[Federal Register Volume 65, Number 178 (Wednesday, September 13, 2000)]
[Notices]
[Pages 55302-55303]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23538]


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LIBRARY OF CONGRESS

Copyright Office

[Docket No. 2000-3 CARP DTRA2]


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 receipt of a petition to 
convene a Copyright Arbitration Royalty Panel (``CARP'') to set rates 
and terms for the period beginning January 1, 2001, for two statutory 
licenses which, in one case, allows certain eligible nonsubscription 
services to perform sound recordings publicly by means of digital audio 
transmissions and, in the second case, 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 October 13, 2000.

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, SE., 
Washington, DC 20559-6000; or mailed to: Copyright Arbitration Royalty 
Panel (CARP), P.O. Box 70977, Southwest Station, Washington, DC 20024.

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

SUPPLEMENTARY INFORMATION:

Background

    Since 1995 copyright owners of sound recordings have enjoyed an 
exclusive right to perform publicly their copyrighted work by means of 
a digital audio transmission, subject to certain limitations. 17 U.S.C. 
106(6). Among the initial limitations placed on the performance of the 
sound recording was the creation of a statutory license to cover 
performances made by nonexempt, noninteractive, digital subscription 
services. 17 U.S.C. 114 (1995).
    However, it soon became apparent that with the increased use of 
digital communications networks, like the Internet, further legislation 
was needed to clarify how the law applied to nonsubscription digital 
audio services. Congress responded by passing the Digital Millennium 
Copyright Act of 1998 (``DMCA''), Public Law 105-304, which amended 
section 114 to expand the scope of the statutory license to include a 
public performance of a sound recording by means of ``an eligible 
nonsubscription transmission'' \1\ and a transmission by ``a 
preexisting satellite digital audio radio service'' which performs a 
sound recording by means of a digital audio transmission.\2\
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    \1\ 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. 17 U.S.C. 
114(j)(6)(1998).
    \2\ 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. 17 U.S.C. 
114(j)(10)(1998). Only two entities, CD Radio and XM Satellite Radio 
(formerly known as American Mobile Radio Corporation), are known to 
qualify under the statutory definition as preexisting satellite 
digital audio radio services.
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    The DMCA also created a second statutory license to cover the 
making of an ``ephemeral recording'' of a sound recording--a necessary 
adjunct to the making of a digital transmission. 17 U.S.C. 112(e). 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 procedure set forth in the statute for establishing reasonable 
terms and rates is the same for both licenses. See 17 U.S.C. 112(e), 
114(f), 801(b)(1) and 803(a). The terms and rates for the two new 
statutory licenses may be determined through a voluntary

[[Page 55303]]

negotiation process, or if necessary, through compulsory arbitration 
conducted pursuant to Chapter 8 of the Copyright Act. If interested 
parties are able to negotiate an industry-wide agreement during the 
negotiation phase of the proceeding, they may submit the proposal to 
the Copyright Office for publication in the Federal Register. The 
Librarian can adopt the proposed terms and rates without convening a 
copyright arbitration royalty panel (``CARP''), provided that no party 
with a substantial interest and a desire to participate in an 
arbitration proceeding files a comment opposing the negotiated rates 
and terms. 37 CFR 251.63(b). If, however, no industry-wide agreement is 
reached, or only certain parties negotiate license agreements, then a 
user relying upon one or both of the statutory licenses shall be bound 
by the terms and rates established through the arbitration process.
    To initiate the arbitration phase of the proceeding, an interested 
party must file a petition with the Copyright Office, requesting that a 
CARP be convened for the purpose of determining the rates and terms for 
the statutory licenses. See 17 U.S.C. 112(e)(6), 114(f)(2)(C), 
801(b)(1) and 803(a)(1).

Initial Rate Adjustment Proceeding

    When Congress passed the DMCA in 1998, it chose not to set rates 
and terms for either the new section 112 or the expanded section 114 
license. Instead, the statute directed the Librarian of Congress to 
initiate a voluntary negotiation period within 30 days of enactment of 
the act for the purpose of determining reasonable terms and rates for 
each license for the period beginning on the date of enactment of the 
DMCA and ending on December 31, 2000. 17 U.S.C. 112(e)(4) and 
114(f)(2)(A); see also, 63 FR 65555 (November 27, 1998).
    In response to the November 27 notice, interested parties engaged 
in extensive negotiations but were unable to reach a settlement 
agreeable to all parties. Consequently, the Recording Industry 
Association of America, Inc. (``RIAA'') filed a petition on July 23, 
1999, with the Copyright Office in accordance with 17 U.S.C. 112(e)(4) 
and 114(f)(2)(B), requesting that the Office convene a CARP for the 
purpose of setting rates and terms for the public performance of sound 
recordings by means of eligible nonsubscription transmissions and the 
making of the necessary ephemeral recordings to facilitate the 
transmissions during the period beginning on October 28, 1998, and 
ending on December 31, 2000.
    Accordingly, the Office announced a schedule, setting the dates for 
the 45-day precontroversy discovery period and the initiation of the 
date of the 180-day arbitration period for the initial rate adjustment 
proceeding. See 64 FR 52107 (September 27, 1999). This schedule was 
later suspended, pending completion of a rulemaking proceeding the 
purpose of which was to determine whether a broadcaster could stream an 
AM/FM radio signal via the Internet under a statutory provision that 
exempted a broadcast transmission from the digital performance right. 
See Order, Docket No. 99-6 CARP DTRA (March 21, 2000); 65 FR 14227 
(March 16, 2000).

Petition to Convene a Second Copyright Arbitration Royalty Panel

    In the interim, the Copyright Office announced a new negotiation 
period, in accordance with section 112(e)(6) and 114(f)(2)(C)(i)(II) of 
the Copyright Act. See 65 FR 2194 (January 13, 2000). The purpose of 
the second round of negotiations was to set the rates and terms for the 
section 112 and section 114 statutory licenses for the next period 
beginning on January 1, 2001. Absent an industry-wide, negotiated 
license agreement for the new period, copyright owners of sound 
recordings and entities availing themselves of the statutory licenses 
from January 1, 2001, onward, are subject to the final determination of 
an arbitration proceeding that will set the rates and terms for the new 
period. To date, no settlement agreement has been filed with the 
Office. To convene a CARP for this purpose, however, a party with a 
significant interest in establishing reasonable terms and rates for the 
statutory licenses must file a petition with the Copyright Office, 
requesting that a CARP adjust the rates and terms. 17 U.S.C. 112(e)(6), 
114(f)(2)(C), 801(b)(1) and 803(a)(1). Petitions had to be filed with 
the Office during a 60-day period beginning on July 1, 2000.
    On August 28, 2000, RIAA filed a petition in accordance with 17 
U.S.C. 112(e)(6) and 114(f)(2)(C) requesting that the Office convene a 
CARP for the purpose of setting rates and terms in accordance with 
these provisions for the two-year period beginning January 1, 2001. In 
the petition, RIAA also states that it ``reserves the right to request 
that the Librarian adopt terms and rates under sections 112 and 114 for 
the 2001-2002 license period without convening a CARP, depending on the 
outcome of the pending negotiations and the 1998-2000 CARP proceeding . 
. . [and] the right to seek separate proceedings to establish terms and 
rates as appropriate even though [it] is submitting a single petition 
under both Section 112 and Section 114 statutory licenses and for all 
eligible services.'' Petition at 2-3.
    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 
October 13, 2000. The Librarian will consider these comments when 
evaluating the sufficiency of the petition. See 37 CFR 251.64.

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 October 13, 2000 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 the purpose 
of which 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.

Precontroversy Discovery Periods and Initiation of Arbitrations

    Schedules for the 45-day precontroversy discovery period will be 
announced for the rate adjustment proceedings, Docket Nos. 99-6 CARP 
DTRA and 2000-3 CARP DTRA2, once the Office concludes the rulemaking 
proceeding concerning the streaming of an AM/FM radio signal over the 
Internet by an FCC-licensed broadcaster and issues its ruling on a 
pending motion to consolidate the initial rate adjustment proceeding 
with the second proceeding the purpose of which is to consider rates 
and terms for the sections 112 and 114 statutory licenses for the 
period beginning on January 1, 2001.

    Dated: September 8, 2000.
David O. Carson,
General Counsel.
[FR Doc. 00-23538 Filed 9-12-00; 8:45 am]
BILLING CODE 1410-33-P