[House Report 108-408]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 108-408
======================================================================
COPYRIGHT ROYALTY AND DISTRIBUTION REFORM ACT OF 2003
_______
January 30, 2004.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 1417]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 1417) to amend title 17, United States Code, to replace
copyright arbitration royalty panels with a Copyright Royalty
Judge, and for other purposes, having considered the same,
report favorably thereon with amendments and recommend that the
bill as amended do pass.
CONTENTS
Page
The Amendment.................................................... 1
Purpose and Summary.............................................. 18
Background and Need for the Legislation.......................... 18
Hearings......................................................... 18
Committee Consideration.......................................... 19
Vote of the Committee............................................ 19
Committee Oversight Findings..................................... 19
New Budget Authority and Tax Expenditures........................ 19
Congressional Budget Office Cost Estimate........................ 19
Performance Goals and Objectives................................. 21
Constitutional Authority Statement............................... 21
Section-by-Section Analysis and Discussion....................... 22
Changes in Existing Law Made by the Bill, as Reported............ 43
Markup Transcript................................................ 86
The Amendment
The amendments are as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Copyright Royalty and Distribution
Reform Act of 2003''.
SEC. 2. REFERENCE.
Except as otherwise expressly provided, whenever in this Act an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be considered to
be made to a section or other provision of title 17, United States
Code.
SEC. 3. COPYRIGHT ROYALTY JUDGE AND STAFF.
(a) In General.--Chapter 8 is amended to read as follows:
``CHAPTER 8--PROCEEDINGS BY COPYRIGHT ROYALTY JUDGES
``Sec.
``801. Copyright Royalty Judges; appointment and functions.
``802. Copyright Royalty Judgeships; staff.
``803. Proceedings of Copyright Royalty Judges.
``804. Institution of proceedings.
``805. General rule for voluntarily negotiated agreements.
``Sec. 801. Copyright Royalty Judges; appointment and functions
``(a) Appointment.--The Librarian of Congress shall appoint 3 full-
time Copyright Royalty Judges, and shall appoint one of the three as
the Chief Copyright Royalty Judge. In making such appointments, the
Librarian shall consult with the Register of Copyrights.
``(b) Functions.--Subject to the provisions of this chapter, the
functions of the Copyright Royalty Judges shall be as follows:
``(1) To make determinations and adjustments of reasonable
terms and rates of royalty payments as provided in sections
112(e), 114, 115, 116, 118, 119 and 1004. The rates applicable
under sections 114(f)(1)(B), 115, and 116 shall be calculated
to achieve the following objectives:
``(A) To maximize the availability of creative works
to the public.
``(B) To afford the copyright owner a fair return for
his or her creative work and the copyright user a fair
income under existing economic conditions.
``(C) To reflect the relative roles of the copyright
owner and the copyright user in the product made
available to the public with respect to relative
creative contribution, technological contribution,
capital investment, cost, risk, and contribution to the
opening of new markets for creative expression and
media for their communication.
``(D) To minimize any disruptive impact on the
structure of the industries involved and on generally
prevailing industry practices.
``(2) To make determinations concerning the adjustment of the
copyright royalty rates under section 111 solely in accordance
with the following provisions:
``(A) The rates established by section 111(d)(1)(B)
may be adjusted to reflect--
``(i) national monetary inflation or
deflation; or
``(ii) changes in the average rates charged
cable subscribers for the basic service of
providing secondary transmissions to maintain
the real constant dollar level of the royalty
fee per subscriber which existed as of the date
of October 19, 1976,
except that--
``(I) if the average rates charged cable
system subscribers for the basic service of
providing secondary transmissions are changed
so that the average rates exceed national
monetary inflation, no change in the rates
established by section 111(d)(1)(B) shall be
permitted; and
``(II) no increase in the royalty fee shall
be permitted based on any reduction in the
average number of distant signal equivalents
per subscriber.
The Copyright Royalty Judges may consider all factors
relating to the maintenance of such level of payments,
including, as an extenuating factor, whether the
industry has been restrained by subscriber rate
regulating authorities from increasing the rates for
the basic service of providing secondary transmissions.
``(B) In the event that the rules and regulations of
the Federal Communications Commission are amended at
any time after April 8, 1976, to permit the carriage by
cable systems of additional television broadcast
signals beyond the local service area of the primary
transmitters of such signals, the royalty rates
established by section 111(d)(1)(B) may be adjusted to
insure that the rates for the additional distant signal
equivalents resulting from such carriage are reasonable
in the light of the changes effected by the amendment
to such rules and regulations. In determining the
reasonableness of rates proposed following an amendment
of Federal Communications Commission rules and
regulations, the Copyright Royalty Judges shall
consider, among other factors, the economic impact on
copyright owners and users; except that no adjustment
in royalty rates shall be made under this subparagraph
with respect to any distant signal equivalent or
fraction thereof represented by--
``(i) carriage of any signal permitted under
the rules and regulations of the Federal
Communications Commission in effect on April
15, 1976, or the carriage of a signal of the
same type (that is, independent, network, or
noncommercial educational) substituted for such
permitted signal; or
``(ii) a television broadcast signal first
carried after April 15, 1976, pursuant to an
individual waiver of the rules and regulations
of the Federal Communications Commission, as
such rules and regulations were in effect on
April 15, 1976.
``(C) In the event of any change in the rules and
regulations of the Federal Communications Commission
with respect to syndicated and sports program
exclusivity after April 15, 1976, the rates established
by section 111(d)(1)(B) may be adjusted to assure that
such rates are reasonable in light of the changes to
such rules and regulations, but any such adjustment
shall apply only to the affected television broadcast
signals carried on those systems affected by the
change.
``(D) The gross receipts limitations established by
section 111(d)(1)(C) and (D) shall be adjusted to
reflect national monetary inflation or deflation or
changes in the average rates charged cable system
subscribers for the basic service of providing
secondary transmissions to maintain the real constant
dollar value of the exemption provided by such section,
and the royalty rate specified therein shall not be
subject to adjustment.
``(3) To authorize the distribution, under sections 111, 119,
and 1007, of those royalty fees collected under sections 111,
119, and 1005, as the case may be, to the extent that the
Copyright Royalty Judges have found that the distribution of
such fees is not subject to controversy. In cases where the
Copyright Royalty Judges determine that controversy exists--
``(A) the Copyright Royalty Judges shall determine
the distribution of such fees, in accordance with
section 111, 119, or 1007, as the case may be; and
``(B) the Copyright Royalty Judges shall make a
partial distribution of such fees during the pendency
of the proceeding under subparagraph (A) if all
participants under section 803(b)(2) in the
proceeding--
``(i) agree to such partial distribution;
``(ii) sign an agreement obligating them to
return any excess amounts to the extent
necessary to comply with the final
determination on the distribution of the fees
made under subparagraph (A); and
``(iii) file the agreement with the Copyright
Royalty Judges.
The Copyright Royalty Judges and any other officer or employee
acting in good faith in distributing funds under subparagraph
(B) shall not be held liable for the payment of any excess fees
under subparagraph (B). The Copyright Royalty Judges shall, at
the time the final determination is made, calculate any such
excess amounts.
``(4) To accept or reject royalty claims filed under section
111, 119, and 1007, on the basis of timeliness or the failure
to establish the basis for a claim.
``(5) To accept or reject rate adjustment petitions as
provided in section 804 and petitions to participate as
provided in section 803(b)(1) and (2).
``(6) To determine the status of a digital audio recording
device or a digital audio interface device under sections 1002
and 1003, as provided in section 1010.
``(7)(A) To adopt as the basis for statutory terms and rates
or as a basis for the distribution of statutory royalty
payments, an agreement concerning such matters reached among
some or all of the participants in a proceeding at any time
during the proceeding, except that--
``(i) the Copyright Royalty Judges shall provide to
the other participants in the proceeding under section
803(b)(2) that would be bound by the terms, rates,
distribution, or other determination set by the
agreement an opportunity to comment on the agreement
and object to its adoption as the basis for statutory
terms and rates or as a basis for the distribution of
statutory royalty payments, as the case may be; and
``(ii) the Copyright Royalty Judges may decline to
adopt the agreement as the basis for statutory terms
and rates or as the basis for the distribution of
statutory royalty payments, as the case may be, if any
other participant described in subparagraph (A) objects
to the agreement and the Copyright Royalty Judges find,
based on the record before them, that the agreement is
not likely to meet the statutory standard for setting
the terms and rates, or for distributing the royalty
payments, as the case may be.
``(B) License agreements voluntarily negotiated pursuant to
section 112(e)(5), 114(f)(3), 115(c)(3)(E)(i), 116(c), or
118(b)(2) that do not result in statutory terms and rates shall
not be subject to clauses (i) and (ii) of subparagraph (A).
``(c) Rulings.--The Copyright Royalty Judges may make any necessary
procedural or evidentiary rulings in any proceeding under this chapter
and may, before commencing a proceeding under this chapter, make any
such rulings that would apply to the proceedings conducted by the
Copyright Royalty Judges. The Copyright Royalty Judges may consult with
the Register of Copyrights in making any rulings under section
802(f)(1).
``(d) Administrative Support.--The Librarian of Congress shall
provide the Copyright Royalty Judges with the necessary administrative
services related to proceedings under this chapter.
``(e) Location in Library of Congress.--The offices of the Copyright
Royalty Judges and staff shall be in the Library of Congress.
``Sec. 802. Copyright Royalty Judgeships; staff
``(a) Qualifications of Copyright Royalty Judges.--Each Copyright
Royalty Judge shall be an attorney who has at least 7 years of legal
experience. The Chief Copyright Royalty Judge shall have at least 5
years of experience in adjudications, arbitrations, or court trials. Of
the other two Copyright Royalty Judges, one shall have significant
knowledge of copyright law, and the other shall have significant
knowledge of economics. An individual may serve as a Copyright Royalty
Judge only if the individual is free of any financial conflict of
interest under subsection (h). In this subsection, `adjudication' has
the meaning given that term in section 551 of title 5, but does not
include mediation.
``(b) Staff.--The Chief Copyright Royalty Judge shall hire 3 full-
time staff members to assist the Copyright Royalty Judges in performing
their functions.
``(c) Terms.--The terms of the Copyright Royalty Judges shall each be
6 years, except of the individuals first appointed, the Chief Copyright
Royalty Judge shall be appointed to a term of 6 years, and of the
remaining Copyright Royalty Judges, one shall be appointed to a term of
2 years, and the other shall be appointed to a term of 4 years. An
individual serving as a Copyright Royalty Judge may be reappointed to
subsequent terms. The term of a Copyright Royalty Judge shall begin
when the term of the predecessor of that Copyright Royalty Judge ends.
When the term of office of a Copyright Royalty Judge ends, the
individual serving that term may continue to serve until a successor is
selected.
``(d) Vacancies or Incapacity.--
``(1) Vacancies.--If a vacancy should occur in the position
of Copyright Royalty Judge, the Librarian of Congress shall act
expeditiously to fill the vacancy, and may appoint an interim
Copyright Royalty Judge to serve until another Copyright
Royalty Judge is appointed under this section. An individual
appointed to fill the vacancy occurring before the expiration
of the term for which the predecessor of that individual was
appointed shall be appointed for the remainder of that term.
``(2) Incapacity.--In the case in which a Copyright Royalty
Judge is temporarily unable to perform his or her duties, the
Librarian of Congress may appoint an interim Copyright Royalty
Judge to perform such duties during the period of such
incapacity.
``(e) Compensation.--
``(1) Judges.--The Chief Copyright Royalty Judge shall
receive compensation at the rate of basic pay payable for level
AL-1 for administrative law judges pursuant to section 5372(b)
of title 5, and each of the other two Copyright Royalty Judges
shall receive compensation at the rate of basic pay payable for
level AL-2 for administrative law judges pursuant to such
section. The compensation of the Copyright Royalty Judges shall
not be subject to any regulations adopted by the Office of
Personnel Management pursuant to its authority under section
5376(b)(1) of title 5.
``(2) Staff members.--Of the staff members appointed under
subsection (b)--
``(A) the rate of pay of one staff member shall be
not more than the basic rate of pay payable for GS-15
of the General Schedule;
``(B) the rate of pay of one staff member shall be
not less than the basic rate of pay payable for GS-13
of the General Schedule and not more than the basic
rate of pay payable for GS-14 of such Schedule; and
``(C) the rate of pay for the third staff member
shall be not less than the basic rate of pay payable
for GS-8 of the General Schedule and not more than the
basic rate of pay payable for GS-11 of such Schedule.
``(f) Independence of Copyright Royalty Judge.--
``(1) In making determinations.--
``(A) In general.--Subject to subparagraph (B), the
Copyright Royalty Judges shall have full independence
in making determinations concerning adjustments and
determinations of copyright royalty rates and terms,
the distribution of copyright royalties, the acceptance
or rejection of royalty claims, rate adjustment
petitions, and petitions to participate, and in issuing
other rulings under this title, except that the
Copyright Royalty Judges may consult with the Register
of Copyrights on any matter other than a question of
fact. Any such consultations between the Copyright
Royalty Judges and the Register of Copyright on any
question of law shall be in writing or on the record.
``(B) Novel questions.--(i) Notwithstanding the
provisions of subparagraph (A), in any case in which
the Copyright Royalty Judges in a proceeding under this
title are presented with a novel question of law
concerning an interpretation of those provisions of
this title that are the subject of the proceeding, the
Copyright Royalty Judges shall request the Register of
Copyrights, in writing, to submit a written opinion on
the resolution of such novel question. The Register
shall submit and make public that opinion within such
time period as the Copyright Royalty Judges may
prescribe. Any consultations under this subparagraph
between the Copyright Royalty Judges and the Register
of Copyrights shall be in writing or on the record. The
opinion of the Register shall not be binding on the
Copyright Royalty Judges, but the Copyright Royalty
Judges shall take the opinion of the Register into
account in making the judges' determination on the
question concerned.
``(ii) In clause (i), a `novel question of law' is a
question of law that has not been determined in prior
decisions, determinations, and rulings described in
section 803(a).
``(2) Performance appraisals.--
``(A) In general.--Notwithstanding any other
provision of law or any regulation of the Library of
Congress, and subject to subparagraph (B), the
Copyright Royalty Judges shall not receive performance
appraisals.
``(B) Relating to sanction or removal.--To the extent
that the Librarian of Congress adopts regulations under
subsection (h) relating to the sanction or removal of a
Copyright Royalty Judge and such regulations require
documentation to establish the cause of such sanction
or removal, the Copyright Royalty Judge may receive an
appraisal related specifically to the cause of the
sanction or removal.
``(g) Inconsistent Duties Barred.--No Copyright Royalty Judge may
undertake duties inconsistent with his or her duties and
responsibilities as Copyright Royalty Judge.
``(h) Standards of Conduct.--The Librarian of Congress shall adopt
regulations regarding the standards of conduct, including financial
conflict of interest and restrictions against ex parte communications,
which shall govern the Copyright Royalty Judges and the proceedings
under this chapter.
``(i) Removal or Sanction.--The Librarian of Congress may sanction or
remove a Copyright Royalty Judge for violation of the standards of
conduct adopted under subsection (h), misconduct, neglect of duty, or
any disqualifying physical or mental disability. Any such sanction or
removal may be made only after notice and opportunity for a hearing,
but the Librarian of Congress may suspend the Copyright Royalty Judge
during the pendency of such hearing. The Librarian shall appoint an
interim Copyright Royalty Judge during the period of any such
suspension.
``Sec. 803. Proceedings of Copyright Royalty Judges
``(a) Proceedings.--
``(1) In general.--The Copyright Royalty Judges shall act in
accordance with this title, and to the extent not inconsistent
with this title, in accordance with subchapter II of chapter 5
of title 5, in carrying out the purposes set forth in section
801. The Copyright Royalty Judges shall act in accordance with
regulations issued by the Copyright Royalty Judges and on the
basis of a fully documented written record, prior decisions of
the Copyright Royalty Tribunal, prior copyright arbitration
royalty panel determinations, rulings by the Librarian of
Congress before the effective date of the Copyright Royalty and
Distribution Reform Act of 2003, prior determinations of
Copyright Royalty Judges under this chapter, and decisions of
the court in appeals under this chapter before, on, or after
such effective date. Any participant in a proceeding under
subsection (b)(2) may submit relevant information and proposals
to the Copyright Royalty Judges.
``(2) Judges acting as panel and individually.--The Copyright
Royalty Judges shall preside over hearings in proceedings under
this chapter en banc. The Chief Copyright Royalty Judge may
designate a Copyright Royalty Judge to preside individually
over such collateral and administrative proceedings, and over
such proceedings under paragraphs (1) through (5) of subsection
(b), as the Chief Judge considers appropriate.
``(3) Determinations.--Final determinations of the Copyright
Royalty Judges in proceedings under this chapter shall be made
by majority vote. A Copyright Royalty Judge dissenting from the
majority on any determination under this chapter may issue his
or her dissenting opinion, which shall be included with the
determination.
``(b) Procedures.--
``(1) Initiation.--
``(A) Call for petitions to participate.--(i)
Promptly upon the filing of a petition for a rate
adjustment or determination under section 804(a) or
804(b)(8), or by no later than January 5 of a year
specified in section 804 for the commencement of a
proceeding if a petition has not been filed by that
date, the Copyright Royalty Judges shall cause to be
published in the Federal Register notice of
commencement of proceedings under this chapter calling
for the filing of petitions to participate in a
proceeding under this chapter for the purpose of making
the relevant determination under section 111, 112, 114,
115, 116, 118, 119, 1004 or 1007, as the case may be.
``(ii) Petitions to participate shall be filed by no
later than 30 days after publication of notice of
commencement of a proceeding, under clause (i), except
that the Copyright Royalty Judges may, for substantial
good cause shown and if there is no prejudice to the
participants that have already filed petitions, accept
late petitions to participate at any time up to the
date that is 90 days before the date on which
participants in the proceeding are to file their
written direct statements.
``(B) Petitions to participate.--Each petition to
participate in a proceeding shall describe the
petitioner's interest in the subject matter of the
proceeding. Parties with similar interests may file a
single petition to participate.
``(2) Participation in general.--Subject to paragraph (4), a
person may participate in a proceeding under this chapter,
including through the submission of briefs or other
information, only if--
``(A) that person has filed a petition to participate
in accordance with paragraph (1) (either individually
or as a group under paragraph (1)(B)), together with a
filing fee of $150;
``(B) the Copyright Royalty Judges have not
determined that the petition to participate is facially
invalid; and
``(C) the Copyright Royalty Judges have not
determined, sua sponte or on the motion of another
participant in the proceeding, that the person lacks a
significant interest in the proceeding.
``(3) Voluntary negotiation period.--
``(A) In general.--Promptly after the date for filing
of petitions to participate in a proceeding, the
Copyright Royalty Judges shall make available to all
participants in the proceeding a list of such
participants and shall initiate a voluntary negotiation
period among the participants.
``(B) Length of proceedings.--The voluntary
negotiation period initiated under subparagraph (A)
shall be 3 months.
``(C) Determination of subsequent proceedings.--At
the close of the voluntary negotiation proceedings, the
Copyright Royalty Judges shall, if further proceedings
under this chapter are necessary, determine whether and
to what extent paragraphs (4) and (5) will apply to the
parties.
``(4) Small claims procedure in distribution proceedings.--
``(A) In general.--If, in a proceeding under this
chapter to determine the distribution of royalties, a
participant in the proceeding asserts that the
contested amount of the claim is $10,000 or less, the
Copyright Royalty Judges shall decide the controversy
on the basis of the filing in writing of the initial
claim, the initial response by any opposing
participant, and one additional response by each such
party. The participant asserting the claim shall not be
required to pay the filing fee under paragraph (2).
``(B) Bad faith inflation of claim.--If the Copyright
Royalty Judges determine that a participant asserts in
bad faith an amount in controversy in excess of $10,000
for the purpose of avoiding a determination under the
procedure set forth in subparagraph (A), the Copyright
Royalty Judges shall impose a fine on that participant
in an amount not to exceed the difference between the
actual amount distributed and the amount asserted by
the participant.
``(5) Paper proceedings in ratemaking proceedings.--The
Copyright Royalty Judges in proceedings under this chapter to
determine royalty rates may decide, sua sponte or upon motion
of a participant, to determine issues on the basis of initial
filings in writing, initial responses by any opposing
participant, and one additional response by each such
participant. Prior to making such decision to proceed on such a
paper record only, the Copyright Royalty Judges shall offer to
all parties to the proceeding the opportunity to comment on the
decision. The procedure under this paragraph--
``(A) shall be applied in cases in which there is no
genuine issue of material fact, there is no need for
evidentiary hearings, and all participants in the
proceeding agree in writing to the procedure; and
``(B) may be applied under such other circumstances
as the Copyright Royalty Judges consider appropriate.
``(6) Regulations.--
``(A) In general.--The Copyright Royalty Judges may
issue regulations to carry out their functions under
this title. Not later than 120 days after Copyright
Royalty Judges or interim Copyright Royalty Judges, as
the case may be, are first appointed after the
enactment of the Copyright Royalty and Distribution
Reform Act of 2003, such judges shall issue regulations
to govern proceedings under this chapter.
``(B) Interim regulations.--Until regulations are
adopted under subparagraph (A), the Copyright Royalty
Judges shall apply the regulations in effect under this
chapter on the day before the effective date of the
Copyright Royalty and Distribution Reform Act of 2003,
to the extent such regulations are not inconsistent
with this chapter, except that functions carried out
under such regulations by the Librarian of Congress,
the Register of Copyrights, or copyright arbitration
royalty panels that, as of such date of enactment, are
to be carried out by the Copyright Royalty Judges under
this chapter, shall be carried out by the Copyright
Royalty Judges under such regulations.
``(C) Requirements.--Regulations issued under
subparagraph (A) shall include the following:
``(i) The written direct statements of all
participants in a proceeding under paragraph
(2) shall be filed by a date specified by the
Copyright Royalty Judges, which may be no
earlier than four months, and no later than
five months, after the end of the voluntary
negotiation period under paragraph (3).
Notwithstanding the preceding sentence, a
participant in a proceeding may, within 15 days
after the end of the discovery period specified
in clause (iii), file an amended written direct
statement based on new information received
during the discovery process.
``(ii)(I) Following the submission to the
Copyright Royalty Judges of written direct
statements by the participants in a proceeding
under paragraph (2), the judges shall meet with
the participants for the purpose of setting a
schedule for conducting and completing
discovery. Such schedule shall be determined by
the Copyright Royalty Judges.
``(II) In this chapter, the term `written
direct statements' means witness statements,
testimony, and exhibits to be presented in the
proceedings, and such other information that is
necessary to establish terms and rates, or the
distribution of royalty payments, as the case
may be, as set forth in regulations issued by
the Copyright Royalty Judges.
``(iii) Hearsay may be admitted in
proceedings under this chapter to the extent
deemed appropriate by the Copyright Royalty
Judges.
``(iv) Discovery in such proceedings shall be
permitted for a period of 60 days, except for
discovery ordered by the Copyright Royalty
Judges in connection with the resolution of
motions, orders and disputes pending at the end
of such period.
``(v) Any participant under paragraph (2) in
a proceeding under this chapter to determine
royalty rates may, upon written notice, seek
discovery of information and materials relevant
and material to the proceeding. Any objection
to any such discovery request shall be resolved
by a motion or request to compel discovery made
to the Copyright Royalty Judges. Each motion or
request to compel discovery shall be determined
by the Copyright Royalty Judges, or by a
Copyright Royalty Judge when permitted under
subsection (a)(2), who may approve the request
only if the evidence that would be produced is
relevant and material. A Copyright Royalty
Judge may refuse a request to compel discovery
of evidence that has been found to be relevant
and material, only upon good cause shown. For
purposes of the preceding sentence, the basis
for `good cause' may only be that--
``(I) the discovery sought is
unreasonably cumulative or duplicative,
or is obtainable from another source
that is more convenient, less
burdensome, or less expensive;
``(II) the participant seeking
discovery has had ample opportunity by
discovery in the action to obtain the
information sought; or
``(II) the burden or expense of the
proposed discovery outweighs its likely
benefit, taking into account the needs
and resources of the participants, the
importance of the issues at stake, and
the importance of the proposed
discovery in resolving the issues.
``(vi) The rules in effect on the day before
the effective date of the Copyright Royalty and
Distribution Reform Act of 2003, relating to
discovery in proceedings under this title to
determine the distribution of royalty fees,
shall continue to apply to such proceedings on
and after such effective date.
``(vii) The Copyright Royalty Judges may
issue subpoenas requiring the production of
evidence or witnesses, but only if the evidence
requested to be produced or that would be
proffered by the witness is relevant and
material.
``(viii) The Copyright Royalty Judges shall
order a settlement conference among the
participants in the proceeding to facilitate
the presentation of offers of settlement among
the participants. The settlement conference
shall be held during a 21-day period following
the end of the discovery period.
``(c) Determination of Copyright Royalty Judges.--
``(1) Timing.--The Copyright Royalty Judges shall issue their
determination in a proceeding not later than 11 months after
the conclusion of the 21-day settlement conference period under
subsection (b)(3)(C)(vi), but, in the case of a proceeding to
determine successors to rates or terms that expire on a
specified date, in no event later than 15 days before the
expiration of the then current statutory rates and terms.
``(2) Rehearings.--
``(A) In general.--The Copyright Royalty Judges may,
in exceptional cases, upon motion of a participant
under subsection (b)(2), order a rehearing, after the
determination in a proceeding is issued under paragraph
(1), on such matters as the Copyright Royalty Judges
determine to be appropriate.
``(B) Timing for filing motion.--Any motion for a
rehearing under subparagraph (A) may only be filed
within 15 days after the date on which the Copyright
Royalty Judges deliver their initial determination
concerning rates and terms to the participants in the
proceeding.
``(C) Participation by opposing party not required.--
In any case in which a rehearing is ordered, any
opposing party shall not be required to participate in
the rehearing.
``(D) No negative inference.--No negative inference
shall be drawn from lack of participation in a
rehearing.
``(E) Continuity of rates and terms.--(i) If the
decision of the Copyright Royalty Judges on any motion
for a rehearing is not rendered before the expiration
of the statutory rates and terms that were previously
in effect, in the case of a proceeding to determine
successors to rates and terms that expire on a
specified date, then--
``(I) the initial determination of the
Copyright Royalty Judges that is the subject of
the rehearing motion shall be effective as of
the day following the date on which the rates
and terms that were previously in effect
expire; and
``(II) in the case of a proceeding under
section 114(f)(1)(C) or 114(f)(2)(C), royalty
rates and terms shall, for purposes of section
114(f)(4)(B), be deemed to have been set at
those rates and terms contained in the initial
determination of the Copyright Royalty Judges
that is the subject of the rehearing motion, as
of the date of that determination.
``(ii) The pendency of a motion for a rehearing under
this paragraph shall not relieve persons obligated to
make royalty payments who would be affected by the
determination on that motion from providing the
statements of account and any reports of use, to the
extent required, and paying the royalties required
under the relevant determination or regulations.
``(iii) Notwithstanding clause (ii), whenever
royalties described in clause (ii) are paid to a person
other than the Copyright Office, the entity designated
by the Copyright Royalty Judges to which such royalties
are paid by the copyright user (and any successor
thereto) shall, within 60 days after the motion for
rehearing is resolved or, if the motion is granted,
within 60 days after the rehearing is concluded, return
any excess amounts previously paid to the extent
necessary to comply with the final determination of
royalty rates by the Copyright Royalty Judges.
``(3) Contents of determination.--A determination of the
Copyright Royalty Judges shall be accompanied by the written
record, and shall set forth the facts that the Copyright
Royalty Judges found relevant to their determination. Among
other terms adopted in a determination, the Copyright Royalty
Judges may specify notice and recordkeeping requirements of
users of the copyrights at issue that apply in lieu of those
that would otherwise apply under regulations.
``(4) Continuing jurisdiction.--The Copyright Royalty Judges
may amend the determination or the regulations issued pursuant
to the determination in order to correct any technical errors
in the determination or to respond to unforeseen circumstances
that preclude the proper effectuation of the determination.
``(5) Protective order.--The Copyright Royalty Judges may
issue such orders as may be appropriate to protect confidential
information, including orders excluding confidential
information from the record of the determination that is
published or made available to the public, except that any
terms or rates of royalty payments or distributions may not be
excluded.
``(6) Publication of determination.--The Librarian of
Congress shall cause the determination, and any corrections
thereto, to be published in the Federal Register. The Librarian
of Congress shall also publicize the determination and
corrections in such other manner as the Librarian considers
appropriate, including, but not limited to, publication on the
Internet. The Librarian of Congress shall also make the
determination, corrections, and the accompanying record
available for public inspection and copying.
``(d) Judicial Review.--
``(1) Appeal.--Any determination of the Copyright Royalty
Judges under subsection (c) may, within 30 days after the
publication of the determination in the Federal Register, be
appealed, to the United States Court of Appeals for the
District of Columbia Circuit, by any aggrieved participant in
the proceeding under subsection (b)(2) who fully participated
in the proceeding and who would be bound by the determination.
If no appeal is brought within that 30-day period, the
determination of the Copyright Royalty Judges shall be final,
and the royalty fee or determination with respect to the
distribution of fees, as the case may be, shall take effect as
set forth in paragraph (2).
``(2) Effect of rates.--
``(A) Expiration on specified date.--When this title
provides that the royalty rates and terms that were
previously in effect are to expire on a specified date,
any adjustment or determination by the Copyright
Royalty Judges of successor rates and terms for an
ensuing statutory license period shall be effective as
of the day following the date of expiration of the
rates and terms that were previously in effect, even if
the determination of the Copyright Royalty Judges is
rendered on a later date.
``(B) Other cases.--In cases where rates and terms do
not expire on a specified date or have not yet been
established, successor or new rates or terms shall take
effect on the first day of the second month that begins
after the publication of the determination of the
Copyright Royalty Judges in the Federal Register,
except as otherwise provided in this title, and the
rates and terms previously in effect, to the extent
applicable, shall remain in effect until such successor
rates and terms become effective.
``(C) Obligation to make payments.--(i) The pendency
of an appeal under this subsection shall not relieve
persons obligated to make royalty payments under
section 111, 112, 114, 115, 116, 118, 119, or 1003, who
would be affected by the determination on appeal, from
providing the statements of account (and any report of
use, to the extent required) and paying the royalties
required under the relevant determination or
regulations.
``(ii) Notwithstanding clause (i), whenever royalties
described in clause (i) are paid to a person other than
the Copyright Office, the entity designated by the
Copyright Royalty Judges to which such royalties are
paid by the copyright user (and any successor thereto)
shall, within 60 days after the final resolution of the
appeal, return any excess amounts previously paid (and
interest thereon, if ordered pursuant to paragraph (3))
to the extent necessary to comply with the final
determination of royalty rates on appeal.
``(3) Jurisdiction of court.--If the court, pursuant to
section 706 of title 5, modifies or vacates a determination of
the Copyright Royalty Judges, the court may enter its own
determination with respect to the amount or distribution of
royalty fees and costs, and order the repayment of any excess
fees, the payment of any underpaid fees, and the payment of
interest pertaining respectively thereto, in accordance with
its final judgment. The court may also vacate the determination
of the Copyright Royalty Judges and remand the case to the
Copyright Royalty Judges for further proceedings in accordance
with subsection (a).
``(e) Administrative Matters.--
``(1) Deduction of costs of library of congress and copyright
office from filing fees.--
``(A) Deduction from filing fees.--The Librarian of
Congress may, to the extent not otherwise provided
under this title, deduct from the filing fees collected
under subsection (b) for a particular proceeding under
this chapter the reasonable costs incurred by the
Librarian of Congress, the Copyright Office, and the
Copyright Royalty Judges in conducting that proceeding,
other than the salaries of the Copyright Royalty Judges
and the 3 staff members appointed under section 802(b).
``(B) Authorization of appropriations.--There are
authorized to be appropriated such sums as may be
necessary to pay the costs of proceedings under this
chapter not covered by the filing fees collected under
subsection (b). All funds made available pursuant to
this subparagraph shall remain available until
expended.
``(2) Positions required for administration of compulsory
licensing.--Section 307 of the Legislative Branch
Appropriations Act, 1994, shall not apply to employee positions
in the Library of Congress that are required to be filled in
order to carry out section 111, 112, 114, 115, 116, 118, or 119
or chapter 10.
``Sec. 804. Institution of proceedings
``(a) Filing of Petition.--With respect to proceedings referred to in
paragraphs (1) and (2) of section 801(b) concerning the determination
or adjustment of royalty rates as provided in sections 111, 112, 114,
115, 116, 118, and 1004, during the calendar years specified in the
schedule set forth in subsection (b), any owner or user of a
copyrighted work whose royalty rates are specified by this title, or
are established under this chapter before or after the enactment of the
Copyright Royalty and Distribution Reform Act of 2003, may file a
petition with the Copyright Royalty Judges declaring that the
petitioner requests a determination or adjustment of the rate. The
Copyright Royalty Judges shall make a determination as to whether the
petitioner has such a significant interest in the royalty rate in which
a determination or adjustment is requested. If the Copyright Royalty
Judges determine that the petitioner has such a significant interest,
the Copyright Royalty Judges shall cause notice of this determination,
with the reasons therefor, to be published in the Federal Register,
together with the notice of commencement of proceedings under this
chapter. With respect to proceedings under paragraph (1) of section
801(b) concerning the determination or adjustment of royalty rates as
provided in sections 112 and 114, during the calendar years specified
in the schedule set forth in subsection (b), the Copyright Royalty
Judges shall cause notice of commencement of proceedings under this
chapter to be published in the Federal Register as provided in section
803(b)(1)(A).
``(b) Timing of Proceedings.--
``(1) Section 111 proceedings.--(A) A petition described in
subsection (a) to initiate proceedings under section 801(b)(2)
concerning the adjustment of royalty rates under section 111 to
which subparagraph (A) or (D) of section 801(b)(2) applies may
be filed during the year 2004 and in each subsequent fifth
calendar year.
``(B) In order to initiate proceedings under section
801(b)(2) concerning the adjustment of royalty rates under
section 111 to which subparagraph (B) or (C) of section
801(b)(2) applies, within 12 months after an event described in
either of those subsections, any owner or user of a copyrighted
work whose royalty rates are specified by section 111, or by a
rate established under this chapter before or after the
enactment of the Copyright Royalty and Distribution Reform Act
of 2003, may file a petition with the Copyright Royalty Judges
declaring that the petitioner requests an adjustment of the
rate. The Copyright Royalty Judges shall then proceed as set
forth in subsection (a) of this section. Any change in royalty
rates made under this chapter pursuant to this subparagraph may
be reconsidered in the year 2005, and each fifth calendar year
thereafter, in accordance with the provisions in section
801(b)(3)(B) or (C), as the case may be. A petition for
adjustment of rates under section 11(d)(1)(B) as a result of a
change is the rules and regulations of the Federal
Communications Commission shall set forth the change on which
the petition is based.
``(2) Certain section 112 proceedings.--Proceedings under
this chapter shall be commenced in the year 2007 to determine
reasonable terms and rates of royalty payments for the
activities described in section 112(e)(1) relating to the
limitation on exclusive rights specified by section
114(d)(1)(C)(iv), to become effective on January 1, 2009. Such
proceedings shall be repeated in each subsequent fifth calendar
year.
``(3) Section 114 and corresponding 112 proceedings.--
``(A) For eligible nonsubscription services and new
subscription services.--Proceedings under this chapter
shall be commenced as soon as practicable after the
effective date of the Copyright Royalty and
Distribution Reform Act of 2003 to determine reasonable
terms and rates of royalty payments under sections 114
and 112 for the activities of eligible nonsubscription
transmission services and new subscription services, to
be effective for the period beginning on January 1,
2006, and ending on December 31, 2010. Such proceedings
shall next be commenced in January 2009 to determine
reasonable terms and rates of royalty payments, to
become effective on January 1, 2011. Thereafter, such
proceedings shall be repeated in each subsequent fifth
calendar year.
``(B) For preexisting subscription and satellite
digital audio radio services.--Proceedings under this
chapter shall be commenced in January 2006 to determine
reasonable terms and rates of royalty payments under
sections 114 and 112 for the activities of preexisting
subscription services, to be effective during the
period beginning on January 1, 2008, and ending on
December 31, 2012, and preexisting satellite digital
audio radio services, to be effective during the period
beginning on January 1, 2007, and ending on December
31, 2012. Such proceedings shall next be commenced in
2011 to determine reasonable terms and rates of royalty
payments, to become effective on January 1, 2013.
Thereafter, such proceedings shall be repeated in each
subsequent fifth calendar year.
``(C)(i) Notwithstanding any other provision of this
chapter, this subparagraph shall govern proceedings
commenced pursuant to sections 114(f)(1)(C) and
114(f)(2)(C) concerning new types of services.
``(ii) Not later than 30 days after a petition to
determine rates and terms for a new type of service
that is filed by any copyright owner of sound
recordings, or such new type of service, indicating
that such new type of service is or is about to become
operational, the Copyright Royalty Judges shall issue a
notice for a proceeding to determine rates and terms
for such service.
``(iii) The proceeding shall follow the schedule set
forth in such subsections (b), (c), and (d) of section
803, except that--
``(I) the determination shall be issued by
not later than 24 months after the publication
of the notice under clause (ii); and
``(II) the decision shall take effect as
provided in subsections (c)(2) and (d)(2) of
section 803 and section 114(f)(4)(B)(ii) and
(C).
``(iv) The rates and terms shall remain in effect for
the period set forth in section 114(f)(1)(C) or
114(f)(2)(C), as the case may be.
``(4) Section 115 proceedings.--A petition described in
subsection (a) to initiate proceedings under section 801(b)(1)
concerning the adjustment or determination of royalty rates as
provided in section 115 may be filed in the year 2006 and in
each subsequent fifth calendar year, or at such other times as
the parties have agreed under section 115(c)(3)(B) and (C).
``(5) Section 116 proceedings.--(A) A petition described in
subsection (a) to initiate proceedings under section 801(b)
concerning the determination of royalty rates and terms as
provided in section 116 may be filed at any time within 1 year
after negotiated licenses authorized by section 116 are
terminated or expire and are not replaced by subsequent
agreements.
``(B) If a negotiated license authorized by section 116 is
terminated or expires and is not replaced by another such
license agreement which provides permission to use a quantity
of musical works not substantially smaller than the quantity of
such works performed on coin-operated phonorecord players
during the 1-year period ending March 1, 1989, the Copyright
Royalty Judges shall, upon petition filed under paragraph (1)
within 1 year after such termination or expiration, commence a
proceeding to promptly establish an interim royalty rate or
rates for the public performance by means of a coin-operated
phonorecord player of nondramatic musical works embodied in
phonorecords which had been subject to the terminated or
expired negotiated license agreement. Such rate or rates shall
be the same as the last such rate or rates and shall remain in
force until the conclusion of proceedings by the Copyright
Royalty Judges, in accordance with section 803, to adjust the
royalty rates applicable to such works, or until superseded by
a new negotiated license agreement, as provided in section
116(b).
``(6) Section 118 proceedings.--A petition described in
subsection (a) to initiate proceedings under section 801(b)(1)
concerning the determination of reasonable terms and rates of
royalty payments as provided in section 118 may be filed in the
year 2006 and in each subsequent fifth calendar year.
``(7) Section 1004 proceedings.--A petition described in
subsection (a) to initiate proceedings under section 801(b)(1)
concerning the adjustment of reasonable royalty rates under
section 1004 may be filed as provided in section 1004(a)(3).
``(8) Proceedings concerning distribution of royalty fees.--
With respect to proceedings under section 801(b)(3) concerning
the distribution of royalty fees in certain circumstances under
section 111, 116, 119, or 1007, the Copyright Royalty Judges
shall, upon a determination that a controversy exists
concerning such distribution, cause to be published in the
Federal Register notice of commencement of proceedings under
this chapter.
``Sec. 805. General rule for voluntarily negotiated agreements
``Any rates or terms under this title that--
``(1) are agreed to by participants to a proceeding under
section 803(b)(2),
``(2) are adopted by the Copyright Royalty Judges as part of
a determination under this chapter, and
``(3) are in effect for a period shorter than would otherwise
apply under a determination pursuant to this chapter,
shall remain in effect for such period of time as would otherwise apply
under such determination, except that the Copyright Royalty Judges
shall adjust the rates pursuant to the voluntary negotiations to
reflect national monetary inflation during the additional period the
rates remain in effect.''.
(b) Conforming Amendment.--The table of chapters for title 17, United
States Code, is amended by striking the item relating to chapter 8 and
inserting the following:
``8. Proceedings by Copyright Royalty Judges................ 801''.
SEC. 4. DEFINITION.
Section 101 is amended by inserting after the definition of
``copies'' the following:
``A `Copyright Royalty Judge' is a Copyright Royalty Judge
appointed under section 802 of this title, and includes any
individual serving as an interim Copyright Royalty Judge under
such section.''.
SEC. 5. TECHNICAL AMENDMENTS.
(a) Cable Rates.--Section 111(d) is amended--
(1) in paragraph (2), in the second sentence, by striking ``a
copyright arbitration royalty panel'' and inserting ``the
Copyright Royalty Judges.''; and
(2) in paragraph (4)--
(A) in subparagraph (A), by striking ``Librarian of
Congress'' each place it appears and inserting
``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) in the first sentence, by striking
``Librarian of Congress shall, upon the
recommendation of the Register of Copyrights,''
and inserting ``Copyright Royalty Judges
shall'';
(ii) in the second sentence, by striking
``Librarian determines'' and inserting
``Copyright Royalty Judges determine''; and
(iii) in the third sentence--
(I) by striking ``Librarian'' each
place it appears and inserting
``Copyright Royalty Judges''; and
(II) by striking ``convene a
copyright arbitration royalty panel''
and inserting ``conduct a proceeding'';
and
(C) in subparagraph (C), by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges''.
(b) Ephemeral Recordings.--Section 112(e) is amended--
(1) in paragraph (3)--
(A) by amending the first sentence to read as
follows: ``Voluntary negotiation proceedings initiated
pursuant to section 804(a) for the purpose of
determining reasonable terms and rates of royalty
payments for the activities specified by paragraph (1)
shall cover the 5-year period beginning on January 1 of
the second year following the year in which the
proceedings are commenced, or such other period as the
parties may agree.''; and
(B) in the third sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(2) in paragraph (4)--
(A) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under paragraphs (2) and (3), the Copyright
Royalty Judges shall commence a proceeding pursuant to
chapter 8 to determine and publish in the Federal
Register a schedule of reasonable rates and terms
which, subject to paragraph (5), shall be binding on
all copyright owners of sound recordings and
transmitting organizations entitled to a statutory
license under this subsection during the 5-year period
specified in paragraph (3), or such other period as the
parties may agree.'';
(B) by striking ``copyright arbitration royalty
panel'' each subsequent place it appears and inserting
``Copyright Royalty Judges'';
(C) in the fourth sentence, by striking ``its
decision'' and inserting ``their decision''; and
(D) in the last sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(3) in paragraph (5), by striking ``or decision by the
Librarian of Congress'' and inserting ``, decision by the
Librarian of Congress, or determination by the Copyright
Royalty Judges''; and
(4) by striking paragraph (6) and redesignating paragraphs
(7), (8), and (9), as paragraphs (6), (7), and (8),
respectively; and
(5) in paragraph (6)(A), as so redesignated, by striking
``Librarian of Congress'' and inserting ``Copyright Royalty
Judges''.
(c) Scope of Exclusive Rights in Sound Recordings.--Section 114(f) is
amended--
(1) in paragraph (1)--
(A) in subparagraph (A)--
(i) by amending the first sentence to read as
follows: ``Voluntary negotiation proceedings
initiated pursuant to section 804(a) for the
purpose of determining reasonable terms and
rates of royalty payments for subscription
transmissions by preexisting subscription
services and transmissions by preexisting
satellite digital audio radio services shall
cover the 5-year period beginning on January 1
of the year following the second year in which
the proceedings are commenced, except where
differential transitional periods are provided
in section 804(b)(3), or such other period as
the parties may agree.''; and
(ii) in the third sentence, by striking
``Librarian of Congress'' and inserting
``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under subparagraph (A), the
Copyright Royalty Judges shall commence a
proceeding pursuant to chapter 8 to determine
and publish in the Federal Register a schedule
of rates and terms which, subject to paragraph
(3), shall be binding on all copyright owners
of sound recordings and entities performing
sound recordings affected by this paragraph
during the 5-year period specified in
subparagraph (A), or such other date as the
parties may agree.''; and
(ii) in the second sentence, by striking
``copyright arbitration royalty panel'' and
inserting ``Copyright Royalty Judges''; and
(C) by amending subparagraph (C) to read as follows:
``(C) The procedures under subparagraphs (A) and (B) also
shall be initiated pursuant to a petition filed by any
copyright owners of sound recordings, any preexisting
subscription services, or any preexisting satellite digital
audio radio services indicating that a new type of subscription
digital audio transmission service on which sound recordings
are performed is or is about to become operational, for the
purpose of determining reasonable terms and rates of royalty
payments with respect to such new type of transmission service
for the period beginning with the inception of such new type of
service and ending on the date on which the royalty rates and
terms for subscription digital audio transmission services most
recently determined under subparagraph (A) or (B) and chapter 8
expire, or such other period as the parties may agree.'';
(2) in paragraph (2)--
(A) in subparagraph (A)--
(i) by amending the first sentence to read as
follows: ``Voluntary negotiation proceedings
initiated pursuant to section 804(a) for the
purpose of determining reasonable terms and
rates of royalty payments for public
performances of sound recordings by means of
eligible nonsubscription transmissions and
transmissions by new subscription services
specified by subsection (d)(2) shall cover the
5-year period beginning on January 1 of the
second year following the year in which the
proceedings are commenced, except where
different transitional periods are provided in
section 804(b)(3)(A), or such other period as
the parties may agree.''; and
(ii) in the third sentence, by striking
``Librarian of Congress'' and inserting
``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under subparagraph (A), the
Copyright Royalty Judges shall commence a
proceeding pursuant to chapter 8 to determine
and publish in the Federal Register a schedule
of rates and terms which, subject to paragraph
(3), shall be binding on all copyright owners
of sound recordings and entities performing
sound recordings affected by this paragraph
during the period specified in subparagraph
(A), or such other period as the parties may
agree.''; and
(ii) by striking ``copyright arbitration
royalty panel'' each subsequent place it
appears and inserting ``Copyright Royalty
Judges''; and
(C) by amending subparagraph (C) to read as follows:
``(C) The procedures under subparagraphs (A) and (B) shall
also be initiated pursuant to a petition filed by any copyright
owners of sound recordings or any eligible nonsubscription
service or new subscription service indicating that a new type
of eligible nonsubscription service or new subscription service
on which sound recordings are performed is or is about to
become operational, for the purpose of determining reasonable
terms and rates of royalty payments with respect to such new
type of service for the period beginning with the inception of
such new type of service and ending on the date on which the
royalty rates and terms for preexisting subscription digital
audio transmission services or preexisting satellite digital
radio audio services, as the case may be, most recently
determined under subparagraph (A) or (B) and chapter 8 expire,
or such other period as the parties may agree.'';
(3) in paragraph (3), by striking ``or decision by the
Librarian of Congress'' and inserting ``, decision by the
Librarian of Congress, or determination by the Copyright
Royalty Judges''; and
(4) in paragraph (4), by striking ``Librarian of Congress''
each place it appears and inserting ``Copyright Royalty
Judges''.
(d) Phonorecords of Nondramatic Musical Works.--Section 115(c)(3) is
amended--
(1) in subparagraph (A)(ii), by striking ``(F)'' and
inserting ``(E)'';
(2) in subparagraph (B)--
(A) by striking ``under this paragraph'' and
inserting ``under this section; and
(B) by striking ``subparagraphs (B) through (F)'' and
inserting ``this subparagraph and subparagraphs (B)
through (E)'';
(3) in subparagraph (C)--
(A) by amending the first sentence to read as
follows: ``Voluntary negotiation proceedings initiated
pursuant to a petition filed under section 804(a) for
the purpose of determining reasonable terms and rates
of royalty payments for the activities specified by
this section shall cover the period beginning with the
effective date of such terms and rates, but not earlier
than January 1 of the second year following the year in
which the petition is filed, and ending on the
effective date of successor terms and rates, or such
other period as the parties may agree.''; and
(B) in the third sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(4) in subparagraph (D)--
(A) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under subparagraphs (B) and (C), the
Copyright Royalty Judges shall commence proceedings
pursuant to chapter 8 to determine and publish in the
Federal Register a schedule of rates and terms which,
subject to subparagraph (E), shall be binding on all
copyright owners of nondramatic musical works and
persons entitled to obtain a compulsory license under
subsection (a)(1) during the period specified in
subparagraph (C) or such other period as may be
determined pursuant to subparagraphs (B) and (C), or
such other period as the parties may agree.'';
(B) in the third sentence, by striking ``copyright
arbitration royalty panel'' and inserting ``Copyright
Royalty Judges''; and
(C) in the last sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(5) in subparagraph (E)--
(A) in clause (i)--
(i) in the first sentence, by striking ``the
Librarian of Congress'' and inserting ``a
copyright arbitration royalty panel, the
Librarian of Congress, or the Copyright Royalty
Judges''; and
(ii) in the second sentence, by striking
``(C), (D) or (F) shall be given effect'' and
inserting ``(C) or (D) shall be given effect as
to digital phonorecord deliveries''; and
(B) in clause (ii)(I), by striking ``(C), (D) or
(F)'' each place it appears and inserting ``(C) or
(D)'';
(6) by striking subparagraph (F) and redesignating
subparagraphs (G) through (L) as subparagraphs (F) through (K),
respectively.
(e) Coin-Operated Phonorecord Players.--Section 116 is amended--
(1) in subsection (b), by amending paragraph (2) to read as
follows:
``(2) Chapter 8 proceeding.--Parties not subject to such a
negotiation may have the terms and rates and the division of
fees described in paragraph (1) determined in a proceeding in
accordance with the provisions of chapter 8.''; and
(2) in subsection (c)--
(A) in the subsection heading, by striking
``Copyright Arbitration Royalty Panel Determinations''
and inserting ``Determinations by Copyright Royalty
Judges''; and
(B) by striking ``a copyright arbitration royalty
panel'' and inserting ``the Copyright Royalty Judges''.
(f) Use of Certain Works in Connection With Noncommercial
Broadcasting.--Section 118 is amended--
(1) in subsection (b)--
(A) in paragraph (1)--
(i) in the first sentence, by striking
``Librarian of Congress'' and inserting
``Copyright Royalty Judges''; and
(ii) by striking the second and third
sentences;
(B) in paragraph (2), by striking ``the Librarian of
Congress:'' and all that follows through the end of the
sentence and inserting ``a copyright arbitration
royalty panel, the Librarian of Congress, or the
Copyright Royalty Judge, if copies of such agreements
are filed with the Copyright Royalty Judges within 30
days of execution in accordance with regulations that
the Copyright Royalty Judges shall issue.''; and
(C) in paragraph (3)--
(i) in the second sentence--
(I) by striking ``copyright
arbitration royalty panel'' and
inserting ``Copyright Royalty Judges'';
and
(II) by striking ``paragraph (2).''
and inserting ``paragraph (2) or
(3).'';
(ii) in the last sentence, by striking
```Librarian of Congress'' and inserting
``Copyright Royalty Judges''; and
(iii) by striking ``(3) In'' and all that
follows through the end of the first sentence
and inserting the following:
``(3) Voluntary negotiation proceedings initiated pursuant to
a petition filed under section 804(a) for the purpose of
determining a schedule of terms and rates of royalty payments
by public broadcasting entities to copyright owners in works
specified by this subsection and the proportionate division of
fees paid among various copyright owners shall cover the 5-year
period beginning on January 1 of the second year following the
year in which the petition is filed. The parties to each
negotiation proceeding shall bear their own costs.
``(4) In the absence of license agreements negotiated under
paragraph (2) or (3), the Copyright Royalty Judges shall,
pursuant to chapter 8, conduct a proceeding to determine and
publish in the Federal Register a schedule of rates and terms
which, subject to paragraph (2), shall be binding on all owners
of copyright in works specified by this subsection and public
broadcasting entities, regardless of whether such copyright
owners have submitted proposals to the Copyright Royalty
Judges.'';
(2) by striking subsection (c) and redesignating subsections
(d) through (g) as subsections (c) through (f), respectively;
(3) in subsection (c), as so redesignated, in the matter
preceding paragraph (1)--
(A) by striking ``(b)(2)'' and inserting ``(b)(2) or
(3)'';
(B) by striking ``(b)(3)'' and inserting ``(b)(4)'';
and
(C) by striking ``a copyright arbitration royalty
panel'' and inserting ``the Copyright Royalty Judges'';
(4) in subsection (d), as so redesignated--
(A) by striking ``in the Copyright Office'' and
inserting ``with the Copyright Royalty Judges''; and
(B) by striking ``Register of Copyrights'' and
inserting ``Copyright Royalty Judges''; and
(5) in subsection (f), as so redesignated, by striking
``(d)'' and inserting ``(c)''.
(g) Secondary Transmissions by Satellite Carriers.--Section 119(b) is
amended--
(1) in paragraph (3), by striking ``Librarian of Congress''
and inserting ``Copyright Royalty Judges''; and
(2) in paragraph (4)--
(A) in subparagraph (A), by striking ``Librarian of
Congress'' each place it appears and inserting
``Copyright Royalty Judges''; and
(B) by amending subparagraphs (B) and (C) to read as
follows:
``(B) Determination of controversy; distributions.--
After the first day of August of each year, the
Copyright Royalty Judges shall determine whether there
exists a controversy concerning the distribution of
royalty fees. If the Copyright Royalty Judges determine
that no such controversy exists, the Librarian of
Congress shall, after deducting reasonable
administrative costs under this paragraph, distribute
such fees to the copyright owners entitled to receive
them, or to their designated agents. If the Copyright
Royalty Judges find the existence of a controversy, the
Copyright Royalty Judges shall, pursuant to chapter 8
of this title, conduct a proceeding to determine the
distribution of royalty fees.
``(C) Withholding of fees during controversy.--During
the pendency of any proceeding under this subsection,
the Copyright Royalty Judges shall withhold from
distribution an amount sufficient to satisfy all claims
with respect to which a controversy exists, subject to
any distributions made under section 801(b)(3).''.
(h) Digital Audio Recording Devices.--
(1) Royalty payments.--Section 1004(a)(3) is amended by
striking ``Librarian of Congress'' each place it appears and
inserting ``Copyright Royalty Judges''.
(2) Entitlement to royalty payments.--Section 1006(c) is
amended by striking ``Librarian of Congress shall convene a
copyright arbitration royalty panel which'' and inserting
``Copyright Royalty Judges''.
(3) Procedures for distributing royalty payments.--Section
1007 is amended--
(A) in subsection (a), by amending paragraph (1) to
read as follows:
``(1) Filing of claims.--During the first 2 months of each
calendar year, every interested copyright party seeking to
receive royalty payments to which such party is entitled under
section 1006 shall file with the Copyright Royalty Judges a
claim for payments collected during the preceding year in such
form and manner as the Copyright Royalty Judges shall prescribe
by regulation.''; and
(B) by amending subsections (b) and (c) to read as
follows:
``(b) Distribution of Payments in the Absence of a Dispute.--After
the period established for the filing of claims under subsection (a),
in each year, the Copyright Royalty Judges shall determine whether
there exists a controversy concerning the distribution of royalty
payments under section 1006(c). If the Copyright Royalty Judges
determine that no such controversy exists, the Librarian of Congress
shall, within 30 days after such determination, authorize the
distribution of the royalty payments as set forth in the agreements
regarding the distribution of royalty payments entered into pursuant to
subsection (a). The Librarian of Congress shall, before such royalty
payments are distributed, deduct the reasonable administrative costs
incurred by the Librarian under this section.
``(c) Resolution of Disputes.--If the Copyright Royalty Judges find
the existence of a controversy, the Copyright Royalty Judges shall,
pursuant to chapter 8 of this title, conduct a proceeding to determine
the distribution of royalty payments. During the pendency of such a
proceeding, the Copyright Royalty Judges shall withhold from
distribution an amount sufficient to satisfy all claims with respect to
which a controversy exists, but shall, to the extent feasible,
authorize the distribution of any amounts that are not in controversy.
The Librarian of Congress shall, before such royalty payments are
distributed, deduct the reasonable administrative costs incurred by the
Librarian under this section.''.
(4) Determination of certain disputes.--(A) Section 1010 is
amended to read as follows:
``Sec. 1010. Determination of certain disputes
``(a) Scope of Determination.--Before the date of first distribution
in the United States of a digital audio recording device or a digital
audio interface device, any party manufacturing, importing, or
distributing such device, and any interested copyright party may
mutually agree to petition the Copyright Royalty Judges to determine
whether such device is subject to section 1002, or the basis on which
royalty payments for such device are to be made under section 1003.
``(b) Initiation of Proceedings.--The parties under subsection (a)
shall file the petition with the Copyright Royalty Judges requesting
the commencement of a proceeding. Within 2 weeks after receiving such a
petition, the Chief Copyright Royalty Judge shall cause notice to be
published in the Federal Register of the initiation of the proceeding.
``(c) Stay of Judicial Proceedings.--Any civil action brought under
section 1009 against a party to a proceeding under this section shall,
on application of one of the parties to the proceeding, be stayed until
completion of the proceeding.
``(d) Proceeding.--The Copyright Royalty Judges shall conduct a
proceeding with respect to the matter concerned, in accordance with
such procedures as the Copyright Royalty Judges may adopt. The
Copyright Royalty Judges shall act on the basis of a fully documented
written record. Any party to the proceeding may submit relevant
information and proposals to the Copyright Royalty Judges. The parties
to the proceeding shall each bear their respective costs of
participation.
``(e) Judicial Review.--Any determination of the Copyright Royalty
Judges under subsection (d) may be appealed, by a party to the
proceeding, in accordance with section 803(d) of this title. The
pendency of an appeal under this subsection shall not stay the
determination of the Copyright Royalty Judges. If the court modifies
the determination of the Copyright Royalty Judges, the court shall have
jurisdiction to enter its own decision in accordance with its final
judgment. The court may further vacate the determination of the
Copyright Royalty Judges and remand the case for proceedings as
provided in this section.''.
(B) The item relating to section 1010 in the table of
sections for chapter 10 is amended to read as follows:
``1010. Determination of certain disputes.''.
SEC. 6. EFFECTIVE DATE AND TRANSITION PROVISIONS.
(a) Effective Date.--This Act and the amendments made by this Act
shall take effect 6 months after the date of the enactment of this Act,
except that the Librarian of Congress shall appoint interim Copyright
Royalty Judges under section 802(d) of title 17, United States Code, as
amended by this Act, within 90 days after such date of enactment to
carry out the functions of the Copyright Royalty Judges under title 17,
United States Code, to the extent that Copyright Royalty Judges
provided for in section 801(a) of title 17, United States Code, as
amended by this Act, have not been appointed before the end of that 90-
day period.
(b) Transition Provisions.--
(1) In general.--Subject to paragraph (2), the amendments
made by this Act shall not affect any proceedings commenced,
petitions filed, or voluntary agreements entered into before
the enactment of this Act under the provisions of title 17,
United States Code, amended by this Act, and pending on such
date of enactment. Such proceedings shall continue,
determinations made in such proceedings, and appeals taken
therefrom, as if this Act had not been enacted, and shall
continue in effect until modified under title 17, United States
Code, as amended by this Act. Such petitions filed and
voluntary agreements entered into shall remain in effect as if
this Act had not been enacted.
(2) Effective periods for certain ratemaking proceedings.--
Notwithstanding paragraph (1), terms and rates in effect under
section 114(f)(2) or 112(e) of title 17, United States Code,
for new subscription services, eligible nonsubscription
services, and services exempt under section 114(d)(1)(C)(iv) of
such title for the period 2003 through 2004, and any rates
published in the Federal Register under the authority of the
Small Webcaster Settlement Act of 2002 for the years 2003
through 2004, shall be effective until the first applicable
effective date for successor terms and rates specified in
section 804(b)(2) or (3)(A) of title 17, United States Code, or
until such later date as the parties may agree. Any proceeding
commenced before the enactment of this Act pursuant to section
114(f)(2) and chapter 8 of title 17, United States Code, to
adjust or determine such rates and terms for periods following
2004 shall be terminated upon the enactment of this Act and
shall be null and void.
(c) Existing Appropriations.--Any funds made available in an
appropriations Act before the date of the enactment of this Act to
carry out chapter 8 of title 17, United States Code, shall be available
to the extent necessary to carry out this section.
Amend the title so as to read:
A bill to amend title 17, United States Code, to replace
copyright arbitration royalty panels with Copyright Royalty
Judges, and for other purposes.
Purpose and Summary
H.R. 1417, the ``Copyright Royalty and Distribution Reform
Act,'' would replace the existing administrative structure
within the U.S. Copyright Office that determines copyright
royalty rates and the distribution of royalties under various
compulsory licenses.
Background and Need for the Legislation
The Copyright Royalty Tribunal Reform Act of 1993 \1\
empowered the Librarian of Congress to convene Copyright
Arbitration Royalty Panels, or ``CARPs,'' whenever private
negotiations among affected parties fail to establish rates or
distribute royalties governing the commercial use of certain
copyrighted works like movies and music.
---------------------------------------------------------------------------
\1\ Pub. L. No. 103-198.
---------------------------------------------------------------------------
In brief, critics of the existing CARP system offer the
same general complaints:
CARP decisions are unpredictable and
inconsistent.
Arbitrators lack appropriate expertise to
render decisions and frequently reflect either a
``content'' or ``user'' bias.
The process is unnecessarily expensive.
In response to these and other criticisms, the Subcommittee
on Courts, the Internet, and Intellectual Property conducted a
June 2002 oversight hearing \2\ regarding the CARP structure
and process. The witnesses, including the Register of
Copyrights, agreed that the system is dysfunctional and should
be changed.\3\
---------------------------------------------------------------------------
\2\ Hearings before the Subcommittee on Courts, the Internet, and
Intellectual Property of the House Committee on the Judiciary:
Copyright Arbitration Royalty Panel (CARP) Structure and Process, 107th
Cong., 2nd Sess. (2002).
\3\ See H. Rep. No. 78, 107th Cong., 2nd Sess., at 31 (2002).
---------------------------------------------------------------------------
Subsequent to the hearing, the Subcommittee and the
Copyright Office convened a government-industry roundtable on
the subject, which included 32 participants who offered
recommendations for improving the current system. The contents
of H.R. 1417 are based on many of these suggestions and the
testimony taken at the oversight hearing. Because of the highly
technical and detailed nature of this bill, most of the
substantive discussion is contained in the sectional analysis
portion of the report below.
Hearings
The Subcommittee on Courts, the Internet, and Intellectual
Property held a hearing on H.R. 1417 on March 27, 2003.
Testimony was received from four witnesses, representing
several organizations, with additional material submitted by 12
individuals and organizations.
Committee Consideration
On May 20, 2003, the Subcommittee on Courts, the Internet,
and Intellectual Property met in open session and ordered
favorably reported the bill H.R. 1417, with an amendment, by
voice vote, a quorum being present. On September 24, 2003, the
Committee met in open session and ordered favorably reported
the bill H.R. 1417, with an amendment, by voice vote, a quorum
being present.
Vote of the Committee
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee notes that there
were no recorded votes during the committee consideration of
H.R. 1417.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII 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.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 1417, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
October 17, 2003.
Hon. F. James Sensenbrenner, Jr.,
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. 1417, the
Copyright Royalty and Distribution Reform Act of 2003.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Melissa E.
Zimmerman.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
H.R. 1417--Copyright Royalty and Distribution Reform Act of 2003
Summary: Under current law, the Copyright Office (within
the Library of Congress) collects and distributes royalties for
use of certain copyrighted material. H.R. 1417 would change the
process for determining the rates and distribution of these
royalties. CBO estimates that implementing the bill would cost
$1 million in 2004 and $5 million over the 2004-2008 period
subject to appropriation of the necessary amounts. H.R. 1417
also would have an insignificant effect on direct spending.
Enacting the bill would have no effect on revenues.
H.R. 1417 contains both an intergovernmental and a private-
sector mandate as defined in the Unfunded Mandates Reform Act
(UMRA), but CBO estimates that the cost of complying with the
mandate would be small and well below the relevant thresholds
established by UMRA ($59 million for intergovernmental mandates
and $117 million for private-sector mandates in 2003, adjusted
annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 1417 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------
2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level............................ 1 1 1 1 1
Estimated Outlays........................................ 1 1 1 1 1
----------------------------------------------------------------------------------------------------------------
Basis of Estimate: Under current law, the use of certain
copyrighted material by the public operates under a compulsory
license. Users of copyrighted material do not need specific
permission from owners to use material with a compulsory
license, but must pay royalties and abide by certain conditions
when using the material.
The Copyright Office collects royalties from users of
compulsory licenses and then distributes the royalties to
owners of copyrighted works using guidelines agreed upon in
private negotiations between users and owners. Rates for these
royalties are also determined by negotiation between interested
parties. The majority of these royalties are for cable
television signals, satellite television signals, and digital
audio recording technology. For example, cable operators pay
royalties to transmit distant broadcast signals to cable
viewers, and satellite carriers pay royalties to retransmit
distant network and superstation signals by satellite.
When users and owners of copyright material cannot settle
on rates or how to distribute royalties, the Librarian of
Congress has the authority to convene a Copyright Arbitration
Royalty Panel (CARP) made up of three independent arbitrators.
CARPs hear testimony from interested parties and then make a
recommendation to the Librarian of Congress regarding a rate or
plan of royalty distribution. The Librarian of Congress adopts
the CARPs recommendation unless the Librarian determines that
the findings are arbitrary or conflicting with copyright law.
H.R. 1417 would change the process used to determine
royalty rates and distribution. Three full-time Copyright
Royalty Judges (CRJs) would replace the CARPs and make
determinations on rates and distribution of royalties when
copyright users and carriers cannot settle on the rates or
methods to distribute royalties in private negotiations.
Direct spending
Under current law, payments to the arbitrators for their
services and administrative costs for CARP proceedings are
deducted from the royalties collected from users of the
copyrighted material. H.R. 1417 would change this by making the
salaries of the CRJs under the new system subject to
appropriation. Based on information from the Copyright Office,
CBO estimates that this change would have an insignificant
impact on the pattern (but not the amount) of direct spending.
Spending subject to appropriations
H.R. 1417 would require that the costs of compensation for
the new CRJs, and the staff, and administrative costs for CARP
proceedings come from appropriated funds. Based on information
provided by the Copyright Office, CBO estimates that
implementing H.R. 1417 would increase spending subject to
appropriation by about $1 million in 2004 and $5 million over
the 2004-2008 period. The bill also would require that each
party wishing to participate in a proceeding before the CRJs
pay a filing fee of $150 which would partly offset the
administrative cost for proceedings before the CRJs. Based on
information provided by the Copyright Office, CBO estimates
that such fees would amount to less than $5,000 a year.
Intergovernmental and private-sector impact: H.R. 1417
would impose both an intergovernmental and a private-sector
mandate, as defined in UMRA, because it would require state,
local or tribal governments and entities in the private sector,
if subpoenaed by the Copyright Royalty Judges, to appear or
provide evidence.
Based on conversations with affected entities, CBO expects
that the Judges would likely exercise their subpoena power
sparingly and that the costs to comply with a subpoena would
not be significant. Consequently, CBO estimates that the cost
of complying with the mandate would be small and well below the
relevant thresholds established by UMRA ($59 million for
intergovernmental mandates and $117 million for private-sector
mandates in 2003, adjusted annually for inflation).
Estimate prepared by: Federal Costs: Melissa E. Zimmerman;
Impact on State, Local, and Tribal Governments: Sarah Puro; and
Impact on the Private Sector: Paige Piper/Bach.
Estimate approved by: Paul R. Cullinan, Chief for Human
Resources Cost Estimate Unit, Budget Analysis Division.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee makes the following
statement regarding performance goals and objectives. The
Committee expects that H.R. 1417 will make the ratemaking and
royalty distribution process less expensive and more
expeditious and efficient.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in article I, section 8, clause 8 of the
Constitution.
Section-By-Section Analysis and Discussion
The following section by section analysis describes the
bill as reported by the Committee on the Judiciary.
Section 1. Short title
The Act may be cited as the ``Copyright Royalty and
Distribution Reform Act of 2003''.
Section 2. Reference
Unless otherwise expressly provided for, any reference in
this Act is to title 17, of the United States Code.
Section 3. Copyright Royalty Judge and staff
This section renames Chapter 8 of title 17 of the United
States Code: ``Proceedings by Copyright Royalty Judges.'' It
amends that chapter to read as described below.
Section 801. Copyright Royalty Judge; appointment and functions
(a) Appointment. The Librarian of Congress is to consult
the Register of Copyrights and appoint three full-time
Copyright Royalty Judges (CRJ). One judge will be designated as
the Chief Copyright Royalty Judge.
In Buckley v. Valeo \4\, the Supreme Court considered,
inter alia, the constitutionality of the Federal Election
Commission's (FEC) method of appointing its members. Although
the FEC is an agency residing in the Legislative Branch, the
Court ruled that some of the FEC's functions are related to the
Executive Branch functions; therefore, persons exercising those
functions ``must be appointed in accordance with Article II,
Section 2, Clause 2 of the Constitution (the Appointments
Clause'').\5\ In response to this decision, the Committee has
chosen to vest the authority of appointing CRJs in the
Librarian of Congress, an officer of the United States
nominated by the President with the advice and consent of the
Senate. The Committee does, however, acknowledge the expertise
of the Copyright Office; and as such, is requiring that the
Librarian consult with the Register.
---------------------------------------------------------------------------
\4\ 424 U.S. 1 (1976).
\5\ 424 U.S. at 126.
---------------------------------------------------------------------------
Although parties have complained about the lack of
stability and consistency with regard to the current system's
reliance on arbitrators instead of permanent judges, parties
also expressed their belief that a significant strength of the
existing system was that three individuals, rather than any one
single person, was charged with decisionmaking authority. The
Committee believes that vesting decisionmaking authority in
three permanent judges will address the issues of stability,
consistency, and potential bias.
(b) Functions. The functions of the CRJs are as follows.
(1) This section confers authority upon CRJs to set and
adjust reasonable terms and rates of royalty payments for the
Sec. Sec. 112(e) (ephemeral recordings), 114 (limited
performance rights under the Digital Performance in Sound
Recording Act of 1995), 115 (mechanical compulsory license for
certain uses of copyrighted musical compositions), 116 (public
performance of musical works embodied in coin operated
phonorecord players), 118 (published nondramatic musical works
and published pictorial, graphic, and sculptural works in
connection with noncommercial broadcasting), 119
(retransmission of television broadcast signals by satellite
carriers), and 1004 (devices set forth under the Audio Home
Recordings Act) licenses.
Subsection 801(b)(1) further provides that the CRJs must
specifically calculate rates under the Sec. Sec. 114(f)(1)(B),
115, and 116 licenses in a manner that ensures maximum
availability of creative works to the public, fairly
compensates copyright owners for their work, and affords
copyright users a fair income under existing economic
conditions. The rate reflects the relative contributions of
both a copyright owner and user in the product made publicly
available and minimizes any disruptive impact on affected
industries or generally prevailing industry practices.
Subsection 801(b)(2) governs the factors to be taken into
account in adjusting compulsory license rates and the
circumstances under which the Sec. 111 cable license rates may
be adjusted, is amended only to make those procedural changes
necessary to substitute CRJs for arbitration panels.
Subsection 801(b)(3) grants authority to the CRJs to
authorize the distribution of royalty fees collected under the
Sec. 111 cable license, the Sec. 119 satellite license, and the
Sec. 1007 license (distributing royalty payments under the
Audio Home Recording Act). Under the current law, the Copyright
Office has the discretion to distribute royalties under the
licenses in this subsection which are not in controversy prior
to the time that distribution proceedings are final, even
though there may be controversy as to distribution of remaining
royalties in the distribution pool. Copyright owners consider
these ``partial distributions'' to be particularly important
since there is often a lengthy period of time between the
payment of royalties by copyright users and the conclusion of
the distribution proceedings.
This subsection amends the law to mandate that the CRJs
make a partial distribution during the pendency of a
distribution proceeding for the licenses listed in this
subsection, whether they are in controversy or not, so long as
all participants provide the CRJs with a signed written
agreement obligating them to return any excess amounts
necessary to comply with a final determination of a
distribution proceeding. To alleviate concerns by employees of
the licensing division of the Library of Congress that they
would be personally liable for making partialdistributions when
the funds to be distributed are in controversy, this section has been
amended to relieve them of any future liability with respect to such
distributions. Instead, the CRJs shall be responsible for calculating
any such excess amounts at the time a final determination is made.
Subsection 801(b)(4) gives authority to the CRJs to accept
or reject royalty claims filed under Sec. Sec. 111, 119, and
1007 on the basis of timeliness or the failure to establish the
basis for a claim.
Subsection 801(b)(5) gives authority to the CRJs to accept
or reject rate adjustment petitions as provided in Sec. 804 and
petitions to participate as provided in 17 U.S.C.
Sec. Sec. 803(b)(1) \6\ and (2).\7\
---------------------------------------------------------------------------
\6\ Subsection 803(b)(1) sets forth the procedures for initiating a
rate adjustment or determination proceeding as set out in Chapter 8.
\7\ Subsection 803(b)(2) sets forth the requirements a person must
meet in order to participate in a proceeding under Chapter 8.
---------------------------------------------------------------------------
Subsection 801(b)(6) gives authority to the CRJs to
determine the status of a digital audio recording device or a
digital audio interface device under Sec. Sec. 1002 and 1003,
as provided for in Sec. 1010. Section 1010 authorizes parties
to request the commencement of an arbitration proceeding for
the purpose of establishing whether a digital audio recording
device or digital audio interface device is a device subject to
Sec. Sec. 1002 or 1003.
Subsection 801(b)(7) gives the CRJs the necessary authority
to adopt as binding on all participants settlement agreements
proposed by some or all of the participants in ratesetting or
distribution proceedings. By facilitating and encouraging
settlement agreements for determining royalty rates and
establishing distribution of royalties, this section reduces
the need to conduct full-fledged ratesetting and distribution
proceedings. This will generate savings while expediting the
disposition of proceedings. Clauses (i) and (ii) are designed
specifically to address concerns about CRJs having authority to
adopt as binding on all participants the terms of agreements
proposed by subsets of participants. Clause (i) allows other
participants in the relevant proceeding who would be bound by
the proposed settlement to object to the CRJ's adoption of the
agreement. When an objection has been registered pursuant to
clause (i), clause (ii) gives the CRJs discretionary power to
decline to adopt the proposed agreement if they find, based on
the record before them, that the agreement is not likely to
meet the relevant statutory standard. Because settlement
agreements can be offered at any time before final disposition
of a proceeding, the extent of the record before the CRJs may
vary widely depending on the timing of the settlement
agreement. Bearing in mind the objective of encouraging
settlement, the CRJs are to use their best judgment as to
whether the record before them indicates the proposed agreement
is not likely to meet the relevant statutory standard.
(c) Rulings. This section gives authority to the CRJs to
make any necessary procedural or evidentiary rulings in any
proceeding under Chapter 8. In doing so, the CRJs may consult
with the Register of Copyrights.
(d) Administrative Support. This section states that the
Librarian of Congress must provide the CRJs with the necessary
administrative services required to carry out their obligations
as set forth under Chapter 8.
(e) Location in Library of Congress. This section provides
that the offices of the CRJs and staff will be located within
the Library of Congress. The current CARP system falls within
the purview of the Library of Congress. The Staff, as well as
the proceedings, have historically been seated in the Copyright
Office, but the Committee intends that the CRJs will be
separate and independent from the Copyright Office.
Section 802. Copyright Royalty Judgeships; staff
(a) Qualifications of Copyright Royalty Judges. This
subsection provides that there will be three CRJs, each of whom
shall have at least seven years of legal experience. One of
these judges will be designated the Chief Copyright Royalty
Judge. This Judge must possess at least five years of
experience in adjudications, arbitrations, or court trials. Of
the other two CRJs, one must have significant knowledge of
copyright law; the other must have a significant knowledge of
economics.
The Committee wishes to create a system that leads to
stability and predictability in the decisionmaking process.
Parties have expressed concern to the Committee that often the
arbitrators selected under the current CARP system do not have
the training, education, or experience in relevant subject
matter. Specifically, parties expressed concern that the
evidence presented in the determination of a rate necessitates
a significant mastery of economics and marketplace factors as
well as considerable knowledge of copyright law. Recognizing
that finding an individual who possesses substantial knowledge
and experience in all of these areas would be difficult at
best, the Committee believes that an appropriate resolution is
to divide the requisite knowledge and experience among all
three judges.
An individual may serve as a CRJ if he or she is free of
any financial conflict of interest as defined by the Librarian
of Congress under the authority granted in subsection (h).
Subsection (h) grants the Librarian of Congress the authority
to adopt regulations establishing CRJ standards of conduct. The
definition of ``conflict of interest'' in this section
sufficiently balances the competing interests of ensuring that
individuals with considerable experience in the field of
relevant subject matter to proceedings are not excluded for
perceived bias while also ensuring that no monetary incentive
exists by which a CRJ might otherwise improperly be influenced
in their decisionmaking.
(b) Staff. This section provides that the Chief CRJ will
hire three full-time staff members to assist the CRJs in
performing their functions. The CRJs will directly supervise
the staffers. The Copyright Royalty Judge system will be an
autonomous body independent of the Copyright Office. This
attribute will obviate the need of the Copyright Office to
employ staff to work solely on CARP related matters.
(c) Terms. This section states that the CRJs will sit for
six years, except the first individuals appointed to be CRJs
shall have their terms staggered. The Committee intends that
there be no more than one CRJ with less than two years
experience ever sitting at one time. This will ensure that,
except for the first individuals appointed, there will at all
times be a sitting judge with prior experience as a CRJ.
A CRJ may be reappointed to subsequent terms. The Committee
expects that by allowing individuals who have produced high
quality work to remain, the goals of stability and
predictability of the system will be furthered.
A sitting CRJ shall continue to serve in that capacity
until a successor is selected.
(d) Vacancies or Incapacity. This section provides that if
a CRJ becomes incapacitated or leaves, the Librarian of
Congress must quickly appoint an interim CRJ to serve out the
remainder of the vacancy term.
(e) Compensation.
(1) Judges. This subsection provides that the Chief CRJ
will be paid at the rate of basicpay payable for level AL-1 for
administrative law judges pursuant to Sec. 5372(b) of title 5. The
other two CRJs will be compensated at the rate of basic pay payable for
level AL-2 for administrative law judges pursuant to Sec. 5372(b) of
title 5. CRJs salaries are not subject to the regulations of the Office
of Personnel Management.
(2) Staff. The CRJs will be staffed by three individuals,
one of whom will be paid no more than the basic rate of pay
payable for GS-15 of the General Schedule, the second of pay
payable for GS-13, the third of pay payable for GS-11.
(f) Independence of Copyright Royalty Judge.
(1) In Making Determinations. Subsection 802(f)(1)(A)
states that the CRJs are to have full independence in making
determinations concerning adjustments and determinations of
copyright royalty rates and terms, the distribution of
copyright royalties, the acceptance or rejection of royalty
claims, rate adjustment petitions, and petitions to
participate, and in issuing any other rulings under title 17
that pertain to the responsibilities of the CRJs set forth in
Sec. 801, except that the CRJs may consult with the Register of
Copyrights on any matters other than questions of fact. Any
consultations of this nature must be in writing or on the
record.
In an attempt to balance the concerns of preserving
independence in the role and decisionmaking of the CRJs against
the benefit of having the ability to consult the expertise of
the Copyright Office, this section allows the CRJs to consult
with the Register of Copyrights on any matter which they have
authority over under title 8, other than a question of fact.
This section will help to effectuate the Committee's goal that
the Copyright Office retain responsibility for creating and
implementing copyright policy, while the CRJs will retain sole
responsibility for making factual and legal determinations
regarding matters before them in a proceeding.
Subsection 802(f)(1)(B) states that when presented with a
novel question of law, a CRJ must request the Register of
Copyrights, in writing, to submit a written opinion that is to
be made public. The Committee defines a novel question of law
as one that has not been determined in prior decisions,
determinations, or rulings. The opinion of the Register will
not be binding on the CRJ, but the CRJ must nonetheless take it
into account.
Because the Committee is cognizant of concerns that ex
parte communications should not occur between the Copyright
Office and CRJs without the knowledge of proceeding
participants, any consultations under this subparagraph between
the CRJs and the Register of Copyrights must be in writing or
on the record.
(2) Performance Appraisals.
Subsection 802(f)(2)(A) states that the CRJs will not
receive performance appraisals.
Subsection 802(f)(2)(B) states, that if under subsection
(h), which relates to the sanctioning and removal of a CRJ,
those regulations require documentation to establish the cause
of a sanction or removal, a CRJ may receive an appraisal
relating specifically to the cause of the sanction or removal.
(g) Inconsistent Duties Barred. This section holds that no
CRJ may undertake duties inconsistent with his or her duties
and responsibilities as a CRJ.
(h) Standards of Conduct. This section requires the
Librarian of Congress to adopt regulations regarding the
standards of conduct, including financial conflict of interest
and restrictions against ex parte communications, which will
govern the CRJ and the proceedings under this chapter.
(i) Removal or Sanction. The Librarian of Congress may
sanction or remove a CRJ for violation of standards of conduct
adopted under subsection (h), misconduct, neglect of duty, or
any disqualifying physical or mental disability. Notice and an
opportunity for a hearing must be given before a sanction or
removal may occur. The Librarian shall appoint an interim
Copyright Royalty Judge during the pendency of a suspension.
Section 803. Proceedings of Copyright Royalty Judges
(a) Proceedings. This section provides that the CRJs are to
act in accordance with regulations they have issued, a fully
documented written record, prior decisions of the Copyright
Royalty Tribunal, prior Copyright Arbitration Royalty Panel
Determinations, rulings by the Librarian of Congress before the
effective date of the Copyright Royalty and Distribution Reform
Act of 2003, prior determinations of CRJs under this chapter,
and appellate court decisions under this chapter before, on, or
after such effective date.
These decisions are not necessarily controlling, but will
be considered for their precedential value and may be
distinguished.
Any participant in a proceeding under subsection 803(b)(2)
may submit relevant information and proposals to the CRJs.
Subsection 803(b)(2) sets forth the requirements a party must
meet to become a participant in a proceeding. To ensure that
only parties with legally protectable and tangible interests
may take part in these processes, the Committee defines the
term ``participant.'' The Committee intends that only those
parties meeting the requirements of this definition may
participate in the process as set forth in the new Chapter 8.
The Committee anticipates that the CRJs will adopt
regulations to define the requisite ``significant interest''
that a party must demonstrate to participate in a proceeding.
Such regulations should recognize that the Committee intends
the ``significant interest'' requirement to restrict
participation to those who have a stake in the outcome of the
proceeding. In other words, to have a significant interest in a
royalty rate, the participant must be a party directly affected
by the royalty fee (e.g., as a copyright owner, a copyright
user, or an entity or organization involved in the collection
and distribution of royalties). As a copyright owner, one has a
significant interest in a royalty rate because the rate
determines how much the owner will receive in compulsory
license fees from the use of his or her works. As a copyright
user, one has a significant interest in a royalty rate because
the rate determines how much that party must pay for the use of
copyrighted works. Included in these categories are
organizations and societies that represent the rights and
interests of copyright owners and users.
(2) Judges Acting as Panel and Individually. The CRJs are
to conduct hearings en banc, except that the Chief CRJ may, in
his or her discretion, designate a CRJ to sit individually over
collateral and administrative proceedings under subsections
803(b)(1) through 803(b)(5).
Although parties expressed concern that the ad hoc nature
of the CARP produces instability and inconsistency, other
participants have stated that a significant strength of the
existing system is that a panel of three individuals conducts
hearings. In keeping with the tradition of checks and balances,
the Committee believes that the interaction of at least three
decisionmakers who have the ability to consider and to debate
the many issues involved in rate-setting and distribution
proceedings produces the most reasoned, supportable, and
credible results. Still, the Committee acknowledges that there
may be instances where a single judge could fairly and
equitably preside over part of the hearing process; the
legislation makes thisallowance. The Committee does not intend,
however, that individual CRJs should have the sole authority to render
final decisions.
(3) Determinations. Final determinations of CRJs under
proceedings in Chapter 8 require a majority vote. A dissenting
CRJ's opinion is to be included with the determination.
The Committee expects that the majority vote requirement
will ensure that a proper level of checks and balances in the
proceedings is maintained.
(b) Procedures.
(1) Initiation.
(A) Call for Petitions to Participate. Subsection
803(b)(1)(A) requires that promptly upon a filing of a petition
for a rate adjustment or determination as set forth under
section 804(a) \8\ or 804(b),\9\ or by no later than January 5
of a year specified in section 804 for a hearing to begin, if a
petition has not been filed by that date, the CRJs will publish
in the Federal Register notice of the beginning of proceedings
under Chapter 8 for the filing of Petitions to Participate in a
proceeding under Sec. Sec. 111, 112, 114, 115, 116, 118, 119,
1004, or 1007. No later than 30 days after this publication,
petitions to participate must be filed; but CRJs may accept
late petitions to participate up to 90 days before written
direct statements are due if there is no prejudice to the
parties and the petitioner can show good cause.
---------------------------------------------------------------------------
\8\ 17 U.S.C. Sec. 04(a) (Filing of Petition).
\9\ 17 U.S.C. Sec. 04(b) (Timing of Proceedings).
---------------------------------------------------------------------------
H.R. 1417 as reported out by the Subcommittee included a
provision which required parties subject to statutory licenses
to pay an interim rate equivalent to the old rate until a new
one is determined.
The user community voiced concern that if these ``interim
fees'' were not housed in an escrow account that the content
community would have the ability to access the fees and fund
their litigation pursuits against the user community. This
concern stemmed from a provision in the Small Webcaster
Settlement Act of 2002 \10\ that allowed Sound Exchange, the
designated receiving agent, to deduct its litigation expenses
from the royalties collected.
---------------------------------------------------------------------------
\10\ Small Webcaster Settlement Act of 2002, P.L. No. 107-321.
---------------------------------------------------------------------------
The copyright community opposed an escrow account, claiming
the interim funds were necessary for Sound Exchange to continue
its operations. In an industry-wide agreement, both communities
adopted the position of the Copyright Office that the best
solution was to implement ratesetting proceedings under chapter
8 far enough in advance so as to render certain there will
always be a new rate in place prior to the expiration of an old
rate. To ensure that this principle is maintained, this bill
sets forth a specific timeline in which steps in the Chapter 8
proceedings must be completed. Since there may be instances in
which a party may have a valid excuse for not complying, the
bill will permit late filing of petitions to participate under
limited circumstances.
Subsection 803(b)(1)(B) states that a petition to
participate must describe a petitioner's interest in the
subject matter. Parties with similar interests may file a
single petition.
By requiring petitioners to set forth their ``interest in
the subject matter'', CRJs will be better prepared to identify
parties with legally protectable and tangible interests that
qualify as participants.
Traditionally, as in the case of the performing rights
societies, parties with a similar interest have always filed a
single petition. The Committee believes this mechanism has
worked successfully and should therefore continue to be
utilized.
(2) Participation in General. This subsection requires that
to participate in a proceeding under Chapter 8, a person must
file a ``facially valid'' petition to participate setting forth
his other significant interest in a proceeding, and pay a $150
filing fee. Only participants subject to the small claims
procedure in distribution proceedings under subsection (4) or
paper proceedings in ratemaking proceedings under subsection 5
are exempt from the $150 filing fee. This amount is identical
to that required in 28 U.S.C. Sec. 1914 for all litigants
filing civil actions in U.S. district courts. The Committee
intends that one filing fee be paid for each notice filed. The
CRJs may decide on their own motion or on the motion of another
participant in the proceeding that a party lacks a significant
interest in a proceeding.
Under the current CARP system, parties are responsible for
bearing the costs of the proceedings. The legislative history
accompanying the Copyright Royalty Tribunal Reform Act of
1993,\11\ as well as at least one reviewing court,\12\ have
indicated that the original intent behind the creation of the
CARP system was to create a system which would, by its design,
discourage parties from choosing to engage it. Both copyright
owners and users have indicated that the CARP system has not
accomplished this goal. Cognizant of both copyright owner and
user concerns about the costs of rate-setting and distribution
proceedings, this bill as reported provides for the majority of
all administrative costs associated with these proceedings to
be born by the government, save the de minimus $150 filing fee.
The Committee intends that this money will help defray in part
these administrative costs as well as have the added benefit of
perhaps discouraging the filing of frivolous claims.
---------------------------------------------------------------------------
\11\ H. Rep. No. 103-286.
\12\ National Ass'n of Broadcasters v. Librarian of Congress, 146
F. 3d 907, 920 (D.C. Cir. 1998).
---------------------------------------------------------------------------
(3) Voluntary Negotiation Period. This section requires
that promptly after petitions to participate have been filed,
the CRJs must make available to all participants in the
proceeding a list of all other participants. Upon making
available these names, the CRJs are to initiate a voluntary
negotiation among the participants which is to last for three
months. At the close of the voluntary negotiation proceedings,
the CRJs are to determine whether and to what extent paragraphs
(4) (small claims procedure in distribution proceedings) and
(5) (paper proceedings in ratemaking proceedings).
In granting CRJs the necessary authority to adopt as
binding on all participants settlement agreements proposed by
some or all of the participants in rate-setting or distribution
proceedings, the Committee intends that the bill as reported
will facilitate and encourage settlement agreements for
determining royalty rates and the distribution of royalties
throughout the Chapter 8 process. The Committee believes that
by creating a formalized time period for encouraging settlement
under the direction of the CRJs, parties will necessarily have
to focus their attentions upon the Committee's goal of
achieving settlements. The Committee intends that the CRJs
during this time period act in a capacity similar to that of
Federal judges during their scheduling conferences. The
Committee expects the CRJs to act in a manner which ensures
that the timetable for proceedings are adhered to, while
helping to facilitate the ultimate goal of conflict resolution
between participants. The Committee does not expect the CRJs to
be present with parties during all discussions during this time
period.
(4) Small Claims Procedure in Distribution Proceedings. If
a participant in a proceedingunder Chapter 8 asserts a
contested claim of $10,000 or less, the CRJs must decide the
controversy on the basis of a written initial claim, an initial written
response by any opposing participant, and one additional response by
each party. Any participant subject to a proceeding under this
subsection is exempt from paying the $150 filing fee required under
subsection (2).
The large claimants expressed concern that the current
statutory mandate prescribing allocation of CARP costs in a
``distribution proceeding in proportion to the royalty funds
awarded to each party'' has had the unfortunate effect of
allowing those with small claims to inflate their claims and
initiate litigation at the expense of other parties. The
Copyright Office asserts that it lacks authority either to
prevent these abuses or expedite decision-making. In contrast,
small claimants expressed concern about the costs associated
with distribution hearings and their inability to pay such
costs.
The Committee expects that the creation of this small
claims proceeding will streamline the resolution of small
claims making the procedure more efficient to all participants
involved. In arriving at the threshold amount by which a party
may be subjected to a paper proceeding, the Committee looked to
the threshold amount utilized by small claims courts ($10,000).
Subsection 803(b)(4)(B) provides that if a CRJ decides that
a participant has set forth an invalid amount in controversy to
avoid settling the controversy through an all-paper small
claims proceeding set forth in subsection 803(b)(4)(A), the CRJ
must impose a fine on the participant in an amount not to
exceed the difference between the actual amount distributed and
the amount asserted by the participant.
The Committee has created this sanction with the goal of
not allowing participants to circumvent the Committee's intent
of creating a streamlined mechanism for resolving small claim
disputes in a distribution hearing.
(5) Paper Proceedings in Ratemaking Proceedings. The CRJs
have broad authority to determine royalty rates through
abbreviated, paper-only proceedings. These paper proceedings
allow each participant to make an initial filing in writing, an
initial response, and one additional response.
Paper proceedings should further the overriding objectives
of this legislation by resulting in less costly and far quicker
rate-settings than those achieved through full-blown rate-
setting proceedings. CRJs are required to conduct paper
proceedings to determine rates in situations where (1) there is
no genuine issue of material fact, (2) there is no need for
evidentiary hearings, and (3) all participants to the
proceeding agree in writing to conduct a paper proceeding. The
CRJ's may conduct paper proceedings in such other circumstances
as they deem appropriate. It is anticipated that CRJs will
choose to exercise their discretion to order paper proceedings
in circumstances where, for instance, the cost of the
proceeding would exceed the royalties likely to be collected,
or where a class of participants may otherwise find it
impossible to participate. The CRJ may choose to conduct paper
proceedings either on their own initiative or in response to a
motion of a participant. In either case, the CRJs must offer
all parties to the proceeding the opportunity to comment on the
decision to conduct a paper proceeding.
(6) Regulations.
Subsection 803(b)(6)(A) provides that the CRJs may issue
regulations to carry out their functions under title 17. No
later than 120 days after the CRJs or interim CRJs are
appointed after the enactment of this bill, the CRJs must issue
regulations to govern proceedings under this chapter.
Subsection 803(b)(6)(B) provides that until permanent
regulations have been adopted, CRJs are to apply those
regulations in effect under this chapter on the day before the
effective date of the Copyright Royalty and Distribution Reform
Act of 2003, which are not inconsistent with this chapter.
Subsection 803(b)(6)(C) requires that the CRJs must, at
minimum, issue the regulations that include the following:
(i) A required date by which participants' written direct
statements must be filed, which may be no earlier than four
months and no later than five months after the end of the
voluntary negotiation period, except that participants may,
within 15 days after the end of the discovery period, file an
amended written direct statement based on new information
received during the discovery process. Prior to discovery under
the current CARP system, parties are required simultaneously to
submit and exchange in written form the direct testimony of
each of their witnesses--lay and expert alike--together with
every trial exhibit to be utilized. Some parties expressed
concern that this is contrary to the Federal Rules of Evidence
and effectively locks in their trial positions based upon
limited information. Other parties expressed concern that if
this sequencing was changed, it would yield the potential for
open-ended discovery which would ultimately lead to abuse and
exorbitant costs. Recognizing the importance of creating a full
and accurate record at the fact-finding level, the Committee
believes that the addition of the 15-day period is the proper
amount of time for parties to amend their written statements
that reflects additional information gained through the
discovery process.
(ii)(I) The CRJs must meet with participants subsequent to
their filing written direct statements to set a schedule for
conducting and completing discovery. The CRJs will determine
the schedule.
(II) Written direct statements means witness statements,
testimony, and exhibits to be presented in proceedings, and
such information as is necessary to establish terms and rates
or the distribution of royalty payments. The Committee relied
on the Federal Rule of Civil Procedure Rule 16 in creating this
subsection. The Committee intends that the creation of this
subsection will give CRJs early control of a proceeding,
thereby ensuring that the proceedings will not be protracted as
a result of mismanagement. The creation of a discovery schedule
will minimize discovery costs by prohibiting participants from
engaging in stall tactics and forcing participants to compress
the amount of resources invested in the proceedings. The bill
codifies the definition of ``written direct statements''
currently set forth under 37 CFR Sec. 251.43(b) and expands it
by adding that other information deemed necessary to a
proceeding under this chapter may be admitted.
(iii) Hearsay may be admitted in proceedings under this
chapter to the extent deemed appropriate by the CRJ. The
Committee intends that this subclause contemplates a more
permissive approach to the admission of hearsay than the
Federal Rules of Evidence. Instead of limiting admission of
hearsay to certain specific instances, this subclause gives the
CRJs full discretion as to the admissibility of hearsay. This
subsection also gives the CRJs full discretion to decide how
much credibility to accord any particular hearsay evidence. The
Committee anticipates that the CRJs will exercise their
discretion judiciously to ensure that the admission of hearsay
leads to speedier, better supported, and less costly
resolutions.
(iv) The discovery duration is 60 days, except when a CRJ
orders otherwise in connection with the resolution, motions,
orders, and disputes pending at the end of such period. As
noted,the bill initiates ratesetting proceedings under chapter
8 far enough in advance so as to render certain there will always be a
new rate in place prior to the expiration of an old rate. To achieve
this objective, the substitute sets forth specific time periods for the
various procedural and substantive steps participants complete
throughout a ratesetting or distribution proceeding, (e.g., the 60-day
discovery period). Concerns were expressed as to how motions that had
been filed within the 60-day time period but remained pending after the
60-day time period should be resolved. Since the Committee's intent is
to create a complete and accurate record at the fact-finding level of
the rate making and distribution process, this goal is best furthered
by allowing timely-filed motions still pending at the conclusion of the
60-day discovery time period to be resolved.
(v) Any participant may, in writing, seek discovery of
information and materials relevant and material to the
proceeding. If the responding participant chooses not to
comply, then the participant may request a CRJ to compel
compliance. A CRJ may approve a request for compliance if the
evidence that would be produced is relevant and material. Even
if a request would produce relevant and material evidence, a
CRJ may still refuse the request for good cause shown. Good
cause shown entails looking at such indicia as whether the
discovery sought is unreasonably cumulative or duplicative, is
obtainable from another more convenient source, is less
burdensome, or is less expensive.
(vi) The rules in place under the current regulations for
discovery are codified in this subsection. Parties involved in
both the ratemaking and distribution processes expressed to the
Committee that there are substantial differences between the
purposes of these two processes and therefore they should be
treated separate and distinct. The Committee is cognizant of
the inherent differences in the desired goal of each of these
processes. For example, there has been a 25-year-plus history
of cable royalty distribution proceedings among essentially the
same participants in which a substantial body of precedent and
practice has been established. This experience contrasts
sharply with the recent Sec. 114 proceedings designed to
establish for the first time a rate for a new compulsory
license. The Committee believes that the regulations for
discovery currently in place function to achieve the desired
goals of the Committee in relation to the distribution process.
(vii) The CRJs may issue subpoenas for the purpose of
obtaining evidence that is relevant and material to the task of
setting rates and terms of payment or making distributions to
copyright owners and performers. The purpose of this provision
is to give the decisionmakers a means to create a more complete
record upon which to make their decisions. Historically, the
process has allowed parties to circumscribe the type and amount
of evidence considered by limiting discovery to documents
underlying a party's direct case and by limiting the
decisionmakers' authority to request additional evidence.
Consequently, decisionmakers have set rates or made
distributions in some instances without the benefit of the most
probative evidence or access to witnesses that, for example,
were better to explain to the intricacies of a study or explain
the rationale for specific provisions in a negotiated
agreement. The Committee believes that the grant of subpoena
power to the CRJs will alleviate this problem by allowing the
CRJs to subpoena additional witnesses and evidence when it is
apparent the record is incomplete. The Committee does not
anticipate that the use of subpoena power will become a common
occurrence. The CRJs are expected to exercise this power
judiciously and only in those instances where they believe a
subpoena is necessary to obtain information that the parties
have not provided and that the judges deem necessary to make
their decision.
(viii) At the end of the discovery period the CRJs will
order a 21-day settlement conference. In granting CRJs the
necessary authority to adopt as binding on all participants
settlement agreements proposed by some or all of the
participants in rate-setting or distribution proceedings, the
Committee intends that the bill will facilitate and encourage
settlement agreements for determining royalty rates and
establishing distribution of royalties throughout the entire
process under Chapter 8. The Committee believes that by
creating formalized time periods for encouraging settlement
under the direction of the CRJs, parties will necessarily focus
their attention on the goal of achieving a settlement. The
Committee recognizes that information obtained during the
discovery process may alter a pre-discovery position, making
the affected party more likely to engage in settlement
negotiations. The Committee intends that the CRJs during this
time period act in a capacity similar to that of federal judges
during their FRCP Rule 16 scheduling conferences. The Committee
expects CRJs to act in a manner which ensures that the
timetable for proceedings as set forth in this bill as amended
are adhered to, while helping to facilitate the ultimate goal
of conflict resolution between participants. The Committee does
not expect the CRJs to be present with parties during all
discussions during this time period.
(c) Determination of Copyright Royalty Judges.
(1) Timing. Subsection 803(c)(1) states that CRJs must
issue their determination within 11 months of the end of the
21-day settlement conference, except in the case of a
ratemaking proceeding which expires on a specified date. In
that case, a decision must be rendered within 15 days before
the expiration of the then current statutory rates and terms.
This bill starts ratesetting proceedings under Chapter 8
far enough in advance to ensure certain there will always be a
new rate in place prior to the expiration of an old rate. To
achieve this objective, the substitute sets forth specific time
periods for the various procedural and substantive steps
participants must complete throughout a ratesetting or
distribution proceeding. In keeping with this goal, this
subsection ensures that decisions are rendered in a timely
fashion.
(2) Rehearings. Subsection 803(c)(2)(A) provides that CRJs
may, in exceptional cases, and upon the motion of a
participant, order a rehearing after a determination has been
issued. The Librarian of Congress believes that under existing
law it is unclear whether he has the authority to correct
errors or address unanticipated issues that have arisen
subsequent to a determination. Many parties, including the
Register of Copyrights, requested that the Committee provide
the CRJs with continuing jurisdiction so that matters such as
these could be addressed. The Committee expects that this
provision will not be used as a ``back door'' for aggrieved
parties to circumvent the process.
Subsection 803(c)(2)(B) provides that motions for
rehearings must be filed within 15 days after the date on which
the CRJs deliver their initial determination concerning rates
and terms.
Subsection 803(c)(2)(C) states that any opposing party is
not required to participate in a rehearing. Many parties voiced
concerns that the rehearing mechanism in this substitute would
force them to expend cost and time which, if given the option,
they would choose not to do. Although the Committee believes
that the CRJs should be given the first opportunity to address
affected parties' arguments, it also does not intend to impose
rehearing proceedings upon participants.
Subsection 803(c)(2)(D) provides that no negative inference
is to be drawn from lack of participation in a hearing.
(E) Continuity of Rates and Terms. Subsection
803(c)(2)(E)(i)(I) provides that if a rehearing decision in a
rate making proceeding is not rendered before the expiration of
the statutory license previously in effect, then the rates and
terms set forth in the decision which are subject to the
rehearing will remain in place until a final rehearing decision
is rendered.
Subsection 803(c)(2)(E)(i)(II) states that in the case of a
proceeding under Sec. 114(f)(1)(C) \13\ or
Sec. 114(f)(2)(C),\14\ royalty rates and terms are, for
purposes of Sec. 114(f)(4)(B),\15\ deemed to have been set at
those rates and terms contained in the initial determination of
the CRJs that is the subject of the rehearing motion, as of the
date of that determination.
---------------------------------------------------------------------------
\13\ 17 U.S.C. Sec. 114(f)(1)(C) is amended in this substitute to
state that procedures under subparagraphs Sec. Sec. 114(f)(1)(A) and
(B) are also to be initiated by a petition filed by any copyright
owners of sound recordings, any preexisting subscription services, or
any preexisting satellite digital audio radio services indicating a new
type of subscription digital audio transmission service on which sound
recordings are performed is or is about to become operational, for the
purpose of determining rates and terms of royalty payments with respect
to those new types of services for the time period starting with the
inception of such service and ending on the date on which the rates and
terms for subscription digital audio transmission services most
recently were determined under Sec. Sec. 114(f)(1)(A) and (B), or such
other period as the parties may agree.
\14\ 17 U.S.C. Sec. 114(f)(2)(C) is amended in this substitute to
state that procedures under subparagraphs Sec. Sec. 114(f)(1)(A) and
(B) are to be initiated by a petition filed by any copyright owners of
sound recordings or any eligible nonsubscription service or new
subscription service indicating that a new type of eligible
nonsubscription service or new subscription service on which sound
recordings are performed is or is about to become operational, for the
purpose of determining reasonable terms and rates of royalty payments
with respect to such new type of service for the time period starting
with the inception of such new type of service and ending on the date
on which the royalty rates and terms for preexisting subscription
digital audio transmission services, as the case may be, most recently
were determined under Sec. Sec. 114(f)(1)(A) or (B), or such period as
the parties may agree.
\15\ 17 U.S.C. Sec. 114(f)(1)(B) is amended in this substitute to
state that in the absence of license agreements negotiated under
subparagraph Sec. 114(f)(1)(A), which sets forth the dates by which
voluntary negotiation proceedings initiated for the purpose of
determining terms and rates for subscription transmission by
preexisting subscription services and transmissions by preexisting
satellite digital audio radio services, CRJs are to begin a proceeding
pursuant to Chapter 8 to determine and publish in the Federal Register
a schedule of rates and terms pertaining to these licenses.
---------------------------------------------------------------------------
Subsection 803(c)(2)(E)(ii) and (iii) provide that persons
obligated to make royalty payments under the licenses which are
the subject of determinations in a pending motion for a
rehearing must continue to provide statements of account and
any reports of use as well as make all royalty payments as
required under the relevant regulations or determinations. When
a copyright user or successor makes royalty payments to a
person other than the Copyright Office, the entity designated
by the CRJ to receive these royalties must return any excess
amounts paid by those persons to the extent necessary to comply
with a final determination by the CRJs. This must be done
within 60 days after a motion for a rehearing is resolved or,
if the motion is granted, within 60 days after the rehearing is
concluded.
During the 107th Congress, a CARP was convened to set a
rate for those licenses affecting webcasters and simulcasters.
A rate was determined, and a situation arose where certain
members of the webcasting and simulcasting market claimed that
they could not pay that amount. More specifically, these
parties argued that the prescribed rate exceeded their
expectations and insufficient funds were therefore put aside.
Because of this complaint, the bill includes a provision
that requires parties subject to statutory licenses to continue
to fulfill their obligations under the applicable statute or
regulation until new rates and terms have been established.
(3) Contents of Determination. A determination by the CRJs
must be accompanied by the written record and set forth the
facts that the CRJs found relevant to their determination. CRJs
may specify notice and recordkeeping requirements for users of
copyrights that apply in lieu of those that would otherwise
apply under regulations.
Subsection 803(c)(3) addresses the need to preserve the
facts as discovered for later potential ``appealable'' purposes
as well as addresses concerns raised by various parties that
under the current system, CARP decisions have been rendered
without adequate explanations.
Although the CRJs' core function with regard to rate making
proceedings is to set rates and terms for statutory licenses,
the issues relating to notice and recordkeeping or to notices
of use are often integral to the issues of rates and terms of
payment; therefore, the CRJs are best equipped to handle this
task.
(4) Continuing Jurisdiction. Subsection 803(c)(4) allows
CRJs to amend a determination or regulation issued pursuant to
a determination to correct any technical errors in a
determination or respond to unforseen circumstances that
preclude the proper effectuation of the determination.
The Copyright Office and other parties requested that a
provision be included that afforded the CRJs with continuing
jurisdiction, to correct actual errors and to respond to
unforseen circumstances. To illustrate, when the rates and
terms for the Sec. 114 license were set in 2002, the question
arose as to what would happen if the designated receiving agent
were to go out of business. The Copyright Office took the
position that the Librarian's power to set rates and terms
under the existing CARP system did not on its face include the
power to amend the terms subsequent to a final determination.
The inclusion of this provision now provides a mechanism under
which such a potential circumstance might be addressed.
(5) Protective Order. Subsection 803(c)(5) provides that
CRJs may issue orders to protect confidential information,
including orders excluding confidential information from the
record of the determination that is published or made available
to the public; except that all terms or rates of royalty
payments or distributions must be published.
Participants expressed to the Committee the importance of
protecting proprietary information during the course of a
proceeding, after the official close of a proceeding, or in a
final version of a report from the CRJs. Because parties to the
proceedings depend on this continuing protection when they make
the decision to produce sensitive commercial and financial
information, they argued that they would be deterred from
submitting that information as part of the proceeding record in
the absence of continuing protection. Since an overarching goal
of the Committee is to create a complete and full record, the
Committee has included this provision to ensure that parties
will submit all necessary information providing the CRJs the
opportunity to make well-informed decisions based on a full and
complete record of the contested issues in proceedings.
(6) Publication of Determination. Subsection 803(c)(6)
mandates that the Librarian of Congress ensure that the CRJs
determinations and corrections thereto are published in the
Federal Register, published on the Internet, and made publicly
available in any other manner which the Librarian considers
appropriate. The Librarian must also make determinations,
corrections, and the accompanying records available for public
inspection and reproduction. Historically, the Librarian of
Congress has been responsible for ensuring the publication
ofdeterminations in the Federal Register. In light of Buckley v.
Valeo,\16\ the Committee believes that the initial responsibility for
publication should rest with the Librarian and that the Library may in
its discretion delegate such responsibility.
---------------------------------------------------------------------------
\16\ See Notes 3 and 4, supra. In Buckley, the Supreme Court ruled
that a statute authorizing the President pro tempore of the Senate and
the Speaker of the House of Representatives to appoint a majority of
members of the FEC, was unconstitutional because some of the
Commission's duties were Executive Branch functions. Consequently, a
person exercising those functions ``must be appointed in accordance
with article II, sec. 2, clause 2 of the Constitution, the Appointments
Clause.'' 424 U.S. at 126.
---------------------------------------------------------------------------
(d) Judicial Review.
(1) Appeal. Subsection 803(d)(1) mandates that any
determination by a CRJ may within 30 days after publication of
the determination in the Federal Register, be appealed to the
United States Court of Appeals for the District of Columbia
Circuit by any aggrieved participant in the proceeding who
fully participated in the proceeding and who would be bound by
the determination. If no appeal is brought within that 30-day
time period, the determination of the CRJs is final and the
royalty fee or distribution determination is to take effect as
set forth in subsection 803(d)(2). The United States Court of
Appeals for the District of Columbia Circuit has historically
been the court of review for many agency actions. The judges on
that court are familiar with the standard of review for agency
determinations and the often intricate body of law to which
agencies are subject. As such, the Committee believes that
these judges are best suited to review CRJ's determinations.
(2) Effect of Rates.
Subsection 803(d)(2)(A) states that where this title
provides that royalty rates and terms expire on a certain date,
any adjustment or determination by the CRJs of successor rates
and terms will be effective as of the day following the date of
expiration of previous rates and terms in effect, even if the
determination of the CRJs are rendered on a later date.
Subsection 803(d)(2)(B) states that where rates and terms
do not expire on a specified date or have not yet been
established, successor rates or terms are to take effect on the
first day of the second month that begins after publication of
the CRJs determination in the Federal Register, unless this
title provides otherwise. Rates and terms previously in effect
are to remain in effect until successor rates and terms become
effective.
Subsection 803(d)(2)(C)(i) provides that persons who are
obligated to make royalty payments under Sec. Sec. 111, 112,
114, 115, 116, 118, 119, or 1003 and who would be affected by a
determination on appeal, must continue during the pendency of
that appeal to provide statements of account, any report of use
to the extent required, and pay royalties required under the
relevant determination or regulations.
Subsection 803(d)(2)(C)(ii) provides that whenever a
copyright user or its successor pays royalties to a person
other than the Copyright Office, the entity designated by the
CRJs to receive those royalties must, within 60 days after the
final resolution of the appeal, return any excess amounts
previously paid and any interest ordered by the Court of
Appeal.
(3) Jurisdiction of Court. If the court, pursuant to
Sec. 706 of title 5, modifies or vacates a determination of the
CRJs, the court may enter its own determination with respect to
the amount or distribution of royalty fees and costs, and order
the repayment of any excess fees, the payment of any underpaid
fees, and the payment of interest, in accordance with its final
judgment. The court may also vacate the determination of the
CRJ and remand the case to the CRJ for further proceedings. If
a reviewing court finds that an agency action is ``arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law,'' \17\ that agency action is to be held
unlawful and set aside. The Committee believes that Sec. 706 of
title 5 provides a clear statutory directive to the reviewing
court.
---------------------------------------------------------------------------
\17\ 706 U.S.C. Sec. 5(2)(C).
---------------------------------------------------------------------------
(e) Administrative Matters.
(1) Deduction of Costs of Library of Congress and Copyright
Office From Filing Fees.
Subsection 803(e)(1)(A) provides that the Librarian of
Congress may, to the extent not otherwise provided for under
this title, deduct from the $150 filing fee generally required
by participants for a particular proceeding under this chapter
the reasonable costs incurred by the Librarian of Congress, the
Copyright Office, the CRJ, and the three staff members. The
Committee intends that the $150 filing fee will be utilized to
defray the administrative costs incurred by the Office in
connection with proceedings under this chapter. Parties voiced
concerns that it would be inequitable to use monies gained from
the $150 filing fees paid by parties in a particular proceeding
to fund administrative costs accompanying another proceeding.
As such, the Committee intends that monies collected from the
$150 filing fee be applied to the proceeding in which the
parties who have paid that fee are participating.
Subsection 803(e)(1)(B) gives authorization for whatever
funds are necessary to pay for the costs of proceedings under
this chapter not covered by the monies collected from the $150
filing fee generally required by participants. All funds made
available under this subparagraph are to remain available until
expended. Both copyright owners and users voiced serious
concerns about the costs associated with the current CARP
system. In particular, copyright owners noted that compulsory
licenses allow the government to set prices for copyrighted
works. They believe the CARP system compounds this burden by
generating lower royalties.
The Committee intends that H.R. 1417 create a system
responsible for ratesetting and distribution of funds for
compulsory licenses that minimizes costs to participants. The
Committee expects the participating parties to make good faith
efforts to resolve their differences to the extent possible,
either without engaging the process set forth in Chapter 8 or
in the form of settlement during the process set forth in the
bill as reported.
(2) Positions Required for Administration of Compulsory
Licensing. Section 307 \18\ of the Legislative Branch
Appropriations Act does not apply to employee positions in the
Library of Congress that are required to be filled to carry out
Sec. Sec. 111, 112, 114, 115, 116, 118, or 119, or chapter 10.
---------------------------------------------------------------------------
\18\ Section 307 of the Legislative Branch Appropriations Act
states that the number of employee positions, on a full-time equivalent
basis, for each covered entity shall be reduced by at least four
percent from the level, other than those supported by gift and trust
funds, as of September 30,1992, or, with the approval of the Committee
on Appropriations of the House of Representatives and the Committee on
Appropriations of the Senate, as of a later date, but not later than
September 30, 1993. At least 10 percent of the positions eliminated
shall be positions the pay for which is equal to or greater than the
annual rate of basic pay payable for grade GS-14 of the General
Schedule. This required reduction shall be completed not later than
September 30, 1995, with at least 62.5 percent of the reduction for
each covered entity to be achieved by September 30, 1994. The
Comptroller General shall carry out compliance reporting under this
section.
---------------------------------------------------------------------------
Section 804. Institution and conclusion of proceedings
(a) Filing of Petition. Any owner or user of a copyrighted
work whose royalty rates are subject to determinations and
adjustments as provided in Sec. Sec. 111, 112(e), 114, 115,
116, 118, 119, and 1004, or are established under this chapter
before or after the enactment of H.R. 1417, may file a petition
with the CRJs declaring that the petition requests a
determination oradjustment of the rate during the calendar
years specified in the schedule set forth in Sec. 804(b). CRJs are to
determine whether the petitioner has such a significant interest in the
royalty rate in which a determination or adjustment is requested. If a
petitioner is found to have a significant interest, the CRJs are to
publish this determination with an accompanying explanation in the
Federal Register. Responding specifically to the determination or
adjustment of royalty rates in Sec. Sec. 112 and 114, during the
calendar years specified in Sec. 804(b), the CRJ must notice
commencement of proceedings under this chapter to be published in the
Federal Register as provided in subsection 803(b)(1)(A).
By requiring the filing of petitions on dates certain, this
mechanism ensures that ratesetting proceedings will be
accomplished in a timely manner thereby ensuring that new rates
are always in place prior to the expiration of old rates.
Some parties expressed concern that the current system
subjects the Copyright Office and the arbitrators to an extreme
workload fluctuation. They are either inundated with several
proceedings at once or faced with periods where there is
relatively little to do. To create a steady flow of work
justifying the need for three CRJs and three professional
staffers, as well as to alleviate the overwhelming burden of
such immense workloads at given periods of time, H.R. 1417
changes the license period for all licenses to a five-year
period, and staggers the actual dates at which they will be
addressed. Filing petitions on dates certain will ensure that
distribution and rate-making proceedings are conducted in a
timely fashion.
(b) Timing of Proceedings.
(1) Section 111 proceedings. Rates for use of the cable
license set forth in Sec. 111 are to be considered under the
new schedule in two different proceedings on two different
timetables. In 2004, a petition to adjust the cable rates to
reflect changes in national monetary inflation or deflation or
changes in the rate charged for basic services may be filed
with the CRJs, whereas consideration of the rates that reflect
changes in rules and regulations of the Federal Communications
Commission would take place the following year with the filing
of a petition in 2005. Petitions to consider further
adjustments to these rates may be initiated with the filing of
a petition during each subsequent fifth calendar year.
(2) Certain Sec. 112 proceedings. Two different schedules
have been established for the consideration of the adjustments
of rates and terms for use of the Sec. 112 license for the
making of ephemeral recordings to allow for the consideration
of statutory rates with respect to different types of services.
Petitions to adjust the rates of the Sec. 112 license for use
of the license by those services that are exempt from the
digital performance right under Sec. 114(d)(1)(C)(iv) are to be
filed in 2007 and each subsequent fifth calendar year, whereas
those services that require a statutory license for making
ephemeral recordings for the purpose of making digital
transmissions of sound recordings under the statutory license
set forth in Sec. 114, are to file their petitions for
consideration of the applicable Sec. 112 rates concurrently
with their petition to consider adjustment of the rates and
terms for the Sec. 114 license pursuant to Sec. 804(b)(3), as
explained below.
(3) Section 114 and corresponding 112 proceedings. The
first rate adjustment proceeding scheduled to begin after the
enactment of H.R. 1417 shall be for the reconsideration of the
rates and terms for the use of the Sec. 114 and Sec. 112
licenses by nonsubscription transmission services and new
subscription services. It shall commence immediately with the
publication of a notice of commencement in the Federal Register
in accordance with Sec. 803(b)(1) and shall consider rates for
the license period beginning on January 1, 2006 and ending on
December 31, 2010. A petition requesting a proceeding to set
rates and terms applicable to nonsubscription transmission
services and new subscription services for the subsequent
license periods may be filed with the CRJs in 2009, and in each
fifth calendar year thereafter.
Similarly, petitions to consider the rates and terms for
use of the Sec. Sec. 112 and 114 licenses by preexisting
subscription and satellite digital audio radio services may be
filed in 2006 and again in 2011. Thereafter, proceedings to
consider the Sec. Sec. 112 and 114 licenses for use by
preexisting subscription and satellite digital audio radio
services may be filed in each subsequent fifth calendar year.
However, the effective dates for these rates and terms differ
for the first license period to accommodate the previous
determinations made under the CARP system. Hence, the initial
license period to be determined by the CRJs for the activities
of the preexisting subscription services begins on January 1,
2008, and ends on December 31, 2012; and the license period for
the preexisting satellite digital audio radio services begins
on January 1, 2007, and ends on December 31, 2012, at which
time, the license periods for the preexisting services become
synchronized.
In the case of a new type of digital audio transmission
service, a petition may be filed to set rates and terms for use
of the Sec. 114 license and the corresponding Sec. 112 license.
The CRJs must then publish a notice in the Federal Register to
commence a rate adjustment proceeding for such service, and do
so not later than 30 days after the filing of the petition.
(4) Section 115 proceedings. Petitions concerning the
adjustment or determinations of rates for the making and
distribution of phonorecords may be filed in 2006 and each
subsequent fifth calendar year, or at such other times as the
parties have agreed under Sec. 115(c)(3)(B) and (C). Congress
first granted the power to vary the rate setting schedule to
the parties with respect to digital phonorecord deliveries
(``DPDs'') in 1995, when it amended Sec. 115 and adopted a
mechanism to set rates for digital download on a five-year
cycle. Congress chose this approach because it recognized the
rapid pace at which digital technology was developing and the
potential need to revisit the issue more frequently than once
every 10 years as provided for the physical phonorecords.
However, with the advent of new and continually emerging
business models, the distinction between physical phonorecords
and DPDs has become less meaningful since 1995. Consequently,
the bill as reported adjusts the schedule for setting physical
phonorecords, providing for a single proceeding, the purpose of
which will be to set rates for both physical phonorecords and
DPDs and adopts a five-year cycle for reviewing these rates.
Moreover, the Committee finds the market to be in a state of
flux and acknowledges the need to maintain a degree of
flexibility with respect to the schedule for reviewing the
rates. Thus, the Committee has chosen to retain the provision
whereby parties may vary the schedule in order to respond to
changing technology and to meet marketplace demand.
(5) Section 116 proceedings. The amendment to Sec. 116
maintains the prior mechanism for setting rates for Sec. 116,
including the provision for the filing of a petition to
establish rates for the public performance of nondramatic
musicals work by means of a coin-operated phonorecord player
within one year of the expiration or termination of a
negotiated license authorized by Sec. 116. Because the rates
for the Sec. 116 license have been established through
voluntary license agreements since 1990 and continue to be set
in this manner, no statutory schedule has been established for
the reconsideration of such rates.
(6) Section 118 proceedings. Parties with a significant
interest in the Sec. 118 rates may petition the CRJs to
initiate a proceeding to reexamine the rates for the use of
certain works in connection with noncommercial broadcasting in
2006 and in each subsequent fifth calendar year.
(7) Section 1004 proceedings. Subsection 804(b)(7)
incorporates by reference the procedures specified in
Sec. 1004(a)(3) for initiating a proceeding to consider an
adjustment to the royalty rates for the importation and
distribution of, or the manufacture and distribution of, any
digital audio recording device or digital audio recording media
pursuant to Sec. 1004.
(8) Proceedings concerning distribution of royalty fees.
Proceedings concerning the distribution of royalty fees
collected by the Copyright Office pursuant to Sec. Sec. 111,
116, 119, and 1007 are not restricted to a set schedule.
However, once the CRJs have determined that a controversy
exists with respect to a particular distribution, they shall
cause to be published in the Federal Register a notice
announcing the commencement of a proceeding to determine the
distribution of those funds that are in controversy.
Section 805. General rule for voluntarily negotiated agreements
Any rates or terms under this title that are agreed to by
participants, adopted by the CRJs, and are in effect for a
period shorter than would otherwise apply under a determination
pursuant to this chapter are to remain in effect for the time
period that would otherwise apply under a determination, except
that the CRJ will adjust the rates pursuant to voluntary
negotiations to reflect national monetary inflation during the
additional period the rates remain in effect.
In addition, by extending the license periods subject to
the proceedings under this chapter to five-year periods, the
Committee believes that parties will resolve disputes in the
marketplace or via settlement, that might otherwise be dealt
with through the process set forth in this chapter. While the
Committee does not wish to restrict parties' ability to resolve
disputes among themselves, it also believes that to engage the
process as set out in this chapter prior to every five years
would be a waste of government funding as well as contrary to
the overall goal of eliminating participants costs.
Section 4. Definition
Section 101 is amended by inserting after the definition of
copies, a CRJ is a CRJ appointed under section 802 of this
title, and includes any individual serving as an interim CRJ.
Section 5. Technical Amendments
In general, Sec. 5 makes the necessary technical amendments
to title 17 to confer authority on the CRJs to conduct
proceedings to set rates and, as required, terms of payment,
for use of the statutory licenses set forth in Sec. Sec. 111,
112, 114, 115, 116, 118, 119, and chapter 10, and proceedings
to determine the distribution of royalty fees collected under
Sec. Sec. 111, 119, and 1005. In conjunction with these
responsibilities, the technical amendments grant specific
authorization to the CRJs to accept or reject royalty claims
filed under Sec. Sec. 111, 119 and 1007; to make distributions
of the royalty fees deposited with the Copyright Office
(including partial distributions under certain circumstances);
to prescribe regulations governing the proceedings, the filing
of claims, and notice and recordkeeping activities; and to make
determinations whether a digital audio recording device or a
digital audio interface device is subject to Sec. 1002 and
requires payment of the royalty fee under Sec. 1003.
Previously, the Register of Copyrights prescribed
regulations setting forth rules for providing notice of use of
copyrighted works to the rightful owners. However, such terms
have no direct bearing on copyright law or policy and,
therefore, do not require the expertise of the Register for
their formulation. Rather, such information is required only to
insure the proper use of the license and to insure payment to
the proper parties. For these reasons, the responsibility for
establishing regulations governing notice and record of use has
been given to the CRJs thus requiring amendment of
Sec. Sec. 112(e)(4), 114(f)(4)(A), 115(c)(3)(D), and 118(b)(3).
The CRJs also now have the responsibility for considering
the status of digital audio technology devices and media and
whether a specific device or media is subject to the royalty
fees to be made under Sec. 1003. Formerly, parties could agree
to binding arbitration and have the matter decided by an
independent panel of three arbitrators who considered the
matter according to their own rules. However, such a process
does not insure continuity in the decision making process, nor
does it allow any agency or tribunal to develop a level of
expertise with respect to the highly specialized nature of the
inquiry. Consequently, the CRJs are vested with the authority
to consider these questions, thereby allowing for the
development of a consistent body of law on the question of what
constitutes a digital audio technology device or media for
purposes of chapter 10. Necessary technical amendments have
been made to Sec. 1010 to effectuate this change.
In 1995, Congress passed the Digital Performance Right in
Sound Recording Act which, inter alia, amended Sec. 115 to
create a new statutory license for the making and distribution
of nondramatic musical works by means of a digital
transmission. As part of that license, Congress included an
antitrust exemption with respect to collective negotiations and
agreements related to the new statutory license. However, the
provision did not extend to negotiations and agreements related
to the traditional mechanical license. Consequently,
Sec. 115(c)(3)(B) has been amended to cover collective
negotiations and agreements relating to statutory licenses, in
order to harmonize the licensing practices covered by section
115 and conform those practices with similar practices found
elsewhere in the law.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) 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 italics, existing law in which no change
is proposed is shown in roman):
TITLE 17, UNITED STATES CODE
Chap. Sec.
Subject Matter and Scope of Copyright..........................101
* * * * * * *
Copyright Arbitration Royalty Panels..........................801]
Proceedings by Copyright Royalty Judges........................801
* * * * * * *
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 of which no natural person is identified
as author.
* * * * * * *
``Copies'' are material objects, other than
phonorecords, in which a work is fixed by any method
now known or later developed, and from which the work
can be perceived, reproduced, or otherwise
communicated, either directly or with the aid of a
machine or device. The term ``copies'' includes the
material object, other than a phonorecord, in which the
work is first fixed.
A ``Copyright Royalty Judge'' is a Copyright Royalty
Judge appointed under section 802 of this title, and
includes any individual serving as an interim Copyright
Royalty Judge under such section.
* * * * * * *
Sec. 111. Limitations on exclusive rights: Secondary transmissions
(a) * * *
* * * * * * *
(d) Compulsory License for Secondary Transmissions by Cable
Systems.--
(1) * * *
(2) The Register of Copyrights shall receive all fees
deposited under this section and, after deducting the
reasonable costs incurred by the Copyright Office under
this section, shall deposit the balance in the Treasury
of the United States, in such manner as the Secretary
of the Treasury directs. All funds held by the
Secretary of the Treasury shall be invested in
interest-bearing United States securities for later
distribution with interest by the Librarian of Congress
in the event no controversy over distribution exists,
or by [a copyright arbitration royalty panel] the
Copyright Royalty Judges in the event a controversy
over such distribution exists.
* * * * * * *
(4) The royalty fees thus deposited shall be
distributed in accordance with the following
procedures:
(A) During the month of July in each year,
every person claiming to be entitled to
statutory license fees for secondary
transmissions shall file a claim with the
[Librarian of Congress] Copyright Royalty
Judges, in accordance with requirements that
the [Librarian of Congress] Copyright Royalty
Judges shall prescribe by regulation.
Notwithstanding any provisions of the antitrust
laws, for purposes of this clause any claimants
may agree among themselves as to the
proportionate division of statutory licensing
fees among them, may lump their claims together
and file them jointly or as a single claim, or
may designate a common agent to receive payment
on their behalf.
(B) After the first day of August of each
year, the [Librarian of Congress shall, upon
the recommendation of the Register of
Copyrights,] Copyright Royalty Judges shall
determine whether there exists a controversy
concerning the distribution of royalty fees. If
the [Librarian determines] Copyright Royalty
Judges determine that no such controversy
exists, the Librarian shall, after deducting
reasonable administrative costs under this
section, distribute such fees to the copyright
owners entitled to such fees, or to their
designated agents. If the [Librarian] Copyright
Royalty Judges finds the existence of a
controversy, the [Librarian] Copyright Royalty
Judges shall, pursuant to chapter 8 of this
title, [convene a copyright arbitration royalty
panel] conduct a proceeding to determine the
distribution of royalty fees.
(C) During the pendency of any proceeding
under this subsection, the [Librarian of
Congress] Copyright Royalty Judges shall
withhold from distribution an amount sufficient
to satisfy all claims with respect to which a
controversy exists, but shall have discretion
to proceed to distribute any amounts that are
not in controversy.
* * * * * * *
Sec. 112. Limitations on exclusive rights: Ephemeral recordings
(a) * * *
* * * * * * *
(e) Statutory License.--(1) * * *
* * * * * * *
(3) [No later than 30 days after the date of the enactment of
the Digital Millennium Copyright Act, 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 paragraph (1) of this
subsection during the period beginning on the date of the
enactment of such Act and ending on December 31, 2000, or such
other date as the parties may agree.] Voluntary negotiation
proceedings initiated pursuant to section 804(a) for the
purpose of determining reasonable terms and rates of royalty
payments for the activities specified by paragraph (1) shall
cover the 5-year period beginning on January 1 of the second
year following the year in which the proceedings are commenced,
or such other period as the parties may agree. Such rates shall
include a minimum fee for each type of service offered by
transmitting organizations. Any copyright owners of sound
recordings or any transmitting organizations entitled to a
statutory license under this subsection may submit to the
[Librarian of Congress] Copyright Royalty Judges licenses
covering such activities with respect to such sound recordings.
The parties to each negotiation proceeding shall bear their own
costs.
(4) [In the absence of license agreements negotiated under
paragraph (2), during the 60-day period commencing 6 months
after publication of the notice specified in paragraph (3), 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 reasonable
rates and terms which, subject to paragraph (5), shall be
binding on all copyright owners of sound recordings and
transmitting organizations entitled to a statutory license
under this subsection during the period beginning on the date
of the enactment of the Digital Millennium Copyright Act and
ending on December 31, 2000, or such other date as the parties
may agree.] In the absence of license agreements negotiated
under paragraphs (2) and (3), the Copyright Royalty Judges
shall commence a proceeding pursuant to chapter 8 to determine
and publish in the Federal Register a schedule of reasonable
rates and terms which, subject to paragraph (5), shall be
binding on all copyright owners of sound recordings and
transmitting organizations entitled to a statutory license
under this subsection during the 5-year period specified in
paragraph (3), or such other period as the parties may agree.
Such rates shall include a minimum fee for each type of service
offered by transmitting organizations. The [copyright
arbitration royalty panel] Copyright Royalty Judges shall
establish rates that most clearly represent the fees that would
have been negotiated in the marketplace between a willing buyer
and a willing seller. In determining such rates and terms, the
[copyright arbitration royalty panel] Copyright Royalty Judges
shall base [its] their decision on economic, competitive, and
programming information presented by the parties, including--
(A) whether use of the service may substitute for or
may promote the sales of phonorecords or otherwise
interferes with or enhances the copyright owner's
traditional streams of revenue; and
(B) the relative roles of the copyright owner and the
transmitting organization in the copyrighted work and
the service made available to the public with respect
to relative creative contribution, technological
contribution, capital investment, cost, and risk.
In establishing such rates and terms, the [copyright
arbitration royalty] Copyright Royalty Judges panel may
consider the rates and terms under voluntary license agreements
negotiated as provided in paragraphs (2) and (3). The
[Librarian of Congress] Copyright Royalty Judges 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 transmitting organizations entitled to
obtain a statutory license under this subsection.
(5) License agreements voluntarily negotiated at any time
between 1 or more copyright owners of sound recordings and 1 or
more transmitting organizations entitled to obtain a statutory
license under this subsection shall be given effect in lieu of
any determination by a copyright arbitration royalty panel [or
decision by the Librarian of Congress], decision by the
Librarian of Congress, or determination by the Copyright
Royalty Judges.
[(6) Publication of a notice of the initiation of voluntary
negotiation proceedings as specified in paragraph (3) shall be
repeated, in accordance with regulations that the Librarian of
Congress shall prescribe, in the first week of January 2000,
and at 2-year intervals thereafter, except to the extent that
different years for the repeating of such proceedings may be
determined in accordance with paragraph (3). The procedures
specified in paragraph (4) shall be repeated, in accordance
with regulations that the Librarian of Congress shall
prescribe, upon filing of a petition in accordance with section
803(a)(1), during a 60-day period commencing on July 1, 2000,
and at 2-year intervals thereafter, except to the extent that
different years for the repeating of such proceedings may be
determined in accordance with paragraph (3). The procedures
specified in paragraph (4) shall be concluded in accordance
with section 802.]
[(7)] (6)(A) Any person who wishes to make a phonorecord of a
sound recording under a statutory license in accordance with
this subsection may do so without infringing the exclusive
right of the copyright owner of the sound recording under
section 106(1)--
(i) by complying with such notice requirements as the
[Librarian of Congress] Copyright Royalty Judges shall
prescribe by regulation and by paying royalty fees in
accordance with this subsection; or
* * * * * * *
[(8)] (7) If a transmitting organization entitled to make a
phonorecord under this subsection is prevented from making such
phonorecord by reason of the application by the copyright owner
of technical measures that prevent the reproduction of the
sound recording, the copyright owner shall make available to
the transmitting organization the necessary means for
permitting the making of such phonorecord as permitted under
this subsection, if it is technologically feasible and
economically reasonable for the copyright owner to do so. If
the copyright owner fails to do so in a timely manner in light
of the transmitting organization's reasonable business
requirements, the transmitting organization shall not be liable
for a violation of section 1201(a)(1) of this title for
engaging in such activities as are necessary to make such
phonorecords as permitted under this subsection.
[(9)] (8) Nothing in this subsection annuls, limits, impairs,
or otherwise affects in any way the existence or value of any
of the exclusive rights of the copyright owners in a sound
recording, except as otherwise provided in this subsection, or
in a musical work, including the exclusive rights to reproduce
and distribute a sound recording or musical work, including by
means of a digital phonorecord delivery, under sections 106(1),
106(3), and 115, and the right to perform publicly a sound
recording or musical work, including by means of a digital
audio transmission, under sections 106(4) and 106(6).
* * * * * * *
Sec. 114. Scope of exclusive rights in sound recordings
(a) * * *
* * * * * * *
(f) Licenses for Certain Nonexempt Transmissions.--
(1)(A) [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 subscription transmissions by
preexisting subscription services and transmissions by
preexisting satellite digital audio radio services
specified by subsection (d)(2) of this section during
the period beginning on the effective date of such Act
and ending on December 31, 2001, or, if a copyright
arbitration royalty panel is convened, ending 30 days
after the Librarian issues and publishes in the Federal
Register an order adopting the determination of the
copyright arbitration royalty panel or an order setting
the terms and rates (if the Librarian rejects the
panel's determination).] Voluntary negotiation
proceedings initiated pursuant to section 804(a) for
the purpose of determining reasonable terms and rates
of royalty payments for subscription transmissions by
preexisting subscription services and transmissions by
preexisting satellite digital audio radio services
shall cover the 5-year period beginning on January 1 of
the year following the second year in which the
proceedings are commenced, except where differential
transitional periods are provided in section 804(b)(3),
or such other period as the parties may agree. Such
terms and rates shall distinguish among the different
types of digital audio transmission services then in
operation. Any copyright owners of sound recordings,
preexisting subscription services, or preexisting
satellite digital audio radio services may submit to
the [Librarian of Congress] Copyright Royalty Judges
licenses covering such subscription transmissions with
respect to such sound recordings. The parties to each
negotiation proceeding shall bear their own costs.
(B) [In the absence of license agreements negotiated
under subparagraph (A), during the 60-day period
commencing 6 months after publication of the notice
specified in subparagraph (A), 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
affected by this paragraph.] In the absence of license
agreements negotiated under subparagraph (A), the
Copyright Royalty Judges shall commence a proceeding
pursuant to chapter 8 to determine and publish in the
Federal Register a schedule of rates and terms which,
subject to paragraph (3), shall be binding on all
copyright owners of sound recordings and entities
performing sound recordings affected by this paragraph
during the 5-year period specified in subparagraph (A),
or such other date as the parties may agree. In
establishing rates and terms for preexisting
subscription services and preexisting satellite digital
audio radio services, in addition to the objectives set
forth in section 801(b)(1), the [copyright arbitration
royalty panel] Copyright Royalty Judges may consider
the rates and terms for comparable types of
subscription digital audio transmission services and
comparable circumstances under voluntary license
agreements negotiated as provided in subparagraph (A).
[(C)(i) Publication of a notice of the initiation of
voluntary negotiation proceedings as specified in
subparagraph (A) 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, any preexisting subscription
services, or any preexisting satellite digital
audio radio services indicating that a new type
of subscription digital audio transmission
service on which sound recordings are performed
is or is about to become operational; and
[(II) in the first week of January 2001, and
at 5-year intervals thereafter.
[(ii) The procedures specified in subparagraph (B)
shall be repeated, in accordance with regulations that
the Librarian of Congress shall prescribe, upon filing
of a petition in accordance with section 803(a)(1)
during a 60-day period commencing--
[(I) 6 months after publication of a notice
of the initiation of voluntary negotiation
proceedings under subparagraph (A) pursuant to
a petition under clause (i)(I) of this
subparagraph; or
[(II) on July 1, 2001, and at 5-year
intervals thereafter.
[(iii) The procedures specified in subparagraph (B)
shall be concluded in accordance with section 802.]
(C) The procedures under subparagraphs (A) and (B)
also shall be initiated pursuant to a petition filed by
any copyright owners of sound recordings, any
preexisting subscription services, or any preexisting
satellite digital audio radio services indicating that
a new type of subscription digital audio transmission
service on which sound recordings are performed is or
is about to become operational, for the purpose of
determining reasonable terms and rates of royalty
payments with respect to such new type of transmission
service for the period beginning with the inception of
such new type of service and ending on the date on
which the royalty rates and terms for subscription
digital audio transmission services most recently
determined under subparagraph (A) or (B) and chapter 8
expire, or such other period as the parties may agree.
(2)(A) [No later than 30 days after the date of the
enactment of the Digital Millennium Copyright Act, 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 public performances of sound recordings by
means of eligible nonsubscription transmissions and
transmissions by new subscription services specified by
subsection (d)(2) during the period beginning on the
date of the enactment of such Act and ending on
December 31, 2000, or such other date as the parties
may agree.] Voluntary negotiation proceedings initiated
pursuant to section 804(a) for the purpose of
determining reasonable terms and rates of royalty
payments for public performances of sound recordings by
means of eligible nonsubscription transmissions and
transmissions by new subscription services specified by
subsection (d)(2) shall cover the 5-year period
beginning on January 1 of the second year following the
year in which the proceedings are commenced, except
where different transitional periods are provided in
section 804(b)(3)(A), or such other period as the
parties may agree. Such rates and terms shall
distinguish among the different types of eligible
nonsubscription transmission services and new
subscription services then in operation and shall
include a minimum fee for each such type of service.
Any copyright owners of sound recordings or any
entities performing sound recordings affected by this
paragraph may submit to the [Librarian of Congress]
Copyright Royalty Judges licenses covering such
eligible nonsubscription transmissions and new
subscription services with respect to such sound
recordings. The parties to each negotiation proceeding
shall bear their own costs.
(B) [In the absence of license agreements negotiated
under subparagraph (A), during the 60-day period
commencing 6 months after publication of the notice
specified in subparagraph (A), 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
affected by this paragraph during the period beginning
on the date of the enactment of the Digital Millennium
Copyright Act and ending on December 31, 2000, or such
other date as the parties may agree.] In the absence of
license agreements negotiated under subparagraph (A),
the Copyright Royalty Judges shall commence a
proceeding pursuant to chapter 8 to determine and
publish in the Federal Register a schedule of rates and
terms which, subject to paragraph (3), shall be binding
on all copyright owners of sound recordings and
entities performing sound recordings affected by this
paragraph during the period specified in subparagraph
(A), or such other period as the parties may agree.
Such rates and terms shall distinguish among the
different types of eligible nonsubscription
transmission services then in operation and shall
include a minimum fee for each such type of service,
such differences to be based on criteria including, but
not limited to, the quantity and nature of the use of
sound recordings and the degree to which use of the
service may substitute for or may promote the purchase
of phonorecords by consumers. In establishing rates and
terms for transmissions by eligible nonsubscription
services and new subscription services, the [copyright
arbitration royalty panel] Copyright Royalty Judges
shall establish rates and terms that most clearly
represent the rates and terms that would have been
negotiated in the marketplace between a willing buyer
and a willing seller. In determining such rates and
terms, the [copyright arbitration royalty panel]
Copyright Royalty Judges shall base its decision on
economic, competitive and programming information
presented by the parties, including--
(i) whether use of the service may substitute
for or may promote the sales of phonorecords or
otherwise may interfere with or may enhance the
sound recording copyright owner's other streams
of revenue from its sound recordings; and
(ii) the relative roles of the copyright
owner and the transmitting entity in the
copyrighted work and the service made available
to the public with respect to relative creative
contribution, technological contribution,
capital investment, cost, and risk.
In establishing such rates and terms, the [copyright
arbitration royalty panel] Copyright Royalty Judges may
consider the rates and terms for comparable types of
digital audio transmission services and comparable
circumstances under voluntary license agreements
negotiated under subparagraph (A).
[(C)(i) Publication of a notice of the initiation of
voluntary negotiation proceedings as specified in
subparagraph (A) 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 eligible nonsubscription
service or new subscription service indicating
that a new type of eligible nonsubscription
service or new subscription service on which
sound recordings are performed is or is about
to become operational; and
[(II) in the first week of January 2000, and
at 2-year intervals thereafter, except to the
extent that different years for the repeating
of such proceedings may be determined in
accordance with subparagraph (A).
[(ii) The procedures specified in subparagraph (B)
shall be repeated, in accordance with regulations that
the Librarian of Congress shall prescribe, upon filing
of a petition in
accordance with section 803(a)(1) during a 60-day
period commencing--
[(I) 6 months after publication of a notice
of the
initiation of voluntary negotiation proceedings
under subparagraph (A) pursuant to a petition
under clause (i)(I); or
[(II) on July 1, 2000, and at 2-year
intervals thereafter, except to the extent that
different years for the repeating of such
proceedings may be determined in accordance
with subparagraph (A).
[(iii) The procedures specified in subparagraph (B)
shall be concluded in accordance with section 802.]
(C) The procedures under subparagraphs (A) and (B)
shall also be initiated pursuant to a petition filed by
any copyright owners of sound recordings or any
eligible nonsubscription service or new subscription
service indicating that a new type of eligible
nonsubscription service or new subscription service on
which sound recordings are performed is or is about to
become operational, for the purpose of determining
reasonable terms and rates of royalty payments with
respect to such new type of service for the period
beginning with the inception of such new type of
service and ending on the date on which the royalty
rates and terms for preexisting subscription digital
audio transmission services or preexisting satellite
digital radio audio services, as the case may be, most
recently determined under subparagraph (A) or (B) and
chapter 8 expire, or such other period as the parties
may agree.
(3) License agreements voluntarily negotiated at any
time between 1 or more copyright owners of sound
recordings and 1 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], decision by
the Librarian of Congress, or determination by the
Copyright Royalty Judges.
(4)(A) The [Librarian of Congress] Copyright Royalty
Judges 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.
(B) Any person who wishes to perform a sound
recording publicly by means of a transmission eligible
for statutory licensing 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]
Copyright Royalty Judges shall prescribe by
regulation and by paying royalty fees in
accordance with this subsection; or
* * * * * * *
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) * * *
* * * * * * *
(c) Royalty Payable Under Compulsory License.--
(1) * * *
* * * * * * *
(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) * * *
(ii) on or after January 1, 1998, the royalty
payable by the compulsory licensee shall be the
royalty prescribed under subparagraphs (B)
through [(F)] (E) 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] under this section 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)] this
subparagraph and subparagraphs (B) through (E) 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.]
Voluntary negotiation proceedings initiated pursuant to
a petition filed under section 804(a) for the purpose
of determining reasonable terms and rates of royalty
payments for the activities specified by this section
shall cover the period beginning with the effective
date of such terms and rates, but not earlier than
January 1 of the second year following the year in
which the petition is filed, and ending on the
effective date of successor terms and rates, or such
other period as the parties may agree. 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] Copyright Royalty Judges 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 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).] In the absence of
license agreements negotiated under subparagraphs (B)
and (C), the Copyright Royalty Judges shall commence
proceedings pursuant to chapter 8 to determine and
publish in the Federal Register a schedule of rates and
terms which, subject to subparagraph (E), shall be
binding on all copyright owners of nondramatic musical
works and persons entitled to obtain a compulsory
license under subsection (a)(1) during the period
specified in subparagraph (C) or such other period as
may be determined pursuant to subparagraphs (B) and
(C), or such other period as the parties may agree.
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]
Copyright Royalty Judges 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] Copyright Royalty Judges 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] a
copyright arbitration royalty panel, the Librarian of
Congress, or the Copyright Royalty Judges. Subject to
clause (ii), the royalty rates determined pursuant to
subparagraph [(C), (D) or (F) shall be given effect]
(C) or (D) shall be given effect as to digital
phonorecord deliveries in lieu of any contrary royalty
rates specified in a contract pursuant to which a
recording artist who is the author of a nondramatic
musical work grants a license under that person's
exclusive rights in the musical work under paragraphs
(1) and (3) of section 106 or commits another person to
grant a license in that musical work under paragraphs
(1) and (3) of section 106, to a person desiring to fix
in a tangible medium of expression a sound recording
embodying the musical work.
(ii) 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)] (C) or (D) 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)] (C) or (D) for
the number of musical works within the scope of
the contract as of June 22, 1995; and
* * * * * * *
[(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)] (F) 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)] (G)(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) * * *
* * * * * * *
[(I)] (H) 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)] (I) 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)] (J) 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)] (K) 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.
* * * * * * *
Sec. 116. Negotiated licenses for public performances by means of coin-
operated phonorecord players
(a) * * *
(b) Negotiated Licenses.--
(1) * * *
[(2) Arbitration.--Parties not subject to such a
negotiation may determine, by arbitration in accordance
with the provisions of chapter 8, the terms and rates
and the division of fees described in paragraph (1).]
(2) Chapter 8 proceeding.--Parties not subject to
such a negotiation may have the terms and rates and the
division of fees described in paragraph (1) determined
in a proceeding in accordance with the provisions of
chapter 8.
(c) License Agreements Superior to [Copyright Arbitration
Royalty Panel Determinations] Determinations by Copyright
Royalty Judges.--License agreements between one or more
copyright owners and one or more operators of coin-operated
phonorecord players, which are negotiated in accordance with
subsection (b), shall be given effect in lieu of any otherwise
applicable determination by [a copyright arbitration royalty
panel] the Copyright Royalty Judges.
* * * * * * *
Sec. 118. Scope of exclusive rights: Use of certain works in connection
with noncommercial broadcasting
(a) * * *
(b) Notwithstanding any provision of the antitrust laws, any
owners of copyright in published nondramatic musical works and
published pictorial, graphic, and sculptural works and any
public broadcasting entities, respectively, may negotiate and
agree upon the terms and rates of royalty payments and the
proportionate division of fees paid among various copyright
owners, and may designate common agents to negotiate, agree to,
pay, or receive payments.
(1) Any owner of copyright in a work specified in
this subsection or any public broadcasting entity may
submit to the [Librarian of Congress] Copyright Royalty
Judges proposed licenses covering such activities with
respect to such works. [The Librarian of Congress shall
proceed on the basis of the proposals submitted as well
as any other relevant information. The Librarian of
Congress shall permit any interested party to submit
information relevant to such proceedings.]
(2) License agreements, voluntarily negotiated at any
time between one or more copyright owners and one or
more public broadcasting entities shall be given effect
in lieu of any determination by [the Librarian of
Congress: Provided, That copies of such agreements are
filed in the Copyright Office within thirty days of
execution in accordance with regulations that the
Register of Copyrights shall prescribe.] a copyright
arbitration royalty panel, the Librarian of Congress,
or the Copyright Royalty Judge, if copies of such
agreements are filed with the Copyright Royalty Judges
within 30 days of execution in accordance with
regulations that the Copyright Royalty Judges shall
issue.
[(3) In the absence of license agreements negotiated
under paragraph (2), 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 (2), shall be binding on all owners of
copyright in works specified by this subsection and
public broadcasting entities, regardless of whether
such copyright owners have submitted proposals to the
Librarian of Congress.]
(3) Voluntary negotiation proceedings initiated
pursuant to a petition filed under section 804(a) for
the purpose of determining a schedule of terms and
rates of royalty payments by public broadcasting
entities to copyright owners in works specified by this
subsection and the proportionate division of fees paid
among various copyright owners shall cover the 5-year
period beginning on January 1 of the second year
following the year in which the petition is filed. The
parties to each negotiation proceeding shall bear their
own costs.
(4) In the absence of license agreements negotiated
under paragraph (2) or (3), the Copyright Royalty
Judges shall, pursuant to chapter 8, conduct a
proceeding to determine and publish in the Federal
Register a schedule of rates and terms which, subject
to paragraph (2), shall be binding on all owners of
copyright in works specified by this subsection and
public broadcasting entities, regardless of whether
such copyright owners have submitted proposals to the
Copyright Royalty Judges. In establishing such rates
and terms the [copyright arbitration royalty panel]
Copyright Royalty Judges may consider the rates for
comparable circumstances under voluntary license
agreements negotiated as provided in paragraph (2) or
(3). The [Librarian of Congress] Copyright Royalty
Judges 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 by public
broadcasting entities.
[(c) The initial procedure specified in subsection (b) shall
be repeated and concluded between June 30 and December 31,
1997, and at five-year intervals thereafter, in accordance with
regulations that the Librarian of Congress shall prescribe.]
[(d)] (c) Subject to the terms of any voluntary license
agreements that have been negotiated as provided by subsection
(b)(2) or (3), a public broadcasting entity may, upon
compliance with the provisions of this section, including the
rates and terms established by [a copyright arbitration royalty
panel] the Copyright Royalty Judges under subsection [(b)(3)]
(b)(4), engage in the following activities with respect to
published nondramatic musical works and published pictorial,
graphic, and sculptural works:
(1) * * *
* * * * * * *
[(e)] (d) Except as expressly provided in this subsection,
this section shall have no applicability to works other than
those specified in subsection (b). Owners of copyright in
nondramatic literary works and public broadcasting entities
may, during the course of voluntary negotiations, agree among
themselves, respectively, as to the terms and rates of royalty
payments without liability under the antitrust laws. Any such
terms and rates of royalty payments shall be effective upon
filing [in the Copyright Office] with the Copyright Royalty
Judges, in accordance with regulations that the [Register of
Copyrights] Copyright Royalty Judges shall prescribe.
[(f)] (e) Nothing in this section shall be construed to
permit, beyond the limits of fair use as provided by section
107, the unauthorized dramatization of a nondramatic musical
work, the production of a transmission program drawn to any
substantial extent from a published compilation of pictorial,
graphic, or sculptural works, or the unauthorized use of any
portion of an audiovisual work.
[(g)] (f) As used in this section, the term ``public
broadcasting entity'' means a noncommercial educational
broadcast station as defined in section 397 of title 47 and any
nonprofit institution or organization engaged in the activities
described in paragraph (2) of subsection [(d)] (c).
Sec. 119. Limitations on exclusive rights: Secondary transmissions of
superstations and network stations for private home
viewing
(a) * * *
(b) Statutory License for Secondary Transmissions for Private
Home Viewing.--
(1) * * *
* * * * * * *
(3) Persons to whom fees are distributed.--The
royalty fees deposited under paragraph (2) shall, in
accordance with the procedures provided by paragraph
(4), be distributed to those copyright owners whose
works were included in a secondary transmission for
private home viewing made by a satellite carrier during
the applicable 6-month accounting period and who file a
claim with the [Librarian of Congress] Copyright
Royalty Judges under paragraph (4).
(4) Procedures for distribution.--The royalty fees
deposited under paragraph (2) shall be distributed in
accordance with the following procedures:
(A) Filing of claims for fees.--During the
month of July in each year, each person
claiming to be entitled to statutory license
fees for secondary transmissions for private
home viewing shall file a claim with the
[Librarian of Congress] Copyright Royalty
Judges, in accordance with requirements that
the [Librarian of Congress] Copyright Royalty
Judges shall prescribe by regulation. For
purposes of this paragraph, any claimants may
agree among themselves as to the proportionate
division of statutory license fees among them,
may lump their claims together and file them
jointly or as a single claim, or may designate
a common agent to receive payment on their
behalf.
[(B) Determination of controversy;
distributions.--After the first day of August
of each year, the Librarian of Congress shall
determine whether there exists a controversy
concerning the distribution of royalty fees. If
the Librarian of Congress determines that no
such controversy exists, the Librarian of
Congress shall, after deducting reasonable
administrative costs under this paragraph,
distribute such fees to the copyright owners
entitled to receive them, or to their
designated agents. If the Librarian of Congress
finds the existence of a controversy, the
Librarian of Congress shall, pursuant to
chapter 8 of this title, convene a copyright
arbitration royalty panel to determine the
distribution of royalty fees.
[(C) Withholding of fees during
controversy.--During the pendency of any
proceeding under this subsection, the Librarian
of Congress shall withhold from distribution an
amount sufficient to satisfy all claims with
respect to which a controversy exists, but
shall have discretion to proceed to distribute
any amounts that are not in controversy.]
(B) Determination of controversy;
distributions.--After the first day of August
of each year, the Copyright Royalty Judges
shall determine whether there exists a
controversy concerning the distribution of
royalty fees. If the Copyright Royalty Judges
determine that no such controversy exists, the
Librarian of Congress shall, after deducting
reasonable administrative costs under this
paragraph, distribute such fees to the
copyright owners entitled to receive them, or
to their designated agents. If the Copyright
Royalty Judges find the existence of a
controversy, the Copyright Royalty Judges
shall, pursuant to chapter 8 of this title,
conduct a proceeding to determine the
distribution of royalty fees.
(C) Withholding of fees during controversy.--
During the pendency of any proceeding under
this subsection, the Copyright Royalty Judges
shall withhold from distribution an amount
sufficient to satisfy all claims with respect
to which a controversy exists, subject to any
distributions made under section 801(b)(3).
* * * * * * *
[CHAPTER 8--COPYRIGHT ARBITRATION ROYALTY PANELS
[Sec.
[801. Copyright arbitration royalty panels: Establishment and purpose.
[802. Membership and proceedings of copyright arbitration royalty
panels.
[803. Institution and conclusion of proceedings.
[Sec. 801. Copyright arbitration royalty panels: Establishment and
purpose
[(a) Establishment.--The Librarian of Congress, upon the
recommendation of the Register of Copyrights, is authorized to
appoint and convene copyright arbitration royalty panels.
[(b) Purposes.--Subject to the provisions of this chapter,
the purposes of the copyright arbitration royalty panels shall
be as follows:
[(1) To make determinations concerning the adjustment
of reasonable copyright royalty rates as provided in
sections 114, 115, 116, and 119, and to make
determinations as to reasonable terms and rates of
royalty payments as provided in section 118. The rates
applicable under sections 114(f)(1)(B), 115, and 116
shall be calculated to achieve the following
objectives:
[(A) To maximize the availability of creative
works to the public;
[(B) To afford the copyright owner a fair
return for his creative work and the copyright
user a fair income under existing economic
conditions;
[(C) To reflect the relative roles of the
copyright owner and the copyright user in the
product made available to the public with
respect to relative creative contribution,
technological contribution, capital investment,
cost, risk, and contribution to the opening of
new markets for creative expression and media
for their communication;
[(D) To minimize any disruptive impact on the
structure of the industries involved and on
generally prevailing industry practices.
[(2) To make determinations concerning the adjustment
of the copyright royalty rates in section 111 solely in
accordance with the following provisions:
[(A) The rates established by section
111(d)(1)(B) may be adjusted to reflect (i)
national monetary inflation or deflation or
(ii) changes in the average rates charged cable
subscribers for the basic service of providing
secondary transmissions to maintain the real
constant dollar level of the royalty fee per
subscriber which existed as of the date of
enactment of this Act: Provided, That if the
average rates charged cable system subscribers
for the basic service of providing secondary
transmissions are changed so that the average
rates exceed national monetary inflation, no
change in the rates established by section
111(d)(1)(B) shall be permitted: And provided
further, That no increase in the royalty fee
shall be permitted based on any reduction in
the average number of distant signal
equivalents per subscriber. The copyright
arbitration royalty panels may consider all
factors relating to the maintenance of such
level of payments including, as an extenuating
factor, whether the cable industry has been
restrained by subscriber rate regulating
authorities from increasing the rates for the
basic service of providing secondary
transmissions.
[(B) In the event that the rules and
regulations of the Federal Communications
Commission are amended at any time after April
15, 1976, to permit the carriage by cable
systems of additional television broadcast
signals beyond the local service area of the
primary transmitters of such signals, the
royalty rates established by section
111(d)(1)(B) may be adjusted to insure that the
rates for the additional distant signal
equivalents resulting from such carriage are
reasonable in the light of the changes effected
by the amendment to such rules and regulations.
In determining the reasonableness of rates
proposed following an amendment of Federal
Communications Commission rules and
regulations, the copyright arbitration royalty
panels shall consider, among other factors, the
economic impact on copyright owners and users:
Provided, That no adjustment in royalty rates
shall be made under this subclause with respect
to any distant signal equivalent or fraction
thereof represented by (i) carriage of any
signal permitted under the rules and
regulations of the Federal Communications
Commission in effect on April 15, 1976, or the
carriage of a signal of the same type (that is,
independent, network, or noncommercial
educational) substituted for such permitted
signal, or (ii) a television broadcast signal
first carried after April 15, 1976, pursuant to
an individual waiver of the rules and
regulations of the Federal Communications
Commission, as such rules and regulations were
in effect on April 15, 1976.
[(C) In the event of any change in the rules
and regulations of the Federal Communications
Commission with respect to syndicated and
sports program exclusivity after April 15,
1976, the rates established by section
111(d)(1)(B) may be adjusted to assure that
such rates are reasonable in light of the
changes to such rules and regulations, but any
such adjustment shall apply only to the
affected television broadcast signals carried
on those systems affected by the change.
[(D) The gross receipts limitations
established by section 111(d)(1)(C) and (D)
shall be adjusted to reflect national monetary
inflation or deflation or changes in the
average rates charged cable system subscribers
for the basic service of providing secondary
transmissions to maintain the real constant
dollar value of the exemption provided by such
section; and the royalty rate specified therein
shall not be subject to adjustment.
[(3) To distribute royalty fees deposited with the
Register of Copyrights under sections 111, 116, 119(b),
and 1003, and to determine, in cases where controversy
exists, the distribution of such fees.
[(c) Rulings.--The Librarian of Congress, upon the
recommendation of the Register of Copyrights, may, before a
copyright arbitration royalty panel is convened, make any
necessary procedural or evidentiary rulings that would apply to
the proceedings conducted by such panel, including--
[(1) authorizing the distribution of those royalty
fees collected under sections 111, 119, and 1005 that
the Librarian has found are not subject to controversy;
and
[(2) accepting or rejecting royalty claims filed
under sections 111, 119, and 1007 on the basis of
timeliness or the failure to establish the basis for a
claim.
[(d) Support and Reimbursement of Arbitration Panels.--The
Librarian of Congress, upon the recommendation of the Register
of Copyrights, shall provide the copyright arbitration royalty
panels with the necessary administrative services related to
proceedings under this chapter, and shall reimburse the
arbitrators presiding in distribution proceedings at such
intervals and in such manner as the Librarian shall provide by
regulation. Each such arbitrator is an independent contractor
acting on behalf of the United States, and shall be hired
pursuant to a signed agreement between the Library of Congress
and the arbitrator. Payments to the arbitrators shall be
considered reasonable costs incurred by the Library of Congress
and the Copyright Office for purposes of section 802(h)(1).
[Sec. 802. Membership and proceedings of copyright arbitration royalty
panels
[(a) Composition of Copyright Arbitration Royalty Panels.--A
copyright arbitration royalty panel shall consist of 3
arbitrators selected by the Librarian of Congress pursuant to
subsection (b).
[(b) Selection of Arbitration Panel.--Not later than 10 days
after publication of a notice in the Federal Register
initiating an arbitration proceeding under section 803, and in
accordance with procedures specified by the Register of
Copyrights, the Librarian of Congress shall, upon the
recommendation of the Register of Copyrights, select 2
arbitrators from lists provided by professional arbitration
associations. Qualifications of the arbitrators shall include
experience in conducting arbitration proceedings and
facilitating the resolution and settlement of disputes, and any
qualifications which the Librarian of Congress, upon the
recommendation of the Register of Copyrights, shall adopt by
regulation. The 2 arbitrators so selected shall, within 10 days
after their selection, choose a third arbitrator from the same
lists, who shall serve as the chairperson of the arbitrators.
If such 2 arbitrators fail to agree upon the selection of a
third arbitrator, the Librarian of Congress shall promptly
select the third arbitrator. The Librarian of Congress, upon
the recommendation of the Register of Copyrights, shall adopt
regulations regarding standards of conduct which shall govern
arbitrators and the proceedings under this chapter.
[(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, 112, 114, 116, or 119,
any transmitting organization entitled to a statutory license
under section 112(g), any person entitled to a statutory
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.
[(d) Procedures.--Effective on the date of the enactment of
the Copyright Royalty Tribunal Reform Act of 1993, the
Librarian of Congress shall adopt the rules and regulations set
forth in chapter 3 of title 37 of the Code of Federal
Regulations to govern proceedings under this chapter. Such
rules and regulations shall remain in effect unless and until
the Librarian, upon the recommendation of the Register of
Copyrights, adopts supplemental or superseding regulations
under subchapter II of chapter 5 of title 5.
[(e) Report to the Librarian of Congress.--Not later than 180
days after publication of the notice in the Federal Register
initiating an arbitration proceeding, the copyright arbitration
royalty panel conducting the proceeding shall report to the
Librarian of Congress its determination concerning the royalty
fee or distribution of royalty fees, as the case may be. Such
report shall be accompanied by the written record, and shall
set forth the facts that the arbitration panel found relevant
to its determination.
[(f) Action by Librarian of Congress.--Within 90 days after
receiving the report of a copyright arbitration royalty panel
under subsection (e), the Librarian of Congress, upon the
recommendation of the Register of Copyrights, shall adopt or
reject the determination of the arbitration panel. The
Librarian shall adopt the determination of the arbitration
panel unless the Librarian finds that the determination is
arbitrary or contrary to the applicable provisions of this
title. If the Librarian rejects the determination of the
arbitration panel, the Librarian shall, before the end of an
additional 30-day period, and after full examination of the
record created in the arbitration proceeding, issue an order
setting the royalty fee or distribution of fees, as the case
may be. The Librarian shall cause to be published in the
Federal Register the determination of the arbitration panel,
and the decision of the Librarian (including an order issued
under the preceding sentence). The Librarian shall also
publicize such determination and decision in such other manner
as the Librarian considers appropriate. The Librarian shall
also make the report of the arbitration panel and the
accompanying record available for public inspection and
copying.
[(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.
When this title provides that the royalty rates or terms that
were previously in effect are to expire on a specified date,
any adjustment by the Librarian of those rates or terms shall
be effective as of the day following the date of expiration of
the rates or terms that were previously in effect, even if the
Librarian's decision is rendered on a later date. The pendency
of an appeal under this paragraph shall not relieve persons
obligated to make royalty payments under sections 111, 112,
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) Deduction of costs of library of congress and
copyright office from royalty fees.--The Librarian of
Congress and the Register of Copyrights may, to the
extent not otherwise provided under this title, deduct
from royalty fees deposited or collected under this
title the reasonable costs incurred by the Library of
Congress and the Copyright Office under this chapter.
Such deduction may be made before the fees are
distributed to any copyright claimants. In addition,
all funds made available by an appropriations Act as
offsetting collections and available for deductions
under this subsection shall remain available until
expended. In ratemaking proceedings, the reasonable
costs of the Librarian of Congress and the Copyright
Office shall be borne by the parties to the proceedings
as directed by the arbitration panels under subsection
(c).
[(2) Positions required for administration of
compulsory licensing.--Section 307 of the Legislative
Branch Appropriations Act, 1994, shall not apply to
employee positions in the Library of Congress that are
required to be filled in order to carry out section
111, 112, 114, 115, 116, 118, or 119 or chapter 10.
[Sec. 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 112, 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), (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).
[(4)(A) In proceedings under section 801(b)(1) concerning the
adjustment of royalty rates as provided in section 116, a
petition described in paragraph (1) may be filed at any time
within 1 year after negotiated licenses authorized by section
116 are terminated or expire and are not replaced by subsequent
agreements.
[(B) If a negotiated license authorized by section 116 is
terminated or expires and is not replaced by another such
license agreement which provides permission to use a quantity
of musical works not substantially smaller than the quantity of
such works performed on coin-operated phonorecord players
during the 1-year period ending March 1, 1989, the Librarian of
Congress shall, upon petition filed under paragraph (1) within
1 year after such termination or expiration, convene a
copyright arbitration royalty panel. The arbitration panel
shall promptly establish an interim royalty rate or rates for
the public performance by means of a coin-operated phonorecord
player of non-dramatic musical works embodied in phonorecords
which had been subject to the terminated or expired negotiated
license agreement. Such rate or rates shall be the same as the
last such rate or rates and shall remain in force until the
conclusion of proceedings by the arbitration panel, in
accordance with section 802, to adjust the royalty rates
applicable to such works, or until superseded by a new
negotiated license agreement, as provided in section 116(b).
[(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 112 or 114, the
Librarian of Congress shall proceed when and as provided by
those sections.
[(b) With respect to proceedings under subparagraph (B) or
(C) of section 801(b)(2), following an event described in
either of those subsections, any owner or user of a copyrighted
work whose royalty rates are specified by section 111, or by a
rate established by the Copyright Royalty Tribunal or the
Librarian of Congress, may, within twelve months, file a
petition with the Librarian declaring that the petitioner
requests an adjustment of the rate. In this event the Librarian
shall proceed as in subsection (a) of this section. Any change
in royalty rates made by the Copyright Royalty Tribunal or the
Librarian of Congress pursuant to this subsection may be
reconsidered in 1980, 1985, and each fifth calendar year
thereafter, in accordance with the provisions in section
801(b)(2)(B) or (C), as the case may be.
[(c) With respect to proceedings under section 801(b)(1),
concerning the determination of reasonable terms and rates of
royalty payments as provided in section 118, the Librarian of
Congress shall proceed when and as provided by that section.
[(d) With respect to proceedings under section 801(b)(3) or
(4), concerning the distribution of royalty fees in certain
circumstances under section 111, 116, 119, or 1007, the
Librarian of Congress shall, upon a determination that a
controversy exists concerning such distribution, cause to be
published in the Federal Register notice of commencement of
proceedings under this chapter.]
CHAPTER 8--PROCEEDINGS BY COPYRIGHT ROYALTY JUDGES
Sec.
801. Copyright Royalty Judges; appointment and functions.
802. Copyright Royalty Judgeships; staff.
803. Proceedings of Copyright Royalty Judges.
804. Institution of proceedings.
805. General rule for voluntarily negotiated agreements.
Sec. 801. Copyright Royalty Judges; appointment and functions
(a) Appointment.--The Librarian of Congress shall appoint 3
full-time Copyright Royalty Judges, and shall appoint one of
the three as the Chief Copyright Royalty Judge. In making such
appointments, the Librarian shall consult with the Register of
Copyrights.
(b) Functions.--Subject to the provisions of this chapter,
the functions of the Copyright Royalty Judges shall be as
follows:
(1) To make determinations and adjustments of
reasonable terms and rates of royalty payments as
provided in sections 112(e), 114, 115, 116, 118, 119
and 1004. The rates applicable under sections
114(f)(1)(B), 115, and 116 shall be calculated to
achieve the following objectives:
(A) To maximize the availability of creative
works to the public.
(B) To afford the copyright owner a fair
return for his or her creative work and the
copyright user a fair income under existing
economic conditions.
(C) To reflect the relative roles of the
copyright owner and the copyright user in the
product made available to the public with
respect to relative creative contribution,
technological contribution, capital investment,
cost, risk, and contribution to the opening of
new markets for creative expression and media
for their communication.
(D) To minimize any disruptive impact on the
structure of the industries involved and on
generally prevailing industry practices.
(2) To make determinations concerning the adjustment
of the copyright royalty rates under section 111 solely
in accordance with the following provisions:
(A) The rates established by section
111(d)(1)(B) may be adjusted to reflect--
(i) national monetary inflation or
deflation; or
(ii) changes in the average rates
charged cable subscribers for the basic
service of providing secondary
transmissions to maintain the real
constant dollar level of the royalty
fee per subscriber which existed as of
the date of October 19, 1976,
except that--
(I) if the average rates charged
cable system subscribers for the basic
service of providing secondary
transmissions are changed so that the
average rates exceed national monetary
inflation, no change in the rates
established by section 111(d)(1)(B)
shall be permitted; and
(II) no increase in the royalty fee
shall be permitted based on any
reduction in the average number of
distant signal equivalents per
subscriber.
The Copyright Royalty Judges may consider all
factors relating to the maintenance of such
level of payments, including, as an extenuating
factor, whether the industry has been
restrained by subscriber rate regulating
authorities from increasing the rates for the
basic service of providing secondary
transmissions.
(B) In the event that the rules and
regulations of the Federal Communications
Commission are amended at any time after April
8, 1976, to permit the carriage by cable
systems of additional television broadcast
signals beyond the local service area of the
primary transmitters of such signals, the
royalty rates established by section
111(d)(1)(B) may be adjusted to insure that the
rates for the additional distant signal
equivalents resulting from such carriage are
reasonable in the light of the changes effected
by the amendment to such rules and regulations.
In determining the reasonableness of rates
proposed following an amendment of Federal
Communications Commission rules and
regulations, the Copyright Royalty Judges shall
consider, among other factors, the economic
impact on copyright owners and users; except
that no adjustment in royalty rates shall be
made under this subparagraph with respect to
any distant signal equivalent or fraction
thereof represented by--
(i) carriage of any signal permitted
under the rules and regulations of the
Federal Communications Commission in
effect on April 15, 1976, or the
carriage of a signal of the same type
(that is, independent, network, or
noncommercial educational) substituted
for such permitted signal; or
(ii) a television broadcast signal
first carried after April 15, 1976,
pursuant to an individual waiver of the
rules and regulations of the Federal
Communications Commission, as such
rules and regulations were in effect on
April 15, 1976.
(C) In the event of any change in the rules
and regulations of the Federal Communications
Commission with respect to syndicated and
sports program exclusivity after April 15,
1976, the rates established by section
111(d)(1)(B) may be adjusted to assure that
such rates are reasonable in light of the
changes to such rules and regulations, but any
such adjustment shall apply only to the
affected television broadcast signals carried
on those systems affected by the change.
(D) The gross receipts limitations
established by section 111(d)(1)(C) and (D)
shall be adjusted to reflect national monetary
inflation or deflation or changes in the
average rates charged cable system subscribers
for the basic service of providing secondary
transmissions to maintain the real constant
dollar value of the exemption provided by such
section, and the royalty rate specified therein
shall not be subject to adjustment.
(3) To authorize the distribution, under sections
111, 119, and 1007, of those royalty fees collected
under sections 111, 119, and 1005, as the case may be,
to the extent that the Copyright Royalty Judges have
found that the distribution of such fees is not subject
to controversy. In cases where the Copyright Royalty
Judges determine that controversy exists--
(A) the Copyright Royalty Judges shall
determine the distribution of such fees, in
accordance with section 111, 119, or 1007, as
the case may be; and
(B) the Copyright Royalty Judges shall make a
partial distribution of such fees during the
pendency of the proceeding under subparagraph
(A) if all participants under section 803(b)(2)
in the proceeding--
(i) agree to such partial
distribution;
(ii) sign an agreement obligating
them to return any excess amounts to
the extent necessary to comply with the
final determination on the distribution
of the fees made under subparagraph
(A); and
(iii) file the agreement with the
Copyright Royalty Judges.
The Copyright Royalty Judges and any other officer or
employee acting in good faith in distributing funds
under subparagraph (B) shall not be held liable for the
payment of any excess fees under subparagraph (B). The
Copyright Royalty Judges shall, at the time the final
determination is made, calculate any such excess
amounts.
(4) To accept or reject royalty claims filed under
section 111, 119, and 1007, on the basis of timeliness
or the failure to establish the basis for a claim.
(5) To accept or reject rate adjustment petitions as
provided in section 804 and petitions to participate as
provided in section 803(b)(1) and (2).
(6) To determine the status of a digital audio
recording device or a digital audio interface device
under sections 1002 and 1003, as provided in section
1010.
(7)(A) To adopt as the basis for statutory terms and
rates or as a basis for the distribution of statutory
royalty payments, an agreement concerning such matters
reached among some or all of the participants in a
proceeding at any time during the proceeding, except
that--
(i) the Copyright Royalty Judges shall
provide to the other participants in the
proceeding under section 803(b)(2) that would
be bound by the terms, rates, distribution, or
other determination set by the agreement an
opportunity to comment on the agreement and
object to its adoption as the basis for
statutory terms and rates or as a basis for the
distribution of statutory royalty payments, as
the case may be; and
(ii) the Copyright Royalty Judges may decline
to adopt the agreement as the basis for
statutory terms and rates or as the basis for
the distribution of statutory royalty payments,
as the case may be, if any other participant
described in subparagraph (A) objects to the
agreement and the Copyright Royalty Judges
find, based on the record before them, that the
agreement is not likely to meet the statutory
standard for setting the terms and rates, or
for distributing the royalty payments, as the
case may be.
(B) License agreements voluntarily negotiated
pursuant to section 112(e)(5), 114(f)(3),
115(c)(3)(E)(i), 116(c), or 118(b)(2) that do not
result in statutory terms and rates shall not be
subject to clauses (i) and (ii) of subparagraph (A).
(c) Rulings.--The Copyright Royalty Judges may make any
necessary procedural or evidentiary rulings in any proceeding
under this chapter and may, before commencing a proceeding
under this chapter, make any such rulings that would apply to
the proceedings conducted by the Copyright Royalty Judges. The
Copyright Royalty Judges may consult with the Register of
Copyrights in making any rulings under section 802(f)(1).
(d) Administrative Support.--The Librarian of Congress shall
provide the Copyright Royalty Judges with the necessary
administrative services related to proceedings under this
chapter.
(e) Location in Library of Congress.--The offices of the
Copyright Royalty Judges and staff shall be in the Library of
Congress.
Sec. 802. Copyright Royalty Judgeships; staff
(a) Qualifications of Copyright Royalty Judges.--Each
Copyright Royalty Judge shall be an attorney who has at least 7
years of legal experience. The Chief Copyright Royalty Judge
shall have at least 5 years of experience in adjudications,
arbitrations, or court trials. Of the other two Copyright
Royalty Judges, one shall have significant knowledge of
copyright law, and the other shall have significant knowledge
of economics. An individual may serve as a Copyright Royalty
Judge only if the individual is free of any financial conflict
of interest under subsection (h). In this subsection,
``adjudication'' has the meaning given that term in section 551
of title 5, but does not include mediation.
(b) Staff.--The Chief Copyright Royalty Judge shall hire 3
full-time staff members to assist the Copyright Royalty Judges
in performing their functions.
(c) Terms.--The terms of the Copyright Royalty Judges shall
each be 6 years, except of the individuals first appointed, the
Chief Copyright Royalty Judge shall be appointed to a term of 6
years, and of the remaining Copyright Royalty Judges, one shall
be appointed to a term of 2 years, and the other shall be
appointed to a term of 4 years. An individual serving as a
Copyright Royalty Judge may be reappointed to subsequent terms.
The term of a Copyright Royalty Judge shall begin when the term
of the predecessor of that Copyright Royalty Judge ends. When
the term of office of a Copyright Royalty Judge ends, the
individual serving that term may continue to serve until a
successor is selected.
(d) Vacancies or Incapacity.--
(1) Vacancies.--If a vacancy should occur in the
position of Copyright Royalty Judge, the Librarian of
Congress shall act expeditiously to fill the vacancy,
and may appoint an interim Copyright Royalty Judge to
serve until another Copyright Royalty Judge is
appointed under this section. An individual appointed
to fill the vacancy occurring before the expiration of
the term for which the predecessor of that individual
was appointed shall be appointed for the remainder of
that term.
(2) Incapacity.--In the case in which a Copyright
Royalty Judge is temporarily unable to perform his or
her duties, the Librarian of Congress may appoint an
interim Copyright Royalty Judge to perform such duties
during the period of such incapacity.
(e) Compensation.--
(1) Judges.--The Chief Copyright Royalty Judge shall
receive compensation at the rate of basic pay payable
for level AL-1 for administrative law judges pursuant
to section 5372(b) of title 5, and each of the other
two Copyright Royalty Judges shall receive compensation
at the rate of basic pay payable for level AL-2 for
administrative law judges pursuant to such section. The
compensation of the Copyright Royalty Judges shall not
be subject to any regulations adopted by the Office of
Personnel Management pursuant to its authority under
section 5376(b)(1) of title 5.
(2) Staff members.--Of the staff members appointed
under subsection (b)--
(A) the rate of pay of one staff member shall
be not more than the basic rate of pay payable
for GS-15 of the General Schedule;
(B) the rate of pay of one staff member shall
be not less than the basic rate of pay payable
for GS-13 of the General Schedule and not more
than the basic rate of pay payable for GS-14 of
such Schedule; and
(C) the rate of pay for the third staff
member shall be not less than the basic rate of
pay payable for GS-8 of the General Schedule
and not more than the basic rate of pay payable
for GS-11 of such Schedule.
(f) Independence of Copyright Royalty Judge.--
(1) In making determinations.--
(A) In general.--Subject to subparagraph (B),
the Copyright Royalty Judges shall have full
independence in making determinations
concerning adjustments and determinations of
copyright royalty rates and terms, the
distribution of copyright royalties, the
acceptance or rejection of royalty claims, rate
adjustment petitions, and petitions to
participate, and in issuing other rulings under
this title, except that the Copyright Royalty
Judges may consult with the Register of
Copyrights on any matter other than a question
of fact. Any such consultations between the
Copyright Royalty Judges and the Register of
Copyright on any question of law shall be in
writing or on the record.
(B) Novel questions.--(i) Notwithstanding the
provisions of subparagraph (A), in any case in
which the Copyright Royalty Judges in a
proceeding under this title are presented with
a novel question of law concerning an
interpretation of those provisions of this
title that are the subject of the proceeding,
the Copyright Royalty Judges shall request the
Register of Copyrights, in writing, to submit a
written opinion on the resolution of such novel
question. The Register shall submit and make
public that opinion within such time period as
the Copyright Royalty Judges may prescribe. Any
consultations under this subparagraph between
the Copyright Royalty Judges and the Register
of Copyrights shall be in writing or on the
record. The opinion of the Register shall not
be binding on the Copyright Royalty Judges, but
the Copyright Royalty Judges shall take the
opinion of the Register into account in making
the judges' determination on the question
concerned.
(ii) In clause (i), a ``novel question of
law'' is a question of law that has not been
determined in prior decisions, determinations,
and rulings described in section 803(a).
(2) Performance appraisals.--
(A) In general.--Notwithstanding any other
provision of law or any regulation of the
Library of Congress, and subject to
subparagraph (B), the Copyright Royalty Judges
shall not receive performance appraisals.
(B) Relating to sanction or removal.--To the
extent that the Librarian of Congress adopts
regulations under subsection (h) relating to
the sanction or removal of a Copyright Royalty
Judge and such regulations require
documentation to establish the cause of such
sanction or removal, the Copyright Royalty
Judge may receive an appraisal related
specifically to the cause of the sanction or
removal.
(g) Inconsistent Duties Barred.--No Copyright Royalty Judge
may undertake duties inconsistent with his or her duties and
responsibilities as Copyright Royalty Judge.
(h) Standards of Conduct.--The Librarian of Congress shall
adopt regulations regarding the standards of conduct, including
financial conflict of interest and restrictions against ex
parte communications, which shall govern the Copyright Royalty
Judges and the proceedings under this chapter.
(i) Removal or Sanction.--The Librarian of Congress may
sanction or remove a Copyright Royalty Judge for violation of
the standards of conduct adopted under subsection (h),
misconduct, neglect of duty, or any disqualifying physical or
mental disability. Any such sanction or removal may be made
only after notice and opportunity for a hearing, but the
Librarian of Congress may suspend the Copyright Royalty Judge
during the pendency of such hearing. The Librarian shall
appoint an interim Copyright Royalty Judge during the period of
any such suspension.
Sec. 803. Proceedings of Copyright Royalty Judges
(a) Proceedings.--
(1) In general.--The Copyright Royalty Judges shall
act in accordance with this title, and to the extent
not inconsistent with this title, in accordance with
subchapter II of chapter 5 of title 5, in carrying out
the purposes set forth in section 801. The Copyright
Royalty Judges shall act in accordance with regulations
issued by the Copyright Royalty Judges and on the basis
of a fully documented written record, prior decisions
of the Copyright Royalty Tribunal, prior copyright
arbitration royalty panel determinations, rulings by
the Librarian of Congress before the effective date of
the Copyright Royalty and Distribution Reform Act of
2003, prior determinations of Copyright Royalty Judges
under this chapter, and decisions of the court in
appeals under this chapter before, on, or after such
effective date. Any participant in a proceeding under
subsection (b)(2) may submit relevant information and
proposals to the Copyright Royalty Judges.
(2) Judges acting as panel and individually.--The
Copyright Royalty Judges shall preside over hearings in
proceedings under this chapter en banc. The Chief
Copyright Royalty Judge may designate a Copyright
Royalty Judge to preside individually over such
collateral and administrative proceedings, and over
such proceedings under paragraphs (1) through (5) of
subsection (b), as the Chief Judge considers
appropriate.
(3) Determinations.--Final determinations of the
Copyright Royalty Judges in proceedings under this
chapter shall be made by majority vote. A Copyright
Royalty Judge dissenting from the majority on any
determination under this chapter may issue his or her
dissenting opinion, which shall be included with the
determination.
(b) Procedures.--
(1) Initiation.--
(A) Call for petitions to participate.--(i)
Promptly upon the filing of a petition for a
rate adjustment or determination under section
804(a) or 804(b)(8), or by no later than
January 5 of a year specified in section 804
for the commencement of a proceeding if a
petition has not been filed by that date, the
Copyright Royalty Judges shall cause to be
published in the Federal Register notice of
commencement of proceedings under this chapter
calling for the filing of petitions to
participate in a proceeding under this chapter
for the purpose of making the relevant
determination under section 111, 112, 114, 115,
116, 118, 119, 1004 or 1007, as the case may
be.
(ii) Petitions to participate shall be filed
by no later than 30 days after publication of
notice of commencement of a proceeding, under
clause (i), except that the Copyright Royalty
Judges may, for substantial good cause shown
and if there is no prejudice to the
participants that have already filed petitions,
accept late petitions to participate at any
time up to the date that is 90 days before the
date on which participants in the proceeding
are to file their written direct statements.
(B) Petitions to participate.--Each petition
to participate in a proceeding shall describe
the petitioner's interest in the subject matter
of the proceeding. Parties with similar
interests may file a single petition to
participate.
(2) Participation in general.--Subject to paragraph
(4), a person may participate in a proceeding under
this chapter, including through the submission of
briefs or other information, only if--
(A) that person has filed a petition to
participate in accordance with paragraph (1)
(either individually or as a group under
paragraph (1)(B)), together with a filing fee
of $150;
(B) the Copyright Royalty Judges have not
determined that the petition to participate is
facially invalid; and
(C) the Copyright Royalty Judges have not
determined, sua sponte or on the motion of
another participant in the proceeding, that the
person lacks a significant interest in the
proceeding.
(3) Voluntary negotiation period.--
(A) In general.--Promptly after the date for
filing of petitions to participate in a
proceeding, the Copyright Royalty Judges shall
make available to all participants in the
proceeding a list of such participants and
shall initiate a voluntary negotiation period
among the participants.
(B) Length of proceedings.--The voluntary
negotiation period initiated under subparagraph
(A) shall be 3 months.
(C) Determination of subsequent
proceedings.--At the close of the voluntary
negotiation proceedings, the Copyright Royalty
Judges shall, if further proceedings under this
chapter are necessary, determine whether and to
what extent paragraphs (4) and (5) will apply
to the parties.
(4) Small claims procedure in distribution
proceedings.--
(A) In general.--If, in a proceeding under
this chapter to determine the distribution of
royalties, a participant in the proceeding
asserts that the contested amount of the claim
is $10,000 or less, the Copyright Royalty
Judges shall decide the controversy on the
basis of the filing in writing of the initial
claim, the initial response by any opposing
participant, and one additional response by
each such party. The participant asserting the
claim shall not be required to pay the filing
fee under paragraph (2).
(B) Bad faith inflation of claim.--If the
Copyright Royalty Judges determine that a
participant asserts in bad faith an amount in
controversy in excess of $10,000 for the
purpose of avoiding a determination under the
procedure set forth in subparagraph (A), the
Copyright Royalty Judges shall impose a fine on
that participant in an amount not to exceed the
difference between the actual amount
distributed and the amount asserted by the
participant.
(5) Paper proceedings in ratemaking proceedings.--The
Copyright Royalty Judges in proceedings under this
chapter to determine royalty rates may decide, sua
sponte or upon motion of a participant, to determine
issues on the basis of initial filings in writing,
initial responses by any opposing participant, and one
additional response by each such participant. Prior to
making such decision to proceed on such a paper record
only, the Copyright Royalty Judges shall offer to all
parties to the proceeding the opportunity to comment on
the decision. The procedure under this paragraph--
(A) shall be applied in cases in which there
is no genuine issue of material fact, there is
no need for evidentiary hearings, and all
participants in the proceeding agree in writing
to the procedure; and
(B) may be applied under such other
circumstances as the Copyright Royalty Judges
consider appropriate.
(6) Regulations.--
(A) In general.--The Copyright Royalty Judges
may issue regulations to carry out their
functions under this title. Not later than 120
days after Copyright Royalty Judges or interim
Copyright Royalty Judges, as the case may be,
are first appointed after the enactment of the
Copyright Royalty and Distribution Reform Act
of 2003, such judges shall issue regulations to
govern proceedings under this chapter.
(B) Interim regulations.--Until regulations
are adopted under subparagraph (A), the
Copyright Royalty Judges shall apply the
regulations in effect under this chapter on the
day before the effective date of the Copyright
Royalty and Distribution Reform Act of 2003, to
the extent such regulations are not
inconsistent with this chapter, except that
functions carried out under such regulations by
the Librarian of Congress, the Register of
Copyrights, or copyright arbitration royalty
panels that, as of such date of enactment, are
to be carried out by the Copyright Royalty
Judges under this chapter, shall be carried out
by the Copyright Royalty Judges under such
regulations.
(C) Requirements.--Regulations issued under
subparagraph (A) shall include the following:
(i) The written direct statements of
all participants in a proceeding under
paragraph (2) shall be filed by a date
specified by the Copyright Royalty
Judges, which may be no earlier than
four months, and no later than five
months, after the end of the voluntary
negotiation period under paragraph (3).
Notwithstanding the preceding sentence,
a participant in a proceeding may,
within 15 days after the end of the
discovery period specified in clause
(iii), file an amended written direct
statement based on new information
received during the discovery process.
(ii)(I) Following the submission to
the Copyright Royalty Judges of written
direct statements by the participants
in a proceeding under paragraph (2),
the judges shall meet with the
participants for the purpose of setting
a schedule for conducting and
completing discovery. Such schedule
shall be determined by the Copyright
Royalty Judges.
(II) In this chapter, the term
``written direct statements'' means
witness statements, testimony, and
exhibits to be presented in the
proceedings, and such other information
that is necessary to establish terms
and rates, or the distribution of
royalty payments, as the case may be,
as set forth in regulations issued by
the Copyright Royalty Judges.
(iii) Hearsay may be admitted in
proceedings under this chapter to the
extent deemed appropriate by the
Copyright Royalty Judges.
(iv) Discovery in such proceedings
shall be permitted for a period of 60
days, except for discovery ordered by
the Copyright Royalty Judges in
connection with the resolution of
motions, orders and disputes pending at
the end of such period.
(v) Any participant under paragraph
(2) in a proceeding under this chapter
to determine royalty rates may, upon
written notice, seek discovery of
information and materials relevant and
material to the proceeding. Any
objection to any such discovery request
shall be resolved by a motion or
request to compel discovery made to the
Copyright Royalty Judges. Each motion
or request to compel discovery shall be
determined by the Copyright Royalty
Judges, or by a Copyright Royalty Judge
when permitted under subsection (a)(2),
who may approve the request only if the
evidence that would be produced is
relevant and material. A Copyright
Royalty Judge may refuse a request to
compel discovery of evidence that has
been found to be relevant and material,
only upon good cause shown. For
purposes of the preceding sentence, the
basis for ``good cause'' may only be
that--
(I) the discovery sought is
unreasonably cumulative or
duplicative, or is obtainable
from another source that is
more convenient, less
burdensome, or less expensive;
(II) the participant seeking
discovery has had ample
opportunity by discovery in the
action to obtain the
information sought; or
(II) the burden or expense of
the proposed discovery
outweighs its likely benefit,
taking into account the needs
and resources of the
participants, the importance of
the issues at stake, and the
importance of the proposed
discovery in resolving the
issues.
(vi) The rules in effect on the day
before the effective date of the
Copyright Royalty and Distribution
Reform Act of 2003, relating to
discovery in proceedings under this
title to determine the distribution of
royalty fees, shall continue to apply
to such proceedings on and after such
effective date.
(vii) The Copyright Royalty Judges
may issue subpoenas requiring the
production of evidence or witnesses,
but only if the evidence requested to
be produced or that would be proffered
by the witness is relevant and
material.
(viii) The Copyright Royalty Judges
shall order a settlement conference
among the participants in the
proceeding to facilitate the
presentation of offers of settlement
among the participants. The settlement
conference shall be held during a 21-
day period following the end of the
discovery period.
(c) Determination of Copyright Royalty Judges.--
(1) Timing.--The Copyright Royalty Judges shall issue
their determination in a proceeding not later than 11
months after the conclusion of the 21-day settlement
conference period under subsection (b)(3)(C)(vi), but,
in the case of a proceeding to determine successors to
rates or terms that expire on a specified date, in no
event later than 15 days before the expiration of the
then current statutory rates and terms.
(2) Rehearings.--
(A) In general.--The Copyright Royalty Judges
may, in exceptional cases, upon motion of a
participant under subsection (b)(2), order a
rehearing, after the determination in a
proceeding is issued under paragraph (1), on
such matters as the Copyright Royalty Judges
determine to be appropriate.
(B) Timing for filing motion.--Any motion for
a rehearing under subparagraph (A) may only be
filed within 15 days after the date on which
the Copyright Royalty Judges deliver their
initial determination concerning rates and
terms to the participants in the proceeding.
(C) Participation by opposing party not
required.--In any case in which a rehearing is
ordered, any opposing party shall not be
required to participate in the rehearing.
(D) No negative inference.--No negative
inference shall be drawn from lack of
participation in a rehearing.
(E) Continuity of rates and terms.--(i) If
the decision of the Copyright Royalty Judges on
any motion for a rehearing is not rendered
before the expiration of the statutory rates
and terms that were previously in effect, in
the case of a proceeding to determine
successors to rates and terms that expire on a
specified date, then--
(I) the initial determination of the
Copyright Royalty Judges that is the
subject of the rehearing motion shall
be effective as of the day following
the date on which the rates and terms
that were previously in effect expire;
and
(II) in the case of a proceeding
under section 114(f)(1)(C) or
114(f)(2)(C), royalty rates and terms
shall, for purposes of section
114(f)(4)(B), be deemed to have been
set at those rates and terms contained
in the initial determination of the
Copyright Royalty Judges that is the
subject of the rehearing motion, as of
the date of that determination.
(ii) The pendency of a motion for a rehearing
under this paragraph shall not relieve persons
obligated to make royalty payments who would be
affected by the determination on that motion
from providing the statements of account and
any reports of use, to the extent required, and
paying the royalties required under the
relevant determination or regulations.
(iii) Notwithstanding clause (ii), whenever
royalties described in clause (ii) are paid to
a person other than the Copyright Office, the
entity designated by the Copyright Royalty
Judges to which such royalties are paid by the
copyright user (and any successor thereto)
shall, within 60 days after the motion for
rehearing is resolved or, if the motion is
granted, within 60 days after the rehearing is
concluded, return any excess amounts previously
paid to the extent necessary to comply with the
final determination of royalty rates by the
Copyright Royalty Judges.
(3) Contents of determination.--A determination of
the Copyright Royalty Judges shall be accompanied by
the written record, and shall set forth the facts that
the Copyright Royalty Judges found relevant to their
determination. Among other terms adopted in a
determination, the Copyright Royalty Judges may specify
notice and recordkeeping requirements of users of the
copyrights at issue that apply in lieu of those that
would otherwise apply under regulations.
(4) Continuing jurisdiction.--The Copyright Royalty
Judges may amend the determination or the regulations
issued pursuant to the determination in order to
correct any technical errors in the determination or to
respond to unforeseen circumstances that preclude the
proper effectuation of the determination.
(5) Protective order.--The Copyright Royalty Judges
may issue such orders as may be appropriate to protect
confidential information, including orders excluding
confidential information from the record of the
determination that is published or made available to
the public, except that any terms or rates of royalty
payments or distributions may not be excluded.
(6) Publication of determination.--The Librarian of
Congress shall cause the determination, and any
corrections thereto, to be published in the Federal
Register. The Librarian of Congress shall also
publicize the determination and corrections in such
other manner as the Librarian considers appropriate,
including, but not limited to, publication on the
Internet. The Librarian of Congress shall also make the
determination, corrections, and the accompanying record
available for public inspection and copying.
(d) Judicial Review.--
(1) Appeal.--Any determination of the Copyright
Royalty Judges under subsection (c) may, within 30 days
after the publication of the determination in the
Federal Register, be appealed, to the United States
Court of Appeals for the District of Columbia Circuit,
by any aggrieved participant in the proceeding under
subsection (b)(2) who fully participated in the
proceeding and who would be bound by the determination.
If no appeal is brought within that 30-day period, the
determination of the Copyright Royalty Judges shall be
final, and the royalty fee or determination with
respect to the distribution of fees, as the case may
be, shall take effect as set forth in paragraph (2).
(2) Effect of rates.--
(A) Expiration on specified date.--When this
title provides that the royalty rates and terms
that were previously in effect are to expire on
a specified date, any adjustment or
determination by the Copyright Royalty Judges
of successor rates and terms for an ensuing
statutory license period shall be effective as
of the day following the date of expiration of
the rates and terms that were previously in
effect, even if the determination of the
Copyright Royalty Judges is rendered on a later
date.
(B) Other cases.--In cases where rates and
terms do not expire on a specified date or have
not yet been established, successor or new
rates or terms shall take effect on the first
day of the second month that begins after the
publication of the determination of the
Copyright Royalty Judges in the Federal
Register, except as otherwise provided in this
title, and the rates and terms previously in
effect, to the extent applicable, shall remain
in effect until such successor rates and terms
become effective.
(C) Obligation to make payments.--(i) The
pendency of an appeal under this subsection
shall not relieve persons obligated to make
royalty payments under section 111, 112, 114,
115, 116, 118, 119, or 1003, who would be
affected by the determination on appeal, from
providing the statements of account (and any
report of use, to the extent required) and
paying the royalties required under the
relevant determination or regulations.
(ii) Notwithstanding clause (i), whenever
royalties described in clause (i) are paid to a
person other than the Copyright Office, the
entity designated by the Copyright Royalty
Judges to which such royalties are paid by the
copyright user (and any successor thereto)
shall, within 60 days after the final
resolution of the appeal, return any excess
amounts previously paid (and interest thereon,
if ordered pursuant to paragraph (3)) to the
extent necessary to comply with the final
determination of royalty rates on appeal.
(3) Jurisdiction of court.--If the court, pursuant to
section 706 of title 5, modifies or vacates a
determination of the Copyright Royalty Judges, the
court may enter its own determination with respect to
the amount or distribution of royalty fees and costs,
and order the repayment of any excess fees, the payment
of any underpaid fees, and the payment of interest
pertaining respectively thereto, in accordance with its
final judgment. The court may also vacate the
determination of the Copyright Royalty Judges and
remand the case to the Copyright Royalty Judges for
further proceedings in accordance with subsection (a).
(e) Administrative Matters.--
(1) Deduction of costs of library of congress and
copyright office from filing fees.--
(A) Deduction from filing fees.--The
Librarian of Congress may, to the extent not
otherwise provided under this title, deduct
from the filing fees collected under subsection
(b) for a particular proceeding under this
chapter the reasonable costs incurred by the
Librarian of Congress, the Copyright Office,
and the Copyright Royalty Judges in conducting
that proceeding, other than the salaries of the
Copyright Royalty Judges and the 3 staff
members appointed under section 802(b).
(B) Authorization of appropriations.--There
are authorized to be appropriated such sums as
may be necessary to pay the costs of
proceedings under this chapter not covered by
the filing fees collected under subsection (b).
All funds made available pursuant to this
subparagraph shall remain available until
expended.
(2) Positions required for administration of
compulsory licensing.--Section 307 of the Legislative
Branch Appropriations Act, 1994, shall not apply to
employee positions in the Library of Congress that are
required to be filled in order to carry out section
111, 112, 114, 115, 116, 118, or 119 or chapter 10.
Sec. 804. Institution of proceedings
(a) Filing of Petition.--With respect to proceedings referred
to in paragraphs (1) and (2) of section 801(b) concerning the
determination or adjustment of royalty rates as provided in
sections 111, 112, 114, 115, 116, 118, and 1004, during the
calendar years specified in the schedule set forth in
subsection (b), any owner or user of a copyrighted work whose
royalty rates are specified by this title, or are established
under this chapter before or after the enactment of the
Copyright Royalty and Distribution Reform Act of 2003, may file
a petition with the Copyright Royalty Judges declaring that the
petitioner requests a determination or adjustment of the rate.
The Copyright Royalty Judges shall make a determination as to
whether the petitioner has such a significant interest in the
royalty rate in which a determination or adjustment is
requested. If the Copyright Royalty Judges determine that the
petitioner has such a significant interest, the Copyright
Royalty Judges shall cause notice of this determination, with
the reasons therefor, to be published in the Federal Register,
together with the notice of commencement of proceedings under
this chapter. With respect to proceedings under paragraph (1)
of section 801(b) concerning the determination or adjustment of
royalty rates as provided in sections 112 and 114, during the
calendar years specified in the schedule set forth in
subsection (b), the Copyright Royalty Judges shall cause notice
of commencement of proceedings under this chapter to be
published in the Federal Register as provided in section
803(b)(1)(A).
(b) Timing of Proceedings.--
(1) Section 111 proceedings.--(A) A petition
described in subsection (a) to initiate proceedings
under section 801(b)(2) concerning the adjustment of
royalty rates under section 111 to which subparagraph
(A) or (D) of section 801(b)(2) applies may be filed
during the year 2004 and in each subsequent fifth
calendar year.
(B) In order to initiate proceedings under section
801(b)(2) concerning the adjustment of royalty rates
under section 111 to which subparagraph (B) or (C) of
section 801(b)(2) applies, within 12 months after an
event described in either of those subsections, any
owner or user of a copyrighted work whose royalty rates
are specified by section 111, or by a rate established
under this chapter before or after the enactment of the
Copyright Royalty and Distribution Reform Act of 2003,
may file a petition with the Copyright Royalty Judges
declaring that the petitioner requests an adjustment of
the rate. The Copyright Royalty Judges shall then
proceed as set forth in subsection (a) of this section.
Any change in royalty rates made under this chapter
pursuant to this subparagraph may be reconsidered in
the year 2005, and each fifth calendar year thereafter,
in accordance with the provisions in section
801(b)(3)(B) or (C), as the case may be. A petition for
adjustment of rates under section 11(d)(1)(B) as a
result of a change is the rules and regulations of the
Federal Communications Commission shall set forth the
change on which the petition is based.
(2) Certain section 112 proceedings.--Proceedings
under this chapter shall be commenced in the year 2007
to determine reasonable terms and rates of royalty
payments for the activities described in section
112(e)(1) relating to the limitation on exclusive
rights specified by section 114(d)(1)(C)(iv), to become
effective on January 1, 2009. Such proceedings shall be
repeated in each subsequent fifth calendar year.
(3) Section 114 and corresponding 112 proceedings.--
(A) For eligible nonsubscription services and
new subscription services.--Proceedings under
this chapter shall be commenced as soon as
practicable after the effective date of the
Copyright Royalty and Distribution Reform Act
of 2003 to determine reasonable terms and rates
of royalty payments under sections 114 and 112
for the activities of eligible nonsubscription
transmission services and new subscription
services, to be effective for the period
beginning on January 1, 2006, and ending on
December 31, 2010. Such proceedings shall next
be commenced in January 2009 to determine
reasonable terms and rates of royalty payments,
to become effective on January 1, 2011.
Thereafter, such proceedings shall be repeated
in each subsequent fifth calendar year.
(B) For preexisting subscription and
satellite digital audio radio services.--
Proceedings under this chapter shall be
commenced in January 2006 to determine
reasonable terms and rates of royalty payments
under sections 114 and 112 for the activities
of preexisting subscription services, to be
effective during the period beginning on
January 1, 2008, and ending on December 31,
2012, and preexisting satellite digital audio
radio services, to be effective during the
period beginning on January 1, 2007, and ending
on December 31, 2012. Such proceedings shall
next be commenced in 2011 to determine
reasonable terms and rates of royalty payments,
to become effective on January 1, 2013.
Thereafter, such proceedings shall be repeated
in each subsequent fifth calendar year.
(C)(i) Notwithstanding any other provision of
this chapter, this subparagraph shall govern
proceedings commenced pursuant to sections
114(f)(1)(C) and 114(f)(2)(C) concerning new
types of services.
(ii) Not later than 30 days after a petition
to determine rates and terms for a new type of
service that is filed by any copyright owner of
sound recordings, or such new type of service,
indicating that such new type of service is or
is about to become operational, the Copyright
Royalty Judges shall issue a notice for a
proceeding to determine rates and terms for
such service.
(iii) The proceeding shall follow the
schedule set forth in such subsections (b),
(c), and (d) of section 803, except that--
(I) the determination shall be issued
by not later than 24 months after the
publication of the notice under clause
(ii); and
(II) the decision shall take effect
as provided in subsections (c)(2) and
(d)(2) of section 803 and section
114(f)(4)(B)(ii) and (C).
(iv) The rates and terms shall remain in
effect for the period set forth in section
114(f)(1)(C) or 114(f)(2)(C), as the case may
be.
(4) Section 115 proceedings.--A petition described in
subsection (a) to initiate proceedings under section
801(b)(1) concerning the adjustment or determination of
royalty rates as provided in section 115 may be filed
in the year 2006 and in each subsequent fifth calendar
year, or at such other times as the parties have agreed
under section 115(c)(3)(B) and (C).
(5) Section 116 proceedings.--(A) A petition
described in subsection (a) to initiate proceedings
under section 801(b) concerning the determination of
royalty rates and terms as provided in section 116 may
be filed at any time within 1 year after negotiated
licenses authorized by section 116 are terminated or
expire and are not replaced by subsequent agreements.
(B) If a negotiated license authorized by section 116
is terminated or expires and is not replaced by another
such license agreement which provides permission to use
a quantity of musical works not substantially smaller
than the quantity of such works performed on coin-
operated phonorecord players during the 1-year period
ending March 1, 1989, the Copyright Royalty Judges
shall, upon petition filed under paragraph (1) within 1
year after such termination or expiration, commence a
proceeding to promptly establish an interim royalty
rate or rates for the public performance by means of a
coin-operated phonorecord player of nondramatic musical
works embodied in phonorecords which had been subject
to the terminated or expired negotiated license
agreement. Such rate or rates shall be the same as the
last such rate or rates and shall remain in force until
the conclusion of proceedings by the Copyright Royalty
Judges, in accordance with section 803, to adjust the
royalty rates applicable to such works, or until
superseded by a new negotiated license agreement, as
provided in section 116(b).
(6) Section 118 proceedings.--A petition described in
subsection (a) to initiate proceedings under section
801(b)(1) concerning the determination of reasonable
terms and rates of royalty payments as provided in
section 118 may be filed in the year 2006 and in each
subsequent fifth calendar year.
(7) Section 1004 proceedings.--A petition described
in subsection (a) to initiate proceedings under section
801(b)(1) concerning the adjustment of reasonable
royalty rates under section 1004 may be filed as
provided in section 1004(a)(3).
(8) Proceedings concerning distribution of royalty
fees.--With respect to proceedings under section
801(b)(3) concerning the distribution of royalty fees
in certain circumstances under section 111, 116, 119,
or 1007, the Copyright Royalty Judges shall, upon a
determination that a controversy exists concerning such
distribution, cause to be published in the Federal
Register notice of commencement of proceedings under
this chapter.
Sec. 805. General rule for voluntarily negotiated agreements
Any rates or terms under this title that--
(1) are agreed to by participants to a proceeding
under section 803(b)(2),
(2) are adopted by the Copyright Royalty Judges as
part of a determination under this chapter, and
(3) are in effect for a period shorter than would
otherwise apply under a determination pursuant to this
chapter,
shall remain in effect for such period of time as would
otherwise apply under such determination, except that the
Copyright Royalty Judges shall adjust the rates pursuant to the
voluntary negotiations to reflect national monetary inflation
during the additional period the rates remain in effect.
* * * * * * *
CHAPTER 10--DIGITAL AUDIO RECORDING DEVICES AND MEDIA
SUBCHAPTER A--DEFINITIONS
Sec.
1001. Definitions.
* * * * * * *
SUBCHAPTER D--PROHIBITION ON CERTAIN INFRINGEMENT ACTIONS, REMEDIES, AND
ARBITRATION
1008. Prohibition on certain infringement actions.
* * * * * * *
[1010. Arbitration of certain disputes.]
1010. Determination of certain disputes.
* * * * * * *
SUBCHAPTER C--ROYALTY PAYMENTS
* * * * * * *
Sec. 1004. Royalty payments
(a) Digital Audio Recording Devices.--
(1) * * *
* * * * * * *
(3) Limits on royalties.--Notwithstanding paragraph
(1) or (2), the amount of the royalty payment for each
digital audio recording device shall not be less than
$1 nor more than the royalty maximum. The royalty
maximum shall be $8 per device, except that in the case
of a physically integrated unit containing more than 1
digital audio recording device, the royalty maximum for
such unit shall be $12. During the 6th year after the
effective date of this chapter, and not more than once
each year thereafter, any interested copyright party
may petition the [Librarian of Congress] Copyright
Royalty Judges to increase the royalty maximum and, if
more than 20 percent of the royalty payments are at the
relevant royalty maximum, the [Librarian of Congress]
Copyright Royalty Judges shall prospectively increase
such royalty maximum with the goal of having no more
than 10 percent of such payments at the new royalty
maximum; however the amount of any such increase as a
percentage of the royalty maximum shall in no event
exceed the percentage increase in the Consumer Price
Index during the period under review.
* * * * * * *
Sec. 1006. Entitlement to royalty payments
(a) * * *
* * * * * * *
(c) Allocation of Royalty Payments Within Groups.--If all
interested copyright parties within a group specified in
subsection (b) do not agree on a voluntary proposal for the
distribution of the royalty payments within each group, the
[Librarian of Congress shall convene a copyright arbitration
royalty panel which] Copyright Royalty Judges shall, pursuant
to the procedures specified under section 1007(c), allocate
royalty payments under this section based on the extent to
which, during the relevant period--
(1) * * *
* * * * * * *
Sec. 1007. Procedures for distributing royalty payments
(a) Filing of Claims and Negotiations.--
[(1) Filing of claims.--During the first 2 months of
each calendar year after calendar year 1992, every
interested copyright party seeking to receive royalty
payments to which such party is entitled under section
1006 shall file with the Librarian of Congress a claim
for payments collected during the preceding year in
such form and manner as the Librarian of Congress shall
prescribe by regulation.]
(1) Filing of claims.--During the first 2 months of
each calendar year, every interested copyright party
seeking to receive royalty payments to which such party
is entitled under section 1006 shall file with the
Copyright Royalty Judges a claim for payments collected
during the preceding year in such form and manner as
the Copyright Royalty Judges shall prescribe by
regulation.
* * * * * * *
[(b) Distribution of Payments in the Absence of a Dispute.--
After the period established for the filing of claims under
subsection (a), in each year after 1992, the Librarian of
Congress shall determine whether there exists a controversy
concerning the distribution of royalty payments under section
1006(c). If the Librarian of Congress determines that no such
controversy exists, the Librarian of Congress shall, within 30
days after such determination, authorize the distribution of
the royalty payments as set forth in the agreements regarding
the distribution of royalty payments entered into pursuant to
subsection (a), after deducting its reasonable administrative
costs under this section.
[(c) Resolution of Disputes.--If the Librarian of Congress
finds the existence of a controversy, the Librarian shall,
pursuant to chapter 8 of this title, convene a copyright
arbitration royalty panel to determine the distribution of
royalty payments. During the pendency of such a proceeding, the
Librarian of Congress shall withhold from distribution an
amount sufficient to satisfy all claims with respect to which a
controversy exists, but shall, to the extent feasible,
authorize the distribution of any amounts that are not in
controversy. The Librarian of Congress shall, before
authorizing the distribution of such royalty payments, deduct
the reasonable administrative costs incurred by the Librarian
under this section.]
(b) Distribution of Payments in the Absence of a Dispute.--
After the period established for the filing of claims under
subsection (a), in each year, the Copyright Royalty Judges
shall determine whether there exists a controversy concerning
the distribution of royalty payments under section 1006(c). If
the Copyright Royalty Judges determine that no such controversy
exists, the Librarian of Congress shall, within 30 days after
such determination, authorize the distribution of the royalty
payments as set forth in the agreements regarding the
distribution of royalty payments entered into pursuant to
subsection (a). The Librarian of Congress shall, before such
royalty payments are distributed, deduct the reasonable
administrative costs incurred by the Librarian under this
section.
(c) Resolution of Disputes.--If the Copyright Royalty Judges
find the existence of a controversy, the Copyright Royalty
Judges shall, pursuant to chapter 8 of this title, conduct a
proceeding to determine the distribution of royalty payments.
During the pendency of such a proceeding, the Copyright Royalty
Judges shall withhold from distribution an amount sufficient to
satisfy all claims with respect to which a controversy exists,
but shall, to the extent feasible, authorize the distribution
of any amounts that are not in controversy. The Librarian of
Congress shall, before such royalty payments are distributed,
deduct the reasonable administrative costs incurred by the
Librarian under this section.
SUBCHAPTER D--PROHIBITION ON CERTAIN INFRINGEMENT ACTIONS, REMEDIES,
AND ARBITRATION
* * * * * * *
[Sec. 1010. Arbitration of certain disputes
[(a) Scope of Arbitration.--Before the date of first
distribution in the United States of a digital audio recording
device or a digital audio interface device, any party
manufacturing, importing, or distributing such device, and any
interested copyright party may mutually agree to binding
arbitration for the purpose of determining whether such device
is subject to section 1002, or the basis on which royalty
payments for such device are to be made under section 1003.
[(b) Initiation of Arbitration Proceedings.--Parties agreeing
to such arbitration shall file a petition with the Librarian of
Congress requesting the commencement of an arbitration
proceeding. The petition may include the names and
qualifications of potential arbitrators. Within 2 weeks after
receiving such a petition, the Librarian of Congress shall
cause notice to be published in the Federal Register of the
initiation of an arbitration proceeding. Such notice shall
include the names and qualifications of 3 arbitrators chosen by
the Librarian of Congress from a list of available arbitrators
obtained from the American Arbitration Association or such
similar organization as the Librarian of Congress shall select,
and from potential arbitrators listed in the parties' petition.
The arbitrators selected under this subsection shall constitute
an Arbitration Panel.
[(c) Stay of Judicial Proceedings.--Any civil action brought
under section 1009 against a party to arbitration under this
section shall, on application of one of the parties to the
arbitration, be stayed until completion of the arbitration
proceeding.
[(d) Arbitration Proceeding.--The Arbitration Panel shall
conduct an arbitration proceeding with respect to the matter
concerned, in accordance with such procedures as it may adopt.
The Panel shall act on the basis of a fully documented written
record. Any party to the arbitration may submit relevant
information and proposals to the Panel. The parties to the
proceeding shall bear the entire cost thereof in such manner
and proportion as the Panel shall direct.
[(e) Report to Librarian of Congress.--Not later than 60 days
after publication of the notice under subsection (b) of the
initiation of an arbitration proceeding, the Arbitration Panel
shall report to the Librarian of Congress its determination
concerning whether the device concerned is subject to section
1002, or the basis on which royalty payments for the device are
to be made under section 1003. Such report shall be accompanied
by the written record, and shall set forth the facts that the
Panel found relevant to its determination.
[(f) Action by the Librarian of Congress.--Within 60 days
after receiving the report of the Arbitration Panel under
subsection (e), the Librarian of Congress shall adopt or reject
the determination of the Panel. The Librarian of Congress shall
adopt the determination of the Panel unless the Librarian of
Congress finds that the determination is clearly erroneous. If
the Librarian of Congress rejects the determination of the
Panel, the Librarian of Congress shall, before the end of that
60-day period, and after full examination of the record created
in the arbitration proceeding, issue an order setting forth the
Librarian's decision and the reasons therefor. The Librarian of
Congress shall cause to be published in the Federal Register
the determination of the Panel and the decision of the
Librarian of Congress under this subsection with respect to the
determination (including any order issued under the preceding
sentence).
[(g) Judicial Review.--Any decision of the Librarian of
Congress under subsection (f) with respect to a determination
of the Arbitration Panel may be appealed, by a party to the
arbitration, 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. The
pendency of an appeal under this subsection shall not stay the
decision of the Librarian of Congress. The court shall have
jurisdiction to modify or vacate a decision of the Librarian of
Congress only if it finds, on the basis of the record before
the Librarian of Congress, that the Arbitration Panel or the
Librarian of Congress acted in an arbitrary manner. If the
court modifies the decision of the Librarian of Congress, the
court shall have jurisdiction to enter its own decision in
accordance with its final judgment. The court may further
vacate the decision of the Librarian of Congress and remand the
case for arbitration proceedings as provided in this section.]
Sec. 1010. Determination of certain disputes
(a) Scope of Determination.--Before the date of first
distribution in the United States of a digital audio recording
device or a digital audio interface device, any party
manufacturing, importing, or distributing such device, and any
interested copyright party may mutually agree to petition the
Copyright Royalty Judges to determine whether such device is
subject to section 1002, or the basis on which royalty payments
for such device are to be made under section 1003.
(b) Initiation of Proceedings.--The parties under subsection
(a) shall file the petition with the Copyright Royalty Judges
requesting the commencement of a proceeding. Within 2 weeks
after receiving such a petition, the Chief Copyright Royalty
Judge shall cause notice to be published in the Federal
Register of the initiation of the proceeding.
(c) Stay of Judicial Proceedings.--Any civil action brought
under section 1009 against a party to a proceeding under this
section shall, on application of one of the parties to the
proceeding, be stayed until completion of the proceeding.
(d) Proceeding.--The Copyright Royalty Judges shall conduct a
proceeding with respect to the matter concerned, in accordance
with such procedures as the Copyright Royalty Judges may adopt.
The Copyright Royalty Judges shall act on the basis of a fully
documented written record. Any party to the proceeding may
submit relevant information and proposals to the Copyright
Royalty Judges. The parties to the proceeding shall each bear
their respective costs of participation.
(e) Judicial Review.--Any determination of the Copyright
Royalty Judges under subsection (d) may be appealed, by a party
to the proceeding, in accordance with section 803(d) of this
title. The pendency of an appeal under this subsection shall
not stay the determination of the Copyright Royalty Judges. If
the court modifies the determination of the Copyright Royalty
Judges, the court shall have jurisdiction to enter its own
decision in accordance with its final judgment. The court may
further vacate the determination of the Copyright Royalty
Judges and remand the case for proceedings as provided in this
section.
* * * * * * *
The Committee met, pursuant to notice, at 11 a.m., in room
1241, Rayburn House Office Building, Hon. F. James
Sensenbrenner, Jr. (chairman of the Committee) presiding.
Chairman Sensenbrenner. The Committee will be in order. A
quorum is present.
The first item on the agenda is H.R. 1417, the Copyright
Royalty and Distribution Reform Act of 2003. The Chair
recognizes the gentleman from Texas, Mr. Smith, for a motion.
Mr. Smith. Thank you, Mr. Chairman.
The Subcommittee on Courts, the Internet and Intellectual
property reports favorably the bill H.R. 1417, with a single
amendment in the nature of a substitute, and moves its
favorable recommendation to the full House.
Chairman Sensenbrenner. Without objection, the bill will be
considered as read and open for amendment at any point. The
Subcommittee amendment in the nature of a substitute, which the
members have before them, will be considered as read,
considered as the original text for purposes of amendment, and
open for amendment at any point.
Without objection all members' opening statements will be
placed in the record.
[The amendment in the nature of a substitute follows:]
Strike all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Copyright Royalty and Distribution
Reform Act of 2003''.
SEC. 2. REFERENCE.
Except as otherwise expressly provided, whenever in this Act an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be considered to
be made to a section or other provision of title 17, United States
Code.
SEC. 3. COPYRIGHT ROYALTY JUDGE AND STAFF.
(a) In General.--Chapter 8 is amended to read as follows:
CHAPTER 8--PROCEEDINGS BY COPYRIGHT ROYALTY JUDGES
``Sec.
``801. Copyright Royalty Judges; appointment and functions.
``802. Copyright Royalty Judgeships; staff.
``803. Proceedings of Copyright Royalty Judges.
``804. Institution and conclusion of proceedings.
``805. Interim royalty payments.
``806. General rule for voluntarily negotiated agreements.
``Sec. 801. Copyright Royalty Judge; appointment and functions
``(a) Appointment.--The Librarian of Congress shall appoint 3 full-
time Copyright Royalty Judges, and shall appoint one of the three as
the Chief Copyright Royalty Judge. In making such appointments, the
Librarian may consult with the Register of Copyrights.
``(b) Functions.--Subject to the provisions of this chapter, the
functions of the Copyright Royalty Judges shall be as follows:
``(1) To make determinations concerning the adjustment of
reasonable copyright royalty rates as provided in sections 114,
115, 119, and 1004.
``(2) To make determinations as to reasonable terms and rates
of royalty payments as provided in sections 112(e), 114, 115,
116, and 118. The rates applicable under sections 114(f)(1)(B),
115, and 116 shall be calculated to achieve the following
objectives:
``(A) To maximize the availability of creative works
to the public.
``(B) To afford the copyright owner a fair return for
his or her creative work and the copyright user a fair
income under existing economic conditions.
``(C) To reflect the relative roles of the copyright
owner and the copyright user in the product made
available to the public with respect to relative
creative contribution, technological contribution,
capital investment, cost, risk, and contribution to the
opening of new markets for creative expression and
media for their communication.
``(D) To minimize any disruptive impact on the
structure of the industries involved and on generally
prevailing industry practices.
``(3) To make determinations concerning the adjustment of the
copyright royalty rates under section 111 solely in accordance
with the following provisions:
``(A) The rates established by section 111(d)(1)(B)
may be adjusted to reflect--
``(i) national monetary inflation or
deflation; or
``(ii) changes in the average rates charged
cable subscribers for the basic service of
providing secondary transmissions to maintain
the real constant dollar level of the royalty
fee per subscriber which existed as of the date
of October 19, 1976,
except that--
``(I) if the average rates charged cable
system subscribers for the basic service of
providing secondary transmissions are changed
so that the average rates exceed national
monetary inflation, no change in the rates
established by section 111(d)(1)(B) shall be
permitted; and
``(II) no increase in the royalty fee shall
be permitted based on any reduction in the
average number of distant signal equivalents
per subscriber.
The Copyright Royalty Judges may consider all factors
relating to the maintenance of such level of payments,
including, as an extenuating factor, whether the
industry has been restrained by subscriber rate
regulating authorities from increasing the rates for
the basic service of providing secondary transmissions.
``(B) In the event that the rules and regulations of
the Federal Communications Commission are amended at
any time after April 8, 1976, to permit the carriage by
cable systems of additional television broadcast
signals beyond the local service area of the primary
transmitters of such signals, the royalty rates
established by section 111(d)(1)(B) may be adjusted to
insure that the rates for the additional distant signal
equivalents resulting from such carriage are reasonable
in the light of the changes effected by the amendment
to such rules and regulations. In determining the
reasonableness of rates proposed following an amendment
of Federal Communications Commission rules and
regulations, the Copyright Royalty Judges shall
consider, among other factors, the economic impact on
copyright owners and users; except that no adjustment
in royalty rates shall be made under this subparagraph
with respect to any distant signal equivalent or
fraction thereof represented by--
``(i) carriage of any signal permitted under
the rules and regulations of the Federal
Communications Commission in effect on April
15, 1976, or the carriage of a signal of the
same type (that is, independent, network, or
noncommercial educational) substituted for such
permitted signal; or
``(ii) a television broadcast signal first
carried after April 15, 1976, pursuant to an
individual waiver of the rules and regulations
of the Federal Communications Commission, as
such rules and regulations were in effect on
April 15, 1976.
``(C) In the event of any change in the rules and
regulations of the Federal Communications Commission
with respect to syndicated and sports program
exclusivity after April 15, 1976, the rates established
by section 111(d)(1)(B) may be adjusted to assure that
such rates are reasonable in light of the changes to
such rules and regulations, but any such adjustment
shall apply only to the affected television broadcast
signals carried on those systems affected by the
change.
``(D) The gross receipts limitations established by
section 111(d)(1)(C) and (D) shall be adjusted to
reflect national monetary inflation or deflation or
changes in the average rates charged cable system
subscribers for the basic service of providing
secondary transmissions to maintain the real constant
dollar value of the exemption provided by such section,
and the royalty rate specified therein shall not be
subject to adjustment.
``(4) To authorize the distribution of those royalty fees
collected under sections 111, 119, and 1005 that the Copyright
Royalty Judges have found are not subject to controversy, in
accordance with those sections, and to determine, in cases
where controversy exists, the distribution of such fees, in
accordance with those sections.
``(5) To accept or reject royalty claims filed under section
111, 119, and 1007, on the basis of timeliness or the failure
to establish the basis for a claim.
``(6) To determine the status of a digital audio recording
device or a digital audio interface device under sections 1002
and 1003, as provided in section 1010.
``(7) To adopt any agreement on terms and rates of royalty
payments made pursuant to voluntary negotiation proceedings
under section 112(e), 114, 115, 116, 118, and agreements made
among the parties regarding the distribution of royalty
payments under section 111, 119, or 1007, except that--
``(A) the Copyright Royalty Judges shall provide an
opportunity to any party that would be bound by the
terms, rates, or distribution set by the agreement to
comment on the agreement; and
``(B) if any party described in the subparagraph (A)
objects to the agreement, the Copyright Royalty Judges
shall reject the agreement.
``(c) Rulings.--The Copyright Royalty Judges may make any necessary
procedural or evidentiary rulings in any proceeding under this chapter
and may, before commencing a proceeding under this chapter, make any
such rulings that would apply to the proceedings conducted by the
Copyright Royalty Judges. The Copyright Royalty Judges may consult with
the Register of Copyrights in making any rulings under this subsection.
``(d) Administrative Support.--The Librarian of Congress shall
provide the Copyright Royalty Judges with the necessary administrative
services related to proceedings under this chapter.
``(e) Location in Library of Congress.--The offices of the Copyright
Royalty Judges shall be in the Library of Congress.
``Sec. 802. Copyright Royalty Judgeships; staff
``(a) Qualifications of Copyright Royalty Judges.--Each Copyright
Royalty Judge shall be an attorney who has at least 7 years of legal
experience. The Chief Copyright Royalty Judge shall have at least 5
years of experience in adjudications, arbitrations, or court trials. Of
the other two Copyright Royalty Judges, one shall have significant
knowledge of copyright law, and the other shall have significant
knowledge of economics. An individual may serve as a Copyright Royalty
Judge only if the individual is free of any financial conflict of
interest under subsection (h). In this subsection, `adjudication' has
the meaning given that term in section 551 of title 5, but does not
include mediation.
``(b) Staff.--The Chief Copyright Royalty Judge shall hire 3 full-
time staff members to assist the Copyright Royalty Judges in performing
their functions.
``(c) Terms.--The terms of the Copyright Royalty Judges shall each be
6 years, except of the individuals first appointed, the Chief Copyright
Royalty Judge shall be appointed to a term of 6 years, and of the
remaining Copyright Royalty Judges, one shall be appointed to a term of
2 years, and the other shall be appointed to a term of 4 years. An
individual serving as a Copyright Royalty Judge may be reappointed to
subsequent terms. The term of the Copyright Royalty Judge shall begin
when the term of the predecessor of that Judge ends. When the term of
office of a Copyright Royalty Judge ends, the individual serving that
term may continue to serve until a successor is selected.
``(d) Vacancies or incapacity.--
``(1) Vacancies.--If a vacancy should occur in the position
of Copyright Royalty Judge, the Librarian of Congress shall act
expeditiously to fill the vacancy, and may appoint an interim
Copyright Royalty Judge to serve until another Copyright
Royalty Judge is appointed under this section. An individual
appointed to fill the vacancy occurring before the expiration
of the term for which the predecessor of that individual was
appointed shall be appointed for the remainder of that term.
``(2) Incapacity.--In the case in which a Copyright Royalty
Judge is temporarily unable to perform his or her duties, the
Librarian of Congress may appoint an interim Copyright Royalty
Judge to perform such duties during the period of such
incapacity.
``(e) Compensation.--The Chief Copyright Royalty Judge shall receive
compensation at the rate of basic pay payable for level AL-1 for
administrative law judges pursuant to section 5372(b) of title 5, each
of the other two Copyright Royalty Judges shall receive compensation at
the rate of basic pay payable for level AL-2 for administrative law
judges pursuant to such section. The staff members appointed under
subsection (b) shall each be paid at a rate of pay determined by the
Librarian of Congress, except that--
``(1) the rate of pay for two of the staff members shall be
not less than the basic rate of pay payable for GS-13 of the
General Schedule and not more than the basic rate of pay
payable for GS-14 of such Schedule; and
``(2) the rate of pay for the third staff member shall be not
less than the basic rate of pay payable for GS-8 of the General
Schedule and not more than the basic rate of pay payable for
GS-11 of such Schedule.
The compensation of the Copyright Royalty Judges shall not be subject
to any regulations adopted by the Office of Personnel Management
pursuant to its authority under section 5376(b)(1) of title 5.
``(f) Independence of Copyright Royalty Judge.--
``(1) In making determinations.--
``(A) In general.--Subject to subparagraph (B), the
Copyright Royalty Judges shall have full independence
in making determinations concerning adjustments and
determinations of copyright royalty rates and terms,
the distribution of copyright royalties, the acceptance
or rejection of royalty claims and rate adjustment
petitions, and in issuing rulings under this title,
except that the Copyright Royalty Judges may consult
with the Register of Copyrights in making such
determinations.
``(B) Novel questions.--(i) In any case in which the
Copyright Royalty Judges in a proceeding under this
title are presented with a novel question concerning an
interpretation of those provisions of this title that
are the subject of the proceeding, the Copyright
Royalty Judges shall request the Register of
Copyrights, in writing, to submit a written opinion on
the resolution of such novel question. The Register
shall submit and make public that opinion within such
time period as the Copyright Royalty Judges may
prescribe. The opinion of the Register shall not be
binding on the judges, but the Copyright Royalty Judges
shall take the opinion of the Register into account in
making the judges' determination on the question
concerned.
``(ii) In clause (i), a `novel' question is a
question that has not been determined in prior
decisions, determinations, and rulings described in
section 803(a).
``(2) Performance appraisals.--
``(A) In general.--Notwithstanding any other
provision of law or any regulation of the Library of
Congress, and subject to subparagraph (B), the
Copyright Royalty Judges shall not receive performance
appraisals.
``(B) Relating to sanction or removal.--To the extent
that the Librarian of Congress adopts regulations under
subsection (h) relating to the sanction or removal of a
Copyright Royalty Judge and such regulations require
documentation to establish the cause of such sanction
or removal, the Copyright Royalty Judge may receive an
appraisal related specifically to the cause of the
sanction or removal.
``(g) Inconsistent Duties Barred.--No Copyright Royalty Judge may
undertake duties inconsistent with his or her duties and
responsibilities as Copyright Royalty Judge.
``(h) Standards of Conduct.--The Librarian of Congress shall adopt
regulations regarding the standards of conduct, including financial
conflict of interest and restrictions against ex parte communications,
which shall govern the Copyright Royalty Judges and the proceedings
under this chapter.
``(i) Removal or Sanction.--The Librarian of Congress may sanction or
remove a Copyright Royalty Judge for violation of the standards of
conduct adopted under subsection (h), misconduct, neglect of duty, or
any disqualifying physical or mental disability. Any such sanction or
removal may be made only after notice and opportunity for a hearing,
but the Librarian of Congress may suspend the Copyright Royalty Judge
during the pendency of such hearing. The Librarian shall appoint an
interim Copyright Royalty Judge during the period of any such
suspension.
``Sec. 803. Proceedings of Copyright Royalty Judges
``(a) Proceedings.--
``(1) In general.--The Copyright Royalty Judges shall conduct
proceedings in accordance with subchapter II of chapter 5 of
title 5, for the purpose of making determinations in carrying
out the purposes set forth in section 801. The Copyright
Royalty Judges 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 before the effective date
of the Copyright Royalty and Distribution Reform Act of 2003,
and prior determinations of Copyright Royalty Judges under this
chapter. Any person participating in proceedings under this
chapter may submit relevant information and proposals to the
Copyright Royalty Judges.
``(2) Judges acting as panel and individually.--The Copyright
Royalty Judges shall preside over hearings in proceedings under
this chapter en banc, but the Chief Copyright Royalty Judge may
designate a Copyright Royalty Judge to preside individually
over such collateral and administrative proceedings, and over
such proceedings under paragraphs (2) and (3) of subsection
(b), as the Chief Judge considers appropriate.
``(3) Determinations.--Final determinations of the Copyright
Royalty Judges in proceedings under this chapter shall be made
by majority vote. A Copyright Royalty Judge dissenting from the
majority on any determination under this chapter may issue his
or her dissenting opinion, which shall be included with the
determination.
``(b) Procedures.--
``(1) Participation in general.--Subject to paragraph (2), a
person may participate in proceedings under this chapter,
including through the submission of briefs or other
information, only if that person files with the Copyright
Royalty Judges, in such form and manner as the Copyright
Royalty Judges may by regulation prescribe, a notice of intent
to participate in the proceedings, together with a filing fee
of $150, before the proceedings commence.
``(2) Small claims procedure in distribution proceedings.--
``(A) In general.--If the amount in controversy that
a party to a proceeding under this chapter to determine
the distribution of royalties asserts is $10,000 or
less, the Copyright Royalty Judges shall decide the
controversy on the basis of the filing in writing of
the initial claim, initial response by any opposing
party, and one additional response by each such party.
The party asserting the claim shall not be required to
pay the filing fee under paragraph (1).
``(B) Bad faith inflation of claim.--If the Copyright
Royalty Judges determine that a party asserts in bad
faith an amount in controversy in excess of $10,000 for
the purpose of avoiding a determination under the
procedure set forth in subparagraph (A), the Copyright
Royalty Judges shall impose a fine on that party, in an
amount not to exceed the difference between the actual
amount distributed and the amount asserted by the
party.
``(3) Paper proceedings in ratemaking proceedings.--The
Copyright Royalty Judges in proceedings under this chapter to
determine royalty rates may decide, sua sponte or upon motion
of a party, to determine issues on the basis of initial filings
in writing, initial responses by any opposing party, and one
additional response by each such party. Prior to making such
decision, the judges shall offer to all parties to the
proceeding the opportunity to comment on the decision. The
procedure under this paragraph would apply in cases in which a
small amount of royalties are involved, there is no genuine
issue of material fact, there is no need for evidentiary
hearings, and under such other circumstances as the judges
consider appropriate.
``(4) Regulations.--
``(A) In general.--The Copyright Royalty Judges
shall, not later than 120 days after the effective date
of the Copyright Royalty and Distribution Reform Act of
2003, issue regulations to govern proceedings under
this chapter.
``(B) Interim regulations.--Until regulations are
adopted under subparagraph (A), the Copyright Royalty
Judges shall apply the regulations in effect under this
chapter on the day before the effective date of the
Copyright Royalty and Distribution Reform Act of 2003,
to the extent such regulations are not inconsistent
with this chapter, except that functions carried out
under such regulations by the Librarian of Congress,
the Register of Copyrights, or copyright arbitration
royalty panels that, as of such date of enactment, are
to be carried out by the Copyright Royalty Judges under
this chapter, shall be carried out by the Copyright
Royalty Judges under such regulations.
``(C) Requirements.--Regulations issued under
subparagraph (A) shall include the following:
``(i) The Federal Rules of Evidence with
respect to hearsay shall apply to proceedings
under this chapter.
``(ii) Discovery in such proceedings shall be
permitted for a period of 60 days.
``(iii) The Copyright Royalty Judges shall
order a settlement conference among the parties
for the presentation of offers of settlement
among the parties. The settlement conference
shall be held during a 21-day period following
the end of the discovery period and before the
submission in writing to the judges of the
testimony, witnesses, and exhibits to be
presented in the proceedings. Copyright Royalty
Judges may accept settlement agreements until
the end of that 21-day period.
``(iv) A defending party to a claim in a
proceeding to determine the distribution of
royalties may, not later than the day on which
the settlement conference under clause (iii)
ends, serve upon an adverse party, with notice
thereof to the Chief Copyright Royalty Judge,
an offer to allow for a determination to be
made against the adverse party for the claimed
money or property or other specified amount. If
before the day on which hearings in the
proceeding begin an offer under this clause is
accepted, the parties shall file the offer and
notice of acceptance of the offer with the
Copyright Royalty Judges, who shall enter their
determination pursuant thereto. If the final
determination in the proceeding is not more
favorable to the offeree than the offer made
under this clause, then the Copyright Royalty
Judges shall order the offeree to pay the
reasonable attorney's fees of the defending
party who made the offer that is attributable
to the offer.
``(v) Each request to compel discovery in
proceedings to determine royalty rates must be
approved by a Copyright Royalty Judge, who may
approve the request only if the evidence that
would be produced is relevant and material. A
Copyright Royalty Judge may refuse a request to
compel discovery of evidence that has been
found to be relevant and material, only upon
good cause shown.
``(vi) The Copyright Royalty Judges may issue
subpoenas requiring the production of evidence
or witnesses, but only if the evidence
requested to be produced or that would be
proffered by the witness is relevant and
material.
``(c) Determination of Copyright Royalty Judges.--
``(1) Timing.--Not later than 6 months after the date on
which the settlement conference convened under subsection
(b)(3)(C)(iii) begins, the Copyright Royalty Judges shall issue
their determination in the proceeding, except that the
Copyright Royalty Judges may extend that 6-month period to a
period of up to 1 year for that proceeding if the Copyright
Royalty Judges determine such extension to be necessary.
``(2) Rehearings.--The Copyright Royalty Judges may, in
exceptional cases, upon motion of a party to proceedings under
this chapter, order a rehearing on such matters as the judges
determine to be appropriate. In the case in which a rehearing
is ordered, any opposing party shall not be required to
participate in the rehearing.
``(3) Contents of determination.--The determination of the
Copyright Royalty Judges shall be accompanied by the written
record, and shall set forth the facts that the Copyright
Royalty Judges found relevant to their determination.
``(4) Correction of errors.--The Copyright Royalty Judges
may, after the determination is issued, correct any technical
errors in the determination and correct any error in the
determination that would prevent the determination from
becoming effective.
``(5) Protective order.--The Copyright Royalty Judges may
issue an order excluding confidential information from the
record of the determination that is published or made available
to the public, except that any terms or rates of royalty
payments or distributions may not be excluded.
``(6) Publication of determination.--The Chief Copyright
Royalty Judge shall cause the determination, and any
corrections thereto, to be published in the Federal Register.
The Chief Copyright Royalty Judge shall also publicize the
determination and corrections in such other manner as the Chief
Copyright Royalty Judge considers appropriate, including, but
not limited to, publication on the official website of the
Copyright Office. The Chief Copyright Royalty Judge shall also
make the determination and corrections and the accompanying
record available for public inspection and copying.
``(d) Judicial Review.--
``(1) Appeal.--Any determination of the Copyright Royalty
Judges under subsection (c) may, within 30 days after the
publication of the determination in the Federal Register, be
appealed, to the United States Court of Appeals for the
District of Columbia Circuit, by any party who would be bound
by the determination, who, under subsection (b)(1), filed a
notice of intent to participate in the proceeding pursuant to
which the determination was made, and who submitted in writing
to the Copyright Royalty Judges the testimony, witnesses, and
exhibits to be presented in the proceeding. If no appeal is
brought within that 30-day period, the determination of the
Copyright Royalty Judges 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
determination of the Copyright Royalty Judges.
``(2) Effect of rates.--When this title provides that the
royalty rates or terms that were previously in effect are to
expire on a specified date, any adjustment by the Copyright
Royalty Judges of those rates or terms shall be effective as of
the day following the date of expiration of the rates or terms
that were previously in effect, even if the Copyright Royalty
Judges' determination is rendered on a later date. The pendency
of an appeal under this paragraph shall not relieve persons
obligated to make royalty payments under section 111, 112, 114,
115, 116, 118, 119, or 1003 who would be affected by the
determination on appeal to deposit the statement of account and
royalty fees specified in those sections.
``(3) Jurisdiction of court.--The court shall have
jurisdiction to modify or vacate a determination of the
Copyright Royalty Judges only if it finds, on the basis of the
record before the Copyright Royalty Judges, that the Copyright
Royalty Judges acted in an arbitrary or capricious manner. If
the court modifies the determination of the Copyright Royalty
Judges, 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
determination of the Copyright Royalty Judges and remand the
case to the Copyright Royalty Judges for proceedings in
accordance with subsection (a).
``(e) Administrative Matters.--
``(1) Deduction of costs of library of congress and copyright
office from filing fees.--
``(A) Deduction from filing fees.--The Librarian of
Congress may, to the extent not otherwise provided
under this title, deduct from the filing fees collected
under subsection (b) for a particular proceeding under
this chapter the reasonable costs incurred by the
Librarian of Congress, the Copyright Office, and the
Copyright Royalty Judges in conducting that proceeding,
other than the salaries of the Copyright Royalty Judges
and the 3 staff members appointed under section 802(b).
``(B) Authorization of appropriations.--There are
authorized to be appropriated such sums as may be
necessary to pay the costs of proceedings under this
chapter not covered by the filing fees collected under
subsection (b). All funds made available pursuant to
this subparagraph shall remain available until
expended.
``(2) Positions required for administration of compulsory
licensing.--Section 307 of the Legislative Branch
Appropriations Act, 1994, shall not apply to employee positions
in the Library of Congress that are required to be filled in
order to carry out section 111, 112, 114, 115, 116, 118, or 119
or chapter 10.
``Sec. 804. Institution and conclusion of proceedings
``(a) Filing of Petition.--With respect to proceedings under
paragraphs (1) and (2) of section 801(b) concerning the determination
or adjustment of royalty rates as provided in sections 111, 112, 114,
115, 116, 118, and 1004, during the calendar years specified in the
schedule set forth in subsection (b), any owner or user of a
copyrighted work whose royalty rates are specified by this title, or
are established under this chapter before or after the enactment of the
Copyright Royalty and Distribution Reform Act of 2003, may file a
petition with the Copyright Royalty Judges declaring that the
petitioner requests a determination or adjustment of the rate. The
Copyright Royalty Judges shall make a determination as to whether the
petitioner has such a significant interest in the royalty rate in which
a determination or adjustment is requested. If the Copyright Royalty
Judges determine that the petitioner has such a significant interest,
the Copyright Royalty Judges shall cause notice of this determination,
with the reasons therefor, to be published in the Federal Register,
together with the notice of commencement of proceedings under this
chapter.
``(b) Timing of Petitions.--
``(1) Section 111 proceedings.--(A) In proceedings under
section 801(b)(1) concerning the adjustment of royalty rates
under section 111 to which subparagraph (A) or (D) of section
801(b)(3) applies, a petition described in subsection (a) may
be filed during the year 2005 and in each subsequent fifth
calendar year.
``(B) In proceedings under section 801(b)(1) concerning the
adjustment of royalty rates under section 111 to which
subparagraph (B) or (C) of section 801(b)(3) applies, within 12
months after an event described in either of those subsections,
any owner or user of a copyrighted work whose royalty rates are
specified by section 111, or by a rate established under this
chapter before or after the enactment of the Copyright Royalty
and Distribution Reform Act of 2003, may file a petition with
the Copyright Royalty Judges declaring that the petitioner
requests an adjustment of the rate. The Copyright Royalty
Judges shall then proceed as set forth in subsection (a) of
this section. Any change in royalty rates made under this
chapter pursuant to this subparagraph may be reconsidered in
the year 2005, and each fifth calendar year thereafter, in
accordance with the provisions in section 801(b)(3)(B) or (C),
as the case may be.
``(2) Section 115 proceedings.--In proceedings under section
801(b)(1) or (2) concerning the adjustment or determination of
royalty rates as provided in section 115, a petition described
in paragraph (1) may be filed in the year 2007 and in each
subsequent fifth calendar year or as prescribed in section
115(c)(3)(B), (C), or (D).
``(3) Section 116 proceedings.--(A) In proceedings under
section 801(b)(2) concerning the determination of royalty rates
and terms as provided in section 116, a petition described in
paragraph (1) may be filed at any time within 1 year after
negotiated licenses authorized by section 116 are terminated or
expire and are not replaced by subsequent agreements.
``(B) If a negotiated license authorized by section 116 is
terminated or expires and is not replaced by another such
license agreement which provides permission to use a quantity
of musical works not substantially smaller than the quantity of
such works performed on coin-operated phonorecord players
during the 1-year period ending March 1, 1989, the Copyright
Royalty Judges shall, upon petition filed under paragraph (1)
within 1 year after such termination or expiration, commence a
proceeding to promptly establish an interim royalty rate or
rates for the public performance by means of a coin-operated
phonorecord player of nondramatic musical works embodied in
phonorecords which had been subject to the terminated or
expired negotiated license agreement. Such rate or rates shall
be the same as the last such rate or rates and shall remain in
force until the conclusion of proceedings by the Copyright
Royalty Judges, in accordance with section 803, to adjust the
royalty rates applicable to such works, or until superseded by
a new negotiated license agreement, as provided in section
116(b).
``(4) Section 112 and 114.--With respect to proceedings under
section 801(b)(2) concerning the determination of reasonable
terms and rates of royalty payments as provided in section 112
or 114, the Librarian of Congress and the Copyright Royalty
Judges shall proceed when and as provided by those sections.
``(5) Section 118 proceedings.--With respect to proceedings
under section 801(b)(2) concerning the determination of
reasonable terms and rates of royalty payments as provided in
section 118, the Librarian of Congress and the Copyright
Royalty Judges shall proceed when and as provided by that
section.
``(6) Proceedings concerning distribution of royalty fees.--
With respect to proceedings under section 801(b)(5) concerning
the distribution of royalty fees in certain circumstances under
section 111, 116, 119, or 1007, the Copyright Royalty Judges
shall, upon a determination that a controversy exists
concerning such distribution, cause to be published in the
Federal Register notice of commencement of proceedings under
this chapter.
``Sec. 805. Interim royalty payments
``Whenever royalty rates or terms provided in this title expire
before new rates and terms are provided in this title to replace the
expired rates and terms, persons obligated to make such payments shall
continue to make the payments under the expired rates and terms until
the new rates and terms take effect. If the new rates and terms require
lower payments, refunds of the overpayments shall be made retroactively
to the date the new terms and rates are effective. If the new terms and
rates require higher payments, the Copyright Royalty Judges shall
specify the time within which the persons obligated to make such
payments must pay the difference between the expired rates and terms
and the new rates and terms for such period that the new rates and
terms are applied retroactively.
``Sec. 806. General rule for voluntarily negotiated agreements
``Any rates or terms under this title that--
``(1) are agreed to during the voluntary negotiation periods
provided for under this title,
``(2) are adopted by the Copyright Royalty Judges as part of
a determination under this chapter, and
``(3) are in effect for a period shorter than would otherwise
apply under a determination pursuant to this chapter,
shall remain in effect for such period of time as would otherwise apply
under such determination, except that the Copyright Royalty Judges
shall adjust the rates pursuant to the voluntary negotiations to
reflect national monetary inflation during the additional period the
rates remain in effect.''.
(b) Conforming Amendment.--The table of chapters for title 17, United
States Code, is amended by striking the item relating to chapter 8 and
inserting the following:
``8. PROCEEDINGS OF COPYRIGHT ROYALTY JUDGE................. 801''.
SEC. 4. DEFINITION.
Section 101 is amended by inserting after the definition of
``copies'' the following:
``A `Copyright Royalty Judge' is a Copyright Royalty Judge
appointed under section 802 of this title, and includes any
individual serving as an interim Copyright Royalty Judge under
such section.''.
SEC. 5. TECHNICAL AMENDMENTS.
(a) Cable Rates.--Section 111(d) is amended--
(1) in paragraph (2), in the second sentence, by striking ``a
copyright royalty panel'' and inserting ``the Copyright Royalty
Judges.''; and
(2) in paragraph (4)--
(A) in subparagraph (A), by striking ``Librarian of
Congress'' each place it appears and inserting
``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) in the first sentence, by striking
``Librarian of Congress shall, upon the
recommendation of the Register of Copyrights,''
and inserting ``Copyright Royalty Judges
shall'';
(ii) in the second sentence, by striking
``Librarian determines'' and inserting
``Copyright Royalty Judges determine''; and
(iii) in the third sentence--
(I) by striking ``Librarian'' each
place it appears and inserting
``Copyright Royalty Judges''; and
(II) by striking ``convene a
copyright arbitration royalty panel''
and inserting ``conduct a proceeding'';
and
(C) in subparagraph (C), by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges''.
(b) Ephemeral Recordings.--Section 112(e) is amended--
(1) in paragraph (3)--
(A) by amending the first sentence to read as
follows: ``During the first week of January 2007, the
Chief Copyright Royalty Judge 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 paragraph (1)
during the period beginning on January 1, 2007, and
ending on December 31, 2011, or such other date as the
parties may agree.''; and
(B) in the third sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(2) in paragraph (4)--
(A) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under paragraph (2), during the 60-day
period beginning on the date that is 6 months after
publication of the notice specified in paragraph (3),
and upon the filing of a petition in accordance with
section 804(a), the Copyright Royalty Judges shall
commence a proceeding pursuant to chapter 8 to
determine and publish in the Federal Register a
schedule of reasonable rates and terms which, subject
to paragraph (5), shall be binding on all copyright
owners of sound recordings and transmitting
organizations entitled to a statutory license under
this subsection during the 5-year period specified in
paragraph (3), or such other date as the parties may
agree.'';
(B) by striking ``copyright arbitration royalty
panel'' each subsequent place it appears and inserting
``Copyright Royalty Judges'';
(C) in the fourth sentence, by striking ``its
decision'' and inserting ``their decision''; and
(D) in the last sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(3) in paragraph (5), by striking ``or decision by the
Librarian of Congress'' and inserting ``, decision by Librarian
of Congress, or determination by the Copyright Royalty
Judges''; and
(4) in paragraph (6)--
(A) in the first sentence--
(i) by striking ``Librarian of Congress''
each place it appears and inserting ``Copyright
Royalty Judges''; and
(ii) by striking ``January 2000, and at 2-
year'' and inserting ``January 2012, and at 5-
year'';
(B) in the second sentence--
(i) by striking ``803(a)(1)'' and inserting
``804(a)''; and
(ii) by striking ``July 1, 2000, and at 2-
year'' and inserting ``July 1, 2012, and at 5-
year''; and
(C) in the last sentence, by striking ``802'' and
inserting ``803''; and
(5) in paragraph (7)(A), by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges''.
(c) Scope of Exclusive Rights in Sound Recordings.--Section 114(f) is
amended--
(1) in paragraph (1)--
(A) in subparagraph (A)--
(i) by amending the first sentence to read as
follows: ``During the first week of January
2006, the Chief Copyright Royalty Judge 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 subscription transmissions
by preexisting subscription services and
transmissions by preexisting satellite digital
audio radio services specified by subsection
(d)(2) during the period beginning on January
1, 2006, and ending on December 31, 2010, or
such other date as the parties may agree.'';
and
(ii) in the third sentence, by striking
``Librarian of Congress'' and inserting
``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under subparagraph (A), during the
60-day period beginning on the date that is 6
months after publication of the notice
specified in subparagraph (A), and upon the
filing of a petition in accordance with section
804(a), the Copyright Royalty Judges shall
commence proceedings pursuant to chapter 8 to
determine and publish in the Federal Register a
schedule of rates and terms which, subject to
paragraph (3), shall be binding on all
copyright owners of sound recordings and
entities performing sound recordings affected
by this paragraph.''; and
(ii) in the second sentence, by striking
``copyright arbitration royalty panel'' and
inserting ``Copyright Royalty Judges''; and
(C) in subparagraph (C)--
(i) in clause (i)--
(I) by striking ``Librarian of
Congress'' and inserting ``Copyright
Royalty Judges''; and
(II) in subclause (II), by striking
``2001'' and inserting ``2011'';
(ii) in clause (ii)--
(I) by striking ``Librarian of
Congress'' and inserting ``Copyright
Royalty Judges'';
(II) by striking ``803(a)(1)'' and
inserting ``804(a)''; and
(III) in subclause (II), by striking
``2001'' and inserting ``2011''; and
(iii) in clause (iii), by striking ``802''
and inserting ``803'';
(2) in paragraph (2)--
(A) in subparagraph (A)--
(i) by amending the first sentence to read as
follows: ``During the first week of January
2007, the Chief Copyright Royalty Judge 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 public performances of
sound recordings by means of eligible
nonsubscription transmissions and transmissions
by new subscription services specified by
subsection (d)(2) during the period beginning
on January 1, 2007, and ending on December 31,
2011, or such other date as the parties may
agree.''; and
(ii) in the third sentence, by striking
``Librarian of Congress'' and inserting
``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under subparagraph (A), during the
60-day period beginning on the date that is 6
months after publication of the notice
specified in subparagraph (A), and upon the
filing of a petition in accordance with section
804(a), the Copyright Royalty Judges shall
commence proceedings pursuant to chapter 8 to
determine and publish in the Federal Register a
schedule of rates and terms which, subject to
paragraph (3), shall be binding on all
copyright owners of sound recordings and
entities performing sound recordings affected
by this paragraph during the period beginning
on January 1, 2007, and ending on December 31,
2011, or such other date as the parties may
agree.''; and
(ii) by striking ``copyright arbitration
royalty panel'' each subsequent place it
appears and inserting ``Copyright Royalty
Judges'';
(C) in subparagraph (C)--
(i) in clause (i)--
(I) by striking ``Librarian of
Congress'' and inserting ``Copyright
Royalty Judges''; and
(II) in subclause (II), by striking
``January 2000, and at 2-year'' and
inserting ``January 2012, and at 5-
year'';
(ii) in clause (ii)--
(I) by striking ``Librarian of
Congress'' and inserting ``Copyright
Royalty Judges'';
(II) by striking ``803(a)(1)'' and
inserting ``804(a)''; and
(III) in subclause (II), by striking
``July 1, 2000, and at 2-year'' and
inserting ``July 1, 2012, and at 5-
year''; and
(iii) in clause (iii), by striking ``802''
and inserting ``803'';
(3) in paragraph (3), by striking ``or decision by the
Librarian of Congress'' and inserting ``, decision by the
Librarian of Congress, or determination by the Copyright
Royalty Judges''; and
(4) in paragraph (4), by striking ``Librarian of Congress''
each place it appears and inserting ``Copyright Royalty
Judges''.
(d) Phonorecords of Nondramatic Musical Works.--Section 115(c)(3) is
amended--
(1) in subparagraph (C)--
(A) by amending the first sentence to read as
follows: ``During the period of June 30, 2006, through
December 31, 2006, the Chief Copyright Royalty Judge
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, 2008, and ending on the effective
date of any new terms and rates established pursuant to
this subparagraph or subparagraph (D) or (F), or such
other date (regarding digital phonorecord deliveries)
as the parties may agree.''; and
(B) in the third sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(2) in subparagraph (D)--
(A) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under subparagraphs (B) and (C), upon the
filing of a petition in accordance with section 804(a),
the Copyright Royalty Judges shall commence proceedings
pursuant to chapter 8 to determine and publish in the
Federal Register a schedule or 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, 2008, and ending on the effective date of any new
terms and rates established pursuant to subparagraph
(C) or (F) or this subparagraph, or such other date
(regarding digital phonorecord deliveries) as may be
determined pursuant to subparagraphs (B) and (C).'';
(B) in the third sentence, by striking ``copyright
arbitration royalty panel'' and inserting ``Copyright
Royalty Judges''; and
(C) in the last sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(3) in subparagraph (E)(i), in the first sentence, by
striking ``the Librarian of Congress'' and inserting ``a
copyright arbitration royalty panel, the Librarian of Congress,
or the Copyright Royalty Judges''; and
(4) in subparagraph (F)--
(A) by striking ``Librarian of Congress'' and
inserting ``Copyright Royalty Judges''; and
(B) by striking ``1997'' and inserting ``2002''.
(e) Coin-Operated Phonorecord Players.--Section 116 is amended--
(1) in subsection (b), by amending paragraph (2) to read as
follows:
``(2) Chapter 8 proceeding.--Parties not subject to such a
negotiation may have the terms and rates and the division of
fees described in paragraph (1) determined in a proceeding in
accordance with the provisions of chapter 8.''; and
(2) in subsection (c)--
(A) in the subsection heading, by striking
``Copyright Arbitration Royalty Panel Determinations''
and inserting ``Determinations by Copyright Royalty
Judges''; and
(B) by striking ``a copyright arbitration royalty
panel'' and inserting ``the Copyright Royalty Judges''.
(f) Use of Certain Works in Connection With Noncommercial
Broadcasting.--Section 118 is amended--
(1) in subsection (b)--
(A) in paragraph (1)--
(i) in the first sentence, by striking
``Librarian of Congress'' and inserting
``Copyright Royalty Judges''; and
(ii) by striking the second and third
sentences;
(B) in paragraph (2), by striking ``the Librarian of
Congress:'' and all that follows through the end of the
sentence and inserting ``a copyright arbitration
royalty panel, the Librarian of Congress, or the
Copyright Royalty Judge, if copies of such agreements
are filed with the Copyright Royalty Judges within 30
days of execution in accordance with regulations that
the Copyright Royalty Judges shall issue.''; and
(C) in paragraph (3)--
(i) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under paragraph (2), the Copyright
Royalty Judges shall, pursuant to chapter 8,
conduct a proceeding to determine and publish
in the Federal Register a schedule of rates and
terms which, subject to paragraph (2), shall be
binding on all owners of copyright in works
specified by this subsection and public
broadcasting entities, regardless of whether
such copyright owners have submitted proposals
to the Copyright Royalty Judges.'';
(ii) in the second sentence, by striking
``copyright arbitration royalty panel'' and
inserting ``Copyright Royalty Judges''; and
(iii) in the last sentence, by striking
``Librarian of Congress'' and inserting
``Copyright Royalty Judges'';
(2) in subsection (c)--
(A) by striking ``1997'' and inserting ``2007''; and
(B) by striking ``Librarian of Congress'' and
inserting ``Copyright Royalty Judges'';
(3) in subsection (d), by striking ``a copyright arbitration
royalty panel'' and inserting ``the Copyright Royalty Judges'';
and
(4) in subsection (e)--
(A) by striking ``in the Copyright Office'' and
inserting ``with the Copyright Royalty Judges''; and
(B) by striking ``Register of Copyrights'' and
inserting ``Copyright Royalty Judges''.
(g) Secondary Transmissions by Satellite Carriers.--Section 119(b) is
amended--
(1) in paragraph (3), by striking ``Librarian of Congress''
and inserting ``Copyright Royalty Judges''; and
(2) in paragraph (4)--
(A) in subparagraph (A), by striking ``Librarian of
Congress'' each place it appears and inserting
``Copyright Royalty Judges''; and
(B) by amending subparagraphs (B) and (C) to read as
follows:
``(B) Determination of controversy; distributions.--
After the first day of August of each year, the
Copyright Royalty Judges shall determine whether there
exists a controversy concerning the distribution of
royalty fees. If the Copyright Royalty Judges determine
that no such controversy exists, the Librarian of
Congress shall, after deducting reasonable
administrative costs under this paragraph, distribute
such fees to the copyright owners entitled to receive
them, or to their designated agents. If the Copyright
Royalty Judges find the existence of a controversy, the
Copyright Royalty Judges shall, pursuant to chapter 8
of this title, conduct a proceeding to determine the
distribution of royalty fees.
``(C) Withholding of fees during controversy.--During
the pendency of any proceeding under this subsection,
the Copyright Royalty Judges shall withhold from
distribution an amount sufficient to satisfy all claims
with respect to which a controversy exists, but shall
have discretion to authorize the distribution of any
amounts that are not in controversy.''.
(h) Digital Audio Recording Devices.--
(1) Royalty payments.--Section 1004(a)(3) is amended by
amending the third sentence to read as follows: ``Not more than
once each year, any interested copyright party may petition the
Copyright Royalty Judges to increase the royalty maximum and,
if more than 20 percent of the royalty payments are at the
relevant royalty maximum, the Copyright Royalty Judges shall
prospectively increase such royalty maximum with the goal of
having no more than 10 percent of such payments at the new
royalty maximum; however the amount of any such increase as a
percentage of the royalty maximum shall in no event exceed the
percentage increase in the Consumer Price Index during the
period under review.''.
(2) Entitlement to royalty payments.--Section 1006(c) is
amended by striking ``Librarian of Congress shall convene a
copyright arbitration royalty panel which'' and inserting
``Copyright Royalty Judges''.
(3) Procedures for distributing royalty payments.--Section
1007 is amended--
(A) in subsection (a), by amending paragraph (1) to
read as follows:
``(1) Filing of claims.--During the first 2 months of each
calendar year, every interested copyright party seeking to
receive royalty payments to which such party is entitled under
section 1006 shall file with the Copyright Royalty Judges a
claim for payments collected during the preceding year in such
form and manner as the Copyright Royalty Judges shall prescribe
by regulation.''; and
(B) by amending subsections (b) and (c) to read as
follows:
``(b) Distribution of Payments in the Absence of a Dispute.--After
the period established for the filing of claims under subsection (a),
in each year, the Copyright Royalty Judges shall determine whether
there exists a controversy concerning the distribution of royalty
payments under section 1006(c). If the Copyright Royalty Judges
determine that no such controversy exists, the Librarian of Congress
shall, within 30 days after such determination, authorize the
distribution of the royalty payments as set forth in the agreements
regarding the distribution of royalty payments entered into pursuant to
subsection (a). The Librarian of Congress shall, before such royalty
payments are distributed, deduct the reasonable administrative costs
incurred by the Librarian under this section.
``(c) Resolution of Disputes.--If the Copyright Royalty Judges find
the existence of a controversy, the Copyright Royalty Judges shall,
pursuant to chapter 8 of this title, conduct a proceeding to determine
the distribution of royalty payments. During the pendency of such a
proceeding, the Copyright Royalty Judges shall withhold from
distribution an amount sufficient to satisfy all claims with respect to
which a controversy exists, but shall, to the extent feasible,
authorize the distribution of any amounts that are not in controversy.
The Librarian of Congress shall, before such royalty payments are
distributed, deduct the reasonable administrative costs incurred by the
Librarian under this section.''.
(5) Determination of certain disputes.--(A) Section 1010 is
amended to read as follows:
``Sec. 1010. Determination of certain disputes
``(a) Scope of Determination.--Before the date of first distribution
in the United States of a digital audio recording device or a digital
audio interface device, any party manufacturing, importing, or
distributing such device, and any interested copyright party may
mutually agree to petition the Copyright Royalty Judges to determine
whether such device is subject to section 1002, or the basis on which
royalty payments for such device are to be made under section 1003.
``(b) Initiation of Proceedings.--The parties under subsection (a)
shall file the petition with the Copyright Royalty Judges requesting
the commencement of a proceeding. Within 2 weeks after receiving such a
petition, the Chief Copyright Royalty Judge shall cause notice to be
published in the Federal Register of the initiation of the proceeding.
``(c) Stay of Judicial Proceedings.--Any civil action brought under
section 1009 against a party to a proceeding under this section shall,
on application of one of the parties to the proceeding, be stayed until
completion of the proceeding.
``(d) Proceeding.--The Copyright Royalty Judges shall conduct a
proceeding with respect to the matter concerned, in accordance with
such procedures as the Copyright Royalty Judges may adopt. The
Copyright Royalty Judges shall act on the basis of a fully documented
written record. Any party to the proceeding may submit relevant
information and proposals to the Copyright Royalty Judges. The parties
to the proceeding shall bear the entire cost thereof in such manner and
proportion as the Copyright Royalty Judges shall direct.
``(e) Judicial Review.--Any determination of the Copyright Royalty
Judges under subsection (d) may be appealed, by a party to the
proceeding, in accordance with section 803(d) of this title. The
pendency of an appeal under this subsection shall not stay the
determination of the Copyright Royalty Judges. If the court modifies
the determination of the Copyright Royalty Judges, the court shall have
jurisdiction to enter its own decision in accordance with its final
judgment. The court may further vacate the determination of the
Copyright Royalty Judges and remand the case for proceedings as
provided in this section.''.
(B) The item relating to section 1010 in the table of
sections for chapter 10 is amended to read as follows:
``1010. Determination of certain disputes.''.
SEC. 6. EFFECTIVE DATE AND TRANSITION PROVISIONS.
(a) Effective Date.--This Act and the amendments made by this Act
shall take effect 30 days after the date of the enactment of this Act,
except that the Librarian of Congress shall appoint interim Copyright
Royalty Judges under section 802(d) of title 17, United States Code, as
amended by this Act, within that 30-day period to carry out the
functions of the Copyright Royalty Judges under title 17, United States
Code, to the extent that Copyright Royalty Judges provided for in
section 801(a) of title 17, United States Code, as amended by this Act,
have not been appointed before the end of that 30-day period.
(b) Transition Provisions.--
(1) In general.--Subject to paragraph (2), the amendments
made by this Act shall not affect any proceedings commenced
before the enactment of this Act under the provisions of title
17, United States Code, amended by this Act, and pending on
such date of enactment. Such proceedings shall continue,
determinations made in such proceedings, and appeals taken
therefrom, as if this Act had not been enacted, and shall
continue in effect until modified under title 17, United States
Code, as amended by this Act.
(2) Effective periods for certain ratemaking proceedings.--
Notwithstanding paragraph (1), terms and rates determined under
proceedings under section 114(f)(2) or 112(e) of title 17,
United States Code, commenced in 2002 shall be effective for an
additional period of 3 years, or until such later date as the
parties may agree, in lieu of the 2-year period otherwise
provided for under such sections.
Chairman Sensenbrenner. The Chair recognizes the gentleman
from Texas, Mr. Smith, to strike the last word.
Mr. Smith. Mr. Chairman, I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized.
Mr. Smith. Mr. Chairman, today's legislation represents a
bipartisan effort to reform the ratemaking and royalty
distribution system for compulsory and statutory licenses, a
task currently performed by the Copyright Arbitration Royalty
Panels, called CARPs.
For more than 20 years, Congress has struggled to develop
the appropriate mechanism to govern the copyright royalty
ratemaking and distribution process. Congress created the
Copyright Royalty Tribunals in 1976, but abolished them in 1993
in response to criticism voiced by the Copyright Office and
other interested parties. The tribunals gave way to the present
CARP system, but we are faced yet again with the task of
reforming a system that forces parties to participate on
costly, laborious proceedings that often result in contentious
decisions and additional litigation.
The existing CARP process with its attorneys fees, arbiter
fees, Copyright Office fees and expert fees, is a very costly
experience for participants. The discovery aspect of the CARP
proceeding is restrictive. The scope of the discovery is
limited to written testimony, with access to official documents
not available to shed more light on a particular issue, and
because CARPs have no subpoena powers, the arbitrators are left
with no real mechanism to gain the information they often need
to make a fair and balanced decision.
In response to these concerns, the subcommittee conducted
an oversight hearing and subsequently convened a government-
industry roundtable on this subject, which included 32
participants who offered recommendations for improving the
current system. H.R. 1417 reflects the suggestions made at the
hearing and at the roundtable discussions.
Along with ranking member Howard Berman, I will offer a
substitute amendment that improves the underlying bill. I urge
my colleagues to support both the amendment and the bill, and I
yield back the balance of my time.
Chairman Sensenbrenner. The gentleman from California, Mr.
Berman.
Mr. Berman. Thank you, Mr. Chairman. Mr. Chairman, I think
you are to be commended for pushing H.R. 1417 through Committee
before the October recess. What October recess? There is now a
realistic possibility that it will become law during the 108th
Congress.
You are also to be commended for ensuring that the bill
remedies the substantial procedural defects of the CARP
process, but does not stray into substantive copyright law
issues that would surely waylay its adoption.
I also thank you and Subcommittee Chairman Smith for
working so closely with me and my staff in drafting this bill
and its various iterations.
There is widespread agreement among copyright owners and
users alike that the CARP process is broken. The costs involved
often are so high that parties cannot either afford to
participate or find out that the costs outweigh any potential
royalties or efficiencies. The decisions often take too long to
issue and, thus, create uncertainty and confusion among
licensors and licensees alike.
Finally, even when the decisions do issue, they are often
overturned or modified, are inconsistent with precedence, and
can't be effectively implemented until corresponding
rulemakings are completed. The bill reported by thesubcommittee
will go a long way to remedying the defects of the CARP process.
The amendment that Chairman Smith, ranking member Conyers
and I offer today is intended to further perfect the reported
bill. While I would not profess to 100 percent satisfaction
with each provision included within the reported bill and
amendment, I wholeheartedly support the overall product. Thus,
I ask my colleagues to both support our amendment and vote to
report the bill favorably, as amended.
The amendment before us today contains a wide variety of
changes designed to address some lingering concerns about the
bill as reported by subcommittee. These changes further
solidify the consensus support for this bill among all
interested parties. While the changes are too copious to list
in total, I would like to highlight a few of the improvements
to be made through this amendment, and I do so in part because
the distribution of the amendment in the nature of a substitute
was rather late in the day.
The subcommittee bill generated some concerns, legitimate
in my eyes, that the new Copyright Royalty Judges would not be
able to draw on and benefit from the substantial expertise of
the Copyright Office in this area. To remedy these concerns,
the amendment now requires that the librarian consult with the
Registrar of Copyrights when appointing CRJs. Furthermore, the
amendment allows the CRJs to consult on the record with the
Registrar of Copyrights on all matters other than questions of
fact.
The series of interrelated changes ensures that all rates
and terms for statutory licenses will be set prospectively, not
retroactively, and eliminate, therefore, the possibility that a
time period covered by a statutory license will commence before
the establishment of rates and terms. As these changes
eliminate the need for interim royalty payments, the amendment
deletes the provisions regarding interim payments.
The amendment reflects our ongoing effort to bridge
differences regarding the evidentiary and discovery rules that
will adhere in statutory licensing proceedings. The amendment
allows admission of hearsay ``to the extent deemed
appropriate'' by the CRJ, rather than according to the Federal
Rules of Evidence, and allows CRJs to issue subpoenas for
relevant and material information.
It directs the CRJs to conduct discovery conferences for
the purpose of setting a schedule for completing discovery. The
amendment clarifies and provides assurance that the discovery
rules in distribution proceedings will mirror those currently
in use.
For rate-setting proceedings, the amendment limits
discovery to relevant and material information, and allows the
CRJs to deny discovery for good cause. The circumstancesthat
constitute good cause include whether the discovery requests are
unreasonably cumulative or duplicative, easily obtainable from another
source, or the burden of expense outweighs its likely benefit.
While the amendment's rules of discovery may not wholly
satisfy Chairman Smith or myself, they reflect a good faith
accommodation. The amendment expands the continuing
jurisdiction of the CRJs to ensure that they ``have the ability
to respond to unforeseen circumstances that preclude the proper
effectuation of the determination,'' again in quotes.
It also ensures that only parties who have fully
participated in the proceeding and are bound by its
determination will have the right to appeal that determination.
Finally, Mr. Chairman, the amendment addresses a concern
that the reported bill would vitiate the ability of section
115, licensors and licensees, to agree to out-of-cycle rate
determinations through voluntary agreements adopted by the
CRJs. The substitute amendment restores this ability to section
115 participants, but allows the CRJs to reject such out-of-
cycle determinations if workload concerns so merit.
I think H.R. 1417 and the proposed amendment will
substantially improve the CARP process and I ask my colleagues
to support both.
Chairman Sensenbrenner. The gentleman's time has expired.
Are there amendments?
The gentleman from Texas.
Mr. Smith. Mr. Chairman, I have an amendment at the desk.
Chairman Sensenbrenner. The Clerk will report the
amendment.
Without objection, the amendment is considered as read and
open for amendment at any point. The gentleman from Texas is
recognized for five quick minutes, because we're about ready to
vote and have a reporting quorum.
[The amendment of Mr. Smith follows:]
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Copyright Royalty and Distribution
Reform Act of 2003''.
SEC. 2. REFERENCE.
Except as otherwise expressly provided, whenever in this Act an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be considered to
be made to a section or other provision of title 17, United States
Code.
SEC. 3. COPYRIGHT ROYALTY JUDGE AND STAFF.
(a) In General.--Chapter 8 is amended to read as follows:
CHAPTER 8--PROCEEDINGS BY COPYRIGHT ROYALTY JUDGES
``Sec.
``801. Copyright Royalty Judges; appointment and functions.
``802. Copyright Royalty Judgeships; staff.
``803. Proceedings of Copyright Royalty Judges.
``804. Institution of proceedings.
``805. General rule for voluntarily negotiated agreements.
``Sec. 801. Copyright Royalty Judge; appointment and functions
``(a) Appointment.--The Librarian of Congress shall appoint 3 full-
time Copyright Royalty Judges, and shall appoint one of the three as
the Chief Copyright Royalty Judge. In making such appointments, the
Librarian shall consult with the Register of Copyrights.
``(b) Functions.--Subject to the provisions of this chapter, the
functions of the Copyright Royalty Judges shall be as follows:
``(1) To make determinations and adjustments of reasonable
terms and rates of royalty payments as provided in sections
112(e), 114, 115, 116, 118, 119 and 1004. The rates applicable
under sections 114(f)(1)(B), 115, and 116 shall be calculated
to achieve the following objectives:
``(A) To maximize the availability of creative works
to the public.
``(B) To afford the copyright owner a fair return for
his or her creative work and the copyright user a fair
income under existing economic conditions.
``(C) To reflect the relative roles of the copyright
owner and the copyright user in the product made
available to the public with respect to relative
creative contribution, technological contribution,
capital investment, cost, risk, and contribution to the
opening of new markets for creative expression and
media for their communication.
``(D) To minimize any disruptive impact on the
structure of the industries involved and on generally
prevailing industry practices.
``(2) To make determinations concerning the adjustment of the
copyright royalty rates under section 111 solely in accordance
with the following provisions:
``(A) The rates established by section 111(d)(1)(B)
may be adjusted to reflect--
``(i) national monetary inflation or
deflation; or
``(ii) changes in the average rates charged
cable subscribers for the basic service of
providing secondary transmissions to maintain
the real constant dollar level of the royalty
fee per subscriber which existed as of the date
of October 19, 1976,
except that--
``(I) if the average rates charged cable
system subscribers for the basic service of
providing secondary transmissions are changed
so that the average rates exceed national
monetary inflation, no change in the rates
established by section 111(d)(1)(B) shall be
permitted; and
``(II) no increase in the royalty fee shall
be permitted based on any reduction in the
average number of distant signal equivalents
per subscriber.
The Copyright Royalty Judges may consider all factors
relating to the maintenance of such level of payments,
including, as an extenuating factor, whether the
industry has been restrained by subscriber rate
regulating authorities from increasing the rates for
the basic service of providing secondary transmissions.
``(B) In the event that the rules and regulations of
the Federal Communications Commission are amended at
any time after April 8, 1976, to permit the carriage by
cable systems of additional television broadcast
signals beyond the local service area of the primary
transmitters of such signals, the royalty rates
established by section 111(d)(1)(B) may be adjusted to
insure that the rates for the additional distant signal
equivalents resulting from such carriage are reasonable
in the light of the changes effected by the amendment
to such rules and regulations. In determining the
reasonableness of rates proposed following an amendment
of Federal Communications Commission rules and
regulations, the Copyright Royalty Judges shall
consider, among other factors, the economic impact on
copyright owners and users; except that no adjustment
in royalty rates shall be made under this subparagraph
with respect to any distant signal equivalent or
fraction thereof represented by--
``(i) carriage of any signal permitted under
the rules and regulations of the Federal
Communications Commission in effect on April
15, 1976, or the carriage of a signal of the
same type (that is, independent, network, or
noncommercial educational) substituted for such
permitted signal; or
``(ii) a television broadcast signal first
carried after April 15, 1976, pursuant to an
individual waiver of the rules and regulations
of the Federal Communications Commission, as
such rules and regulations were in effect on
April 15, 1976.
``(C) In the event of any change in the rules and
regulations of the Federal Communications Commission
with respect to syndicated and sports program
exclusivity after April 15, 1976, the rates established
by section 111(d)(1)(B) may be adjusted to assure that
such rates are reasonable in light of the changes to
such rules and regulations, but any such adjustment
shall apply only to the affected television broadcast
signals carried on those systems affected by the
change.
``(D) The gross receipts limitations established by
section 111(d)(1)(C) and (D) shall be adjusted to
reflect national monetary inflation or deflation or
changes in the average rates charged cable system
subscribers for the basic service of providing
secondary transmissions to maintain the real constant
dollar value of the exemption provided by such section,
and the royalty rate specified therein shall not be
subject to adjustment.
``(3) To authorize the distribution, under sections 111, 119,
and 1007, of those royalty fees collected under sections 111,
119, and 1005, as the case may be, to the extent that the
Copyright Royalty Judges have found that the distribution of
such fees is not subject to controversy. In cases where the
Copyright Royalty Judges determine that controversy exists--
``(A) the Copyright Royalty Judges shall determine
the distribution of such fees, in accordance with
section 111, 119, or 1007, as the case may be; and
``(B) the Copyright Royalty Judges shall make a
partial distribution of such fees during the pendency
of the proceeding under subparagraph (A) if all
participants under section 803(b)(2) in the
proceeding--
``(i) agree to such partial distribution;
``(ii) sign an agreement obligating them to
return any excess amounts to the extent
necessary to comply with the final
determination on the distribution of the fees
made under subparagraph (A); and
``(iii) file the agreement with the Copyright
Royalty Judges.
The Copyright Royalty Judges and any other officer or employee
acting in good faith in distributing funds under subparagraph
(B) shall not be held liable for the payment of any excess fees
under subparagraph (B). The Copyright Royalty Judges shall, at
the time the final determination is made, calculate any such
excess amounts.
``(4) To accept or reject royalty claims filed under section
111, 119, and 1007, on the basis of timeliness or the failure
to establish the basis for a claim.
``(5) To accept or reject rate adjustment petitions as
provided in section 804 and petitions to participate as
provided in section 803(b)(1) and (2).
``(6) To determine the status of a digital audio recording
device or a digital audio interface device under sections 1002
and 1003, as provided in section 1010.
``(7)(A) To adopt as the basis for statutory terms and rates
or as a basis for the distribution of statutory royalty
payments, an agreement concerning such matters reached among
some or all of the participants in a proceeding at any time
during the proceeding, except that--
``(i) the Copyright Royalty Judges shall provide to
the other participants in the proceeding under section
803(b)(2) that would be bound by the terms, rates,
distribution, or other determination set by the
agreement an opportunity to comment on the agreement
and object to its adoption as the basis for statutory
terms and rates or as a basis for the distribution of
statutory royalty payments, as the case may be; and
``(ii) the Copyright Royalty Judges may decline to
adopt the agreement as the basis for statutory terms
and rates or as the basis for the distribution of
statutory royalty payments, as the case may be, if any
other participant described in subparagraph (A) objects
to the agreement and the Copyright Royalty Judges find,
based on the record before them, that the agreement is
not likely to meet the statutory standard for setting
the terms and rates, or for distributing the royalty
payments, as the case may be.
``(B) License agreements voluntarily negotiated pursuant to
section 112(e)(5), 114(f)(3), 115(c)(3)(E)(i), 116(c), or
118(b)(2) that do not result in statutory terms and rates shall
not be subject to clauses (i) and (ii) of subparagraph (A).
``(c) Rulings.--The Copyright Royalty Judges may make any necessary
procedural or evidentiary rulings in any proceeding under this chapter
and may, before commencing a proceeding under this chapter, make any
such rulings that would apply to the proceedings conducted by the
Copyright Royalty Judges. The Copyright Royalty Judges may consult with
the Register of Copyrights in making any rulings under section
802(f)(1).
``(d) Administrative Support.--The Librarian of Congress shall
provide the Copyright Royalty Judges with the necessary administrative
services related to proceedings under this chapter.
``(e) Location in Library of Congress.--The offices of the Copyright
Royalty Judges and staff shall be in the Library of Congress.
``Sec. 802. Copyright Royalty Judgeships; staff
``(a) Qualifications of Copyright Royalty Judges.--Each Copyright
Royalty Judge shall be an attorney who has at least 7 years of legal
experience. The Chief Copyright Royalty Judge shall have at least 5
years of experience in adjudications, arbitrations, or court trials. Of
the other two Copyright Royalty Judges, one shall have significant
knowledge of copyright law, and the other shall have significant
knowledge of economics. An individual may serve as a Copyright Royalty
Judge only if the individual is free of any financial conflict of
interest under subsection (h). In this subsection, `adjudication' has
the meaning given that term in section 551 of title 5, but does not
include mediation.
``(b) Staff.--The Chief Copyright Royalty Judge shall hire 3 full-
time staff members to assist the Copyright Royalty Judges in performing
their functions.
``(c) Terms.--The terms of the Copyright Royalty Judges shall each be
6 years, except of the individuals first appointed, the Chief Copyright
Royalty Judge shall be appointed to a term of 6 years, and of the
remaining Copyright Royalty Judges, one shall be appointed to a term of
2 years, and the other shall be appointed to a term of 4 years. An
individual serving as a Copyright Royalty Judge may be reappointed to
subsequent terms. The term of a Copyright Royalty Judge shall begin
when the term of the predecessor of that Copyright Royalty Judge ends.
When the term of office of a Copyright Royalty Judge ends, the
individual serving that term may continue to serve until a successor is
selected.
``(d) Vacancies or incapacity.--
``(1) Vacancies.--If a vacancy should occur in the position
of Copyright Royalty Judge, the Librarian of Congress shall act
expeditiously to fill the vacancy, and may appoint an interim
Copyright Royalty Judge to serve until another Copyright
Royalty Judge is appointed under this section. An individual
appointed to fill the vacancy occurring before the expiration
of the term for which the predecessor of that individual was
appointed shall be appointed for the remainder of that term.
``(2) Incapacity.--In the case in which a Copyright Royalty
Judge is temporarily unable to perform his or her duties, the
Librarian of Congress may appoint an interim Copyright Royalty
Judge to perform such duties during the period of such
incapacity.
``(e) Compensation.--
``(1) Judges.--The Chief Copyright Royalty Judge shall
receive compensation at the rate of basic pay payable for level
AL-1 for administrative law judges pursuant to section 5372(b)
of title 5, and each of the other two Copyright Royalty Judges
shall receive compensation at the rate of basic pay payable for
level AL-2 for administrative law judges pursuant to such
section. The compensation of the Copyright Royalty Judges shall
not be subject to any regulations adopted by the Office of
Personnel Management pursuant to its authority under section
5376(b)(1) of title 5.
``(2) Staff members.--Of the staff members appointed under
subsection (b)--
``(A) the rate of pay of one staff member shall be
not more than the basic rate of pay payable for GS-15
of the General Schedule;
``(B) the rate of pay of one staff member shall be
not less than the basic rate of pay payable for GS-13
of the General Schedule and not more than the basic
rate of pay payable for GS-14 of such Schedule; and
``(C) the rate of pay for the third staff member
shall be not less than the basic rate of pay payable
for GS-8 of the General Schedule and not more than the
basic rate of pay payable for GS-11 of such Schedule.
``(f) Independence of Copyright Royalty Judge.--
``(1) In making determinations.--
``(A) In general.--Subject to subparagraph (B), the
Copyright Royalty Judges shall have full independence
in making determinations concerning adjustments and
determinations of copyright royalty rates and terms,
the distribution of copyright royalties, the acceptance
or rejection of royalty claims, rate adjustment
petitions, and petitions to participate, and in issuing
other rulings under this title, except that the
Copyright Royalty Judges may consult with the Register
of Copyrights on any matter other than a question of
fact. Any such consultations between the Copyright
Royalty Judges and the Register of Copyright on any
question of law shall be in writing or on the record.
``(B) Novel questions.--(i) Notwithstanding the
provisions of subparagraph (A), in any case in which
the Copyright Royalty Judges in a proceeding under this
title are presented with a novel question of law
concerning an interpretation of those provisions of
this title that are the subject of the proceeding, the
Copyright Royalty Judges shall request the Register of
Copyrights, in writing, to submit a written opinion on
the resolution of such novel question. The Register
shall submit and make public that opinion within such
time period as the Copyright Royalty Judges may
prescribe. Any consultations under this subparagraph
between the Copyright Royalty Judges and the Register
of Copyrights shall be in writing or on the record. The
opinion of the Register shall not be binding on the
Copyright Royalty Judges, but the Copyright Royalty
Judges shall take the opinion of the Register into
account in making the judges' determination on the
question concerned.
``(ii) In clause (i), a `novel question of law' is a
question of law that has not been determined in prior
decisions, determinations, and rulings described in
section 803(a).
``(2) Performance appraisals.--
``(A) In general.--Notwithstanding any other
provision of law or any regulation of the Library of
Congress, and subject to subparagraph (B), the
Copyright Royalty Judges shall not receive performance
appraisals.
``(B) Relating to sanction or removal.--To the extent
that the Librarian of Congress adopts regulations under
subsection (h) relating to the sanction or removal of a
Copyright Royalty Judge and such regulations require
documentation to establish the cause of such sanction
or removal, the Copyright Royalty Judge may receive an
appraisal related specifically to the cause of the
sanction or removal.
``(g) Inconsistent Duties Barred.--No Copyright Royalty Judge may
undertake duties inconsistent with his or her duties and
responsibilities as Copyright Royalty Judge.
``(h) Standards of Conduct.--The Librarian of Congress shall adopt
regulations regarding the standards of conduct, including financial
conflict of interest and restrictions against ex parte communications,
which shall govern the Copyright Royalty Judges and the proceedings
under this chapter.
``(i) Removal or Sanction.--The Librarian of Congress may sanction or
remove a Copyright Royalty Judge for violation of the standards of
conduct adopted under subsection (h), misconduct, neglect of duty, or
any disqualifying physical or mental disability. Any such sanction or
removal may be made only after notice and opportunity for a hearing,
but the Librarian of Congress may suspend the Copyright Royalty Judge
during the pendency of such hearing. The Librarian shall appoint an
interim Copyright Royalty Judge during the period of any such
suspension.
``Sec. 803. Proceedings of Copyright Royalty Judges
``(a) Proceedings.--
``(1) In general.--The Copyright Royalty Judges shall act in
accordance with this title, and to the extent not inconsistent
with this title, in accordance with subchapter II of chapter 5
of title 5, in carrying out the purposes set forth in section
801. The Copyright Royalty Judges shall act in accordance with
regulations issued by the Copyright Royalty Judges and on the
basis of a fully documented written record, prior decisions of
the Copyright Royalty Tribunal, prior copyright arbitration
royalty panel determinations, rulings by the Librarian of
Congress before the effective date of the Copyright Royalty and
Distribution Reform Act of 2003, prior determinations of
Copyright Royalty Judges under this chapter, and decisions of
the court in appeals under this chapter before, on, or after
such effective date. Any participant in a proceeding under
subsection (b)(2) may submit relevant information and proposals
to the Copyright Royalty Judges.
``(2) Judges acting as panel and individually.--The Copyright
Royalty Judges shall preside over hearings in proceedings under
this chapter en banc. The Chief Copyright Royalty Judge may
designate a Copyright Royalty Judge to preside individually
over such collateral and administrative proceedings, and over
such proceedings under paragraphs (1) through (5) of subsection
(b), as the Chief Judge considers appropriate.
``(3) Determinations.--Final determinations of the Copyright
Royalty Judges in proceedings under this chapter shall be made
by majority vote. A Copyright Royalty Judge dissenting from the
majority on any determination under this chapter may issue his
or her dissenting opinion, which shall be included with the
determination.
``(b) Procedures.--
``(1) Initiation.--
``(A) Call for petitions to participate.--(i)
Promptly upon the filing of a petition for a rate
adjustment or determination under section 804(a) or
804(b)(8), or by no later than January 5 of a year
specified in section 804 for the commencement of a
proceeding if a petition has not been filed by that
date, the Copyright Royalty Judges shall cause to be
published in the Federal Register notice of
commencement of proceedings under this chapter calling
for the filing of petitions to participate in a
proceeding under this chapter for the purpose of making
the relevant determination under section 111, 112, 114,
115, 116, 118, 119, 1004 or 1007, as the case may be.
``(ii) Petitions to participate shall be filed by no
later than 30 days after publication of notice of
commencement of a proceeding, under clause (i), except
that the Copyright Royalty Judges may, for substantial
good cause shown and if there is no prejudice to the
participants that have already filed petitions, accept
late petitions to participate at any time up to the
date that is 90 days before the date on which
participants in the proceeding are to file their
written direct statements.
``(B) Petitions to participate.--Each petition to
participate in a proceeding shall describe the
petitioner's interest in the subject matter of the
proceeding. Parties with similar interests may file a
single petition to participate.
``(2) Participation in general.--Subject to paragraph (4), a
person may participate in a proceeding under this chapter,
including through the submission of briefs or other
information, only if--
``(A) that person has filed a petition to participate
in accordance with paragraph (1) (either individually
or as a group under paragraph (1)(B)), together with a
filing fee of $150;
``(B) the Copyright Royalty Judges have not
determined that the petition to participate is facially
invalid; and
``(C) the Copyright Royalty Judges have not
determined, sua sponte or on the motion of another
participant in the proceeding, that the person lacks a
significant interest in the proceeding.
``(3) Voluntary negotiation period.--
``(A) In general.--Promptly after the date for filing
of petitions to participate in a proceeding, the
Copyright Royalty Judges shall make available to all
participants in the proceeding a list of such
participants and shall initiate a voluntary negotiation
period among the participants.
``(B) Length of proceedings.--The voluntary
negotiation period initiated under subparagraph (A)
shall be 3 months.
``(C) Determination of subsequent proceedings.--At
the close of the voluntary negotiation proceedings, the
Copyright Royalty Judges shall, if further proceedings
under this chapter are necessary, determine whether and
to what extent paragraphs (4) and (5) will apply to the
parties.
``(4) Small claims procedure in distribution proceedings.--
``(A) In general.--If, in a proceeding under this
chapter to determine the distribution of royalties, a
participant in the proceeding asserts that the
contested amount of the claim is $10,000 or less, the
Copyright Royalty Judges shall decide the controversy
on the basis of the filing in writing of the initial
claim, the initial response by any opposing
participant, and one additional response by each such
party. The participant asserting the claim shall not be
required to pay the filing fee under paragraph (2).
``(B) Bad faith inflation of claim.--If the Copyright
Royalty Judges determine that a participant asserts in
bad faith an amount in controversy in excess of $10,000
for the purpose of avoiding a determination under the
procedure set forth in subparagraph (A), the Copyright
Royalty Judges shall impose a fine on that participant
in an amount not to exceed the difference between the
actual amount distributed and the amount asserted by
the participant.
``(5) Paper proceedings in ratemaking proceedings.--The
Copyright Royalty Judges in proceedings under this chapter to
determine royalty rates may decide, sua sponte or upon motion
of a participant, to determine issues on the basis of initial
filings in writing, initial responses by any opposing
participant, and one additional response by each such
participant. Prior to making such decision to proceed on such a
paper record only, the Copyright Royalty Judges shall offer to
all parties to the proceeding the opportunity to comment on the
decision. The procedure under this paragraph--
``(A) shall be applied in cases in which there is no
genuine issue of material fact, there is no need for
evidentiary hearings, and all participants in the
proceeding agree in writing to the procedure; and
``(B) may be applied under such other circumstances
as the Copyright Royalty Judges consider appropriate.
``(6) Regulations.--
``(A) In general.--The Copyright Royalty Judges may
issue regulations to carry out their functions under
this title. Not later than 120 days after Copyright
Royalty Judges or interim Copyright Royalty Judges, as
the case may be, are first appointed after the
enactment of the Copyright Royalty and Distribution
Reform Act of 2003, such judges shall issue regulations
to govern proceedings under this chapter.
``(B) Interim regulations.--Until regulations are
adopted under subparagraph (A), the Copyright Royalty
Judges shall apply the regulations in effect under this
chapter on the day before the effective date of the
Copyright Royalty and Distribution Reform Act of 2003,
to the extent such regulations are not inconsistent
with this chapter, except that functions carried out
under such regulations by the Librarian of Congress,
the Register of Copyrights, or copyright arbitration
royalty panels that, as of such date of enactment, are
to be carried out by the Copyright Royalty Judges under
this chapter, shall be carried out by the Copyright
Royalty Judges under such regulations.
``(C) Requirements.--Regulations issued under
subparagraph (A) shall include the following:
``(i) The written direct statements of all
participants in a proceeding under paragraph
(2) shall be filed by a date specified by the
Copyright Royalty Judges, which may be no
earlier than four months, and no later than
five months, after the end of the voluntary
negotiation period under paragraph (3).
Notwithstanding the preceding sentence, a
participant in a proceeding may, within 15 days
after the end of the discovery period specified
in clause (iii), file an amended written direct
statement based on new information received
during the discovery process.
``(ii)(I) Following the submission to the
Copyright Royalty Judges of written direct
statements by the participants in a proceeding
under paragraph (2), the judges shall meet with
the participants for the purpose of setting a
schedule for conducting and completing
discovery. Such schedule shall be determined by
the Copyright Royalty Judges.
``(II) In this chapter, the term `written
direct statements' means witness statements,
testimony, and exhibits to be presented in the
proceedings, and such other information that is
necessary to establish terms and rates, or the
distribution of royalty payments, as the case
may be, as set forth in regulations issued by
the Copyright Royalty Judges.
``(iii) Hearsay may be admitted in
proceedings under this chapter to the extent
deemed appropriate by the Copyright Royalty
Judges.
``(iv) Discovery in such proceedings shall be
permitted for a period of 60 days, except for
discovery ordered by the Copyright Royalty
Judges in connection with the resolution of
motions, orders and disputes pending at the end
of such period.
``(v) Any participant under paragraph (2) in
a proceeding under this chapter to determine
royalty rates may, upon written notice, seek
discovery of information and materials relevant
and material to the proceeding. Any objection
to any such discovery request shall be resolved
by a motion or request to compel discovery made
to the Copyright Royalty Judges. Each motion or
request to compel discovery shall be determined
by the Copyright Royalty Judges, or by a
Copyright Royalty Judge when permitted under
subsection (a)(2), who may approve the request
only if the evidence that would be produced is
relevant and material. A Copyright Royalty
Judge may refuse a request to compel discovery
of evidence that has been found to be relevant
and material, only upon good cause shown. For
purposes of the preceding sentence, the basis
for `good cause' may only be that--
``(I) the discovery sought is
unreasonably cumulative or duplicative,
or is obtainable from another source
that is more convenient, less
burdensome, or less expensive;
``(II) the participant seeking
discovery has had ample opportunity by
discovery in the action to obtain the
information sought; or
``(III) the burden or expense of the
proposed discovery outweighs its likely
benefit, taking into account the needs
and resources of the participants, the
importance of the issues at stake, and
the importance of the proposed
discovery in resolving the issues.
``(vi) The rules in effect on the day before
the effective date of the Copyright Royalty and
Distribution Reform Act of 2003, relating to
discovery in proceedings under this title to
determine the distribution of royalty fees,
shall continue to apply to such proceedings on
and after such effective date.
``(vii) The Copyright Royalty Judges may
issue subpoenas requiring the production of
evidence or witnesses, but only if the evidence
requested to be produced or that would be
proffered by the witness is relevant and
material.
``(viii) The Copyright Royalty Judges shall
order a settlement conference among the
participants in the proceeding to facilitate
the presentation of offers of settlement among
the participants. The settlement conference
shall be held during a 21-day period following
the end of the discovery period.
``(c) Determination of Copyright Royalty Judges.--
``(1) Timing.--The Copyright Royalty Judges shall issue their
determination in a proceeding not later than 11 months after
the conclusion of the 21-day settlement conference period under
subsection (b)(3)(C)(vi), but, in the case of a proceeding to
determine successors to rates or terms that expire on a
specified date, in no event later than 15 days before the
expiration of the then current statutory rates and terms.
``(2) Rehearings.--
``(A) In general.--The Copyright Royalty Judges may,
in exceptional cases, upon motion of a participant
under subsection (b)(2), order a rehearing, after the
determination in a proceeding is issued under paragraph
(1), on such matters as the Copyright Royalty Judges
determine to be appropriate.
``(B) Timing for filing motion.--Any motion for a
rehearing under subparagraph (A) may only be filed
within 15 days after the date on which the Copyright
Royalty Judges deliver their initial determination
concerning rates and terms to the participants in the
proceeding.
``(C) Participation by opposing party not required.--
In any case in which a rehearing is ordered, any
opposing party shall not be required to participate in
the rehearing.
``(D) No negative inference.--No negative inference
shall be drawn from lack of participation in a
rehearing.
``(E) Continuity of rates and terms.--(i) If the
decision of the Copyright Royalty Judges on any motion
for a rehearing is not rendered before the expiration
of the statutory rates and terms that were previously
in effect, in the case of a proceeding to determine
successors to rates and terms that expire on a
specified date, then--
``(I) the initial determination of the
Copyright Royalty Judges that is the subject of
the rehearing motion shall be effective as of
the day following the date on which the rates
and terms that were previously in effect
expire; and
``(II) in the case of a proceeding under
section 114(f)(1)(C) or 114(f)(2)(C), royalty
rates and terms shall, for purposes of section
114(f)(4)(B), be deemed to have been set at
those rates and terms contained in the initial
determination of the Copyright Royalty Judges
that is the subject of the rehearing motion, as
of the date of that determination.
``(ii) The pendency of a motion for a rehearing under
this paragraph shall not relieve persons obligated to
make royalty payments who would be affected by the
determination on that motion from providing the
statements of account and any reports of use, to the
extent required, and paying the royalties required
under the relevant determination or regulations.
``(iii) Notwithstanding clause (ii), whenever
royalties described in clause (ii) are paid to a person
other than the Copyright Office, the entity designated
by the Copyright Royalty Judges to which such royalties
are paid by the copyright user (and any successor
thereto) shall, within 60 days after the motion for
rehearing is resolved or, if the motion is granted,
within 60 days after the rehearing is concluded, return
any excess amounts previously paid to the extent
necessary to comply with the final determination of
royalty rates by the Copyright Royalty Judges.
``(3) Contents of determination.--A determination of the
Copyright Royalty Judges shall be accompanied by the written
record, and shall set forth the facts that the Copyright
Royalty Judges found relevant to their determination. Among
other terms adopted in a determination, the Copyright Royalty
Judges may specify notice and recordkeeping requirements of
users of the copyrights at issue that apply in lieu of those
that would otherwise apply under regulations.
``(4) Continuing jurisdiction.--The Copyright Royalty Judges
may amend the determination or the regulations issued pursuant
to the determination in order to correct any technical errors
in the determination or to respond to unforeseen circumstances
that preclude the proper effectuation of the determination.
``(5) Protective order.--The Copyright Royalty Judges may
issue such orders as may be appropriate to protect confidential
information, including orders excluding confidential
information from the record of the determination that is
published or made available to the public, except that any
terms or rates of royalty payments or distributions may not be
excluded.
``(6) Publication of determination.--The Librarian of
Congress shall cause the determination, and any corrections
thereto, to be published in the Federal Register. The Librarian
of Congress shall also publicize the determination and
corrections in such other manner as the Librarian considers
appropriate, including, but not limited to, publication on the
Internet. The Librarian of Congress shall also make the
determination, corrections, and the accompanying record
available for public inspection and copying.
``(d) Judicial Review.--
``(1) Appeal.--Any determination of the Copyright Royalty
Judges under subsection (c) may, within 30 days after the
publication of the determination in the Federal Register, be
appealed, to the United States Court of Appeals for the
District of Columbia Circuit, by any aggrieved participant in
the proceeding under subsection (b)(2) who fully participated
in the proceeding and who would be bound by the determination.
If no appeal is brought within that 30-day period, the
determination of the Copyright Royalty Judges shall be final,
and the royalty fee or determination with respect to the
distribution of fees, as the case may be, shall take effect as
set forth in paragraph (2).
``(2) Effect of rates.--
``(A) Expiration on specified date.--When this title
provides that the royalty rates and terms that were
previously in effect are to expire on a specified date,
any adjustment or determination by the Copyright
Royalty Judges of successor rates and terms for an
ensuing statutory license period shall be effective as
of the day following the date of expiration of the
rates and terms that were previously in effect, even if
the determination of the Copyright Royalty Judges is
rendered on a later date.
``(B) Other cases.--In cases where rates and terms do
not expire on a specified date or have not yet been
established, successor or new rates or terms shall take
effect on the first day of the second month that begins
after the publication of the determination of the
Copyright Royalty Judges in the Federal Register,
except as otherwise provided in this title, and the
rates and terms previously in effect, to the extent
applicable, shall remain in effect until such successor
rates and terms become effective.
``(C) Obligation to make payments.--(i) The pendency
of an appeal under this subsection shall not relieve
persons obligated to make royalty payments under
section 111, 112, 114, 115, 116, 118, 119, or 1003, who
would be affected by the determination on appeal, from
providing the statements of account (and any report of
use, to the extent required) and paying the royalties
required under the relevant determination or
regulations.
``(ii) Notwithstanding clause (i), whenever royalties
described in clause (i) are paid to a person other than
the Copyright Office, the entity designated by the
Copyright Royalty Judges to which such royalties are
paid by the copyright user (and any successor thereto)
shall, within 60 days after the final resolution of the
appeal, return any excess amounts previously paid (and
interest thereon, if ordered pursuant to paragraph (3))
to the extent necessary to comply with the final
determination of royalty rates on appeal.
``(3) Jurisdiction of court.--If the court, pursuant to
section 706 of title 5, modifies or vacates a determination of
the Copyright Royalty Judges, the court may enter its own
determination with respect to the amount or distribution of
royalty fees and costs, and order the repayment of any excess
fees, the payment of any underpaid fees, and the payment of
interest pertaining respectively thereto, in accordance with
its final judgment. The court may also vacate the determination
of the Copyright Royalty Judges and remand the case to the
Copyright Royalty Judges for further proceedings in accordance
with subsection (a).
``(e) Administrative Matters.--
``(1) Deduction of costs of library of congress and copyright
office from filing fees.--
``(A) Deduction from filing fees.--The Librarian of
Congress may, to the extent not otherwise provided
under this title, deduct from the filing fees collected
under subsection (b) for a particular proceeding under
this chapter the reasonable costs incurred by the
Librarian of Congress, the Copyright Office, and the
Copyright Royalty Judges in conducting that proceeding,
other than the salaries of the Copyright Royalty Judges
and the 3 staff members appointed under section 802(b).
``(B) Authorization of appropriations.--There are
authorized to be appropriated such sums as may be
necessary to pay the costs of proceedings under this
chapter not covered by the filing fees collected under
subsection (b). All funds made available pursuant to
this subparagraph shall remain available until
expended.
``(2) Positions required for administration of compulsory
licensing.--Section 307 of the Legislative Branch
Appropriations Act, 1994, shall not apply to employee positions
in the Library of Congress that are required to be filled in
order to carry out section 111, 112, 114, 115, 116, 118, or 119
or chapter 10.
``Sec. 804. Institution and conclusion of proceedings
``(a) Filing of Petition.--With respect to proceedings referred to in
paragraphs (1) and (2) of section 801(b) concerning the determination
or adjustment of royalty rates as provided in sections 111, 112, 114,
115, 116, 118, and 1004, during the calendar years specified in the
schedule set forth in subsection (b), any owner or user of a
copyrighted work whose royalty rates are specified by this title, or
are established under this chapter before or after the enactment of the
Copyright Royalty and Distribution Reform Act of 2003, may file a
petition with the Copyright Royalty Judges declaring that the
petitioner requests a determination or adjustment of the rate. The
Copyright Royalty Judges shall make a determination as to whether the
petitioner has such a significant interest in the royalty rate in which
a determination or adjustment is requested. If the Copyright Royalty
Judges determine that the petitioner has such a significant interest,
the Copyright Royalty Judges shall cause notice of this determination,
with the reasons therefor, to be published in the Federal Register,
together with the notice of commencement of proceedings under this
chapter. With respect to proceedings under paragraph (1) of section
801(b) concerning the determination or adjustment of royalty rates as
provided in sections 112 and 114, during the calendar years specified
in the schedule set forth in subsection (b), the Copyright Royalty
Judges shall cause notice of commencement of proceedings under this
chapter to be published in the Federal Register as provided in section
803(b)(1)(A).
``(b) Timing of Proceedings.--
``(1) Section 111 proceedings.--(A) A petition described in
subsection (a) to initiate proceedings under section 801(b)(2)
concerning the adjustment of royalty rates under section 111 to
which subparagraph (A) or (D) of section 801(b)(2) applies may
be filed during the year 2004 and in each subsequent fifth
calendar year.
``(B) In order to initiate proceedings under section
801(b)(2) concerning the adjustment of royalty rates under
section 111 to which subparagraph (B) or (C) of section
801(b)(2) applies, within 12 months after an event described in
either of those subsections, any owner or user of a copyrighted
work whose royalty rates are specified by section 111, or by a
rate established under this chapter before or after the
enactment of the Copyright Royalty and Distribution Reform Act
of 2003, may file a petition with the Copyright Royalty Judges
declaring that the petitioner requests an adjustment of the
rate. The Copyright Royalty Judges shall then proceed as set
forth in subsection (a) of this section. Any change in royalty
rates made under this chapter pursuant to this subparagraph may
be reconsidered in the year 2005, and each fifth calendar year
thereafter, in accordance with the provisions in section
801(b)(3)(B) or (C), as the case may be. A petition for
adjustment of rates under section 11(d)(1)(B) as a result of a
change is the rules and regulations of the Federal
Communications Commission shall set forth the change on which
the petition is based.
``(2) Certain section 112 proceedings.--Proceedings under
this chapter shall be commenced in the year 2007 to determine
reasonable terms and rates of royalty payments for the
activities described in section 112(e)(1) relating to the
limitation on exclusive rights specified by section
114(d)(1)(C)(iv), to become effective on January 1, 2009. Such
proceedings shall be repeated in each subsequent fifth calendar
year.
``(3) Section 114 and corresponding 112 proceedings.--
``(A) For eligible nonsubscription services and new
subscription services.--Proceedings under this chapter
shall be commenced as soon as practicable after the
effective date of the Copyright Royalty and
Distribution Reform Act of 2003 to determine reasonable
terms and rates of royalty payments under sections 114
and 112 for the activities of eligible nonsubscription
transmission services and new subscription services, to
be effective for the period beginning on January 1,
2006, and ending on December 31, 2010. Such proceedings
shall next be commenced in January 2009 to determine
reasonable terms and rates of royalty payments, to
become effective on January 1, 2011. Thereafter, such
proceedings shall be repeated in each subsequent fifth
calendar year.
``(B) For preexisting subscription and satellite
digital audio radio services.--Proceedings under this
chapter shall be commenced in January 2006 to determine
reasonable terms and rates of royalty payments under
sections 114 and 112 for the activities of preexisting
subscription services, to be effective during the
period beginning on January 1, 2008, and ending on
December 31, 2012, and preexisting satellite digital
audio radio services, to be effective during the period
beginning on January 1, 2007, and ending on December
31, 2012. Such proceedings shall next be commenced in
2011 to determine reasonable terms and rates of royalty
payments, to become effective on January 1, 2013.
Thereafter, such proceedings shall be repeated in each
subsequent fifth calendar year.
``(C)(i) Notwithstanding any other provision of this
chapter, this subparagraph shall govern proceedings
commenced pursuant to sections 114(f)(1)(C) and
114(f)(2)(C) concerning new types of services.
``(ii) Not later than 30 days after a petition to
determine rates and terms for a new type of service
that is filed by any copyright owner of sound
recordings, or such new type of service, indicating
that such new type of service is or is about to become
operational, the Copyright Royalty Judges shall issue a
notice for a proceeding to determine rates and terms
for such service.
``(iii) The proceeding shall follow the schedule set
forth in such subsections (b), (c), and (d) of section
803, except that--
``(I) the determination shall be issued by
not later than 24 months after the publication
of the notice under clause (ii); and
``(II) the decision shall take effect as
provided in subsections (c)(2) and (d)(2) of
section 803 and section 114(f)(4)(B)(ii) and
(C).
``(iv) The rates and terms shall remain in effect for
the period set forth in section 114(f)(1)(C) or
114(f)(2)(C), as the case may be.
``(4) Section 115 proceedings.--A petition described in
subsection (a) to initiate proceedings under section 801(b)(1)
concerning the adjustment or determination of royalty rates as
provided in section 115 may be filed in the year 2006 and in
each subsequent fifth calendar year, or at such other times as
the parties have agreed under section 115(c)(3)(B) and (C).
``(5) Section 116 proceedings.--(A) A petition described in
subsection (a) to initiate proceedings under section 801(b)
concerning the determination of royalty rates and terms as
provided in section 116 may be filed at any time within 1 year
after negotiated licenses authorized by section 116 are
terminated or expire and are not replaced by subsequent
agreements.
``(B) If a negotiated license authorized by section 116 is
terminated or expires and is not replaced by another such
license agreement which provides permission to use a quantity
of musical works not substantially smaller than the quantity of
such works performed on coin-operated phonorecord players
during the 1-year period ending March 1, 1989, the Copyright
Royalty Judges shall, upon petition filed under paragraph (1)
within 1 year after such termination or expiration, commence a
proceeding to promptly establish an interim royalty rate or
rates for the public performance by means of a coin-operated
phonorecord player of nondramatic musical works embodied in
phonorecords which had been subject to the terminated or
expired negotiated license agreement. Such rate or rates shall
be the same as the last such rate or rates and shall remain in
force until the conclusion of proceedings by the Copyright
Royalty Judges, in accordance with section 803, to adjust the
royalty rates applicable to such works, or until superseded by
a new negotiated license agreement, as provided in section
116(b).
``(6) Section 118 proceedings.--A petition described in
subsection (a) to initiate proceedings under section 801(b)(1)
concerning the determination of reasonable terms and rates of
royalty payments as provided in section 118 may be filed in the
year 2006 and in each subsequent fifth calendar year.
``(7) Section 1004 proceedings.--A petition described in
subsection (a) to initiate proceedings under section 801(b)(1)
concerning the adjustment of reasonable royalty rates under
section 1004 may be filed as provided in section 1004(a)(3).
``(8) Proceedings concerning distribution of royalty fees.--
With respect to proceedings under section 801(b)(3) concerning
the distribution of royalty fees in certain circumstances under
section 111, 116, 119, or 1007, the Copyright Royalty Judges
shall, upon a determination that a controversy exists
concerning such distribution, cause to be published in the
Federal Register notice of commencement of proceedings under
this chapter.
``Sec. 805. General rule for voluntarily negotiated agreements
``Any rates or terms under this title that--
``(1) are agreed to by participants to a proceeding under
section 803(b)(2),
``(2) are adopted by the Copyright Royalty Judges as part of
a determination under this chapter, and
``(3) are in effect for a period shorter than would otherwise
apply under a determination pursuant to this chapter,
shall remain in effect for such period of time as would otherwise apply
under such determination, except that the Copyright Royalty Judges
shall adjust the rates pursuant to the voluntary negotiations to
reflect national monetary inflation during the additional period the
rates remain in effect.''.
(b) Conforming Amendment.--The table of chapters for title 17, United
States Code, is amended by striking the item relating to chapter 8 and
inserting the following:
``8. PROCEEDINGS OF COPYRIGHT ROYALTY JUDGE................. 801''.
SEC. 4. DEFINITION.
Section 101 is amended by inserting after the definition of
``copies'' the following:
``A `Copyright Royalty Judge' is a Copyright Royalty Judge
appointed under section 802 of this title, and includes any
individual serving as an interim Copyright Royalty Judge under
such section.''.
SEC. 5. TECHNICAL AMENDMENTS.
(a) Cable Rates.--Section 111(d) is amended--
(1) in paragraph (2), in the second sentence, by striking ``a
copyright royalty panel'' and inserting ``the Copyright Royalty
Judges.''; and
(2) in paragraph (4)--
(A) in subparagraph (A), by striking ``Librarian of
Congress'' each place it appears and inserting
``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) in the first sentence, by striking
``Librarian of Congress shall, upon the
recommendation of the Register of Copyrights,''
and inserting ``Copyright Royalty Judges
shall'';
(ii) in the second sentence, by striking
``Librarian determines'' and inserting
``Copyright Royalty Judges determine''; and
(iii) in the third sentence--
(I) by striking ``Librarian'' each
place it appears and inserting
``Copyright Royalty Judges''; and
(II) by striking ``convene a
copyright arbitration royalty panel''
and inserting ``conduct a proceeding'';
and
(C) in subparagraph (C), by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges''.
(b) Ephemeral Recordings.--Section 112(e) is amended--
(1) in paragraph (3)--
(A) by amending the first sentence to read as
follows: ``Voluntary negotiation proceedings initiated
pursuant to section 804(a) for the purpose of
determining reasonable terms and rates of royalty
payments for the activities specified by paragraph (1)
shall cover the 5-year period beginning on January 1 of
the second year following the year in which the
proceedings are commenced, or such other period as the
parties may agree.''; and
(B) in the third sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(2) in paragraph (4)--
(A) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under paragraphs (2) and (3), the Copyright
Royalty Judges shall commence a proceeding pursuant to
chapter 8 to determine and publish in the Federal
Register a schedule of reasonable rates and terms
which, subject to paragraph (5), shall be binding on
all copyright owners of sound recordings and
transmitting organizations entitled to a statutory
license under this subsection during the 5-year period
specified in paragraph (3), or such other period as the
parties may agree.'';
(B) by striking ``copyright arbitration royalty
panel'' each subsequent place it appears and inserting
``Copyright Royalty Judges'';
(C) in the fourth sentence, by striking ``its
decision'' and inserting ``their decision''; and
(D) in the last sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(3) in paragraph (5), by striking ``or decision by the
Librarian of Congress'' and inserting ``, decision by the
Librarian of Congress, or determination by the Copyright
Royalty Judges''; and
(4) by striking paragraph (6) and redesignating paragraphs
(7), (8), and (9), as paragraphs (6), (7), and (8),
respectively; and
(5) in paragraph (6)(A), as so redesignated, by striking
``Librarian of Congress'' and inserting ``Copyright Royalty
Judges''.
(c) Scope of Exclusive Rights in Sound Recordings.--Section 114(f) is
amended--
(1) in paragraph (1)--
(A) in subparagraph (A)--
(i) by amending the first sentence to read as
follows: ``Voluntary negotiation proceedings
initiated pursuant to section 804(a) for the
purpose of determining reasonable terms and
rates of royalty payments for subscription
transmissions by preexisting subscription
services and transmissions by preexisting
satellite digital audio radio services shall
cover the 5-year period beginning on January 1
of the year following the second year in which
the proceedings are commenced, except where
differential transitional periods are provided
in section 804(b)(3), or such other period as
the parties may agree.''; and
(ii) in the third sentence, by striking
``Librarian of Congress'' and inserting
``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under subparagraph (A), the
Copyright Royalty Judges shall commence a
proceeding pursuant to chapter 8 to determine
and publish in the Federal Register a schedule
of rates and terms which, subject to paragraph
(3), shall be binding on all copyright owners
of sound recordings and entities performing
sound recordings affected by this paragraph
during the 5-year period specified in
subparagraph (A), or such other date as the
parties may agree.''; and
(ii) in the second sentence, by striking
``copyright arbitration royalty panel'' and
inserting ``Copyright Royalty Judges''; and
(C) by amending subparagraph (C) to read as follows:
``(C) The procedures under subparagraphs (A) and (B) also
shall be initiated pursuant to a petition filed by any
copyright owners of sound recordings, any preexisting
subscription services, or any preexisting satellite digital
audio radio services indicating that a new type of subscription
digital audio transmission service on which sound recordings
are performed is or is about to become operational, for the
purpose of determining reasonable terms and rates of royalty
payments with respect to such new type of transmission service
for the period beginning with the inception of such new type of
service and ending on the date on which the royalty rates and
terms for subscription digital audio transmission services most
recently determined under subparagraph (A) or (B) and chapter 8
expire, or such other period as the parties may agree'';
(2) in paragraph (2)--
(A) in subparagraph (A)--
(i) by amending the first sentence to read as
follows: ``Voluntary negotiation proceedings
initiated pursuant to section 804(a) for the
purpose of determining reasonable terms and
rates of royalty payments for public
performances of sound recordings by means of
eligible nonsubscription transmissions and
transmissions by new subscription services
specified by subsection (d)(2) shall cover the
5-year period beginning on January 1 of the
second year following the year in which the
proceedings are commenced, except where
different transitional periods are provided in
section 804(b)(3)(A), or such other period as
the parties may agree.''; and
(ii) in the third sentence, by striking
``Librarian of Congress'' and inserting
``Copyright Royalty Judges'';
(B) in subparagraph (B)--
(i) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under subparagraph (A), the
Copyright Royalty Judges shall commence a
proceeding pursuant to chapter 8 to determine
and publish in the Federal Register a schedule
of rates and terms which, subject to paragraph
(3), shall be binding on all copyright owners
of sound recordings and entities performing
sound recordings affected by this paragraph
during the period specified in subparagraph
(A), or such other period as the parties may
agree.''; and
(ii) by striking ``copyright arbitration
royalty panel'' each subsequent place it
appears and inserting ``Copyright Royalty
Judges''; and
(C) by amending subparagraph (C) to read as follows:
``(C) The procedures under subparagraphs (A) and (B) shall
also be initiated pursuant to a petition filed by any copyright
owners of sound recordings or any eligible nonsubscription
service or new subscription service indicating that a new type
of eligible nonsubscription service or new subscription service
on which sound recordings are performed is or is about to
become operational, for the purpose of determining reasonable
terms and rates of royalty payments with respect to such new
type of service for the period beginning with the inception of
such new type of service and ending on the date on which the
royalty rates and terms for preexisting subscription digital
audio transmission services or preexisting satellite digital
radio audio services, as the case may be, most recently
determined under subparagraph (A) or (B) and chapter 8 expire,
or such other period as the parties may agree.'';
(3) in paragraph (3), by striking ``or decision by the
Librarian of Congress'' and inserting ``, decision by the
Librarian of Congress, or determination by the Copyright
Royalty Judges''; and
(4) in paragraph (4), by striking ``Librarian of Congress''
each place it appears and inserting ``Copyright Royalty
Judges''.
(d) Phonorecords of Nondramatic Musical Works.--Section 115(c)(3) is
amended--
(1) in subparagraph (B), by striking ``under this paragraph''
and inserting ``under this section'';
(2) in subparagraph (C)--
(A) by amending the first sentence to read as
follows: ``Voluntary negotiation proceedings initiated
pursuant to a petition filed under section 804(a) for
the purpose of determining reasonable terms and rates
of royalty payments for the activities specified by
this section shall cover the period beginning with the
effective date of such terms and rates, but not earlier
than January 1 of the second year following the year in
which the petition is filed, and ending on the
effective date of successor terms and rates, or such
other period as the parties may agree.''; and
(B) in the third sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(3) in subparagraph (D)--
(A) by amending the first sentence to read as
follows: ``In the absence of license agreements
negotiated under subparagraphs (B) and (C), the
Copyright Royalty Judges shall commence proceedings
pursuant to chapter 8 to determine and publish in the
Federal Register a schedule of rates and terms which,
subject to subparagraph (E), shall be binding on all
copyright owners of nondramatic musical works and
persons entitled to obtain a compulsory license under
subsection (a)(1) during the period specified in
subparagraph (C) or such other period as may be
determined pursuant to subparagraphs (B) and (C), or
such other period as the parties may agree.'';
(B) in the third sentence, by striking ``copyright
arbitration royalty panel'' and inserting ``Copyright
Royalty Judges''; and
(C) in the last sentence, by striking ``Librarian of
Congress'' and inserting ``Copyright Royalty Judges'';
(2) in subparagraph (E)--
(A) in clause (i)--
(i) in the first sentence, by striking ``the
Librarian of Congress'' and inserting ``a
copyright arbitration royalty panel, the
Librarian of Congress, or the Copyright Royalty
Judges''; and
(ii) in the second sentence, by striking
``(C), (D), or (F) shall be given effect'' and
inserting ``(C) or (D) shall be given effect as
to digital phonorecord deliveries''; and
(B) in clause (ii)(I), by striking ``(C), (D), or
(F)'' each place it appears and inserting ``(C) or
(D)'';
(5) by striking subparagraph (F) and redesignating
subparagraphs (G) through (L) as subparagraphs (F) through (K),
respectively.
(e) Coin-Operated Phonorecord Players.--Section 116 is amended--
(1) in subsection (b), by amending paragraph (2) to read as
follows:
``(2) Chapter 8 proceeding.--Parties not subject to such a
negotiation may have the terms and rates and the division of
fees described in paragraph (1) determined in a proceeding in
accordance with the provisions of chapter 8.''; and
(2) in subsection (c)--
(A) in the subsection heading, by striking
``Copyright Arbitration Royalty Panel Determinations''
and inserting ``Determinations by Copyright Royalty
Judges''; and
(B) by striking ``a copyright arbitration royalty
panel'' and inserting ``the Copyright Royalty Judges''.
(f) Use of Certain Works in Connection With Noncommercial
Broadcasting.--Section 118 is amended--
(1) in subsection (b)--
(A) in paragraph (1)--
(i) in the first sentence, by striking
``Librarian of Congress'' and inserting
``Copyright Royalty Judges''; and
(ii) by striking the second and third
sentences;
(B) in paragraph (2), by striking ``the Librarian of
Congress:'' and all that follows through the end of the
sentence and inserting ``a copyright arbitration
royalty panel, the Librarian of Congress, or the
Copyright Royalty Judge, if copies of such agreements
are filed with the Copyright Royalty Judges within 30
days of execution in accordance with regulations that
the Copyright Royalty Judges shall issue.''; and
(C) in paragraph (3)--
(i) in the second sentence--
(I) by striking ``copyright
arbitration royalty panel'' and
inserting ``Copyright Royalty Judges``;
and
(II) by striking ``paragraph (2).''
and inserting ``paragraph (2) or
(3).'';
(ii) in the last sentence, by striking
```Librarian of Congress'' and inserting
``Copyright Royalty Judges''; and
(iii) by striking ``(3) In'' and all that
follows through the end of the first sentence
and inserting the following:
``(3) Voluntary negotiation proceedings initiated pursuant to
a petition filed under section 804(a) for the purpose of
determining a schedule of terms and rates of royalty payments
by public broadcasting entities to copyright owners in works
specified by this subsection and the proportionate division of
fees paid among various copyright owners shall cover the 5-year
period beginning on January 1 of the second year following the
year in which the petition is filed. The parties to each
negotiation proceeding shall bear their own costs.
``(4) In the absence of license agreements negotiated under
paragraph (2) or (3), the Copyright Royalty Judges shall,
pursuant to chapter 8, conduct a proceeding to determine and
publish in the Federal Register a schedule of rates and terms
which, subject to paragraph (2), shall be binding on all owners
of copyright in works specified by this subsection and public
broadcasting entities, regardless of whether such copyright
owners have submitted proposals to the Copyright Royalty
Judges.'';
(2) by striking subsection (c) and redesignating subsections
(d) through (g) as subsections (c) through (f), respectively;
(3) in subsection (c), as so redesignated, in the matter
preceding paragraph (1)--
(A) by striking ``(b)(2)'' and inserting ``(b)(2) or
(3)'';
(B) by striking ``(b)(3)'' and inserting ``(b)(4)'';
and
(C) by striking ``a copyright arbitration royalty
panel'' and inserting ``the Copyright Royalty Judges'';
(4) in subsection (d), as so redesignated--
(A) by striking ``in the Copyright Office'' and
inserting ``with the Copyright Royalty Judges''; and
(B) by striking ``Register of Copyrights'' and
inserting ``Copyright Royalty Judges''; and
(5) in subsection (f), as so redesignated, by striking
``(d)'' and inserting ``(c)''.
(g) Secondary Transmissions by Satellite Carriers.--Section 119(b) is
amended--
(1) in paragraph (3), by striking ``Librarian of Congress''
and inserting ``Copyright Royalty Judges''; and
(2) in paragraph (4)--
(A) in subparagraph (A), by striking ``Librarian of
Congress'' each place it appears and inserting
``Copyright Royalty Judges''; and
(B) by amending subparagraphs (B) and (C) to read as
follows:
``(B) Determination of controversy; distributions.--
After the first day of August of each year, the
Copyright Royalty Judges shall determine whether there
exists a controversy concerning the distribution of
royalty fees. If the Copyright Royalty Judges determine
that no such controversy exists, the Librarian of
Congress shall, after deducting reasonable
administrative costs under this paragraph, distribute
such fees to the copyright owners entitled to receive
them, or to their designated agents. If the Copyright
Royalty Judges find the existence of a controversy, the
Copyright Royalty Judges shall, pursuant to chapter 8
of this title, conduct a proceeding to determine the
distribution of royalty fees.
``(C) Withholding of fees during controversy.--During
the pendency of any proceeding under this subsection,
the Copyright Royalty Judges shall withhold from
distribution an amount sufficient to satisfy all claims
with respect to which a controversy exists, subject to
any distributions made under section 801(b)(3).''.
(h) Digital Audio Recording Devices.--
(1) Royalty payments.--Section 1004(a)(3) is amended by
striking ``Librarian of Congress'' each place it appears and
inserting ``Copyright Royalty Judges''.
(2) Entitlement to royalty payments.--Section 1006(c) is
amended by striking ``Librarian of Congress shall convene a
copyright arbitration royalty panel which'' and inserting
``Copyright Royalty Judges''.
(3) Procedures for distributing royalty payments.--Section
1007 is amended--
(A) in subsection (a), by amending paragraph (1) to
read as follows:
``(1) Filing of claims.--During the first 2 months of each
calendar year, every interested copyright party seeking to
receive royalty payments to which such party is entitled under
section 1006 shall file with the Copyright Royalty Judges a
claim for payments collected during the preceding year in such
form and manner as the Copyright Royalty Judges shall prescribe
by regulation.''; and
(B) by amending subsections (b) and (c) to read as
follows:
``(b) Distribution of Payments in the Absence of a Dispute.--After
the period established for the filing of claims under subsection (a),
in each year, the Copyright Royalty Judges shall determine whether
there exists a controversy concerning the distribution of royalty
payments under section 1006(c). If the Copyright Royalty Judges
determine that no such controversy exists, the Librarian of Congress
shall, within 30 days after such determination, authorize the
distribution of the royalty payments as set forth in the agreements
regarding the distribution of royalty payments entered into pursuant to
subsection (a). The Librarian of Congress shall, before such royalty
payments are distributed, deduct the reasonable administrative costs
incurred by the Librarian under this section.
``(c) Resolution of Disputes.--If the Copyright Royalty Judges find
the existence of a controversy, the Copyright Royalty Judges shall,
pursuant to chapter 8 of this title, conduct a proceeding to determine
the distribution of royalty payments. During the pendency of such a
proceeding, the Copyright Royalty Judges shall withhold from
distribution an amount sufficient to satisfy all claims with respect to
which a controversy exists, but shall, to the extent feasible,
authorize the distribution of any amounts that are not in controversy.
The Librarian of Congress shall, before such royalty payments are
distributed, deduct the reasonable administrative costs incurred by the
Librarian under this section.''.
(4) Determination of certain disputes.--(A) Section 1010 is
amended to read as follows:
``Sec. 1010. Determination of certain disputes
``(a) Scope of Determination.--Before the date of first distribution
in the United States of a digital audio recording device or a digital
audio interface device, any party manufacturing, importing, or
distributing such device, and any interested copyright party may
mutually agree to petition the Copyright Royalty Judges to determine
whether such device is subject to section 1002, or the basis on which
royalty payments for such device are to be made under section 1003.
``(b) Initiation of Proceedings.--The parties under subsection (a)
shall file the petition with the Copyright Royalty Judges requesting
the commencement of a proceeding. Within 2 weeks after receiving such a
petition, the Chief Copyright Royalty Judge shall cause notice to be
published in the Federal Register of the initiation of the proceeding.
``(c) Stay of Judicial Proceedings.--Any civil action brought under
section 1009 against a party to a proceeding under this section shall,
on application of one of the parties to the proceeding, be stayed until
completion of the proceeding.
``(d) Proceeding.--The Copyright Royalty Judges shall conduct a
proceeding with respect to the matter concerned, in accordance with
such procedures as the Copyright Royalty Judges may adopt. The
Copyright Royalty Judges shall act on the basis of a fully documented
written record. Any party to the proceeding may submit relevant
information and proposals to the Copyright Royalty Judges. The parties
to the proceeding shall each bear their respective costs of
participation.
``(e) Judicial Review.--Any determination of the Copyright Royalty
Judges under subsection (d) may be appealed, by a party to the
proceeding, in accordance with section 803(d) of this title. The
pendency of an appeal under this subsection shall not stay the
determination of the Copyright Royalty Judges. If the court modifies
the determination of the Copyright Royalty Judges, the court shall have
jurisdiction to enter its own decision in accordance with its final
judgment. The court may further vacate the determination of the
Copyright Royalty Judges and remand the case for proceedings as
provided in this section.''.
(B) The item relating to section 1010 in the table of
sections for chapter 10 is amended to read as follows:
``1010. Determination of certain disputes.''.
SEC. 6. EFFECTIVE DATE AND TRANSITION PROVISIONS.
(a) Effective Date.--This Act and the amendments made by this Act
shall take effect 6 months after the date of the enactment of this Act,
except that the Librarian of Congress shall appoint interim Copyright
Royalty Judges under section 802(d) of title 17, United States Code, as
amended by this Act, within 90 days after such date of enactment to
carry out the functions of the Copyright Royalty Judges under title 17,
United States Code, to the extent that Copyright Royalty Judges
provided for in section 801(a) of title 17, United States Code, as
amended by this Act, have not been appointed before the end of that 90-
day period.
(b) Transition Provisions.--
(1) In general.--Subject to paragraph (2), the amendments
made by this Act shall not affect any proceedings commenced,
petitions filed, or voluntary agreements entered into before
the enactment of this Act under the provisions of title 17,
United States Code, amended by this Act, and pending on such
date of enactment. Such proceedings shall continue,
determinations made in such proceedings, and appeals taken
therefrom, as if this Act had not been enacted, and shall
continue in effect until modified under title 17, United States
Code, as amended by this Act. Such petitions filed and
voluntary agreements entered into shall remain in effect as if
this Act had not been enacted.
(2) Effective periods for certain ratemaking proceedings.--
Notwithstanding paragraph (1), terms and rates in effect under
section 114(f)(2) or 112(e) of title 17, United States Code,
for new subscription services, eligible nonsubscription
services, and services exempt under section 114(d)(1)(C)(iv) of
such title for the period 2003 through 2004, and any rates
published in the Federal Register under the authority of the
Small Webcaster Settlement Act of 2002 for the years 2003
through 2004, shall be effective until the first applicable
effective date for successor terms and rates specified in
section 804(b)(2) or (3)(A) of title 17, United States Code, or
until such later date as the parties may agree. Any proceeding
commenced before the enactment of this Act pursuant to section
114(f)(2) and chapter 8 of title 17, United States Code, to
adjust or determine such rates and terms for periods following
2004 shall be terminated upon the enactment of this Act and
shall be null and void.
(c) Existing Appropriations.--Any funds made available in an
appropriations Act before the date of the enactment of this Act to
carry out chapter 8 of title 17, United States Code, shall be available
to the extent necessary to carry out this section.
Mr. Smith. Thank you, Mr. Chairman.
Mr. Chairman, following our subcommittee markup, members
and other interested parties continued to offer constructive
recommendations to improve H.R. 1417. The substitute I am
offering with Mr. Berman incorporates necessary tweaks on a
number of issues that will improve the operations of the new
ratemaking and distribution system. Mr. Berman has mentioned a
couple of those tweaks and I will mention a couple more.
Briefly, the substitute includes the following revisions:
first, to preserve the integrity of privately-negotiated
agreements and maintain the uniformity of the five-year
extension of licensing periods. The substitute staggers the
licenses accordingly.
Second, parties and their petitions to participate must
provide sufficient evidence demonstrating that they have a
significant interest in the proceeding. This will ensure that
only parties with standing become actual participants.
Third, in the interest of uniformity, the Copyright Royalty
Judges will conduct discovery conferences to ensure that the
discovery process is conducted in a timely and consistent
manner.
Fourth, upon motion by participants or the Copyright
Royalty Judge, a ratemaking determination may be conducted as
an all-paper proceeding under specified conditions.
Fifth, participants in a ratemaking proceeding may seek
discovery of relevant and material information. A Copyright
Royalty Judge may deny a discovery request for good cause shown
that includes such factors as whether the discovery sought is
unreasonable.
Lastly, the substitute clarifies that Copyright Royalty
Judges may consult the Copyright Office on any questions other
than issues of fact. All questions of law, including novel
questions, will remain as part of the proceedings record.
Mr. Chairman, these and other provisions of the substitute
were painstakingly negotiated over many weeks. Like the
underlying text of H.R. 1417, the substitute is a product of
compromise that reflects a bipartisan consensus on how best to
improve the bill.
I urge its adoption and yield back the balance of my time.
Chairman Sensenbrenner. Are there amendments? If not, the
question is on the amendment in the nature of a substitute.
Those in favor will say aye. Opposed, no. The ayes appear to
have it. The ayes have it and the amendment in the nature of a
substitute is agreed to.
A reporting quorum is present. The question now occurs on
the motion to report the bill, H.R. 1417, favorably as amended.
Those in favor will say aye. Opposed, no. The ayes appear to
have it. The ayes have it and the motion to report favorably is
adopted.
Without objection, the bill will be reported favorably to
the House in the form of a single amendment in the nature of a
substitute, incorporating the amendment adopted here today.
Without objection, the Chairman is authorized to move to go to
conference pursuant to House rules. Without objection, the
staff is directed to make any technical and conforming changes,
and all members will be given two days pursuant to the rules in
which to submit additional dissenting, supplemental, or
minority views.
[Statements of Hon. John Conyers, Jr. and Hon. Sheila
Jackson-Lee follows:]
Statement of Hon. John Conyers, Jr.
I would like to speak in favor of this legislation. It has been a
year since the Committee held a hearing on concerns with the CARP, the
system that sets royalty rates for copyrighted content. People on both
sides, the owners and buyers, agree that the current system needs
changes. Based on that hearing, Chairman Smith, Ranking Member Berman,
and I introduced legislation, H.R. 1417, that would make substantial
procedural changes.
We heard the current system is costly because the copyright owners
and users have to pay for the arbitrators. Our bill creates three
Copyright Royalty Judges who would be paid from appropriated funds to
carry out functions related to setting royalty rates and distributing
royalty fees.
Another complaint was that the CARP does not have adequate rules on
how to address hearsay evidence. This bill explicitly requires that the
Judges treat hearsay evidence in the same manner that it is treated in
federal court.
This bill also alters the terms for which certain royalty rates are
in effect. Rates that are determined by the Copyright Royalty Judge
will be in effect for five years. This should create some
predictability and uniformity for those who rely on the Judge's
determinations.
Finally, parties on both sides argued that the substantive
standards that the CARP uses to set royalty rates should be changed
somehow. In an effort to reach a compromise and pass a bill that does
not alter any substantive rights, this bill changes only the procedure
for rate settings and distributions.
There will be a substitute amendment to the bill that was worked
out by the majority, minority, and all groups interested in the CARP
process. I hope we can continue to work on resolving any outstanding
issues and moving this bill through the full House and the Senate.
I urge my colleagues to vote ``Yes'' on this bill as amended.
______
Statement of Congresswoman Sheila Jackson-Lee
Mr. Chairman and Mr. Ranking Member, I thank you for convening this
markup to amend several bills, including H.R. 1417, the ``Copyright
Royalty and Distribution Reform Act.'' Mr. Smith, Mr. Berman, and
Ranking Member Conyers, thank you for your hard work in crafting this
legislation.
The bill would replace the existing administrative procedures
within the U.S. Copyright Office that determine copyright royalty rates
and the distribution of related royalties under various compulsory
licenses.
Under the Copyright Royalty Tribunal Reform Act of 1993, the
Librarian of Congress has the authority to convene Copyright
Arbitration Royalty Panels, or ``CARPs,'' to resolve failed private
negotiations between parties that fail to establish rates or to
distribute royalties regarding the commercial use of movies, music and
other specified copyrighted works.
For years, the CARP system has been criticized for rendering
unpredictable and inconsistent decisions, employing arbitrators lacking
the expertise to render sound decisions, and for being unnecessarily
expensive.
H.R. 1417 is a reasonable bill to cure these concerns and is based
on the input and recommendations of government and industry experts.
H.R. 1417 addresses the problem of lack of arbitrator expertise by
appointing a ``Copyright Judge'' to preside over the new process. The
Copyright Judge will be appointed by the Librarian of Congress, have
full adjudicatory responsibility, and have the authority to make
rulings on both the law and rates. The Copyright Judge will select two
professional staff members with knowledge of economics, business, and
finance. These staff qualifications will also improve the quality of
the decisions rendered.
H.R. 1417 redefines the role of the Copyright Office. Presently,
acts as an intake agency answering initial case intake questions, as
well as an appellate court for CARP decisions by advising the Librarian
on cases. This dual role forces the Copyright Office to often decline
to answer threshold intake questions for fear of having to review its
own decisions at the appellate stage. Under H.R. 1417, the Copyright
Office's appellate responsibilities will be removed and the Office will
only act in an administrative and advisory capacity by counseling the
Copyright Judge on substantive issues as requested.
For small claimants who participate in the CARP process, the
substantial expenses are practically preclusive. H.R. 1417 contains
provisions to make the process more accessible. First, claimants must
declare an ``amount in controversy'' during a distribution
determination phase of the proceedings. If the dollar figure is $500 or
less, the claimant will be assigned to the small claims process which
is a less expensive, ``all-paper'' claim resolution method.
Another provision of H.R. 1417, that benefits both large and small
claimants requires the filing of a ``notice of intent to participate''
in either a rate-making or distribution proceeding. This requirement
will discourage entities from disrupting the process by participating
at the last minute. If a party failure to file in a timely manner or
failure to pay the required fee, they will be an exclusion of either
written or oral participation in that determination. Those exempted as
small claimants would not be affected by this requirement.
H.R. 1417 contains several procedural changes to make the claim
resolution process more convenient for the parties. H.R. 1417 expands
the duration of the discovery phase from 45 to 60 days to give parties
more time to file their claims. Additionally, the 180-day time-frame
for completing the CARP hearing process is amended to require parties
complete the hearing phrase of a rate-making or distribution
determination in six months. The Copyright Judge, at their discretion,
could extend this period up to a maximum of six additional months.
Mr. Chairman and Mr. Ranking Member, H.R. 1417 makes changes to the
CARP system that benefit the parties as well as the agents of the
copyright adjudication system. I support H.R. 1417, and I urge my
colleagues on the Judiciary Committee to do likewise.