[Federal Register Volume 64, Number 186 (Monday, September 27, 1999)]
[Notices]
[Pages 52107-52109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25040]


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LIBRARY OF CONGRESS

Copyright Office
[Docket No. 99-6 CARP DTRA]


Digital Performance Right in Sound Recordings and Ephemeral 
Recordings

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice with a request for comments.

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SUMMARY: The Copyright Office is announcing the schedule for the 
Copyright Arbitration Royalty Panel which shall set rates and terms for 
two compulsory licenses. One license allows certain eligible 
nonsubscription services to perform sound recordings publicly by means 
of digital audio transmissions and the other allows a transmitting 
organization to make an ephemeral recording of a sound recording for 
the purpose of making a permitted public performance. The Office is 
also announcing the date by which a party who wishes to participate in 
the rate adjustment proceeding must file its Notice of Intention to 
Participate.

DATES: Comments and Notices of Intention to Participate are due no 
later than November 1, 1999.

ADDRESSES: An original and five copies of a Notice of Intention to 
Participate and an original and five copies of any comment shall be 
delivered to: Office of the General Counsel, Copyright Office, James 
Madison Building, Room LM-403, First and Independence Avenue, S.E. 
Washington, D.C. 20559-6000; or mailed to: Copyright Arbitration 
Royalty Panel (CARP), P.O. Box 70977, Southwest Station, Washington, 
D.C. 20024.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 
Tanya M. Sandros, Attorney Advisor, Copyright Arbitration Royalty 
Panel, P.O. Box 70977, Southwest Station, Washington, D.C. 20024. 
Telephone: (202) 707-8380. Telefax: (202) 252-3423.

SUPPLEMENTARY INFORMATION:

Background

    In 1995, Congress passed the Digital Performance Right in Sound 
Recordings Act (``DPRA''), Public Law 104-39, 109 Stat. 336 (1995), 
which created for copyright owners of sound recordings an exclusive 
right, subject to certain limitations, to perform publicly the 
copyrighted work by means of a digital audio transmission. 17 U.S.C. 
106(6). Among the limitations placed on the performance of the sound 
recording was the creation of a new compulsory license for nonexempt, 
noninteractive, digital subscription services. 17 U.S.C. 114. The scope 
of this license was expanded in 1998 with the passage of the Digital 
Millennium Copyright Act (``DMCA'') to cover the public performance of 
sound recordings by means of eligible nonsubscription transmissions and 
transmissions by any preexisting satellite digital audio radio service 
which performs a sound recording by means of a digital audio 
transmission.
    An ``eligible nonsubscription transmission'' is a noninteractive 
digital audio transmission which, as the name implies, does not require 
a subscription for receiving the transmission. The transmission must 
also be made as part of a service that provides audio programming 
consisting in whole or in part of performances of sound recordings the 
purpose of which is to provide audio or entertainment programming, but 
not to sell, advertise, or promote particular goods or services. A 
``preexisting satellite digital audio radio service'' is a subscription 
digital audio radio service that received a satellite digital audio 
radio service license issued by the Federal Communications Commission 
on or before July 31, 1998. See 17 U.S.C. 114(j)(6) and (10). Only two 
known entities, CD Radio and XM Satellite Radio (formerly known as 
American Mobile Radio Corporation), qualify under the statutory 
definition as preexisting satellite digital audio radio services.
    In addition to expanding the current section 114 license, the DMCA 
creates a new statutory license for the making of an ``ephemeral 
recording'' of a sound recording by certain transmitting organizations. 
The new statutory license allows entities that transmit performances of 
sound recordings to business establishments, pursuant to the 
limitations set forth in section 114(d)(1)(C)(iv), to make an ephemeral 
recording of a sound recording for purposes of a later transmission. 
The new license also provides a means by which a transmitting entity 
with a statutory license under section 114(f) can make more than the 
one phonorecord specified in section 112(a). 17 U.S.C. 112(e).

Determination of Reasonable Terms and Rates

    The statutory scheme for establishing reasonable terms and rates is 
the same for both licenses. The terms and rates for the two new 
statutory licenses may be determined through a voluntary negotiation 
process, or if necessary, through compulsory arbitration conducted 
pursuant to Chapter 8 of the Copyright Act. Because the DMCA does not 
establish reasonable rates and terms for either the new section 112 or 
the expanded section 114 license, the statute requires the Librarian of 
Congress to initiate a voluntary negotiation period, the first phase in 
the rate setting process, within 30 days of enactment for the purpose 
of determining reasonable terms and rates for each license. See 17 
U.S.C. 112(e)(4) and 114(f)(2)(A).
    Accordingly, the Office announced the dates for the six-month 
negotiation period in the Federal Register on November 27, 1998. 63 FR 
65555

[[Page 52108]]

(November 27, 1998).\1\ The designated six-month negotiation period 
began on November 27, 1998, and concluded on May 27, 1999.
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    \1\ The docket number for this proceeding has been changed from 
RM 98-4 CARP, as indicated in the November 27 notice, to 99-6 CARP 
DTRA. All future filings shall reference this proceeding 
accordingly.
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    At this time, the parties continue to negotiate. If the affected 
parties are able to negotiate an industry-wide agreement, then it will 
not be necessary for the parties to participate in an arbitration 
proceeding. In such a case, the Librarian of Congress will follow 
current rate regulation procedures and notify the public of the 
proposed agreement in a notice and comment proceeding. If no party with 
a substantial interest and an intent to participate in an arbitration 
proceeding files a comment opposing the negotiated rates and terms, the 
Librarian will adopt the proposed terms and rates without convening a 
copyright arbitration royalty panel. 37 CFR 251.63(b). If, however, no 
industry-wide agreement is reached or only certain parties negotiate 
license agreements, then those copyright owners and users relying upon 
one or both of the statutory licenses shall be bound by the terms and 
rates established through the arbitration process.
    Arbitration proceedings are initiated upon the filing of a petition 
for ratemaking with the Librarian of Congress during the 60 days 
immediately following the six-month negotiation period. Arbitration 
cannot take place, however, unless a party files a petition. 17 U.S.C. 
112(e)(5) and 114(f)(2)(B).
    On July 23, 1999, the Recording Industry of America, Inc. 
(``RIAA'') filed a petition in accordance with 17 U.S.C. 112(e)(5) and 
114(f)(2)(B) requesting that the Office convene a Copyright Arbitration 
Royalty Panel for the purpose of setting rates and terms for the 
expanded section 114 license and the newly created section 112 license. 
In addition, RIAA asks that the Office not require the filing of a 
Notice of Intention to Participate before October 1, 1999, nor set the 
commencement of the 45-day precontroversy period to begin before 
January 15, 2000. RIAA makes these requests based upon its belief 
``that more time for voluntary negotiation is likely to result in 
additional agreements that may avoid a CARP proceeding altogether.'' 
RIAA petition at 2.

Comments and Notices of Intention to Participate

    The regulations governing rate adjustment proceedings require that, 
upon the filing of a petition for rate adjustment, the Office establish 
a date certain by which parties wishing to participate in the 
proceeding must file with the Librarian a Notice of Intention to 
Participate. 37 CFR 251.45(a). In consideration of the ongoing 
negotiations, the Office is setting November 1, 1999, as the date by 
which an interested party must file its Notice of Intention to 
Participate. Failure to submit a timely notice will preclude the 
interested party from participating in the CARP proceeding whose 
purpose will be to set rates and terms for: (1) certain digital audio 
transmissions by a service eligible to make use of the expanded section 
114 license, and (2) for ephemeral recordings made in accordance with 
the section 112 license.
    In addition, any party who wishes to comment on the RIAA petition 
may file a comment with the Copyright Office no later than close of 
business on November 1, 1999. The Librarian will consider these 
comments when evaluating the sufficiency of the petition. See 37 CFR 
251.64.

Precontroversy Discovery Schedule

    The Copyright Office is announcing the schedule for the 45-day 
precontroversy discovery period. Any party that files a Notice of 
Intention to Participate in this proceeding may participate in the 
precontroversy discovery period, provided that the party has submitted 
a written direct case with the Copyright Office and with all other 
parties who have filed a Notice of Intention to Participate. Each party 
may request of an opposing party nonprivileged documents underlying 
facts asserted in another party's written direct case. The 
precontroversy discovery period is limited to discovery of documents 
related to a party's written direct case and any amendment made to it 
during the 45-day period.
    The precontroversy discovery schedule will be as follows:

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                Action                              Deadline
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Filing of written direct cases.......  January 18, 2000.
Requests for underlying documents      January 26, 2000.
 related to written direct cases.
Responses to request for underlying    February 1, 2000.
 documents.
Completion of document production....  February 7, 2000.
Follow-up requests for underlying      February 11, 2000.
 documents.
Responses to follow-up requests......  February 16, 2000.
Motions related to document            February 22, 2000.
 production.
Production of documents in response    February 28, 2000.
 to follow-up requests.
All other motions, petitions, and      March 2, 2000.
 objections.
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    The precontroversy discovery period, as specified by Sec. 251.45(b) 
of the rules, will begin on January 18, 2000, with the filing of 
written direct cases by each party. Each party in this proceeding who 
has filed a Notice of Intention to Participate must file a written 
direct case on the date prescribed above. Failure to submit a timely 
filed written direct case will result in dismissal of that party's 
claim. Parties must comply with the form and content of written direct 
cases as prescribed in 37 CFR 251.43. Each party to the proceeding must 
deliver a complete copy of its written direct case to each of the other 
parties to the proceeding, as well as file a complete copy with the 
Copyright Office by close of business on January 18, 2000, the first 
day of the 45-day period.
    After the filing of the written direct cases, document production 
will proceed according to the above-described schedule. Each party may 
request underlying documents related to each of the other parties' 
written direct cases by January 26, 2000, and responses to those 
requests by February 1, 2000. Documents which are produced as a result 
of the requests must be exchanged by February 7, 2000. It is important 
to note that all initial document requests must be made by the January 
26, 2000, deadline. Thus, for example, if one party asserts facts that 
expressly rely on the results of a particular study that was not 
included in the written direct case, another party desiring production 
of that study must make its request by January 26, 2000; otherwise, the 
requesting party is not entitled to production of the study.
    The precontroversy discovery schedule also establishes deadlines 
for follow-up discovery requests. Follow-up requests are due by 
February 11, 2000, and responses to those requests are due by February 
16, 2000. Any documentation produced as a result of a follow-up request 
must be exchanged by February 28, 2000. An example of a follow-up 
request would be as follows. In the above example, one party expressly 
relies on the results of a particular study which is not included in 
its written direct case. As noted above, a party desiring production of 
that study or survey must make its

[[Page 52109]]

request by January 26, 2000. If, after receiving a copy of the study, 
the reviewing party determines that the study heavily relies on the 
results of a statistical survey, it would be appropriate for that party 
to make a follow-up request for production of the statistical survey by 
the February 11, 2000, deadline. Again, failure to make a timely 
follow-up request would waive the requesting party's right to request 
production of the survey.
    In addition to the deadlines for document requests and production, 
there are two deadlines for the filing of precontroversy motions. 
Motions related to document production must be filed by February 22, 
2000. Typically, these motions are motions to compel production of 
requested documents for failure to produce them, but they may also be 
motions for protective orders. Finally, all other motions, petitions 
and objections must be filed by March 2, 2000, the final day of the 45-
day precontroversy discovery period. These motions, petitions, and 
objections include, for example, petitions to dispense with formal 
hearings under Sec. 251.41(b).
    Due to the time limitations between the procedural steps of the 
precontroversy discovery schedule, we are requiring that all discovery 
requests and responses to such requests be served by hand or fax on the 
party to whom such response or request is directed. Filing of requests 
and responses with the Copyright Office is neither encouraged nor 
required.
    Filing and service of all precontroversy motions, petitions, 
objections, oppositions, and replies shall be as follows. In order to 
be considered properly filed with the Librarian and/or Copyright 
Office, all pleadings must be delivered to the Copyright Office no 
later than 5 p.m. of the filing deadline date. Parties may deliver the 
pleadings to: Office of the Register of Copyrights, Room LM-403, James 
Madison Memorial Building, 101 Independence Avenue, S.E., Washington, 
D.C. 20540; or alternatively, parties may send their pleadings by 
Federal Express to: Copyright Arbitration Royalty Panel (CARP), Attn: 
Gina Giuffreda (Tel. 202-707-8380), Federal Express, 208 Second Street, 
S.E., Washington, D.C. 20003, provided that the filing reaches the 
Copyright Office by the deadline. The Office cautions parties to use 
only the Federal Express address listed in this Notice, to include the 
telephone number of the Office, and to direct the package to the 
attention of the CARP Specialist, Ms. Gina Giuffreda. The Federal 
Express office will notify the Copyright Office upon receipt of a 
properly addressed package, and the Copyright Office will make 
arrangements to pick up the package the same day. Under no 
circumstances will the Office make arrangements to retrieve a package 
from any other Federal Express location or track a misdirected package. 
Each party bears the responsibility for insuring that the filings are 
in the Copyright Office by the deadline.
    The form and content of all motions, petitions, objections, 
oppositions, and replies filed with the Office must be in compliance 
with Secs. 251.44(b)-(e). As provided in Sec. 251.45(b), oppositions to 
any motions or petitions must be filed with the Office no later than 
seven business days from the date of filing of such motion or petition. 
Replies are due five business days from the date of filing of such 
oppositions. Service of all motions, petitions, objections, 
oppositions, and replies must be made on counsel or the parties by 
means no slower than overnight express mail on the same day the 
pleading is filed.

Initiation of Arbitration

    The 180-day arbitration period will be initiated on May 1, 2000. 
The schedule of the arbitration proceeding will be established by the 
CARP after the three arbitrators have been selected.

Future Proceedings

    Sections 114(f)(2)(C) and 112(e)(7) of the Copyright Act, title 17, 
require the publication of a notice of the initiation of voluntary 
negotiation proceedings during the first week of January 2000. The 
purpose of these negotiations would be to set rates and terms for the 
public performance of sound recordings by means of eligible 
nonsubscription transmission services and for the making of ephemeral 
recordings for the period January 1, 2001, to December 31, 2003. 
Parties to a voluntary agreement, however, may designate an alternative 
schedule for setting rates and terms for the section 114 license as a 
provision of the settlement agreement. 17 U.S.C. 114(f)(2)(A) and 
(2)(C)(i)(II); 17 U.S.C. 112(e) (4) and (7).
    In the event the parties to the current proceeding do not reach a 
settlement agreement prior to the first week of January, 2000, which 
includes an alternative schedule for setting rates and terms to cover 
the period January 1, 2001, to December 31, 2003, the Office will 
adhere to the statutory time frame and announce the initiation of the 
voluntary negotiation period for this next two-year cycle.

    Dated: September 21, 1999.
David O. Carson,
General Counsel.
[FR Doc. 99-25040 Filed 9-24-99; 8:45 am]
BILLING CODE 1410-33-P