[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.
          * * * * * * *

                                
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