and
``(ii) in the first week of January, 2000 and at 5-
year intervals thereafter.
``(B)(i) The procedures specified in paragraph (2) shall be
repeated, in accordance with regulations that the Librarian of
Congress shall prescribe, upon the filing of a petition in
accordance with section 803(a)(1) during a 60-day period
commencing--
``(I) six months after publication of a notice of the
initiation of voluntary negotiation proceedings under
paragraph (1) pursuant to a petition under paragraph
(4)(A)(i); or
``(II) on July 1, 2000 and at 5-year intervals
thereafter.
``(ii) The procedures specified in paragraph (2) shall be
concluded in accordance with section 802.
``(5)(A) Any person who wishes to perform a sound recording
publicly by means of a nonexempt subscription transmission
under this subsection may do so without infringing the
exclusive right of the copyright owner of the sound recording--
``(i) by complying with such notice requirements as
the Librarian of Congress shall prescribe by regulation
and by paying royalty fees in accordance with this
subsection; or
``(ii) if such royalty fees have not been set, by
agreeing to pay such royalty fees as shall be
determined in accordance with this subsection.
``(B) Any royalty payments in arrears shall be made on or
before the twentieth day of the month next succeeding the month
in which the royalty fees are set.
``(g) Proceeds From Licensing of Subscription Transmissions.--
``(1) Except in the case of a subscription transmission
licensed in accordance with subsection (f) of this section--
``(A) a featured recording artist who performs on a
sound recording that has been licensed for a
subscription transmission shall be entitled to receive
payments from the copyright owner of the sound
recording in accordance with the terms of the artist's
contract; and
``(B) a nonfeatured recording artist who performs on
a sound recording that has been licensed for a
subscription transmission shall be entitled to receive
payments from the copyright owner of the sound
recording in accordance with the terms of the
nonfeatured recording artist's applicable contract or
other applicable agreement.
``(2) The copyright owner of the exclusive right under
section 106(6) of this title to publicly perform a sound
recording by means of a digital audio transmission shall
allocate to recording artists in the following manner its
receipts from the statutory licensing of subscription
transmission performances of the sound recording in accordance
with subsection (f) of this section:
``(A) 2\1/2\ percent of the receipts shall be
deposited in an escrow account managed by an
independent administrator jointly appointed by
copyright owners of sound recordings and the American
Federation of Musicians (or any successor entity) to be
distributed to nonfeatured musicians (whether or not
members of the American Federation of Musicians) who
have performed on sound recordings.
``(B) 2\1/2\ percent of the receipts shall be
deposited in an escrow account managed by an
independent administrator jointly appointed by
copyright owners of sound recordings and the American
Federation of Television and Radio Artists (or any
successor entity) to be distributed to nonfeatured
vocalists (whether or not members of the American
Federation of Television and Radio Artists) who have
performed on sound recordings.
``(C) 45 percent of the receipts shall be allocated,
on a per sound recording basis, to the recording artist
or artists featured on such sound recording (or the
persons conveying rights in the artists' performance in
the sound recordings).
``(h) Licensing to Affiliates.--
``(1) If the copyright owner of a sound recording licenses an
affiliated entity the right to publicly perform a sound
recording by means of a digital audio transmission under
section 106(6), the copyright owner shall make the licensed
sound recording available under section 106(6) on no less
favorable terms and conditions to all bona fide entities that
offer similar services, except that, if there are material
differences in the scope of the requested license with respect
to the type of service, the particular sound recordings
licensed, the frequency of use, the number of subscribers
served, or the duration, then the copyright owner may establish
different terms and conditions for such other services.
``(2) The limitation set forth in paragraph (1) of this
subsection shall not apply in the case where the copyright
owner of a sound recording licenses--
``(A) an interactive service; or
``(B) an entity to perform publicly up to 45 seconds
of the sound recording and the sole purpose of the
performance is to promote the distribution or
performance of that sound recording.
``(i) No Effect on Royalties for Underlying Works.--License fees
payable for the public performance of sound recordings under section
106(6) shall not be taken into account in any administrative, judicial,
or other governmental proceeding to set or adjust the royalties payable
to copyright owners of musical works for the public performance of
their works. It is the intent of Congress that royalties payable to
copyright owners of musical works for the public performance of their
works shall not be diminished in any respect as a result of the rights
granted by section 106(6).
``(j) Definitions.--As used in this section, the following terms have
the following meanings:
``(1) An `affiliated entity' is an entity engaging in digital
audio transmissions covered by section 106(6), other than an
interactive service, in which the licensor has any direct or
indirect partnership or any ownership interest amounting to 5
percent or more of the outstanding voting or non-voting stock.
``(2) A `broadcast' transmission is a transmission made by a
terrestrial broadcast station licensed as such by the Federal
Communications Commission.
``(3) A `digital audio transmission' is a digital
transmission as defined in section 101, that embodies the
transmission of a sound recording. This term does not include
the transmission of any audiovisual work.
``(4) An `interactive service' is one that enables a member
of the public to receive, on request, a transmission of a
particular sound recording chosen by or on behalf of the
recipient. The ability of individuals to request that
particular sound recordings be performed for reception by the
public at large does not make a service interactive. If an
entity offers both interactive and non-interactive services
(either concurrently or at different times), the non-
interactive component shall not be treated as part of an
interactive service.
``(5) A `nonsubscription' transmission is any transmission
that is not a subscription transmission.
``(6) A `retransmission' is a further transmission of an
initial transmission, and includes any further retransmission
of the same transmission. Except as provided in this section, a
transmission qualifies as a `retransmission' only if it is
simultaneous with the initial transmission. Nothing in this
definition shall be construed to exempt a transmission that
fails to satisfy a separate element required to qualify for an
exemption under section 114(d)(1).
``(7) The `sound recording performance complement' is the
transmission during any 3-hour period, on a particular channel
used by a transmitting entity, of no more than--
``(A) 3 different selections of sound recordings from
any one phonorecord lawfully distributed for public
performance or sale in the United States, if no more
than 2 such selections are transmitted consecutively;
or
``(B) 4 different selections of sound recordings
``(i) by the same featured recording artist;
or
``(ii) from any set or compilation of
phonorecords lawfully distributed together as a
unit for public performance or sale in the
United States,
if no more than three such selections are transmitted
consecutively:
Provided, That the transmission of selections in excess of the
numerical limits provided for in clauses (A) and (B) from
multiple phonorecords shall nonetheless qualify as a sound
recording performance complement if the programming of the
multiple phonorecords was not willfully intended to avoid the
numerical limitations prescribed in such clauses.
``(8) A `subscription' transmission is a transmission that is
controlled and limited to particular recipients, and for which
consideration is required to be paid or otherwise given by or
on behalf of the recipient to receive the transmission or a
package of transmissions including the transmission.
``(9) A `transmission' includes both an initial transmission
and a retransmission.''.
SEC. 4. MECHANICAL ROYALTIES IN DIGITAL PHONORECORD DELIVERIES.
Section 115 of title 17, United States Code, is amended--
(1) in subsection (a)(1)--
(A) in the first sentence by striking out ``any other
person'' and inserting in lieu thereof ``any other
person, including those who make phonorecords or
digital phonorecord deliveries,''; and
(B) in the second sentence by inserting before the
period ``, including by means of a digital phonorecord
delivery'';
(2) in subsection (c)(2) in the second sentence by inserting
``and other than as provided in paragraph (3),'' after ``For
this purpose,'';
(3) by redesignating paragraphs (3), (4), and (5) of
subsection (c) as paragraphs (4), (5), and (6), respectively,
and by inserting after paragraph (2) the following new
paragraph:
``(3)(A) A compulsory license under this section includes the
right of the compulsory licensee to distribute or authorize the
distribution of a phonorecord of a nondramatic musical work by
means of a digital transmission which constitutes a digital
phonorecord delivery, regardless of whether the digital
transmission is also a public performance of the sound
recording under section 106(6) of this title or of any
nondramatic musical work embodied therein under section 106(4)
of this title. For every digital phonorecord delivery by or
under the authority of the compulsory licensee--
``(i) on or before December 31, 1997, the royalty
payable by the compulsory licensee shall be the royalty
prescribed under paragraph (2) and chapter 8 of this
title; and
``(ii) on or after January 1, 1998, the royalty
payable by the compulsory licensee shall be the royalty
prescribed under subparagraphs (B) through (F) and
chapter 8 of this title.
``(B) 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)(1) may negotiate and agree upon the terms and
rates of royalty payments under this paragraph and the
proportionate division of fees paid among copyright owners, and
may designate common agents 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 subparagraphs (B) through
(F) and chapter 8 of this title shall next be determined.
``(C) During the period of June 30, 1996, through December
31, 1996, the Librarian of Congress shall cause notice to be
published in the Federal Register of the initiation of
voluntary negotiation proceedings for the purpose of
determining reasonable terms and rates of royalty payments for
the activities specified by subparagraph (A) during the period
beginning January 1, 1998, and ending on the effective date of
any new terms and rates established pursuant to subparagraph
(C), (D) or (F), or such other date (regarding digital
phonorecord deliveries) as the parties may agree. Such terms
and rates shall distinguish between (i) digital phonorecord
deliveries where the reproduction or distribution of a
phonorecord is incidental to the transmission which constitutes
the digital phonorecord delivery, and (ii) digital phonorecord
deliveries in general. Any copyright owners of nondramatic
musical works and any persons entitled to obtain a compulsory
license under subsection (a)(1) may submit to the Librarian of
Congress licenses covering such activities. The parties to each
negotiation proceeding shall bear their own costs.
``(D) In the absence of license agreements negotiated under
subparagraphs (B) and (C), upon the filing of a petition in
accordance with section 803(a)(1), the Librarian of Congress
shall, pursuant to chapter 8, convene a copyright arbitration
royalty panel to determine and publish in the Federal Register
a schedule of rates and terms which, subject to subparagraph
(E), shall be binding on all copyright owners of nondramatic
musical works and persons entitled to obtain a compulsory
license under subsection (a)(1) during the period beginning
January 1, 1998, and ending on the effective date of any new
terms and rates established pursuant to subparagraph (C), (D)
or (F), or such other date (regarding digital phonorecord
deliveries) as may be determined pursuant to subparagraphs (B)
and (C). Such terms and rates shall distinguish between (i)
digital phonorecord deliveries where the reproduction or
distribution of a phonorecord is incidental to the transmission
which constitutes the digital phonorecord delivery, and (ii)
digital phonorecord deliveries in general. In addition to the
objectives set forth in section 801(b)(1), in establishing such
rates and terms, the copyright arbitration royalty panel may
consider rates and terms under voluntary license agreements
negotiated as provided in subparagraphs (B) and (C). The
royalty rates payable for a compulsory license for a digital
phonorecord delivery under this section shall be established de
novo and no precedential effect shall be given to the amount of
the royalty payable by a compulsory licensee for digital
phonorecord deliveries on or before December 31, 1997. The
Librarian of Congress shall also establish requirements by
which copyright owners may receive reasonable notice of the use
of their works under this section, and under which records of
such use shall be kept and made available by persons making
digital phonorecord deliveries.
``(E)(i) 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)(1) shall be given
effect in lieu of any determination by the Librarian of
Congress. Subject to clause (ii), the royalty rates determined
pursuant to subparagraph (C), (D) or (F) shall be given effect
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 sections 106(1) and
(3) or commits another person to grant a license in that
musical work under sections 106(1) and (3), to a person
desiring to fix in a tangible medium of expression a sound
recording embodying the musical work.
``(ii) 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
subparagraph (C), (D) or (F) 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 subparagraph (C), (D) or (F) 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 sections
106(1) and 106(3).
``(F) The procedures specified in subparagraphs (C) and (D)
shall be repeated and concluded, in accordance with regulations
that the Librarian of Congress shall prescribe, in each fifth
calendar year after 1997, except to the extent that different
years for the repeating and concluding of such proceedings may
be determined in accordance with subparagraphs (B) and (C).
``(G) Except as provided in section 1002(e) of this title, 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.
``(H)(i) 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 and section 509, unless--
``(I) the digital phonorecord delivery has been
authorized by the copyright owner of the sound
recording; and
``(II) the owner of the copyright in the sound
recording or the entity making the digital phonorecord
delivery has obtained a compulsory license under this
section or has otherwise been authorized by the
copyright owner of the musical work to distribute or
authorize the distribution, by means of a digital
phonorecord delivery, of each musical work embodied in
the sound recording.
``(ii) 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 subsection (c)(6) and
section 106(4) and the owner of the copyright in the sound
recording under section 106(6).
``(I) 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.
``(J) Nothing in section 1008 shall be construed to prevent
the exercise of the rights and remedies allowed by this
paragraph, paragraph (6), 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.
``(K) 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 sections 106(4) and 106(6), (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
sections 106(1) and 106(3), 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 either before or after
the date of enactment of the Digital Performance Right in Sound
Recordings Act of 1995.
``(L) 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 section 106(1) through (5)
with respect to such transmissions and retransmissions.''; and
(5) by adding after subsection (c) the following:
``(d) Definition.--As used in this section, the following term has
the following meaning: A `digital phonorecord delivery' is each
individual delivery of a phonorecord by digital transmission of a sound
recording which 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 nondramatic musical
work embodied therein. 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.''.
SEC. 5. CONFORMING AMENDMENTS.
(a) Definitions.--Section 101 of title 17, United States Code, is
amended by inserting after the definition of ``device'', ``machine'',
or ``process'' the following:
``A `digital transmission' is a transmission in whole or in
part in a digital or other non-analog format.''.
(b) Limitations on Exclusive Rights: Secondary Transmissions.--
Section 111(c)(1) of title 17, United States Code, is amended in the
first sentence by inserting ``and section 114(d)'' after ``of this
subsection''.
(c) Limitations on Exclusive Rights: Secondary Transmissions of
Superstations and Network Stations for Private Home Viewing.--
(1) Section 119(a)(1) of title 17, United States Code, is
amended in the first sentence by inserting ``and section
114(d)'' after ``of this subsection''.
(2) Section 119(a)(2)(A) of title 17, United States Code, is
amended in the first sentence by inserting ``and section
114(d)'' after ``of this subsection''.
(d) Copyright Arbitration Royalty Panels.--
(1) Section 801(b)(1) of title 17, United States Code, is
amended in the first and second sentences by striking ``115''
each place it appears and inserting ``114, 115,''.
(2) Section 802(c) of title 17, United States Code, is
amended in the third sentence by striking ``section 111, 116,
or 119,'' and inserting ``section 111, 114, 116, or 119, any
person entitled to a compulsory license under section 114(d),
any person entitled to a compulsory license under section
115,''.
(3) Section 802(g) of title 17, United States Code, is
amended in the third sentence by inserting ``114,'' after
``111,''.
(4) Section 802(h)(2) of title 17, United States Code, is
amended by inserting ``114,'' after ``111,''.
(5) Section 803(a)(1) of title 17, United States Code, is
amended in the first sentence by striking ``115'' and inserting
``114, 115'' and by striking ``and (4)'' and inserting ``(4)
and (5)''.
(6) Section 803(a)(3) of title 17, United States Code, is
amended by inserting before the period ``or as prescribed in
section 115(c)(3)(D)''.
(7) Section 803(a) of title 17, United States Code, is
amended by inserting after paragraph (4) the following new
paragraph:
``(5) With respect to proceedings under section 801(b)(1)
concerning the determination of reasonable terms and rates of
royalty payments as provided in section 114, the Librarian of
Congress shall proceed when and as provided by that section.''.
SEC. 6. EFFECTIVE DATE.
This Act and the amendments made by this Act shall take effect 3
months after the date of enactment of this Act, except that the
provisions of sections 114(e) and 114(f) of title 17, United States
Code (as added by section 3 of this Act) shall take effect immediately
upon the date of enactment of this Act.
Purpose and Summary
The purpose of H.R. 1506 is to ensure that performing
artists, record companies and others whose livelihood depends
upon effective copyright protection for sound recordings, will
be protected as new technologies affect the ways in which their
creative works are used. H.R. 1506 does this by granting a
limited right to copyright owners of sound recordings which are
publicly performed by means of a digital transmission.
Background and Need for the Legislation
The historic lack of a performance right for sound
recordings under U.S. copyright law has been a source of
controversy for decades. The first efforts to amend the
copyright laws to provide protection for sound recordings date
from the 1920's. Through much of the 1960's and 1970's, both
Houses of Congress studied and debated the arguments for and
against establishing a performance right in sound recordings.
In the 103d Congress, this issue was again considered without
resolution.
Sound recordings were first granted Federal copyright
protection by amendment to the Copyright Act in 1971. The
purpose of the ``Sound Recording Act of 1971'' \1\ (SRA) was to
prevent phonorecord piracy due to advances in duplicating
technology. Accordingly, to fulfill this specific objective,
and to provide balance among the parties affected by the
legislation, Congress did not grant sound recording copyright
owners all of the rights usually afforded by a copyright.
Specifically, they were granted only reproduction,
distribution, and adaptation rights; they were not granted the
rights of public performance,\2\ on the presumption that the
granted rights would suffice to protect against record piracy.
The Federal courts quickly upheld the validity of the SRA
against constitutional challenge,\3\ and sound recording
copyright owners began to enjoy limited copyright protection.
\1\ Sound Recording Act of 1971, Public Law 92-140, 85 Stat. 391
(1971). This Act was amended and made permanent by Public Law 93-573,
88 Stat. 1873 (1974) (codified in the Copyright Act of 1976, 17 U.S.C.
102 (1990).
\2\ 17 U.S.C. 114(a): ``The exclusive rights of the owner of
copyright in sound recordings are limited to the rights specified by
clauses (1), (2), and (3) of section 106, and do not include any right
of performance under Sec. 106(4).''
\3\ Shaab v. Kleindienst, 345 F. 589 (D.D.C. 1972).
---------------------------------------------------------------------------
In the wake of the 1991 Copyright Office study on digital
audio transmission services, the House of Representatives held
an Oversight hearing during the first session of the 103d
Congress regarding sound recording performance rights.\4\ In
the second session, Senators Orrin Hatch and Dianne Feinstein
introduced S. 1421, which provided for an exclusive right to
perform sound recordings publicly by means of digital
transmissions.\5\ A companion bill was introduced in the House
of Representatives by Representative William Hughes.\6\
Although the proposed right was limited, interested parties
including representatives of broadcasters and of the recording
industry proposed further amendments to these bills, and they
were withdrawn at the end of the session. Prior to that, most
parties did come to a compromise on May 11, 1994, but could not
come to a final agreement.
\4\ Performers and Performance Rights in Sound Recordings: Hearing
before the Subcommittee on Intellectual Property and Judicial
Administration of the House Committee on the Judiciary, 103d Congress.,
1st sess. (1993).
\5\ S. 1421, 103d Cong., 1st sess. (1993).
\6\ H.R. 2576, 103d Cong., 1st sess. (1993).
---------------------------------------------------------------------------
Although no hearings were held on the bills in the Senate
or in the House, introduction of these bills in the 103rd
Congress revitalized the quest for a public performance right
as interested parties met to discuss the issues that needed to
be resolved. In fact, in his remarks on H.R. 2576, Congressman
Moorhead recognized that H.R. 2576 would ``undergo some change
as it works its way through the legislative process and * * *
encouraged the affected parties to work with the subcommittee
and each other to reach a solution.'' \7\ Acting on that
advice, the parties held a series of meetings. These meetings
began under the auspices of ``roundtable discussions'' hosted
by the House Subcommittee on Intellectual Property and Judicial
Administration, and continued as interested parties met on
their own to attempt to resolve their differences.
\7\ 139 Cong. Rec. E1731 (daily ed., July 1, 1993) (statement of
Rep. Moorhead).
---------------------------------------------------------------------------
On January 13, 1995, Senators Hatch and Feinstein
introduced S. 227, a new version of this legislation. That bill
reflected some of the provisions in the compromise of May 11,
1994. On April 7, 1995 Congressmen Moorhead, Hyde, Conyers and
Gekas introduced a bill very similar to the compromise, H.R.
1506. H.R. 1506 differed in a number of respects from S. 227
with the record industry supporting S. 227 and the songwriters
and music publishers supporting H.R. 1506. At the two days of
hearing on H.R. 1506 (June 21 and 28th, 1995) Subcommittee
Chairman Moorhead strongly urged the parties to ``work out
their differences, otherwise legislation was not likely.'' On
June 29th the parties announced that they had reached a
compromise. The Senate Judiciary Committee, on June 29, 1995,
gave unanimous approval to S. 227 which incorporated the
compromise agreement. On July 27th the Subcommittee on Courts
and Intellectual Property met and incorporated the compromise
into H.R. 1506. On August 8th the Senate passed S. 227 by
unanimous consent. On September 12, the House Judiciary
Committee passed H.R. 1506 by recorded vote, 29 to 0 in favor
of the bill.
Notwithstanding the views of the Copyright Office and the
Patent and Trademark Office that it is appropriate to create a
comprehensive performance right for sound recordings, H.R. 1506
addressed the concerns of record producers and performers
regarding the effects that new digital technology and
distribution systems might have on their core business without
upsetting the longstanding business and contractual
relationships among record producers and performers, music
composers and publishers and broadcasters that have served all
of these industries well for decades. Accordingly, H.R. 1506
creates a carefully crafted and narrow performance right,
applicable only to certain digital transmissions of sound
recordings.
In a comparatively few years, compact discs (CD's), which
embody digital recordings, have edged out analog recording
media such as cassette tapes and vinyl records to become the
dominant physical medium for the distribution of copyrighted
sound recordings. Consumers have embraced digital recordings
because of their superior sound quality.
Even more recently, a small number of services have begun
to make digital transmissions of recordings available to
subscribers. Trends within the music industry, as well as the
telecommunications and information services industries, suggest
that digital transmission of sound recordings is likely to
become a very important outlet for the performance of recorded
music in the near future. Some digital transmission services,
such as so-called ``celestial jukebox'' ``pay-per-listen'' or
``audio-on-demand'' services, will be interactive services that
enable a member of the public to receive, on request, a digital
transmission of the particular recording that person wants to
hear.
These new digital transmission technologies may permit
consumers to enjoy performances of a broader range of higher-
quality recordings than has ever before been possible. These
new technologies also may lead to new systems for the
electronic distribution of phonorecords with the authorization
of the affected copyright owners. Such systems could increase
the selection of recordings available to consumers, and make it
more convenient for consumers to acquire authorized
phonorecords.
However, in the absence of appropriate copyright protection
in the digital environment, the creation of new sound
recordings and musical works could be discouraged, ultimately
denying the public some of the potential benefits of the new
digital transmission technologies. Current copyright law is
inadequate to address all of the issues raised by these new
technologies dealing with the digital transmission of sound
recordings and musical works and, thus, to protect the
livelihoods of the recording artists, songwriters, record
companies, music publishers and others who depend upon revenues
derived from traditional record sales.
In particular, recording artists and record companies
cannot be effectively protected unless copyright law recognizes
at least a limited performance right in sound recordings. Thus,
H.R. 1506 grants such a performance right, subject to various
limitations intended to strike a balance among all of the
interests affected thereby.
The relevant technologies will continue to advance. The
bill has been carefully drafted to accommodate foreseeable
technological changes. However, to the extent that the language
of the bill does not precisely anticipate particular
technological changes, it is the committee's intention that
both the rights and the exemptions and limitations created by
the bill be interpreted in order to achieve their intended
purposes.
An important rationale for enactment of this legislation is
to address the potential impact on the prerecorded music
industry of digital subscription and interaction services. The
sale of many sound recordings and the careers of many
performers have benefitted considerably from airplay and other
promotional activities provided by both noncommercial and
advertiser-supported, free over-the-air broadcasting. The radio
industry has grown and prospered with the availability and use
of prerecorded music. H.R. 1506 does not change or jeopardize
the mutually beneficial economic relationship between the
recording and traditional broadcasting industries.
This legislation is a narrowly crafted response to one of
the concerns expressed by representatives of the recording
community, namely that certain types of subscription and
interaction audio services might adversely affect sales of
sound recordings and erode copyright owners' ability to control
and be paid for use of their work. Subscription and interactive
audio services can provide multi-channel offerings of various
music formats in CD-quality recordings, commercial free and 24
hours a day.
Copyright owners of sound recordings should enjoy
protection with respect to interactive and certain digital
subscription performances. By contrast, free over-the-air
broadcasts are available without subscription, do not rely on
interactive delivery, and provide a mix of entertainment and
non-entertainment programming and other public interest
activities to local communities to fulfill a condition of the
broadcasters' license. The Committee has considered these
factors in concluding not to include free over-the-air
broadcast services in the legislation. Other media, such as
cable television also undertake public interest activities, but
they provide subscription or interactive service which
establish the basis for subjecting them to the requirements of
this legislation.
The limited right created by this legislation reflects
changed circumstances--that is, the commercial exploitation of
new technologies in ways that may change the way prerecorded
music is distributed to the consuming public. It is the intent
of this legislation to provide copyright holders of sound
recordings with the ability to control the distribution of
their product by digital transmissions, without hampering the
arrival of new technologies, and without imposing new and
unreasonable burdens on radio and television broadcasters,
which often promote, and appear to pose no threat to, the
distribution of sound recordings.
In deciding to grant a new exclusive right to perform
copyrighted sound recordings publicly by means of digital audio
transmission, it is important to strike a balance among all of
the interests affected thereby. That balance is reflected in
various limitations on the new performance rights that are set
forth in the bill's amendments to section 114 of title 17 and
described in detail later in this report. Two of the concerns
that motivated certain of the limitations on exclusive rights
are deserving of particular mention. First, concern was
expressed that granting a performance right in sound recordings
would make it economically infeasible for some transmitters to
continue certain uses of sound recordings. This concern is
addressed by various limitations on the exclusive right:
H.R. 1506 applies only to digital audio
transmissions. Purely analog transmissions are not
covered, and neither are digital transmissions of
audiovisual works;
H.R. 1506 contains a number of exemptions from the
exclusive right that are directed toward specific uses
of sound recordings. Probably most important,
nonsubscription transmissions (i.e., transmissions not
controlled or limited to particular recipients or for
which no consideration is required to be paid), such as
nonsubscription broadcast transmissions by radio and
television stations, are exempted unless they are part
of an interactive service; and
Nonexempt, noninteractive subscription transmissions
are eligible for statutory licensing.
Second, concern was expressed that granting sound recording
copyright owners an exclusive performance right could limit
opportunities for the performance of musical works. That
concern is addressed by the limitations described above and
also by the provisions of section 114(d)(3), which impose
certain limitations on the granting of exclusive licenses under
the new performance right in order not to hinder the growth of
interactive services.
It is important to recognize that these limitations on the
new performance right (other than the limitation on exclusive
licensing of interactive services contained in section
114(d)(3)) do not apply to interactive digital transmission
services. Of all the new forms of digital transmission
services, interactive services are most likely to have a
significant impact on traditional record sales, and therefore
pose the greatest threat to the livelihoods of those whose
income depends upon revenues derived from traditional record
sales. The Committee believes that sound recording copyright
owners should have the exclusive right to control the
performance of their works as part of an interactive service,
and so has excluded interactive services from these limitations
on the performance right.
The Committee was particularly concerned that this bill
could be construed as affecting existing rights of the
copyright owners of musical works embodied in sound recordings.
The purpose of H.R. 1506 is to recognize a new limited
performance right in sound recordings. As set forth in the
various savings clauses of section 114(d)(4), H.R. 1506 does
not limit any existing right of a sound recording or musical
work of a copyright owner. To the extent, if any, that a
limitation on the new right of public performance is
inconsistent with the rights of a musical work or sound
recording copyright owner under sections 106(1) through 106(5),
the copyright owner may fully exercise its exclusive rights
under section 106(1) through 106(5), and obtain the remedies
provided by title 17 pursuant to such rights, notwithstanding
any limitations on the new right of public performance. The
limitations on exclusive rights contained in section 107
through 113, in sections 116 through 120, and in the unamended
portions of sections 114 and 115 are likewise unchanged by this
bill.
The Committee is aware of ongoing discussions and attempts
at greater international harmonization of copyright and
neighboring rights at the World Intellectual Property
Organization (WIPO), in discussions within the G-7, and other
forums. This legislation reflects a careful balancing of
interests, reflecting the statutory and regulatory requirements
imposed on U.S. broadcasters, recording interests, composers,
and publishers, and the recognition of the potential impact of
new technologies on the recording industry. The purpose and
scope of this new right are clearly laid out in the bill and
this report. The underlying rationale for creation of this
limited right is grounded in the way the market for prerecorded
music has developed, and the potential impact on that market
posed by subscription and interactive services--but not by
broadcasting and related transmissions.
Hearings
The Committee's Subcommittee on Courts and Intellectual
Property held two days of hearings on H.R. 1506 on June 21 and
June 28, 1995. On June 21st testimony was received from the
following six witnesses: Mr. Jason S. Berman, Chairman and
Chief Executive Officer of the Recording Industry Association
of America; Mr. Wayland D. Holyfield, Board Member of the
American Society of Composers Authors and Publishers; Mr.
Edward P. Murphy, President and Chief Executive Officer of the
National Music Publishers Association; and Mr. Marvin Berenson,
Senior Vice President and General Counsel of the Broadcast
Music, Inc.; Mr. Edward O. Fritts, President of the National
Association of Broadcasters; and Mr. Jerold H. Rubinstein,
Chairman and Chief Executive Officer of the International
Cablecasting Technologies, Inc.
On June 28th testimony was heard from the following four
witnesses: The Honorable Bruce Lehman, Assistant Secretary of
Commerce and Commissioner of Patents and Trademarks of the
Patent and Trademark Office of the United States Department of
Commerce; and Ms. Marybeth Peters, Register of Copyrights of
the Copyright Office of the United States Library of Congress;
Mr. Dennis Dreith, President of the Recording Musicians'
Association of the United States and Canada; and Mr. Barry
Bergman, President of the International Managers Forum.
Committee Consideration
On July 27, 1995 the Subcommittee on Courts and
Intellectual Property met in open session and ordered reported
the bill H.R. 1506, as amended, by a voice vote, a quorum being
present. On September 12, 1995, the Committee met in open
session and ordered reported the bill H.R. 1506, amended, by a
recorded vote of 29 in favor and 0 opposed, a quorum being
present.
Vote of the Committee
Mr. Moorhead called up H.R. 1506 as amended by the
Subcommittee on Courts and Intellectual Property, then offered
an amendment in the nature of a substitute to the Subcommittee
amendment which contained technical and clarifying changes in
order to conform H.R. 1506 to the Senate-passed bill, S. 227.
That amendment passed on voice vote. The Subcommittee amendment
then passed on voice vote. Mr. Moorhead then moved adoption of
H.R. 1506 as amended. The motion carried on a recorded vote of
29 in favor and 0 opposed, a quorum being present.
rollcall no. 1
Subject: H.R. 1506 Final Passage. Agreed to 29-0.
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Moorhead.................. X ............ ............
Mr. Sensenbrenner............. X ............ ............
Mr. McCollum.................. X ............ ............
Mr. Gekas..................... X ............ ............
Mr. Coble..................... X ............ ............
Mr. Smith (TX)................ X ............ ............
Mr. Schiff.................... X ............ ............
Mr. Gallegly.................. X ............ ............
Mr. Canady.................... X ............ ............
Mr. Inglis.................... X ............ ............
Mr. Goodlatte................. X ............ ............
Mr. Buyer..................... ............ ............ ............
Mr. Hoke...................... X ............ ............
Mr. Bono...................... X ............ ............
Mr. Heineman.................. X ............ ............
Mr. Bryant (TN)............... ............ ............ ............
Mr. Chabot.................... X ............ ............
Mr. Flanagan.................. X ............ ............
Mr. Barr...................... X ............ ............
Mr. Conyers................... X ............ ............
Mrs. Schroeder................ X ............ ............
Mr. Frank..................... X ............ ............
Mr. Schumer................... ............ ............ ............
Mr. Berman.................... X ............ ............
Mr. Boucher................... X ............ ............
Mr. Bryant (TX)............... X ............ ............
Mr. Reed...................... X ............ ............
Mr. Nadler.................... ............ ............ ............
Mr. Scott..................... X ............ ............
Mr. Watt...................... X ............ ............
Mr. Becerra................... ............ ............ ............
Mr. Serrano................... ............ ............ ............
Ms. Lofgren................... X ............ ............
Ms. Jackson-Lee............... X ............ ............
Mr. Hyde, Chairman............ X ............ ............
-----------------------------------------
Total................... 29 0 ............
------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 2(l)(3)(A) of rule XI of the
Rules of the House of Representatives, the Committee reports
that the findings and recommendations of the Committee, based
on oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform and Oversight Findings
No findings or recommendations of the Committee on
Government Reform and Oversight were received as referred to in
clause 2(l)(3)(D) of rule XI of the Rules of the House of
Representatives.
New Budget Authority and Tax Expenditures
Clause 2(l)(3)(B) of House Rule XI is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 2(l)(C)(3) of rule XI of the
Rules of the House of Representatives, the Committee sets
forth, with respect to the bill, H.R. 1506, the following
estimate and comparison prepared by the Director of the
Congressional Budget Office under section 403 of the
Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 19, 1995.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1506, the Digital
Performance Right in Sound Recordings Act of 1995.
Enacting H.R. 1506 would affect direct spending and
receipts. Therefore, pay-as-you-go procedures would apply to
the bill.
If you wish further details on this estimate, we will be
pleased to provide them.
Sincerely,
James L. Blum
(For June E. O'Neill, Director).
Enclosure.
congressional budget office cost estimate
1. Bill number: H.R. 1506.
2. Bill title: Digital Performance Right in Sound
Recordings Act of 1995.
3. Bill status: As ordered reported by the House Committee
on the Judiciary on September 12, 1995.
4. Bill purpose: H.R. 1506 would create a system to ensure
that recording artists and companies are compensated for public
performances of their works by means of certain types of
digital audio transmissions. The bill would require most
subscription users of sound recordings to obtain a statutory
license in order to broadcast these creative works, and would
guarantee a license to subscription users so long as they pay
royalties to copyright owners.
The bill would require the Library of Congress to announce
the initiation of voluntary negotiations between copyright
owners and users of digital sound recordings. If the parties
could not agree on a rate, the Librarian of Congress would
convene a copyright arbitration panel to establish rates. H.R.
1506 would require copyright owners to deposit a portion of
their receipts from royalty payments into certain escrow
accounts. An independent manager jointly appointed by the
copyright owners and recording artists or their representatives
would then distribute the proceeds to the designated
recipients.
H.R. 1506 also would expand the scope of the mechanical
royalty to include the duplication and distribution of digital
phonographs. The mechanical royalty is the amount of royalty
paid for the physical reproduction and distribution of recorded
music. It ensures that copyright owners receive compensation
when their non- dramatical musical works are duplicated and
distributed. The bill would require the Librarian of Congress
to announce the initiation of voluntary negotiations between
copyright owners and distributors of nondramatical musical
works and would convene an arbitration panel, if necessary, to
establish the royalty rates.
5. Estimated cost to the Federal Government: The Copyright
Office within the Library of Congress currently administers
several funds similar to the escrow accounts that would be
established under H.R. 1506. CBO expects that the Copyright
Office would be asked to manage these escrow accounts as well.
CBO estimates that the Copyright Office incur no significant
additional cost to manage those funds. If the Copyright Office
administers arbitration proceedings, CBO expects that no
additional costs would be incurred because current law allows
the Copyright Office to bill the parties to the dispute for the
costs of arbitration.
Because H.R. 1506 would require certain parties to make
payments to other parties as a result of the exercises of the
sovereign power of the government, CBO believes that the
payments into the escrow accounts should be included in the
federal budget as governmental receipts, and the payments from
the escrow accounts should be included as direct spending.
CBO expects a lag of several months between the receipt of
the royalties and the distribution to the recipients. Because
of this lag, CBO estimates that the net payments to the
accounts will exceed the net distributions by an amount less
than $500,000 in the first year. In the following years, CBO
expects the net annual impact of such payments on the federal
deficit to be close to zero because outlays from the escrow
accounts would be roughly equal to the receipts.
The costs of this bill fall within budget function 370.
6. Comparison with spending under current law: There is no
current system of royalty transfers for public performances
covered by H.R. 1506; hence, all receipts and spending under
the bill would be new.
7. Pay-as-you-go considerations: Section 252 of the
Balanced Budget and Emergency Deficit Control Act of 1985 sets
up pay-as-you-go procedures for legislation affecting direct
spending or receipts through 1998. Enacting H.R. 1506 would
affect both direct spending and receipts; therefore the bill
would be subject to pay-as-you-go procedures. However, CBO
estimates that the impact on both outlays and receipts would be
less than $500,000 in each year. The following table summarizes
the estimated pay-as-you-go impact of this bill.
------------------------------------------------------------------------
1995 1996 1997 1998
------------------------------------------------------------------------
Change in outlays........... 0 0 0 0
Change in receipts.......... 0 0 0 0
------------------------------------------------------------------------
8. Estimated cost to State and local governments: None.
9. Estimate comparison: None.
10. Previous CBO estimate: On July 21, 1995, CBO provided a
cost estimate for S. 227, the Digital Performance Right in
Sound Recordings Act of 1995 as ordered reported by the Senate
Committee on the Judiciary. The two bills differ in that H.R.
1506 would require the Librarian of Congress to oversee
negotiations and review rates for the expansion of the
mechanical royalty. H.R. 1506 also would set more stringent
requirements for subscription users to qualify for a statutory
license. In all other regards the bills are very similar and
CBO has estimated the same budgetary impact for both bills.
11. Estimate prepared by: Rachel Forward.
12. Estimate approved by: Robert A. Sunshine for Paul N.
Van de Water, Assistant Director for Budget Analysis.
Inflationary Impact Statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee estimates that H.R.
1506 will have no significant inflationary impact on prices and
costs in the national economy.
Section-by Section Analysis and Discussion
Section 1. Short title
Section one sets forth the title of the bill.
Section 2. Exclusive rights in copyright works
Section 2 amends 17 U.S.C. 106 by adding a new exclusive
right giving copyright owners of sound recordings the right to
perform their works publicly by means of a digital audio
transmission. The precise language of the new right is intended
to exclude from coverage digital transmissions of audiovisual
works, analog transmissions, and performances that are not
transmitted.
Section 3. Scope of exclusive rights in sound recordings
Section 3 deletes the existing subsection (d) in Sec. 114
and replaces it with six new subsections (d), (3), (f), (g),
(h) and (i).
(d) Limitations on exclusive right
The new subsection (d) contains four paragraphs that define
the scope of the new exclusive right created in Sec. 106(6).
The first paragraph delineates exempt transmissions and
retransmissions that create no liability; the second paragraph
sets out a statutory license for certain subscription
transmissions; and the third paragraph delineates the sound
recording rightsholder's exclusive right to license
transmissions for interactive services. The fourth paragraph, a
savings clause, refers to rights that are not otherwise
limited.
(1) Exempt Transmissions and Retransmissions. Paragraph
144(d)(1) exempts certain types of transmissions and
retransmissions, provided they are not part of an interactive
service. An ``interactive service'' is defined in
Sec. 114(j)(4) as a service that enables a listener to receive
a transmission of a particular sound recording on request
(e.g., an ``audio-on-demand service'').
Subparagraph (A)(i) exempts: a nonsubscription transmission
other than a retransmission; (ii) an initial nonsubscription
retransmission made for direct reception by members of the
public of a prior or simultaneous incidental transmission that
is not made for direct reception by members of the public; or
(iii) a nonsubscription broadcast transmission.
Subparagraph (B) exempts certain retransmissions of
nonsubscription broadcast transmissions, including certain: (i)
retransmissions of a radio station by multichannel program
distributors within 150 miles of the station's transmission or,
in the case of nonsubscription retransmission, by a terrestrial
broadcaster, translator or repeater licensed by the FCC without
regard to the 150 mile limitation; (ii) retransmissions by
cable systems of radio station broadcasts on an ``all-band''
basis; (iii) existing retransmissions of a radio station by a
satellite carrier under certain circumstances; and (iv)
retransmissions of broadcasts by non-commercial educational
radio stations.
Subparagraph (C) also exempts the following transmissions
and retransmissions: (i) those that are solely incidental to
exempt transmissions such as network feeds; (ii) those confined
to a business establishment or its immediate surrounding
vicinity, e.g., storecasts; (iii) those that are authorized
simultaneous retransmissions of licensed transmissions, e.g.,
by the affiliates of a licensed transmitter (a ``through the
listener'' exemption); and (iv) those by a commercial music
service to a business establishment for use in the ordinary
course of its business.
Section 114(d)(2). Subscription transmissions
Paragraph (2) establishes ``statutory licensing'' for
certain subscription transmissions. ``Subscription''
transmissions are transmissions for which subscribers are
charged a fee. Under paragraph (2) transmitters are guaranteed
a license so long as they pay royalties (at rates to be
negotiated, or if necessary, arbitrated) and comply with the
other provisions of section 114.
The statutory license places four limitations on the
licensees' activities. A statutory license is not available for
transmissions by an interactive service. It is also not
available for subscription transmission performances that
exceed the ``sound recording performance complement'' (as
defined in Sec. 114(j)(7)). The ``sound recording complement''
is the performance in any three-hour period of three selections
from a single record album, with no more than two selections
transmitted consecutively, or of four selections by a single
featured artist or from a single boxed set, with no more than
three transmitted consecutively. A service that selects from
multiple sources and happens to exceed these limits will still
be eligible for the license if it did not willfully intend to
avoid the limits by so programming the selections.
In order to avoid solicitation of home taping under this
license, a statutory license is unavailable for a transmission
service that publishes a program guide, pre-announces
selections, or causes a consumer's receiver to switch
automatically from one channel to another. Finally, a statutory
license is not available unless the transmission service
includes the copyright management information encoded in the
sound recording by the record producer.
Section 114(d)(3). Licenses for transmissions by interactive services
Limits have been based on licenses granted to interactive
services in response to concerns that sound recording copyright
owners might become ``gatekeepers'' to the performances of
musical works. To address these concerns, the bill limits the
term of an exclusive license to a maximum of twelve months at a
time (twenty-four months in the case of small licensors). For
purposes of this paragraph (3), the term ``licensors'' includes
the licensing entity and any other entity under common
ownership, management or control that owns sound recording
copyrights. After an initial exclusive license expires, the
copyright owner may not issue an exclusive renewal to that same
licensee until at least thirteen months have elapsed. A
licensor can avoid these limits by licensing a sufficient
number of recordings to at least five different interactive
services. These limits on interactive licenses, also do not
apply to licenses operated for promotional transmissions. The
bill also addresses the gatekeeper concern by confirming that
in addition to obtaining a license for the performance of sound
recordings, the interactive services must obtain a license to
perform the copyrighted musical works embodied in the sound
recordings that they transmit. Such a license may be obtained
from the copyright owners themselves or from a ``performing
rights society,'' (such as the American Society of Composers,
Authors, and Publishers, Broadcast Music, Inc., or SESAC,
Inc.), that licenses the public performance of nondramatic
musical works on behalf of copyright owners. Finally,
subparagraph (D) provides a ``through to the listener''
exemption for certain retransmissions.
Section 114(d)(4). Rights not otherwise limited
These savings clauses make clear that existing exclusive
rights, including specifically those of owners of copyrights in
musical works and sound recordings, are not impaired in any
way. The savings clause first specifies in subparagraph (A)
that nothing other than what is specified in this section
limits or impairs the exclusive right to perform a sound
recording publicly by means of a digital audio transmission
under the new section 106(6). It then goes on to clarify in
subparagraph (B) that nothing in section 114 is meant to annul
or limit in any way the right to publicly perform a musical
work under Sec. 106(4) including by means of a digital
transmission the right to reproduce, adapt and distribute a
sound recording or the musical work embodied therein under
Sec. 106(1), Sec. 106(2) or Sec. 106(3), or any other rights or
remedies found either in other clauses of Sec. 106 or elsewhere
in title 17 as such rights exist before or after the enactment
of H.R. 1506. Subparagraph (C) ensures that where an activity
implicates a sound recording copyright owner's rights under
both section 106(6) and some other clause of section 106, the
limitations contained in section 114 shall not be construed to
limit or impair in any way any other rights the copyright owner
may have, or any other exemptions to which users may be
entitled, with respect to the particular activity.
Under existing principles of copyright law, the
transmission or other communication to the public of a musical
work constitutes a public performance of that musical work. The
digital transmission of a sound recording that results in the
reproduction by or for the transmission recipient of a
phonorecord of that sound recording implicates the exclusive
rights to reproduce and distribute the sound recording and the
musical work embodied therein. New technological uses of
copyrighted sound recordings are arising which require an
affirmation of existing copyright principles and application of
those principles to the digital transmission of sound
recordings, to encourage the creation of and protect rights in
those sound recordings and the musical works they contain.
Section 114(e). Authority of negotiations
Under subsection (e)(1), owners of copyrights and operators
of digital services may negotiate licensing agreements for
statutory licenses ``notwithstanding any provision of the
antitrust laws.'' This exemption is patterned after those
contained in existing copyright law (see, e.g., 17 U.S.C.
Sec. 118(b), noncommercial broadcasting), with the added
provision that any common agents must be nonexclusive. In this
context, this is a very limited antitrust exemption. It simply
authorizes the copyright holders to take actions which are
necessary to effectuate Congress's intent to enable the
statutory goals to be met. It is important to emphasize that it
encompasses only certain actions that are taken, and those
actions must be taken in conjunction with the statutory license
only, the level of which can be set by the copyright
arbitration royalty panel convened by the Librarian of Congress
if an agreement is not reached between the parties. Thus,
unlike a broad antitrust exemption, this provision should not
result in anticompetitive terms being imposed on consumers. If
supracompetitive rates are attempted to be imposed on
operators, the copyright arbitration royalty panel can be
called on to set an acceptable rate.
The exemption also is only available if any common agents
designated are nonexclusive, thus preserving the ability to
negotiate directly with and seek to secure a statutory license
from a copyright owner directly. This should prevent copyright
owners from using any common agent to demand supracompetitive
rates from operators.
Subsection (e)(2) addresses non-statutory licensing. For
those types of licenses, there is no antitrust exemption. Each
copyright owner and each entity performing sound recordings
must establish the royalty rates and license terms on their
own. They may use common agents only to perform a clearinghouse
function and not for rate-setting.
Section 114(f). Licenses for nonexempt subscription transmissions
This provision describes the procedures by which royalty
rates for statutory licenses of subscription transmissions will
be determined. The rates will either be negotiated, or if
necessary, the Librarian of Congress will convene a Copyright
Arbitration Royalty Panel (CARP) to set the rates through
arbitration, consistent with existing rate-setting procedures
under the Copyright Act.
More specifically, the terms and rates for subscription
transmissions that qualify for a compulsory license may be
determined by voluntary negotiation in a proceeding initiated
by the Librarian of Congress. The first negotiated licenses
cover a period beginning with the effective date of the Act and
ending on December 31, 2000, and must distinguish among the
different types of digital audio transmission services in
operation when the agreements were reached.
If no agreements are reached, or for those persons not
included in the agreements that are reached and who file a
petition for arbitration, the Librarian is to convene a CARP to
set the terms and rates. The panel may take into account any
agreements that have been reached in determining the rates. The
Librarian is directed to establish requirements for
recordkeeping and giving reasonable notice to copyright owners
of the use of their sound recordings.
The same procedures--voluntary negotiations and then
perhaps the convening of a CARP will be initiated every five
years beginning in the year 2000 and whenever a petition is
filed informing the Librarian of Congress that a new type of
digital audio transmission service is about to become
operational.
Entities digitally transmitting sound recordings by means
of a qualifying subscription transmission may avoid liability
for infringement by paying the royalty fees and complying with
the notice requirements, or if rates have not yet been set,
agreeing to pay them as they are determined.
Section 114(g). Proceeds from licensing of subscription transmissions
In the absence of the applications of the work made for
hire doctrine of the copyright law, record companies, as
authors of the sound engineering, and performers, as authors of
their recorded interpretations, are joint authors of a sound
recording. However, the work made for hire doctrine often
applies to recorded performances. Under this doctrine, upon
creation of the sound recording, record companies are authors
of both the performance and the sound engineering portions of
the sound recordings, and thus the sole rightsholders.
Performers, in these cases, receive their compensation for the
performance from the rightsholder on a contractual basis. The
Committee intends the language of section 114(g) to ensure that
a fair share of the digital sound recording performance
royalties goes to performers according to the terms of their
contracts. Subsection (g) then, refers to all royalties
generated by the new digital performance right.
Paragraph (1) of subsection (g) directs payments to
performers for nonstatutory sound recording performances. In
such cases, the bill requires a rightsholder to make payments
according to the terms of its contracts with performers, as
follows: 45% to the featured artists allocated on a per sound
recording basis; 2\1/2\% to the background musicians; and 2\1/
2\% to the background vocalists.
Paragraph (2) of subsection (g) sets out a formula for
receipts from statutory licensing to be divided equally between
sound recording copyright owners and recording artists
allocated on a per sound recording basis. In each case,
nonfeatured artist funds are deposited in escrow accounts
managed by independent administrators, jointly chosen by
copyright owners of sound recordings and the musicians' or
vocalists' unions--the American Federation of Musicians and the
American Federation of Television and Radio Artists,
respectively. The Committee believes that it will be especially
important for these independent administrators to identify and
pay those vocalists and musicians who are not members of the
union. They must establish procedures designed to enable all
eligible parties to receive royalties, including nonunion
members.
Section 114(h). Licensing to affiliates
Subsection (h) addresses the issue of vertical integration
among companies involved in both the music and the subscription
service business. This section is designed to assure that, if a
record company grants a performance license to an affiliated
entity, it must make performance licenses available to other
similar services on no less favorable terms. An ``affiliated
entity'' is defined as an entity other than an interactive
service, in which the licensor has any direct or indirect
partnership or any ownership interest amounting to 5 percent or
more of stock.
Although licenses must be made available to similarly
situated entities, the license terms may differ according to
material differences in their scope. The requested license may
vary with respect to differences in price, duration and terms
and to accommodate differences in geographic region, as well as
numbers of subscribers or other relevant factors that may
justify different terms and conditions.
This licensing to affiliate provision does not apply to
promotional transmissions of up to 45 seconds. Nor does it
apply to licenses to interactive services.
Section 114(i). No effect on royalties for underlying works
To dispel the fear that license fees for sound recording
performance may adversely affect music performance royalties,
subsection (i) makes an express statement of Congressional
intent: license fees for music performance shall not be reduced
by reason of obligations to pay royalties under this bill.
Section 114(j). Definitions
Section 114(j)(1)--``affiliated entity''
A digital transmission service is considered affiliated
with a licensor when the licensor has any direct or indirect
partnership or any ownership interest of more than 5 percent of
the outstanding voting or nonvoting stock in the entity
engaging in digital audio transmissions. An entity engaging in
interactive services cannot be an affiliated entity under this
definition; but to the extent that an entity is engaging in
digital transmissions that are not interactive, it can qualify
as an affiliated entity for that purpose alone.
Section 114(j)(2)--``broadcast transmission''
Transmissions made by a terrestrial broadcast station
licensed as such by the Federal Communications Commission come
within this definition.
Section 114(j)(3)--``digital audio transmission''
This phrase means a transmission in a digital format (or
any other nonanalog format that might currently exist or be
developed in the future) that embodies the transmission of a
sound recording. A transmission that is only partly in a
digital or nonanalog format satisfies this definition. (See
section 101 definition of ``digital transmission.'') A
transmission of an audiovisual work does not come within this
definition.
This definition makes clear that the performance right
recognized herein applies only to digital transmissions of
sound recordings and that nothing in the bill creates any new
copyright liability with respect to the transmission of a
motion picture or other audiovisual work, whether digital or
analog, whether subscription or nonsubscription, and whether
interactive or noninteractive.
Section 114(j)(4)--``interactive service''
The phrase ``interactive service'' is defined, in part, as
a service that ``enables a member of the public to receive, on
request, a transmission of a particular sound recording. * *
*'' This term is intended to reach, for example, a service that
enables an individual to make a request (by telephone, e-mail,
or otherwise) to a service that will send a digital
transmission to that individual or another individual of the
specific sound recording that had been requested by or on
behalf of the recipient. Thus, it would include such services
commonly referred to as ``audio-on-demand,'' ``pay-per-listen''
or ``celestial jukebox'' services. The term also would apply to
an on-line service that transmits recordings on demand,
regardless of whether there is a charge for the service or for
any transmission. But as the second sentence of the definition
makes clear, the term ``interactive service'' is not intended
to cover traditional practices engaged in by, for example,
radio broadcast stations, through which individuals can ask the
station to play a particular sound recording as part of the
service's general programming available for reception by
members of the public at large.
If an entity offering a nonsubscription service (such as a
radio or television station) chooses to offer an interactive
service as a separate business, or only during certain hours of
the day, that decision does not affect the exempt status of any
component of the entity's business that does not offer an
interactive service. In other words, each transmission should
be judged on its own merits with regard to whether it qualifies
as part of an ``interactive'' service. The third sentence of
the definition of ``interactive service'' is intended to make
this clear.
Section 114(j)(5)--``nonsubscription transmission''
This term includes any transmission that does not come
within the definition of ``subscription'' transmission.
Section 114(j)(6)--``retransmission''
As the definition of ``retransmission'' makes clear, that
term includes any further retransmission of the same
transmission. That is, the term ``retransmission'' is intended
to cover both an initial retransmission of a transmission (such
as by a satellite carrier) and any further transmission of that
transmission (such as by a cable system). Of course, the fact
that a further simultaneous transmission qualifies as a
``retransmission'' does not by itself mean that it is exempt
under any particular paragraph of section 114(d)(1). To qualify
for the 114(d)(1)(C)(ii) exemption, for example, a
retransmission would need to be made by a business
establishment on its premises or the immediately surrounding
vicinity. Except as otherwise provided, a transmission is a
retransmission only if it is simultaneous with the initial
transmission. The term ``simultaneous'' is used throughout this
definition (and throughout the bill) to refer to
retransmissions that are essentially simultaneous. Although
there may be momentary time delays resulting from the
technology used for retransmissions, such delays do not affect
the status of the retransmissions as simultaneous.
Section 114(j)(7)--``sound recording performance complement''
The ``sound recording performance complement'' defines the
metes and bounds of programming available to be transmitted
under the statutory license grant in subsection (f). The
definition is intended to encompass certain typical programming
practices such as those used on broadcast radio. It does not
extend to the performance of albums in their entirety, or the
performance over a short period of time of a substantial number
of different selections by a particular artist or from a
particular phonorecord or compilation of phonorecords.
Transmissions that exceed the limits of the complement are not
eligible for a statutory license under subsection (f).
The definition provides that for a transmission to be
within the complement, it must not include, on a particular
channel in any rolling 3-hour period, more than three
selections from any one phonorecord, and no more than two of
those selections can be transmitted consecutively. The
transmission also must not include, on a particular channel in
any rolling 3-hour period, more than four selections by the
same featured artist or from any boxed set or compilation of
phonorecords, and no more than three of those selections can be
transmitted consecutively. Whether selections are consecutive
is determined by the sequence of the sound recordings
transmitted, regardless of whether some tones or other brief
interlude is transmitted between the sound recordings.
The requirement of ``different selections'' permits the
performance of the same selection in excess of the numerical
limits. This is intended to facilitate under the statutory
license the programming of music formats that tend to repeat
the same selections of music, such as ``top 40'' formats.
To avoid imposing liability for programming that
unintentionally may exceed the complement, the complement is
limited to the performance of sound recordings ``from'' a
particular phonorecord. Many phonorecords include sound
recordings that also appear on other phonorecords or
compilations, such as the ``greatest hits'' of a particular
artist, decade or genre of music. Similarly, the same sound
recordings may appear on separate compilations under the names
of different featured artists. It is not the intention of this
legislation to impose liability where selections that are
performed from separate phonorecords also may be incorporated
on a different phonorecord or compilation, or also may appear
on a different phonorecord under the name of another featured
artist, in the absence of an intention by the performing entity
to knowingly circumvent the numerical limits of the complement.
The complement is to be evaluated as of the time of ``the
programming of the multiple phonorecords,'' rather than at the
time of transmission. This avoids imposing liability for
programming that occurs such as a week or two in advance of
transmission that unintentionally exceeds the complement such
as where, between the time of the programming and transmission,
a phonorecord or set or compilation of phonorecords may be
released that embodies selections previously programmed by the
transmitting entity from multiple phonorecords.
Section 114(j)(8)--``subscription transmission''
A ``subscription transmission'' is defined as a
transmission of a sound recording in a digital format that is
``controlled and limited to particular recipients,'' and for
which consideration is required to be paid or given ``by or on
behalf of the recipient to receive the transmission or a
package of transmissions including the transmission.'' It does
not matter what the mechanism might be for the delivery of the
transmission; thus, a digital transmission, whether delivered
by cable, wire, satellite or terrestrial microwave, video
dialtone, the Internet or any other digital transmission
mechanism, could be a subscription transmission if the
requirements cited above are satisfied. This definition
obviously does not reach traditional over-the-air broadcast
transmissions, which satisfy neither of these requirements. A
typical transmission that would qualify as a ``subscription
transmission'' under this definition is a cable system's
transmission of a digital audio service, which is available
only to the paying customers of the cable system.
Section 114(j)(9)--``transmission''
This definition recognizes that the term ``transmission''
refers to any transmission, whether it is an initial
transmission or a retransmission.
Section 4. Mechanical royalties in digital phonorecord deliveries
Section 4 of the bill governs conditions under which
mechanical royalties are to be paid when nondramatic music is
reproduced and distributed via a ``digital phonorecord
delivery.'' It amends 17 U.S.C. Sec. 115, to confirm that the
existing ``mechanical rights'' of writers and publishers (i.e.
the right to be paid when compact discs and cassettes embodying
their music are distributed) apply to certain distributions of
phonorecords by digital transmission (referred to in the bill
as ``digital phonorecord deliveries''). It does this by
renumbering paragraphs (3), (4) and (5), and inserting a new
paragraph (3), which contains twelve subsections.
Section 115(c). Royalty payable under compulsory license
Subparagraph (A) of paragraph (3) expands the scope of the
mechanical license to include the right of the licensee to
distribute or authorize others to distribute a phonorecord by
means of a digital transmission which constitutes a digital
phonorecord delivery. A digital phonorecord delivery is an
individual delivery of a phonorecord by digital transmission or
a sound recording that results in a specifically identifiable
reproduction of a phonorecord of that sound recording, by or
for a transmission recipient. Digital phonorecord delivery, as
defined in Sec. 115(d), may also constitute a public
performance but it does not include real-time non-interactive
subscription transmission where the recorded performance and
music are merely received in order to hear them.
Through 1997, the royalty rate payable for digital
phonorecord delivery shall be the same as for physical
phonorecords. After 1997, the rates for digital phonorecord
delivery will be determined as provided by the amended
provisions Sec. 115(c)(3), and need not be the same as for the
making and distribution of physical phonorecords.
Subparagraph (B) allows copyright owners of nondramatic
musical works and those seeking compulsory licenses for digital
transmissions to negotiate the terms of compulsory licenses
notwithstanding any provision of the antitrust laws. This
exemption is similar to others in existing copyright law. This
narrow exemption authorizes the parties to take only those
actions necessary to effect the congressional intent embodied
in the statute. The exemption applies only to the negotiation
of compulsory licenses for digital transmissions. The royalty
for these types of licenses may be set by a copyright
arbitration panel convened by the Librarian of Congress if the
parties do not reach an agreement. Thus, this narrow exemption
should not result in anticompetitive terms for consumers. If
the copyright owners attempt to impose supracompetitive rates,
the copyright arbitration royalty panel can step in and set a
competitive rate.
Subparagraph (C) provides that a voluntary negotiation
proceeding will be convened by the Librarian of Congress during
the period of June 30, 1996, to December 31, 1996, to specify
the terms and rates of royalty payments of digital phonorecord
delivery. This proceeding will cover the 5-year period
beginning January 1, 1998, or any other period to which the
parties agree. Voluntary agreements shall distinguish between
digital phonorecord deliveries where the reproduction or
distribution of a phonorecord is incidental to the digital
transmission, and digital phonorecord deliveries in general.
Subparagraph (D) provides that if no agreements are
reached, or, for those persons not covered by the agreements
that are reached, and who file a petition for arbitration, the
Librarian of Congress shall convene a CARP to determine the
terms and rates of royalty payments for the five-year period
beginning January 1, 1998, or for such other period as the
parties may agree.
The terms and rates shall be established according to the
same criteria that apply to the license for making and
distributing physical phonorecords, and, in addition, the panel
may take into account the voluntary agreements that were
reached for the 5-year period beginning January 1, 1998.
However, the panel may not take into account the Sec. 115
royalty rates in effect on or before December 31, 1997.
The Librarian of Congress is directed to establish the
requirements by which copyright owners receive notice of the
use of their works and the records to be kept and made
available by persons making digital phonorecords deliveries.
Subparagraph (E) direct that generally, voluntarily
negotiated license agreements supersede any rates determined
through industry-wide negotiation or arbitration. However, this
subparagraph limits substantially the application in the
digital transmission environment of so-called ``controlled
composition'' clauses in recording contracts between singer-
songwriters and record companies except in limited
circumstances.
Subparagraph (F) specifies that negotiation and arbitration
proceedings shall take place every five years, or in other
years, if it is so determined by negotiation. Reasons for more
frequent royalty determinations include, but are not limited to
rapidly changing technological or market conditions.
Subparagraph (G) requires persons engaging in digital
phonorecord delivery to include copyright management
information encoded in the sound recording by the copyright
owner in order to perfect the compulsory license.
Subparagraph (H) confirms that unauthorized digital
phonorecord deliveries are infringing. However, a person or
entity engaged in digital phonorecord delivery will not be
liable for infringement if the delivery has been authorized by
the copyright owner of the sound recordings, and a compulsory
license has been perfected or an authorization from the
copyright owner of the musical work has been obtained.
Subparagraph (I) clarifies the circumstances under which a
sound recording copyright owner may be liable for contributory
infringement as a result of unauthorized digital phonorecord
deliveries by one of its licensees. The copyright owner of a
sound recording will not be liable for infringement by a person
or entity engaged in digital phonorecord delivery if the owner
of the copyright in the sound recording did not license the
distribution of a phonorecord of the musical work.
Subparagraph (J) clarifies the relationship between
Sec. 115 as amended and the Audio Home Recording Act of 1992.
It prohibits certain infringement actions 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 a consumer.
Subparagraph (K), a final savings clause, provides that
section 115 does not annul or limit the exclusive rights to
reproduce, distribute and publicly perform a sound recording;
nor, except for compulsory licensing specified by this section,
does it limit rights in the underlying musical work.
Subparagraph (L) excluded the compulsory license for
digital phonorecord delivery from applicability to broadcast
transmissions or retransmission that are exempt under amended
section 114. Those broadcasts or retransmissions will, however,
remain subject to the existing exclusive rights of copyright
owners.
Section 115(d). Definition
This subsection defines the term ``digital phonorecord
delivery.'' A ``digital phonorecord delivery'' is each
individual delivery of a phonorecord by digital transmission of
a sound recording which results in a specifically identifiable
reproduction by or for any transmission recipient of a
phonorecord of that sound recording. The phrase ``specifically
identifiable reproduction,'' as used in this definition, should
be understood to mean a reproduction specifically identifiable
to the transmission service. A transmission recipient making a
reproduction from a transmission is able to identify that
reproduction, but the mere fact that a transmission recipient
can make and identify a reproduction should not in itself cause
a transmission to be considered a digital phonorecord delivery.
The final sentence of the definition of ``digital phonorecord
delivery'' is not intended to change current law with respect
to rights under section 106, or the limitations on those rights
under sections 107-113, section 116-120, and the unamended
portions of sections 114 and 115.
Section 5. Conforming amendments
Section 5 makes necessary conforming amendments to various
provisions of the Copyright Act. For example, conforming
amendments have been made to the Copyright Act to provide a
definition of ``digital transmission'' in Section 101, and to
make the cable and satellite carrier compulsory licenses
subject to compliance with new section 114(d). Pursuant to the
Chapter 8 conforming amendment, this section clarifies that
section 114 and 115 ratemaking proceedings are CARP
proceedings, allows parties to section 114 and 115 ratemaking
proceedings to submit all relevant evidence, and requires all
parties to section 114 and 115 ratemaking proceedings to pay
the determined rate during the pendency of any appeal.
Section 6. Effective date
This section is intended to permit negotiations for digital
performance right licenses to begin immediately upon enactment
of the bill. Otherwise, the bill is to become effective three
months after enactment.
Agency Views
In testimony before the Subcommittee on Courts and
Intellectual Property on June 28, 1995 the Department of
Commerce (Patent and Trademark Office) and the Library of
Congress (U.S. Copyright Office) testified in favor of H.R.
1506. In a letter to Subcommittee Chairman Moorhead dated July
28, 1995 the Department of Justice also supports H.R. 1506 as
amended.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italic, existing law in which no change is proposed
is shown in roman):
TITLE 17, UNITED STATES CODE
* * * * * * *
CHAPTER 1--SUBJECT MATTER AND SCOPE OF COPYRIGHT
* * * * * * *
Sec. 101. Definitions
Except as otherwise provided in this title, as used in this
title, the following terms and their variant forms mean the
following:
An ``anonymous work'' is a work on the copies or
phonorecords which no natural person is identified as
author.
An ``architectural work'' is the design of a building
as embodied in any tangible medium of expression,
including a building, architectural plans, or drawings.
The work includes the overall form as well as the
arrangement and composition of spaces and elements in
the design, but does not include individual standard
features.
``Audiovisual works'' are works that consist of a
series related images which are intrinsically intended
to be shown by the use of machines, or devices such as
projectors, viewers, or electronic equipment, together
with accompanying sounds, if any, regardless of the
nature of the material objects, such as films or tapes,
in which the works are embodied.
* * * * * * *
A ``device'', ``machine'', or ``process'' is one now
known or later developed.
* * * * * * *
A ``digital transmission'' is a transmission in whole
or in part in a digital or other non-analog format.
* * * * * * *
Sec. 106. Exclusive rights in copyrighted works
Subject to sections 107 through 120, the owner of copyright
under this title has the exclusive rights to do and to
authorize any of the following:
(1) * * *
* * * * * * *
(4) in the case of literary, musical, dramatic, and
choreographic works, pantomimes, and motion pictures
and other audiovisual works, to perform the copyrighted
work publicly; [and]
(5) in the case of literary, musical, dramatic, and
choreographic works, pantomimes, and pictorial,
graphic, or sculptural works, including the individual
images of a motion picture or other audiovisual work,
to display the copyrighted work publicly[.]; and
(6) in the case of sound recordings, to perform the
copyrighted work publicly by means of a digital audio
transmission.
* * * * * * *
Sec. 111. Limitations on exclusive rights: Secondary transmissions
(a) * * *
* * * * * * *
(c) Secondary Transmissions by Cable Systems.--
(1) Subject to the provisions of clauses (2), (3),
and (4) of this subsection and section 114(d),
secondary transmissions to the public by a cable system
of a primary transmission made by a broadcast station
licensed by the Federal Communications Commission or by
an appropriate governmental authority of Canada or
Mexico and embodying a performance or display of a work
shall be subject to compulsory licensing upon
compliance with the requirements of subsection (d)
where the carriage of the signals comprising the
secondary transmission is permissible under the rules,
regulations, or authorizations of the Federal
Communications Commission.
* * * * * * *
Sec. 114. Scope of exclusive rights in sound recordings
(a) The exclusive rights of the owner of copyright in a sound
recording are limited to the rights specified by clauses (1),
(2), [and (3)] (3) and (6) of section 106, and do not include
any right of performance under section 106(4).
(b) The exclusive right of the owner of copyright in a sound
recording under clause (1) of section 106 is limited to the
right to duplicate the sound recording in the form of
[phonorecords, or of copies of motion pictures and other
audiovisual works,] phonorecords or copies that directly or
indirectly recapture the actual sounds fixed in the recording.
The exclusive right of the owner of copyright in a sound
recording under clause (2) of section 106 is limited to the
right to prepare a derivative work in which the actual sounds
fixed in the sound recording are rearranged, remixed, or
otherwise altered in sequence or quality. The exclusive rights
of the owner of copyright in a sound recording under clauses
(1) and (2) of section 106 do not extend to the making or
duplication of another sound recording that consists entirely
of an independent fixation of other sounds, even though such
sounds imitate or simulate those in the copyrighted sound
recording. The exclusive rights of the owner of copyright in a
sound recording under clauses (1), (2), and (3) of section 106
do not apply to sound recordings included in educational
television and radio programs (as defined in section 397 of
title 47) distributed or transmitted by or through public
broadcasting entities (as defined by section 118(g)): Provided,
That copies or phonorecords of said programs are not
commercially distributed by or through public broadcasting
entities to the general public.
* * * * * * *
[(d) On January 3, 1978, the Register of Copyrights, after
consulting with representatives of owners of copyrighted
materials, representatives of the broadcasting, recording,
motion picture, entertainment industries, and arts
organizations, representatives of organized labor and
performers of copyrighted materials, shall submit to the
Congress a report setting forth recommendations as to whether
this section should be amended to provide for performers and
copyright owners of copyrighted material any performance rights
in such material. The report should describe the status of such
rights in foreign countries, the views of major interested
parties, and specific legislative or other recommendations, if
any.]
(d) Limitations on Exclusive Right.--Notwithstanding the
provisions of section 106(6)--
(1) Exempt transmissions and retransmissions.--The
performance of a sound recording publicly by means of a
digital audio transmission, other than as a part of an
interactive service, is not an infringement of section
106(6) if the performance is part of--
(A)(i) a nonsubscription transmission other
than a retransmission;
(ii) an initial nonsubscription
retransmission made for direct reception by
members of the public of a prior or
simultaneous incidental transmission that is
not made for direct reception by members of the
public; or
(iii) a nonsubscription broadcast
transmission;
(B) a retransmission of a nonsubscription
broadcast transmission: Provided, That, in the
case of a retransmission of a radio station's
broadcast transmission--
(i) the radio station's broadcast
transmission is not willfully or
repeatedly retransmitted more than a
radius of 150 miles from the site of
the radio broadcast transmitter,
however--
(I) the 150 mile limitation
under this clause shall not
apply when a nonsubscription
broadcast transmission by a
radio station licensed by the
Federal Communications
Commission is retransmitted on
a nonsubscription basis by a
terrestrial broadcast station,
terrestrial translator, or
terrestrial repeater licensed
by the Federal Communications
Commission; and
(II) in the case of a
subscription retransmission of
a nonsubscription broadcast
retransmission covered by
subclause (I), the 150 mile
radius shall be measured from
the transmitter site of such
broadcast retransmitter;
(ii) the retransmission is of radio
station broadcast transmissions that
are--
(I) obtained by the
retransmitter over the air;
(II) not electronically
processed by the retransmitter
to deliver separate and
discrete signals; and
(III) retransmitted only
within the local communities
served by the retransmitter;
(iii) the radio station's broadcast
transmission was being retransmitted to
cable systems (as defined in section
111(f)) by a satellite carrier on
January 1, 1995, and that
retransmission was being retransmitted
by cable systems as a separate and
discrete signal, and the satellite
carrier obtains the radio station's
broadcast transmission in an analog
format: Provided, That the broadcast
transmission being retransmitted may
embody the programming of no more than
one radio station; or
(iv) the radio station's broadcast
transmission is made by a noncommercial
educational broadcast station funded on
or after January 1, 1995, under section
396(k) of the Communications Act of
1934 (47 U.S.C. 396(k)), consists
solely of noncommercial educational and
cultural radio programs, and the
retransmission, whether or not
simultaneous, is a nonsubscription
terrestrial broadcast retransmission;
or
(C) a transmission that comes within any of
the following categories:
(i) a prior or simultaneous
transmission incidental to an exempt
transmission, such as a feed received
by and then retransmitted by an exempt
transmitter: Provided, That such
incidental transmissions do not include
any subscription transmission directly
for reception by members of the public;
(ii) a transmission within a business
establishment, confined to its premises
or the immediately surrounding
vicinity;
(iii) a retransmission by any
retransmitter, including a multichannel
video programming distributor as
defined in section 602(12) of the
Communications Act of 1934 (47 U.S.C.
522(12)), of a transmission by a
transmitter licensed to publicly
perform the sound recording as a part
of that transmission, if the
retransmission is simultaneous with the
licensed transmission and authorized by
the transmitter; or
(iv) a transmission to a business
establishment for use in the ordinary
course of its business: Provided, That
the business recipient does not
retransmit the transmission outside of
its premises or the immediately
surrounding vicinity, and that the
transmission does not exceed the sound
recording performance complement.
Nothing in this clause shall limit the
scope of the exemption in clause (ii).
(2) Subscription transmissions.--In the case of a
subscription transmission not exempt under subsection
(d)(1), the performance of a sound recording publicly
by means of a digital audio transmission shall be
subject to statutory licensing, in accordance with
subsection (f) of this section, if--
(A) the transmission is not part of an
interactive service;
(B) the transmission does not exceed the
sound recording performance complement;
(C) the transmitting entity does not cause to
be published by means of an advance program
schedule or prior announcement the titles of
the specific sound recordings or phonorecords
embodying such sound recordings to be
transmitted;
(D) except in the case of transmission to a
business establishment, the transmitting entity
does not automatically and intentionally cause
any device receiving the transmission to switch
from one program channel to another; and
(E) except as provided in section 1002(e) of
this title, the transmission of the sound
recording is accompanied by the information
encoded in that 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.
(3) Licenses for transmissions by interactive
services.--
(A) No interactive service shall be granted
an exclusive license under section 106(6) for
the performance of a sound recording publicly
by means of digital audio transmission for a
period in excess of 12 months, except that with
respect to an exclusive license granted to an
interactive service by a licensor that holds
the copyright to 1,000 or fewer sound
recordings, the period of such license shall
not exceed 24 months: Provided, however, That
the grantee of such exclusive license shall be
ineligible to receive another exclusive license
for the performance of that sound recording for
a period of 13 months from the expiration of
the prior exclusive license.
(B) The limitation set forth in subparagraph
(A) of this paragraph shall not apply if--
(i) the licensor has granted and
there remain in effect licenses under
section 106(6) for the public
performance of sound recordings by
means of digital audio transmission by
at least 5 different interactive
services: Provided, however, That each
such license must be for a minimum of
10 percent of the copyrighted sound
recordings owned by the licensor that
have been licensed to interactive
services, but in no event less than 50
sound recordings; or
(ii) the exclusive license is granted
to perform publicly up to 45 seconds of
a sound recording and the sole purpose
of the performance is to promote the
distribution or performance of that
sound recording.
(C) Notwithstanding the grant of an exclusive
or nonexclusive license of the right of public
performance under section 106(6), an
interactive service may not publicly perform a
sound recording unless a license has been
granted for the public performance of any
copyrighted musical work contained in the sound
recording: Provided, That such license to
publicly perform the copyrighted musical work
may be granted either by a performing rights
society representing the copyright owner or by
the copyright owner.
(D) The performance of a sound recording by
means of a retransmission of a digital audio
transmission is not an infringement of section
106(6) if--
(i) the retransmission is of a
transmission by an interactive service
licensed to publicly perform the sound
recording to a particular member of the
public as part of that transmission;
and
(ii) the retransmission is
simultaneous with the licensed
transmission, authorized by the
transmitter, and limited to that
particular member of the public
intended by the interactive service to
be the recipient of the transmission.
(E) For the purposes of this paragraph--
(i) a ``licensor'' shall include the
licensing entity and any other entity
under any material degree of common
ownership, management, or control that
owns copyrights in sound recordings;
and
(ii) a ``performing rights society''
is an association or corporation that
licenses the public performance of
nondramatic musical works on behalf of
the copyright owner, such as the
American Society of Composers, Authors
and Publishers, Broadcast Music, Inc.,
and SESAC, Inc.
(4) Rights not otherwise limited.--
(A) Except as expressly provided in this
section, this section does not limit or impair
the exclusive right to perform a sound
recording publicly by means of a digital audio
transmission under section 106(6).
(B) Nothing in this section annuls or limits
in any way--
(i) the exclusive right to publicly
perform a musical work, including by
means of a digital audio transmission,
under section 106(4);
(ii) the exclusive rights in a sound
recording or the musical work embodied
therein under sections 106(1), 106(2)
and 106(3); or
(iii) any other rights under any
other clause of section 106, or
remedies available under this title, as
such rights or remedies exist either
before or after the date of enactment
of the Digital Performance Right in
Sound Recordings Act of 1995.
(C) Any limitations in this section on the
exclusive right under section 106(6) apply only
to the exclusive right under section 106(6) and
not to any other exclusive rights under section
106. Nothing in this section shall be construed
to annul, limit, impair or otherwise affect in
any way the ability of the owner of a copyright
in a sound recording to exercise the rights
under sections 106(1), 106(2) and 106(3), or to
obtain the remedies available under this title
pursuant to such rights, as such rights and
remedies exist either before or after the date
of enactment of the Digital Performance Right
in Sound Recordings Act of 1995.
* * * * * * *
Sec. 115. Scope of exclusive rights in nondramatic musical works:
Compulsory license for making and distributing
phonorecords
In the case of nondramatic musical works, the exclusive
rights provided by clauses (1) and (3) of section 106, to make
and to distribute phonorecords of such works, are subject to
compulsory licensing under the conditions specified by this
section.
(a) Availability and Scope of Compulsory License.--
(1) When phonorecords of a nondramatic musical work
have been distributed to the public in the United
States under the authority of the copyright owner, [any
other person] any other person, including those who
make phonorecords or digital phonorecord deliveries,
may, by complying with the provisions of this section,
obtain a compulsory license to make and distribute
phonorecords of the work. A person may obtain a
compulsory license only if his or her primary purpose
in making phonorecords is to distribute them to the
public for private use, including by means of a digital
phonorecord delivery. A person may not obtain a
compulsory license for use of the work in the making of
phonorecords duplicating a sound recording fixed by
another, unless: (i) such sound recording was fixed
lawfully; and (ii) the making of the phonorecords was
authorized by the owner of 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.
* * * * * * *
(c) Royalty Payable Under Compulsory License.--
(1) * * *
(2) Except as provided by clause (1), the royalty
under a compulsory license shall be payable for every
phonorecord made and distributed in accordance with the
license. For this purpose, and other than as provided
in paragraph (3), a phonorecord is considered
``distributed'' if the person exercising the compulsory
license has voluntarily and permanently parted with its
possession. With respect to each work embodied in the
phonorecord, the royalty shall be either two and three-
fourths cents, or one-half of one cent per minute of
playing time or fraction thereof, whichever amount is
larger.
(3)(A) A compulsory license under this section
includes the right of the compulsory licensee to
distribute or authorize the distribution of a
phonorecord of a nondramatic musical work by means of a
digital transmission which constitutes a digital
phonorecord delivery, regardless of whether the digital
transmission is also a public performance of the sound
recording under section 106(6) of this title or of any
nondramatic musical work embodied therein under section
106(4) of this title. For every digital phonorecord
delivery by or under the authority of the compulsory
licensee--
(i) on or before December 31, 1997, the
royalty payable by the compulsory licensee
shall be the royalty prescribed under paragraph
(2) and chapter 8 of this title; and
(ii) on or after January 1, 1998, the royalty
payable by the compulsory licensee shall be the
royalty prescribed under subparagraphs (B)
through (F) and chapter 8 of this title.
(B) 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)(1) may negotiate and agree upon
the terms and rates of royalty payments under this
paragraph and the proportionate division of fees paid
among copyright owners, and may designate common agents
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 subparagraphs (B)
through (F) and chapter 8 of this title shall next be
determined.
(C) During the period of June 30, 1996, through
December 31, 1996, the Librarian of Congress shall
cause notice to be published in the Federal Register of
the initiation of voluntary negotiation proceedings for
the purpose of determining reasonable terms and rates
of royalty payments for the activities specified by
subparagraph (A) during the period beginning January 1,
1998, and ending on the effective date of any new terms
and rates established pursuant to subparagraph (C), (D)
or (F), or such other date (regarding digital
phonorecord deliveries) as the parties may agree. Such
terms and rates shall distinguish between (i) digital
phonorecord deliveries where the reproduction or
distribution of a phonorecord is incidental to the
transmission which constitutes the digital phonorecord
delivery, and (ii) digital phonorecord deliveries in
general. Any copyright owners of nondramatic musical
works and any persons entitled to obtain a compulsory
license under subsection (a)(1) may submit to the
Librarian of Congress licenses covering such
activities. The parties to each negotiation proceeding
shall bear their own costs.
(D) In the absence of license agreements negotiated
under subparagraphs (B) and (C), upon the filing of a
petition in accordance with section 803(a)(1), the
Librarian of Congress shall, pursuant to chapter 8,
convene a copyright arbitration royalty panel to
determine and publish in the Federal Register a
schedule of rates and terms which, subject to
subparagraph (E), shall be binding on all copyright
owners of nondramatic musical works and persons
entitled to obtain a compulsory license under
subsection (a)(1) during the period beginning January
1, 1998, and ending on the effective date of any new
terms and rates established pursuant to subparagraph
(C), (D) or (F), or such other date (regarding digital
phonorecord deliveries) as may be determined pursuant
to subparagraphs (B) and (C). Such terms and rates
shall distinguish between (i) digital phonorecord
deliveries where the reproduction or distribution of a
phonorecord is incidental to the transmission which
constitutes the digital phonorecord delivery, and (ii)
digital phonorecord deliveries in general. In addition
to the objectives set forth in section 801(b)(1), in
establishing such rates and terms, the copyright
arbitration royalty panel may consider rates and terms
under voluntary license agreements negotiated as
provided in subparagraphs (B) and (C). The royalty
rates payable for a compulsory license for a digital
phonorecord delivery under this section shall be
established de novo and no precedential effect shall be
given to the amount of the royalty payable by a
compulsory licensee for digital phonorecord deliveries
on or before December 31, 1997. The Librarian of
Congress shall also establish requirements by which
copyright owners may receive reasonable notice of the
use of their works under this section, and under which
records of such use shall be kept and made available by
persons making digital phonorecord deliveries.
(E)(i) 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)(1) shall be given effect in lieu of any
determination by the Librarian of Congress. Subject to
clause (ii), the royalty rates determined pursuant to
subparagraph (C), (D) or (F) shall be given effect 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 sections 106(1) and (3) or commits
another person to grant a license in that musical work
under sections 106(1) and (3), to a person desiring to
fix in a tangible medium of expression a sound
recording embodying the musical work.
(ii) 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 subparagraph (C), (D) or
(F) 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 subparagraph (C), (D) or (F) 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 sections 106(1) and
106(3).
(F) The procedures specified in subparagraphs (C) and
(D) shall be repeated and concluded, in accordance with
regulations that the Librarian of Congress shall
prescribe, in each fifth calendar year after 1997,
except to the extent that different years for the
repeating and concluding of such proceedings may be
determined in accordance with subparagraphs (B) and
(C).
(G) Except as provided in section 1002(e) of this
title, 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.
(H)(i) 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 and section 509,
unless--
(I) the digital phonorecord delivery has been
authorized by the copyright owner of the sound
recording; and
(II) the owner of the copyright in the sound
recording or the entity making the digital
phonorecord delivery has obtained a compulsory
license under this section or has otherwise
been authorized by the copyright owner of the
musical work to distribute or authorize the
distribution, by means of a digital phonorecord
delivery, of each musical work embodied in the
sound recording.
(ii) 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
subsection (c)(6) and section 106(4) and the owner of
the copyright in the sound recording under section
106(6).
(I) 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.
(J) Nothing in section 1008 shall be construed to
prevent the exercise of the rights and remedies allowed
by this paragraph, paragraph (6), 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.
(K) 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 sections 106(4)
and 106(6), (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 sections
106(1) and 106(3), 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 either before or after the date of enactment of
the Digital Performance Right in Sound Recordings Act
of 1995.
(L) 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 section 106(1) through (5) with respect to such
transmissions and retransmissions.
[(3)] (4) A compulsory license under this section
includes the right of the maker of a phonorecord of a
nondramatic musical work under subsection (a)(1) to
distribute or authorize distribution of such
phonorecord by rental, lease, or lending (or by acts or
practices in the nature of rental, lease, or lending).
In addition to any royalty payable under clause (2) and
chapter 8 of this title, a royalty shall be payable by
the compulsory licensee for every act of distribution
of a phonorecord by or in the nature of rental, lease,
or lending, by or under the authority of the compulsory
licensee. With respect to each nondramatic musical work
embodied in the phonorecord, the royalty shall be a
proportion of the revenue received by the compulsory
licensee from every such act of distribution of the
phonorecord under this clause equal to the proportion
of the revenue received by the compulsory licensee from
distribution of the phonorecord under clause (2) 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
clause.
[(4)] (5) 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 this section. 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.
[(5)] (6) 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
within thirty days from the date of the notice, 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 and 509.
(d) Definition.--As used in this section, the following term
has the following meaning: A ``digital phonorecord delivery''
is each individual delivery of a phonorecord by digital
transmission of a sound recording which 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
nondramatic musical work embodied therein. 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.
Sec. 119. Limitations on exclusive rights: Secondary transmissions of
superstations and network stations for private home
viewing
(a) Secondary Transmissions by Satellite Carriers.--
(1) Superstations.--Subject to the provisions of
paragraphs (3), (4), and (6) of this subsection and
section 114(d), secondary transmissions of a primary
transmission made by a superstation and embodying a
performance or display of a work shall be subject to
statutory licensing under this section if the secondary
transmission is made by a satellite carrier to the
public for private home viewing, and the carrier makes
a direct or indirect charge for each retransmission
service to each household receiving the secondary
transmission or to a distributor that has contracted
with the carrier for direct or indirect delivery of the
secondary transmission to the public for private home
viewing.
(2) Network stations.--
(A) In general.--Subject to the provisions of
subparagraphs (B) and (C) of this paragraph and
paragraphs (3), (4), (5), and (6) of this
subsection and section 114(d), secondary
transmissions of programming contained in a
primary transmission made by a network station
and embodying a performance or display of a
work shall be subject to statutory licensing
under this section if the secondary
transmission is made by a satellite carrier to
the public for private home viewing, and the
carrier makes a direct or indirect charge for
such retransmission service to each subscriber
receiving the secondary transmission.
* * * * * * *
CHAPTER 8--COPYRIGHT ROYALTY TRIBUNAL
* * * * * * *
Sec. 801. Copyright arbitration royalty panels: Establishment and
purpose
(a) There is hereby created an independent Copyright
Royalty Tribunal in the legislative branch.
(b) Purposes.--Subject to the provisions of this chapter,
the purposes of the copyright arbitration royalty panels shall
be--
(1) to make determinations concerning the adjustment
of reasonable copyright royalty rates as provided in
sections [115] 114, 115, and 116, and to make
determinations as to reasonable terms and rates of
royalty payments as provided in section 118. The rates
applicable under sections [115] 114, 115, and 116 shall
be calculated to achieve the following objectives:
(A) * * *
* * * * * * *
Sec. 802. Membership and proceedings of copyright arbitration royalty
panels
(a) * * *
* * * * * * *
(c) Arbitration Proceedings.--Copyright arbitration royalty
panels shall conduct arbitration proceedings, subject to
subchapter II of chapter 5 of title 5, for the purpose of
making their determinations in carrying out the purposes set
forth in section 801. The arbitration panels shall act on the
basis of a fully documented written record, prior decisions of
the Copyright Royalty Tribunal, prior copyright arbitration
panel determinations, and rulings by the Librarian of Congress
under section 801(c). Any copyright owner who claims to be
entitled to royalties under [section 111, 116, or 119,] section
111, 114, 116, or 119, any person entitled to a compulsory
license under section 114(d), any person entitled to a
compulsory license under section 115, or any interested
copyright party who claims to be entitled to royalties under
section 1006, may submit relevant information and proposals to
the arbitration panels in proceedings applicable to such
copyright owner or interested copyright party, and any other
person participating in arbitration proceedings may submit such
relevant information and proposals to the arbitration panel
conducting the proceedings. In ratemaking proceedings, the
parties to the proceedings shall bear the entire cost thereof
in such manner and proportion as the arbitration panels shall
direct. In distribution proceedings, the parties shall bear the
cost in direct proportion to their share of the distribution.
* * * * * * *
(g) Judicial Review.--Any decision of the Librarian of
Congress under subsection (f) with respect to a determination
of an arbitration panel may be appealed, by any aggrieved party
who would be bound by the determination, to the United States
Court of Appeals for the District of Columbia Circuit, within
30 days after the publication of the decision in the Federal
Register. If no appeal is brought within such 30-day period,
the decision of the Librarian is final, and the royalty fee or
determination with respect to the distribution of fees, as the
case may be, shall take effect as set forth in the decision.
The pendency of an appeal under this paragraph shall not
relieve persons obligated to make royalty payments under
sections 111, 114, 115, 116, 118, 119, or 1003 who would be
affected by the determination on appeal to deposit the
statement of account and royalty fees specified in those
sections. The court shall have jurisdiction to modify or vacate
a decision of the Librarian only if it finds, on the basis of
the record before the Librarian, that the Librarian acted in an
arbitrary manner. If the court modifies the decision of the
Librarian, the court shall have jurisdiction to enter its own
determination with respect to the amount or distribution of
royalty fees and costs, to order the repayment of any excess
fees, and to order the payment of any underpaid fees, and the
interest pertaining respectively thereto, in accordance with
its final judgment. The court may further vacate the decision
of the arbitration panel and remand the case to the Librarian
for arbitration proceedings in accordance with subsection (c).
(h) Administrative Matters.--
(1) * * *
(2) Positions required for administration of
compulsory licensing.--Section 307 of the Legislative
Branch Appropriations Act, 1994, shall not apply to
employee positions in the Library of Congress that are
required to be filled in order to carry out section
111, 114, 115, 116, 118, or 119 or chapter 10.
Sec. 803. Institution and conclusion of proceedings
(a)(1) With respect to proceedings under section 801(b)(1)
concerning the adjustment of royalty rates as provided in
sections [115] 114, 115 and 116, and with respect to
proceedings under subparagraphs (A) and (D) of section
801(b)(2), during the calendar years specified in the schedule
set forth in paragraphs (2), (3), [and (4)] (4) and (5), any
owner or user of a copyrighted work whose royalty rates are
specified by this title, established by the Copyright Royalty
Tribunal before the date of the enactment of the Copyright
Royalty Tribunal Reform Act of 1993, or established by a
copyright arbitration royalty panel after such date of
enactment, may file a petition with the Librarian of Congress
declaring that the petitioner requests an adjustment of the
rate. The Librarian of Congress shall, upon the recommendation
of the Register of Copyrights, make a determination as to
whether the petitioner has such a significant interest in the
royalty rate in which an adjustment is requested. If the
Librarian determines that the petitioner has such a significant
interest, the Librarian shall cause notice of this
determination, with the reasons therefor, to be published in
the Federal Register, together with the notice of commencement
of proceedings under this chapter.
(2) In proceedings under section 801(b)(2)(A) and (D), a
petition described in paragraph (1) may be filed during 1995
and in each subsequent fifth calendar year.
(3) In proceedings under section 801(b)(1) concerning the
adjustment of royalty rates as provided in section 115, a
petition described in paragraph (1) may be filed in 1997 and in
each subsequent tenth calendar year or as prescribed in section
115(c)(3)(D).
* * * * * * *
(5) With respect to proceedings under section 801(b)(1)
concerning the determination of reasonable terms and rates of
royalty payments as provided in section 114, the Librarian of
Congress shall proceed when and as provided by that section.
* * * * * * *