    [United States Statutes at Large, Volume 132, 115th Congress, 2nd Session]
    [From the U.S. Government Publishing Office, www.gpo.gov]

    Public Law 115-264
    115th Congress

    An Act

    To modernize copyright law, and for other purposes. <>

    Be it enacted by the Senate and House of Representatives of the
    United States of America in Congress assembled, <>
    SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.-- <> This Act may be cited
    as the ``Orrin G. Hatch-Bob Goodlatte Music Modernization Act''.

    (b) Table of Contents.--The table of contents for this Act is as
    follows:

    Sec. 1. Short title; table of contents.
    Sec. 2. Customs user fees.

    TITLE I--MUSIC LICENSING MODERNIZATION

    Sec. 101. Short title.
    Sec. 102. Blanket license for digital uses and mechanical licensing
    collective.
    Sec. 103. Amendments to section 114.
    Sec. 104. Random assignment of rate court proceedings.
    Sec. 105. Performing rights society consent decrees.
    Sec. 106. Effective date.

    TITLE II--CLASSICS PROTECTION AND ACCESS

    Sec. 201. Short title.
    Sec. 202. Unauthorized use of pre-1972 sound recordings.

    TITLE III--ALLOCATION FOR MUSIC PRODUCERS

    Sec. 301. Short title.
    Sec. 302. Payment of statutory performance royalties.
    Sec. 303. Effective date.

    TITLE IV--SEVERABILITY

    Sec. 401. Severability.

    SEC. 2. CUSTOMS USER FEES.

    Section 13031(j)(3)(A) of the Consolidated Omnibus Budget
    Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)(A)) is amended by
    striking ``October 13, 2027'' and inserting ``October 20, 2027''.

    TITLE I-- <> MUSIC LICENSING
    MODERNIZATION
    SEC. 101. <>  SHORT TITLE.

    This title may be cited as the ``Musical Works Modernization Act''.

    [[Page 3677]]

    SEC. 102. BLANKET LICENSE FOR DIGITAL USES AND MECHANICAL
    LICENSING COLLECTIVE.

    (a) Amendment.--Section 115 of title 17, United States Code, is
    amended--
    (1) in subsection (a)--
    (A) in the subsection heading, by inserting ``in
    General'' after ``Availability and Scope of Compulsory
    License'';
    (B) by striking paragraph (1) and inserting the
    following:
    ``(1) Eligibility for compulsory license.--
    ``(A) Conditions for compulsory license.--A person
    may by complying with the provisions of this section
    obtain a compulsory license to make and distribute
    phonorecords of a nondramatic musical work, including by
    means of digital phonorecord delivery. A person may
    obtain a compulsory license only if the primary purpose
    in making phonorecords of the musical work is to
    distribute them to the public for private use, including
    by means of digital phonorecord delivery, and--
    ``(i) phonorecords of such musical work have
    previously been distributed to the public in the
    United States under the authority of the copyright
    owner of the work, including by means of digital
    phonorecord delivery; or
    ``(ii) in the case of a digital music provider
    seeking to make and distribute digital phonorecord
    deliveries of a sound recording embodying a
    musical work under a compulsory license for which
    clause (i) does not apply--
    ``(I) the first fixation of such
    sound recording was made under the
    authority of the musical work copyright
    owner, and the sound recording copyright
    owner has the authority of the musical
    work copyright owner to make and
    distribute digital phonorecord
    deliveries embodying such work to the
    public in the United States; and
    ``(II) the sound recording copyright
    owner, or the authorized distributor of
    the sound recording copyright owner, has
    authorized the digital music provider to
    make and distribute digital phonorecord
    deliveries of the sound recording to the
    public in the United States.
    ``(B) Duplication of sound recording.--A person may
    not obtain a compulsory license for the use of the work
    in the making of phonorecords duplicating a sound
    recording fixed by another, including by means of
    digital phonorecord delivery, unless--
    ``(i) such sound recording was fixed lawfully;
    and
    ``(ii) the making of the phonorecords was
    authorized by the owner of the copyright in the
    sound recording or, if the sound recording was
    fixed before February 15, 1972, by any person who
    fixed the sound recording pursuant to an express
    license from the owner of the copyright in the
    musical work or pursuant to a valid compulsory
    license for use of such work in a sound
    recording.''; and

    [[Page 3678]]

    (C) in paragraph (2), by striking ``A compulsory
    license'' and inserting ``Musical arrangement.--A
    compulsory license'';
    (2) by striking subsection (b) and inserting the following:

    ``(b) <>  Procedures To Obtain a
    Compulsory License.--
    ``(1) Phonorecords other than digital phonorecord
    deliveries.--A person who seeks to obtain a compulsory license
    under subsection (a) to make and distribute phonorecords of a
    musical work other than by means of digital phonorecord delivery
    shall, before, or not later than 30 calendar days after, making,
    and before distributing, any phonorecord of the work, serve
    notice of intention to do so on the copyright owner. If the
    registration or other public records of the Copyright Office do
    not identify the copyright owner and include an address at which
    notice can be served, it shall be sufficient to file the notice
    of intention with the Copyright
    Office. <>  The notice shall
    comply, in form, content, and manner of service, with
    requirements that the Register of Copyrights shall prescribe by
    regulation.
    ``(2) Digital phonorecord deliveries.--A person who seeks to
    obtain a compulsory license under subsection (a) to make and
    distribute phonorecords of a musical work by means of digital
    phonorecord delivery--
    ``(A) <>  prior to
    the license availability date, shall, before, or not
    later than 30 calendar days after, first making any such
    digital phonorecord delivery, serve a notice of
    intention to do so on the copyright owner (but may not
    file the notice with the Copyright Office, even if the
    public records of the Office do not identify the owner
    or the owner's address), and such notice shall comply,
    in form, content, and manner of service, with
    requirements that the Register of Copyrights shall
    prescribe by regulation; or
    ``(B) on or after the license availability date,
    shall, before making any such digital phonorecord
    delivery, follow the procedure described in subsection
    (d)(2), except as provided in paragraph (3).
    ``(3) Record company individual download licenses.--
    Notwithstanding paragraph (2)(B), a record company may, on or
    after the license availability date, obtain an individual
    download license in accordance with the notice requirements
    described in paragraph (2)(A) (except for the requirement that
    notice occur prior to the license availability
    date). <>  A record
    company that obtains an individual download license as permitted
    under this paragraph shall provide statements of account and pay
    royalties as provided in subsection (c)(2)(I).
    ``(4) Failure to obtain license.--
    ``(A) Phonorecords other than digital phonorecord
    deliveries.--In the case of phonorecords made and
    distributed other than by means of digital phonorecord
    delivery, the failure to serve or file the notice of
    intention required by paragraph (1) forecloses the
    possibility of a compulsory license under paragraph (1).
    In the absence of a voluntary license, the failure to
    obtain a compulsory license renders the making and
    distribution of

    [[Page 3679]]

    phonorecords actionable as acts of infringement under
    section 501 and subject to the remedies provided by
    sections 502 through 506.
    ``(B) Digital phonorecord deliveries.--
    ``(i) In general.--In the case of phonorecords
    made and distributed by means of digital
    phonorecord delivery:
    ``(I) The failure to serve the
    notice of intention required by
    paragraph (2)(A) or paragraph (3), as
    applicable, forecloses the possibility
    of a compulsory license under such
    paragraph.
    ``(II) <>  The
    failure to comply with paragraph (2)(B)
    forecloses the possibility of a blanket
    license for a period of 3 years after
    the last calendar day on which the
    notice of license was required to be
    submitted to the mechanical licensing
    collective under such paragraph.
    ``(ii) Effect of failure.--In either case
    described in subclause (I) or (II) of clause (i),
    in the absence of a voluntary license, the failure
    to obtain a compulsory license renders the making
    and distribution of phonorecords by means of
    digital phonorecord delivery actionable as acts of
    infringement under section 501 and subject to the
    remedies provided by sections 502 through 506.'';
    (3) by amending subsection (c) to read as follows:

    ``(c) General Conditions Applicable to Compulsory License.--
    ``(1) Royalty payable under compulsory license.--
    ``(A) Identification requirement.--To be entitled to
    receive royalties under a compulsory license obtained
    under subsection (b)(1) the copyright owner must be
    identified in the registration or other public records
    of the Copyright Office. The owner is entitled to
    royalties for phonorecords made and distributed after
    being so identified, but is not entitled to recover for
    any phonorecords previously made and distributed.
    ``(B) Royalty for phonorecords other than digital
    phonorecord deliveries.--Except as provided by
    subparagraph (A), for every phonorecord made and
    distributed under a compulsory license under subsection
    (a) other than by means of digital phonorecord delivery,
    with respect to each work embodied in the phonorecord,
    the royalty shall be the royalty prescribed under
    subparagraphs (D) through (F), paragraph (2)(A), and
    chapter 8. For purposes of this subparagraph, a
    phonorecord is considered `distributed' if the person
    exercising the compulsory license has voluntarily and
    permanently parted with its possession.
    ``(C) Royalty for digital phonorecord deliveries.--
    For every digital phonorecord delivery of a musical work
    made under a compulsory license under this section, the
    royalty payable shall be the royalty prescribed under
    subparagraphs (D) through (F), paragraph (2)(A), and
    chapter 8.
    ``(D) Authority to negotiate.--Notwithstanding any
    provision of the antitrust laws, any copyright owners of
    nondramatic musical works and any persons entitled to

    [[Page 3680]]

    obtain a compulsory license under subsection (a) may
    negotiate and agree upon the terms and rates of royalty
    payments under this section and the proportionate
    division of fees paid among copyright owners, and may
    designate common agents on a nonexclusive basis to
    negotiate, agree to, pay or receive 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 this subparagraph,
    subparagraphs (E) and (F), paragraph (2)(A), and chapter
    8 shall next be determined.
    ``(E) Determination of reasonable rates and terms.--
    <> Proceedings under chapter 8 shall
    determine reasonable rates and terms of royalty payments
    for the activities specified by this section during the
    period beginning with the effective date of such rates
    and terms, but not earlier than January 1 of the second
    year following the year in which the petition requesting
    the proceeding is filed, and ending on the effective
    date of successor rates and terms, or such other period
    as the parties may agree. Any copyright owners of
    nondramatic musical works and any persons entitled to
    obtain a compulsory license under subsection (a) may
    submit to the Copyright Royalty Judges licenses covering
    such activities. The parties to each proceeding shall
    bear their own costs.
    ``(F) Schedule of reasonable rates.--The schedule of
    reasonable rates and terms determined by the Copyright
    Royalty Judges shall, subject to paragraph (2)(A), be
    binding on all copyright owners of nondramatic musical
    works and persons entitled to obtain a compulsory
    license under subsection (a) during the period specified
    in subparagraph (E), such other period as may be
    determined pursuant to subparagraphs (D) and (E), or
    such other period as the parties may agree. The
    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 for digital phonorecord deliveries, the
    Copyright Royalty Judges shall base their decision on
    economic, competitive, and programming information
    presented by the parties, including--
    ``(i) whether use of the compulsory licensee's
    service may substitute for or may promote the
    sales of phonorecords or otherwise may interfere
    with or may enhance the musical work copyright
    owner's other streams of revenue from its musical
    works; and
    ``(ii) the relative roles of the copyright
    owner and the compulsory licensee in the
    copyrighted work and the service made available to
    the public with respect to the relative creative
    contribution, technological contribution, capital
    investment, cost, and risk.
    ``(2) Additional terms and conditions.--
    ``(A) Voluntary licenses and contractual royalty
    rates.--
    ``(i) In general.--License agreements
    voluntarily negotiated at any time between one or
    more copyright owners of nondramatic musical works
    and one or more

    [[Page 3681]]

    persons entitled to obtain a compulsory license
    under subsection (a) shall be given effect in lieu
    of any determination by the Copyright Royalty
    Judges. Subject to clause (ii), the royalty rates
    determined pursuant to subparagraphs (E) and (F)
    of paragraph (1) 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) Applicability.--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
    subparagraphs (E) and (F) of paragraph
    (1) 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
    subparagraphs (E) and (F) of paragraph
    (1) for the number of musical works
    within the scope of the contract as of
    June 22, 1995; and
    ``(II) a contract entered into after
    the date that the sound recording is
    fixed in a tangible medium of expression
    substantially in a form intended for
    commercial release, if at the time the
    contract is entered into, the recording
    artist retains the right to grant
    licenses as to the musical work under
    paragraphs (1) and (3) of section 106.
    ``(B) Sound recording information.--Except as
    provided in section 1002(e), 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.
    ``(C) Infringement remedies.--
    ``(i) In general.--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, unless--

    [[Page 3682]]

    ``(I) the digital phonorecord
    delivery has been authorized by the
    sound recording copyright owner; and
    ``(II) the entity making the digital
    phonorecord delivery has obtained a
    compulsory license under subsection (a)
    or has otherwise been authorized by the
    musical work copyright owner, or by a
    record company pursuant to an individual
    download license, to make and distribute
    phonorecords of each musical work
    embodied in the sound recording by means
    of digital phonorecord delivery.
    ``(ii) Other remedies.--Any cause of action
    under this subparagraph shall be in addition to
    those available to the owner of the copyright in
    the nondramatic musical work under subparagraph
    (J) and section 106(4) and the owner of the
    copyright in the sound recording under section
    106(6).
    ``(D) Liability of sound recording owners.--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.
    ``(E) Recording devices and media.--Nothing in
    section 1008 shall be construed to prevent the exercise
    of the rights and remedies allowed by this paragraph,
    subparagraph (J), 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.
    ``(F) Preservation of rights.--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 paragraphs (4) and (6) of
    section 106;
    ``(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 paragraphs (1) and (3) of section
    106, 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
    before, on, or after the date of enactment of the
    Digital Performance Right in Sound Recordings Act
    of 1995.

    [[Page 3683]]

    ``(G) Exempt transmissions and retransmissions.--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 paragraphs (1) through (5) of section 106 with
    respect to such transmissions and retransmissions.
    ``(H) Distribution by rental, lease, or lending.--A
    compulsory license obtained under subsection (b)(1) to
    make and distribute phonorecords includes the right of
    the maker of such a phonorecord to distribute or
    authorize distribution of such phonorecord, other than
    by means of a digital phonorecord delivery, by rental,
    lease, or lending (or by acts or practices in the nature
    of rental, lease, or lending). With respect to each
    nondramatic musical work embodied in the phonorecord,
    the royalty shall be a proportion of the revenue
    received by the compulsory licensee from every such act
    of distribution of the phonorecord under this clause
    equal to the proportion of the revenue received by the
    compulsory licensee from distribution of the phonorecord
    under subsection (a)(1)(A)(ii)(II) that is payable by a
    compulsory licensee under that clause and under chapter
    8. <>  The Register of Copyrights
    shall issue regulations to carry out the purpose of this
    subparagraph.
    ``(I) Payment of royalties and statements of
    account.--Except as provided in paragraphs (4)(A)(i) and
    (10)(B) of subsection (d), royalty payments shall be
    made on or before the twentieth day of each month and
    shall include all royalties for the month next
    preceding. Each monthly payment shall be made under oath
    and shall comply with requirements that the Register of
    Copyrights shall prescribe by
    regulation. <>  The
    Register shall also prescribe regulations under which
    detailed cumulative annual statements of account,
    certified by a certified public accountant, shall be
    filed for every compulsory license under subsection (a).
    The regulations covering both the monthly and the annual
    statements of account shall prescribe the form, content,
    and manner of certification with respect to the number
    of records made and the number of records distributed.
    ``(J) Notice of default and termination of
    compulsory license.-- <> In the case of
    a license obtained under paragraph (1), (2)(A), or (3)
    of subsection (b), if the copyright owner does not
    receive the monthly payment and the monthly and annual
    statements of account when due, the owner may give
    written notice to the licensee that, unless the default
    is remedied not later than 30 days after the date on
    which the notice is sent, the compulsory license will be
    automatically terminated. Such termination renders
    either the making or the distribution, or both, of all
    phonorecords for which the royalty has not been paid,
    actionable as acts of infringement under section 501 and
    fully subject to the remedies provided by sections 502
    through 506. In the case of a license obtained under
    subsection (b)(2)(B), license authority under the
    compulsory

    [[Page 3684]]

    license may be terminated as provided in subsection
    (d)(4)(E).'';
    (4) by amending subsection (d) to read as follows:

    ``(d) Blanket License for Digital Uses, Mechanical Licensing
    Collective, and Digital Licensee Coordinator.--
    ``(1) Blanket license for digital uses.--
    ``(A) In general.-- <> A digital
    music provider that qualifies for a compulsory license
    under subsection (a) may, by complying with the terms
    and conditions of this subsection, obtain a blanket
    license from copyright owners through the mechanical
    licensing collective to make and distribute digital
    phonorecord deliveries of musical works through one or
    more covered activities.
    ``(B) Included activities.--A blanket license--
    ``(i) covers all musical works (or shares of
    such works) available for compulsory licensing
    under this section for purposes of engaging in
    covered activities, except as provided in
    subparagraph (C);
    ``(ii) includes the making and distribution of
    server, intermediate, archival, and incidental
    reproductions of musical works that are reasonable
    and necessary for the digital music provider to
    engage in covered activities licensed under this
    subsection, solely for the purpose of engaging in
    such covered activities; and
    ``(iii) does not cover or include any rights
    or uses other than those described in clauses (i)
    and (ii).
    ``(C) Other licenses.--A voluntary license for
    covered activities entered into by or under the
    authority of 1 or more copyright owners and 1 or more
    digital music providers, or authority to make and
    distribute permanent downloads of a musical work
    obtained by a digital music provider from a sound
    recording copyright owner pursuant to an individual
    download license, shall be given effect in lieu of a
    blanket license under this subsection with respect to
    the musical works (or shares thereof) covered by such
    voluntary license or individual download authority and
    the following conditions apply:
    ``(i) Where a voluntary license or individual
    download license applies, the license authority
    provided under the blanket license shall exclude
    any musical works (or shares thereof) subject to
    the voluntary license or individual download
    license.
    ``(ii) An entity engaged in covered activities
    under a voluntary license or authority obtained
    pursuant to an individual download license that is
    a significant nonblanket licensee shall comply
    with paragraph (6)(A).
    ``(iii) The rates and terms of any voluntary
    license shall be subject to the second sentence of
    clause (i) and clause (ii) of subsection (c)(2)(A)
    and paragraph (9)(C), as applicable.
    ``(D) Protection against infringement actions.--A
    digital music provider that obtains and complies with
    the terms of a valid blanket license under this
    subsection shall not be subject to an action for
    infringement of the exclusive rights provided by
    paragraphs (1) and (3) of section 106 under this title
    arising from use of a musical

    [[Page 3685]]

    work (or share thereof) to engage in covered activities
    authorized by such license, subject to paragraph (4)(E).
    ``(E) Other requirements and conditions apply.--
    Except as expressly provided in this subsection, each
    requirement, limitation, condition, privilege, right,
    and remedy otherwise applicable to compulsory licenses
    under this section shall apply to compulsory blanket
    licenses under this subsection.
    ``(2) Availability of blanket license.--
    ``(A) Procedure for obtaining license.--
    <> A digital music provider may obtain a
    blanket license by submitting a notice of license to the
    mechanical licensing collective that specifies the
    particular covered activities in which the digital music
    provider seeks to engage, as follows:
    ``(i) <>  The
    notice of license shall comply in form and
    substance with requirements that the Register of
    Copyrights shall establish by regulation.
    ``(ii) <>
    Unless rejected in writing by the mechanical
    licensing collective not later than 30 calendar
    days after the date on which the mechanical
    licensing collective receives the notice, the
    blanket license shall be effective as of the date
    on which the notice of license was sent by the
    digital music provider, as shown by a physical or
    electronic record.
    ``(iii) A notice of license may only be
    rejected by the mechanical licensing collective
    if--
    ``(I) the digital music provider or
    notice of license does not meet the
    requirements of this section or
    applicable regulations, in which case
    the requirements at issue shall be
    specified with reasonable particularity
    in the notice of rejection; or
    ``(II) <>  the
    digital music provider has had a blanket
    license terminated by the mechanical
    licensing collective during the 3-year
    period preceding the date on which the
    mechanical licensing collective receives
    the notice pursuant to paragraph (4)(E).
    ``(iv) <>  If a notice of
    license is rejected under clause (iii)(I), the
    digital music provider shall have 30 calendar days
    after receipt of the notice of rejection to cure
    any deficiency and submit an amended notice of
    license to the mechanical licensing collective. If
    the deficiency has been cured, the mechanical
    licensing collective shall so confirm in writing,
    and the license shall be effective as of the date
    that the original notice of license was provided
    by the digital music provider.
    ``(v) <>  A digital
    music provider that believes a notice of license
    was improperly rejected by the mechanical
    licensing collective may seek review of such
    rejection in an appropriate district court of the
    United States.
    The <> district court shall
    determine the matter de novo based on the record
    before the mechanical licensing collective and any
    additional evidence presented by the parties.
    ``(B) Blanket license effective date.--Blanket
    licenses shall be made available by the mechanical
    licensing

    [[Page 3686]]

    collective on and after the license availability date.
    No such license shall be effective prior to the license
    availability date.
    ``(3) Mechanical licensing collective.--
    ``(A) In general.--The mechanical licensing
    collective shall be a single entity that--
    ``(i) is a nonprofit entity, not owned by any
    other entity, that is created by copyright owners
    to carry out responsibilities under this
    subsection;
    ``(ii) is endorsed by, and enjoys substantial
    support from, musical work copyright owners that
    together represent the greatest percentage of the
    licensor market for uses of such works in covered
    activities, as measured over the preceding 3 full
    calendar years;
    ``(iii) is able to demonstrate to the Register
    of Copyrights that the entity has, or will have
    prior to the license availability date, the
    administrative and technological capabilities to
    perform the required functions of the mechanical
    licensing collective under this subsection and
    that is governed by a board of directors in
    accordance with subparagraph (D)(i); and
    ``(iv) has been designated by the Register of
    Copyrights, with the approval of the Librarian of
    Congress pursuant to section 702, in accordance
    with subparagraph (B).
    ``(B) <>  Designation of mechanical licensing
    collective.--
    ``(i) Initial designation.--
    <> Not later than 270 days after
    the enactment date, the Register of Copyrights
    shall initially designate the mechanical licensing
    collective as follows:
    ``(I) Not later than 90 calendar
    days after the enactment date, the
    Register shall publish notice in the
    Federal Register soliciting information
    to assist in identifying the appropriate
    entity to serve as the mechanical
    licensing collective, including the name
    and affiliation of each member of the
    board of directors described under
    subparagraph (D)(i) and each committee
    established pursuant to clauses (iii),
    (iv), and (v) of subparagraph (D).
    ``(II) <>  After
    reviewing the information requested
    under subclause (I) and making a
    designation, the Register shall publish
    notice in the Federal Register setting
    forth--
    ``(aa) the identity of and
    contact information for the
    mechanical licensing collective;
    and
    ``(bb) the reasons for the
    designation.
    ``(ii) Periodic review of designation.--
    Following the initial designation of the
    mechanical licensing collective, the Register
    shall, every 5 years, beginning with the fifth
    full calendar year to commence after the initial
    designation, publish notice in the Federal
    Register in the month of January soliciting
    information concerning whether the existing
    designation should be continued, or a different
    entity meeting the criteria described in clauses
    (i) through (iii) of subparagraph

    [[Page 3687]]

    (A) shall be designated. Following publication of
    such notice, the Register shall--
    ``(I) <>
    after reviewing the information
    submitted and conducting additional
    proceedings as appropriate, publish
    notice in the Federal Register of a
    continuing designation or new
    designation of the mechanical licensing
    collective, as the case may be, and the
    reasons for such a designation, with any
    new designation to be effective as of
    the first day of a month that is not
    less than 6 months and not longer than 9
    months after the date on which the
    Register publishes the notice, as
    specified by the Register; and
    ``(II) <>  if a
    new entity is designated as the
    mechanical licensing collective, adopt
    regulations to govern the transfer of
    licenses, funds, records, data, and
    administrative responsibilities from the
    existing mechanical licensing collective
    to the new entity.
    ``(iii) Closest alternative designation.--If
    the Register is unable to identify an entity that
    fulfills each of the qualifications set forth in
    clauses (i) through (iii) of subparagraph (A), the
    Register shall designate the entity that most
    nearly fulfills such qualifications for purposes
    of carrying out the responsibilities of the
    mechanical licensing collective.
    ``(C) Authorities and functions.--
    ``(i) In general.--The mechanical licensing
    collective is authorized to perform the following
    functions, subject to more particular requirements
    as described in this subsection:
    ``(I) Offer and administer blanket
    licenses, including receipt of notices
    of license and reports of usage from
    digital music providers.
    ``(II) <>  Collect
    and distribute royalties from digital
    music providers for covered activities.
    ``(III) Engage in efforts to
    identify musical works (and shares of
    such works) embodied in particular sound
    recordings, and to identify and locate
    the copyright owners of such musical
    works (and shares of such works).
    ``(IV) <>  Maintain
    the musical works database and other
    information relevant to the
    administration of licensing activities
    under this section.
    ``(V) <>
    Administer a process by which copyright
    owners can claim ownership of musical
    works (and shares of such works), and a
    process by which royalties for works for
    which the owner is not identified or
    located are equitably distributed to
    known copyright owners.
    ``(VI) Administer collections of the
    administrative assessment from digital
    music providers and significant
    nonblanket licensees, including receipt
    of notices of nonblanket activity.
    ``(VII) Invest in relevant
    resources, and arrange for services of
    outside vendors and others,

    [[Page 3688]]

    to support the activities of the
    mechanical licensing collective.
    ``(VIII) <>
    Engage in legal and other efforts to
    enforce rights and obligations under
    this subsection, including by filing
    bankruptcy proofs of claims for amounts
    owed under licenses, and acting in
    coordination with the digital licensee
    coordinator.
    ``(IX) <>
    Initiate and participate in proceedings
    before the Copyright Royalty Judges to
    establish the administrative assessment
    under this subsection.
    ``(X) <>
    Initiate and participate in proceedings
    before the Copyright Office with respect
    to activities under this subsection.
    ``(XI) Gather and provide
    documentation for use in proceedings
    before the Copyright Royalty Judges to
    set rates and terms under this section.
    ``(XII) Maintain records of the
    activities of the mechanical licensing
    collective and engage in and respond to
    audits described in this subsection.
    ``(XIII) Engage in such other
    activities as may be necessary or
    appropriate to fulfill the
    responsibilities of the mechanical
    licensing collective under this
    subsection.
    ``(ii) Restrictions concerning licensing and
    administrative activities.--With respect to the
    administration of licenses, except as provided in
    clauses (i) and (iii) and subparagraph (E)(v), the
    mechanical licensing collective may only--
    ``(I) issue blanket licenses
    pursuant to subsection (d)(1); and
    ``(II) <>
    administer blanket licenses for
    reproduction or distribution rights in
    musical works for covered activities,
    including collecting and distributing
    royalties, pursuant to blanket licenses.
    ``(iii) <>  Additional
    administrative activities.--Subject to paragraph
    (11)(C), the mechanical licensing collective may
    also administer, including by collecting and
    distributing royalties, voluntary licenses issued
    by, or individual download licenses obtained from,
    copyright owners only for reproduction or
    distribution rights in musical works for covered
    activities, for which the mechanical licensing
    collective shall charge reasonable fees for such
    services.
    ``(iv) Restriction on lobbying.--The
    mechanical licensing collective may not engage in
    government lobbying activities, but may engage in
    the activities described in subclauses (IX), (X),
    and (XI) of clause (i).
    ``(D) Governance.--
    ``(i) Board of directors.--The mechanical
    licensing collective shall have a board of
    directors consisting of 14 voting members and 3
    nonvoting members, as follows:
    ``(I) Ten voting members shall be
    representatives of music publishers--

    [[Page 3689]]

    ``(aa) to which songwriters
    have assigned exclusive rights
    of reproduction and distribution
    of musical works with respect to
    covered activities; and
    ``(bb) none of which may be
    owned by, or under common
    control with, any other board
    member.
    ``(II) Four voting members shall be
    professional songwriters who have
    retained and exercise exclusive rights
    of reproduction and distribution with
    respect to covered activities with
    respect to musical works they have
    authored.
    ``(III) One nonvoting member shall
    be a representative of the nonprofit
    trade association of music publishers
    that represents the greatest percentage
    of the licensor market for uses of
    musical works in covered activities, as
    measured for the 3-year period preceding
    the date on which the member is
    appointed.
    ``(IV) One nonvoting member shall be
    a representative of the digital licensee
    coordinator, provided that a digital
    licensee coordinator has been designated
    pursuant to paragraph (5)(B). Otherwise,
    the nonvoting member shall be the
    nonprofit trade association of digital
    licensees that represents the greatest
    percentage of the licensee market for
    uses of musical works in covered
    activities, as measured over the
    preceding 3 full calendar years.
    ``(V) One nonvoting member shall be
    a representative of a nationally
    recognized nonprofit trade association
    whose primary mission is advocacy on
    behalf of songwriters in the United
    States.
    ``(ii) Bylaws.--
    ``(I) Establishment.--
    <> Not later than 1
    year after the date on which the
    mechanical licensing collective is
    initially designated by the Register of
    Copyrights under subparagraph (B)(i),
    the collective shall establish bylaws to
    determine issues relating to the
    governance of the collective, including,
    but not limited to--
    ``(aa) the length of the
    term for each member of the
    board of directors;
    ``(bb) the staggering of the
    terms of the members of the
    board of directors;
    ``(cc) a process for filling
    a seat on the board of directors
    that is vacated before the end
    of the term with respect to that
    seat;
    ``(dd) a process for
    electing a member to the board
    of directors; and
    ``(ee) a management
    structure for daily operation of
    the collective.
    ``(II) Public availability.--The
    mechanical licensing collective shall
    make the bylaws established under
    subclause (I) available to the public.

    [[Page 3690]]

    ``(iii) Board meetings.--The board of
    directors shall meet not less frequently than
    biannually and discuss matters pertinent to the
    operations of the mechanical licensing collective,
    including the mechanical licensing collective
    budget.
    ``(iv) Operations advisory committee.--
    <> The board of
    directors of the mechanical licensing collective
    shall establish an operations advisory committee
    consisting of not fewer than 6 members to make
    recommendations to the board of directors
    concerning the operations of the mechanical
    licensing collective, including the efficient
    investment in and deployment of information
    technology and data resources. Such committee
    shall have an equal number of members of the
    committee who are--
    ``(I) musical work copyright owners
    who are appointed by the board of
    directors of the mechanical licensing
    collective; and
    ``(II) representatives of digital
    music providers who are appointed by the
    digital licensee coordinator.
    ``(v) <>  Unclaimed
    royalties oversight committee.--The board of
    directors of the mechanical licensing collective
    shall establish and appoint an unclaimed royalties
    oversight committee consisting of 10 members, 5 of
    which shall be musical work copyright owners and 5
    of which shall be professional songwriters whose
    works are used in covered activities.
    ``(vi) Dispute resolution
    committee. <> --The board of
    directors of the mechanical licensing collective
    shall establish and appoint a dispute resolution
    committee that shall--
    ``(I) consist of not fewer than 6
    members; and
    ``(II) include an equal number of
    representatives of musical work
    copyright owners and professional
    songwriters.
    ``(vii) Mechanical licensing collective annual
    report.--
    ``(I) In general.-- <> Not later than
    June 30 of each year commencing after
    the license availability date, the
    mechanical licensing collective shall
    post, and make available online for a
    period of not less than 3 years, an
    annual report that sets forth
    information regarding--
    ``(aa) the operational and
    licensing practices of the
    collective;
    ``(bb) how royalties are
    collected and distributed;
    ``(cc) budgeting and
    expenditures;
    ``(dd) the collective total
    costs for the preceding calendar
    year;
    ``(ee) the projected annual
    mechanical licensing collective
    budget;
    ``(ff) aggregated royalty
    receipts and payments;

    [[Page 3691]]

    ``(gg) expenses that are
    more than 10 percent of the
    annual mechanical licensing
    collective budget; and
    ``(hh) the efforts of the
    collective to locate and
    identify copyright owners of
    unmatched musical works (and
    shares of works).
    ``(II) Submission.--On the date on
    which the mechanical licensing
    collective posts each report required
    under subclause (I), the collective
    shall provide a copy of the report to
    the Register of Copyrights.
    ``(viii) Independent officers.--An individual
    serving as an officer of the mechanical licensing
    collective may not, at the same time, also be an
    employee or agent of any member of the board of
    directors of the collective or any entity
    represented by a member of the board of directors,
    as described in clause (i).
    ``(ix) Oversight and accountability.--
    ``(I) In general.--The mechanical
    licensing collective shall--
    ``(aa) ensure that the
    policies and practices of the
    collective are transparent and
    accountable;
    ``(bb) identify a point of
    contact for publisher inquiries
    and complaints with timely
    redress; and
    ``(cc) <>
    establish an anti-comingling
    policy for funds not collected
    under this section and royalties
    collected under this section.
    ``(II) Audits.--
    ``(aa) In general.--
    <> Beginning in the fourth
    full calendar year that begins
    after the initial designation of
    the mechanical licensing
    collective by the Register of
    Copyrights under subparagraph
    (B)(i), and in every fifth
    calendar year thereafter, the
    collective shall retain a
    qualified auditor that shall--
    ``(AA) examine the
    books, records, and
    operations of the
    collective;

    ``(BB) <>
    prepare a report for the
    board of directors of the
    collective with respect to
    the matters described in
    item (bb); and
    ``(CC) not later than
    December 31 of the year in
    which the qualified auditor
    is retained, deliver the
    report described in subitem
    (BB) to the board of
    directors of the collective.
    ``(bb) Matters addressed.--
    Each report prepared under item
    (aa) shall address the
    implementation and efficacy of
    procedures of the mechanical
    licensing collective--

    ``(AA) <>
    for the receipt, handling,
    and distribution of royalty
    funds, including any amounts
    held as unclaimed royalties;
    ``(BB) to guard against
    fraud, abuse, waste, and the
    unreasonable use of funds;
    and

    [[Page 3692]]

    ``(CC) to protect the
    confidentiality of
    financial, proprietary, and
    other sensitive information.
    ``(cc) Public
    availability.--With respect to
    each report prepared under item
    (aa), the mechanical licensing
    collective shall--
    ``(AA) submit the report
    to the Register of
    Copyrights; and
    ``(BB) make the report
    available to the public.
    ``(E) Musical works database.--
    ``(i) Establishment and maintenance of
    database.--The mechanical licensing collective
    shall establish and maintain a database containing
    information relating to musical works (and shares
    of such works) and, to the extent known, the
    identity and location of the copyright owners of
    such works (and shares thereof) and the sound
    recordings in which the musical works are
    embodied. In furtherance of maintaining such
    database, the mechanical licensing collective
    shall engage in efforts to identify the musical
    works embodied in particular sound recordings, as
    well as to identify and locate the copyright
    owners of such works (and shares thereof), and
    update such data as appropriate.
    ``(ii) Matched works.--With respect to musical
    works (and shares thereof) that have been matched
    to copyright owners, the musical works database
    shall include--
    ``(I) the title of the musical work;
    ``(II) the copyright owner of the
    work (or share thereof), and the
    ownership percentage of that owner;
    ``(III) contact information for such
    copyright owner;
    ``(IV) to the extent reasonably
    available to the mechanical licensing
    collective--
    ``(aa) the international
    standard musical work code for
    the work; and
    ``(bb) identifying
    information for sound recordings
    in which the musical work is
    embodied, including the name of
    the sound recording, featured
    artist, sound recording
    copyright owner, producer,
    international standard recording
    code, and other information
    commonly used to assist in
    associating sound recordings
    with musical works; and
    ``(V) such other information as the
    Register of Copyrights may prescribe by
    regulation.
    ``(iii) Unmatched works.--With respect to
    unmatched musical works (and shares of works) in
    the database, the musical works database shall
    include--
    ``(I) to the extent reasonably
    available to the mechanical licensing
    collective--
    ``(aa) the title of the
    musical work;

    [[Page 3693]]

    ``(bb) the ownership
    percentage for which an owner
    has not been identified;
    ``(cc) if a copyright owner
    has been identified but not
    located, the identity of such
    owner and the ownership
    percentage of that owner;
    ``(dd) identifying
    information for sound recordings
    in which the work is embodied,
    including sound recording name,
    featured artist, sound recording
    copyright owner, producer,
    international standard recording
    code, and other information
    commonly used to assist in
    associating sound recordings
    with musical works; and
    ``(ee) any additional
    information reported to the
    mechanical licensing collective
    that may assist in identifying
    the work; and
    ``(II) such other information
    relating to the identity and ownership
    of musical works (and shares of such
    works) as the Register of Copyrights may
    prescribe by regulation.
    ``(iv) Sound recording information.--Each
    musical work copyright owner with any musical work
    listed in the musical works database shall engage
    in commercially reasonable efforts to deliver to
    the mechanical licensing collective, including for
    use in the musical works database, to the extent
    such information is not then available in the
    database, information regarding the names of the
    sound recordings in which that copyright owner's
    musical works (or shares thereof) are embodied, to
    the extent practicable.
    ``(v) Accessibility of database.--
    <> The musical works
    database shall be made available to members of the
    public in a searchable, online format, free of
    charge. The mechanical licensing collective shall
    make such database available in a bulk, machine-
    readable format, through a widely available
    software application, to the following entities:
    ``(I) Digital music providers
    operating under the authority of valid
    notices of license, free of charge.
    ``(II) Significant nonblanket
    licensees in compliance with their
    obligations under paragraph (6), free of
    charge.
    ``(III) Authorized vendors of the
    entities described in subclauses (I) and
    (II), free of charge.
    ``(IV) The Register of Copyrights,
    free of charge (but the Register shall
    not treat such database or any
    information therein as a Government
    record).
    ``(V) Any other person or entity for
    a fee not to exceed the marginal cost to
    the mechanical licensing collective of
    providing the database to such person or
    entity.
    ``(vi) Additional requirements.--
    <> The Register of Copyrights
    shall establish requirements by regulations

    [[Page 3694]]

    to ensure the usability, interoperability, and
    usage restrictions of the musical works database.
    ``(F) <>  Notices
    of license and nonblanket activity.--
    ``(i) Notices of licenses.--The mechanical
    licensing collective shall receive, review, and
    confirm or reject notices of license from digital
    music providers, as provided in paragraph (2)(A).
    The collective shall maintain a current, publicly
    accessible list of blanket licenses that includes
    contact information for the licensees and the
    effective dates of such licenses.
    ``(ii) Notices of nonblanket activity.--The
    mechanical licensing collective shall receive
    notices of nonblanket activity from significant
    nonblanket licensees, as provided in paragraph
    (6)(A). The collective shall maintain a current,
    publicly accessible list of notices of nonblanket
    activity that includes contact information for
    significant nonblanket licensees and the dates of
    receipt of such notices.
    ``(G) Collection and distribution of royalties.--
    ``(i) In general.--Upon receiving reports of
    usage and payments of royalties from digital music
    providers for covered activities, the mechanical
    licensing collective shall--
    ``(I) engage in efforts to--
    ``(aa) identify the musical
    works embodied in sound
    recordings reflected in such
    reports, and the copyright
    owners of such musical works
    (and shares thereof);
    ``(bb) confirm uses of
    musical works subject to
    voluntary licenses and
    individual download licenses,
    and the corresponding pro rata
    amounts to be deducted from
    royalties that would otherwise
    be due under the blanket
    license; and
    ``(cc) confirm proper
    payment of royalties due;
    ``(II) distribute royalties to
    copyright owners in accordance with the
    usage and other information contained in
    such reports, as well as the ownership
    and other information contained in the
    records of the collective; and
    ``(III) deposit into an interest-
    bearing account, as provided in
    subparagraph (H)(ii), royalties that
    cannot be distributed due to--
    ``(aa) an inability to
    identify or locate a copyright
    owner of a musical work (or
    share thereof); or
    ``(bb) a pending dispute
    before the dispute resolution
    committee of the mechanical
    licensing collective.
    ``(ii) Other collection efforts.--Any
    royalties recovered by the mechanical licensing
    collective as a result of efforts to enforce
    rights or obligations under a blanket license,
    including through a bankruptcy proceeding or other
    legal action, shall be distributed to copyright
    owners based on available usage information and in
    accordance with the procedures described in

    [[Page 3695]]

    subclauses (I) and (II) of clause (i), on a pro
    rata basis in proportion to the overall percentage
    recovery of the total royalties owed, with any pro
    rata share of royalties that cannot be distributed
    deposited in an interest-bearing account as
    provided in subparagraph (H)(ii).
    ``(H) Holding of accrued royalties.--
    ``(i) Holding period.--The mechanical
    licensing collective shall hold accrued royalties
    associated with particular musical works (and
    shares of works) that remain unmatched for a
    period of not less than 3 years after the date on
    which the funds were received by the mechanical
    licensing collective, or not less than 3 years
    after the date on which the funds were accrued by
    a digital music provider that subsequently
    transferred such funds to the mechanical licensing
    collective pursuant to paragraph (10)(B),
    whichever period expires sooner.
    ``(ii) Interest-bearing account.--Accrued
    royalties for unmatched works (and shares thereof)
    shall be maintained by the mechanical licensing
    collective in an interest-bearing account that
    earns monthly interest--
    ``(I) at the Federal, short-term
    rate; and
    ``(II) that accrues for the benefit
    of copyright owners entitled to payment
    of such accrued royalties.
    ``(I) Musical works claiming process.--When a
    copyright owner of an unmatched work (or share of a
    work) has been identified and located in accordance with
    the procedures of the mechanical licensing collective,
    the collective shall--
    ``(i) update the musical works database and
    the other records of the collective accordingly;
    and
    ``(ii) <>  provided that
    accrued royalties for the musical work (or share
    thereof) have not yet been included in a
    distribution pursuant to subparagraph (J)(i), pay
    such accrued royalties and a proportionate amount
    of accrued interest associated with that work (or
    share thereof) to the copyright owner, accompanied
    by a cumulative statement of account reflecting
    usage of such work and accrued royalties based on
    information provided by digital music providers to
    the mechanical licensing collective.
    ``(J) Distribution of unclaimed accrued royalties.--
    ``(i) Distribution procedures.--After the
    expiration of the prescribed holding period for
    accrued royalties provided in subparagraph (H)(i),
    the mechanical licensing collective shall
    distribute such accrued royalties, along with a
    proportionate share of accrued interest, to
    copyright owners identified in the records of the
    collective, subject to the following requirements,
    and in accordance with the policies and procedures
    established under clause (ii):
    ``(I) <>  The
    first such distribution shall occur on
    or after January 1 of the second full
    calendar

    [[Page 3696]]

    year to commence after the license
    availability date, with not less than 1
    such distribution to take place during
    each calendar year thereafter.
    ``(II) <>
    Copyright owners' payment shares for
    unclaimed accrued royalties for
    particular reporting periods shall be
    determined in a transparent and
    equitable manner based on data
    indicating the relative market shares of
    such copyright owners as reflected in
    reports of usage provided by digital
    music providers for covered activities
    for the periods in question, including,
    in addition to usage data provided to
    the mechanical licensing collective,
    usage data provided to copyright owners
    under voluntary licenses and individual
    download licenses for covered
    activities, to the extent such
    information is available to the
    mechanical licensing collective. In
    furtherance of the determination of
    equitable market shares under this
    subparagraph--
    ``(aa) the mechanical
    licensing collective may require
    copyright owners seeking
    distributions of unclaimed
    accrued royalties to provide, or
    direct the provision of,
    information concerning the usage
    of musical works under voluntary
    licenses and individual download
    licenses for covered activities;
    and
    ``(bb) the mechanical
    licensing collective shall take
    appropriate steps to safeguard
    the confidentiality and security
    of usage, financial, and other
    sensitive data used to compute
    market shares in accordance with
    the confidentiality provisions
    prescribed by the Register of
    Copyrights under paragraph
    (12)(C).
    ``(ii) Establishment of distribution
    policies.--The unclaimed royalties oversight
    committee established under subparagraph (D)(v)
    shall establish policies and procedures for the
    distribution of unclaimed accrued royalties and
    accrued interest in accordance with this
    subparagraph, including the provision of usage
    data to copyright owners to allocate payments and
    credits to songwriters pursuant to clause (iv),
    subject to the approval of the board of directors
    of the mechanical licensing collective.
    ``(iii) Public notice of unclaimed accrued
    royalties.--The mechanical licensing collective
    shall--
    ``(I) maintain a publicly accessible
    online facility with contact information
    for the collective that lists unmatched
    musical works (and shares of works),
    through which a copyright owner may
    assert an ownership claim with respect
    to such a work (and a share of such a
    work);
    ``(II) engage in diligent, good-
    faith efforts to publicize, throughout
    the music industry--

    [[Page 3697]]

    ``(aa) the existence of the
    collective and the ability to
    claim unclaimed accrued
    royalties for unmatched musical
    works (and shares of such works)
    held by the collective;
    ``(bb) the procedures by
    which copyright owners may
    identify themselves and provide
    contact, ownership, and other
    relevant information to the
    collective in order to receive
    payments of accrued royalties;
    ``(cc) <>
    any transfer of accrued
    royalties for musical works
    under paragraph (10)(B), not
    later than 180 days after the
    date on which the transfer is
    received; and
    ``(dd) <>  any pending
    distribution of unclaimed
    accrued royalties and accrued
    interest, not less than 90 days
    before the date on which the
    distribution is made; and
    ``(III) as appropriate, participate
    in music industry conferences and events
    for the purpose of publicizing the
    matters described in subclause (II).
    ``(iv) Songwriter payments.--Copyright owners
    that receive a distribution of unclaimed accrued
    royalties and accrued interest shall pay or credit
    a portion to songwriters (or the authorized agents
    of songwriters) on whose behalf the copyright
    owners license or administer musical works for
    covered activities, in accordance with applicable
    contractual terms, but notwithstanding any
    agreement to the contrary--
    ``(I) such payments and credits to
    songwriters shall be allocated in
    proportion to reported usage of
    individual musical works by digital
    music providers during the reporting
    periods covered by the distribution from
    the mechanical licensing collective; and
    ``(II) in no case shall the payment
    or credit to an individual songwriter be
    less than 50 percent of the payment
    received by the copyright owner
    attributable to usage of musical works
    (or shares of works) of that songwriter.
    ``(K) Dispute resolution.--The dispute resolution
    committee established under subparagraph (D)(vi) shall
    establish policies and procedures--
    ``(i) for copyright owners to address in a
    timely and equitable manner disputes relating to
    ownership interests in musical works licensed
    under this section and allocation and distribution
    of royalties by the mechanical licensing
    collective, subject to the approval of the board
    of directors of the mechanical licensing
    collective;
    ``(ii) that shall include a mechanism to hold
    disputed funds in accordance with the requirements
    described in subparagraph (H)(ii) pending
    resolution of the dispute; and
    ``(iii) except as provided in paragraph
    (11)(D), that shall not affect any legal or
    equitable rights or remedies available to any
    copyright owner or songwriter

    [[Page 3698]]

    concerning ownership of, and entitlement to
    royalties for, a musical work.
    ``(L) Verification of payments by mechanical
    licensing collective.--
    ``(i) Verification process.--
    <> A copyright owner entitled to
    receive payments of royalties for covered
    activities from the mechanical licensing
    collective may, individually or with other
    copyright owners, conduct an audit of the
    mechanical licensing collective to verify the
    accuracy of royalty payments by the mechanical
    licensing collective to such copyright owner, as
    follows:
    ``(I) <>  A
    copyright owner may audit the mechanical
    licensing collective only once in a year
    for any or all of the 3 calendar years
    preceding the year in which the audit is
    commenced, and may not audit records for
    any calendar year more than once.
    ``(II) The audit shall be conducted
    by a qualified auditor, who shall
    perform the audit during the ordinary
    course of business by examining the
    books, records, and data of the
    mechanical licensing collective,
    according to generally accepted auditing
    standards and subject to applicable
    confidentiality requirements prescribed
    by the Register of Copyrights under
    paragraph (12)(C).
    ``(III) The mechanical licensing
    collective shall make such books,
    records, and data available to the
    qualified auditor and respond to
    reasonable requests for relevant
    information, and shall use commercially
    reasonable efforts to facilitate access
    to relevant information maintained by
    third parties.
    ``(IV) <>  To
    commence the audit, any copyright owner
    shall file with the Copyright Office a
    notice of intent to conduct an audit of
    the mechanical licensing collective,
    identifying the period of time to be
    audited, and shall simultaneously
    deliver a copy of such notice to the
    mechanical licensing
    collective. <>  The Register
    of Copyrights shall cause the notice of
    audit to be published in the Federal
    Register not later than 45 calendar days
    after the date on which the notice is
    received.

    ``(V) <>
    The qualified auditor shall determine
    the accuracy of royalty payments,
    including whether an underpayment or
    overpayment of royalties was made by the
    mechanical licensing collective to each
    auditing copyright owner, except that,
    before providing a final audit report to
    any such copyright owner, the qualified
    auditor shall provide a tentative draft
    of the report to the mechanical
    licensing collective and allow the
    mechanical licensing collective a
    reasonable opportunity to respond to the
    findings, including by clarifying issues
    and correcting factual errors.
    ``(VI) The auditing copyright owner
    or owners shall bear the cost of the
    audit. In case of an underpayment to any
    copyright owner, the

    [[Page 3699]]

    mechanical licensing collective shall
    pay the amounts of any such underpayment
    to such auditing copyright owner, as
    appropriate. In case of an overpayment
    by the mechanical licensing collective,
    the mechanical licensing collective may
    debit the account of the auditing
    copyright owner or owners for such
    overpaid amounts, or such owner or
    owners shall refund overpaid amounts to
    the mechanical licensing collective, as
    appropriate.
    ``(ii) <>  Alternative
    verification procedures.--Nothing in this
    subparagraph shall preclude a copyright owner and
    the mechanical licensing collective from agreeing
    to audit procedures different from those described
    in this subparagraph, except that a notice of the
    audit shall be provided to and published by the
    Copyright Office as described in clause (i)(IV).
    ``(M) Records of mechanical licensing collective.--
    ``(i) Records maintenance.-- <> The mechanical licensing collective
    shall ensure that all material records of the
    operations of the mechanical licensing collective,
    including those relating to notices of license,
    the administration of the claims process of the
    mechanical licensing collective, reports of usage,
    royalty payments, receipt and maintenance of
    accrued royalties, royalty distribution processes,
    and legal matters, are preserved and maintained in
    a secure and reliable manner, with appropriate
    commercially reasonable safeguards against
    unauthorized access, copying, and disclosure, and
    subject to the confidentiality requirements
    prescribed by the Register of Copyrights under
    paragraph (12)(C) for a period of not less than 7
    years after the date of creation or receipt,
    whichever occurs later.
    ``(ii) Records access.--The mechanical
    licensing collective shall provide prompt access
    to electronic and other records pertaining to the
    administration of a copyright owner's musical
    works upon reasonable written request of the owner
    or the authorized representative of the owner.
    ``(4) Terms and conditions of blanket license.--A blanket
    license is subject to, and conditioned upon, the following
    requirements:
    ``(A) Royalty reporting and payments.--
    ``(i) Monthly reports and payment.--A digital
    music provider shall report and pay royalties to
    the mechanical licensing collective under the
    blanket license on a monthly basis in accordance
    with clause (ii) and subsection (c)(2)(I), except
    that the monthly reporting shall be due on the
    date that is 45 calendar days, rather than 20
    calendar days, after the end of the monthly
    reporting period.
    ``(ii) Data to be reported.--In reporting
    usage of musical works to the mechanical licensing
    collective, a digital music provider shall provide
    usage data for musical works used under the
    blanket license and

    [[Page 3700]]

    usage data for musical works used in covered
    activities under voluntary licenses and individual
    download licenses. In the report of usage, the
    digital music provider shall--
    ``(I) with respect to each sound
    recording embodying a musical work--
    ``(aa) provide identifying
    information for the sound
    recording, including sound
    recording name, featured artist,
    and, to the extent acquired by
    the digital music provider in
    connection with its use of sound
    recordings of musical works to
    engage in covered activities,
    including pursuant to
    subparagraph (B), sound
    recording copyright owner,
    producer, international standard
    recording code, and other
    information commonly used in the
    industry to identify sound
    recordings and match them to the
    musical works the sound
    recordings embody;
    ``(bb) to the extent
    acquired by the digital music
    provider in the metadata
    provided by sound recording
    copyright owners or other
    licensors of sound recordings in
    connection with the use of sound
    recordings of musical works to
    engage in covered activities,
    including pursuant to
    subparagraph (B), provide
    information concerning
    authorship and ownership of the
    applicable rights in the musical
    work embodied in the sound
    recording (including each
    songwriter, publisher name, and
    respective ownership share) and
    the international standard
    musical work code; and
    ``(cc) provide the number of
    digital phonorecord deliveries
    of the sound recording,
    including limited downloads and
    interactive streams;
    ``(II) identify and provide contact
    information for all musical work
    copyright owners for works embodied in
    sound recordings as to which a voluntary
    license, rather than the blanket
    license, is in effect with respect to
    the uses being reported; and
    ``(III) provide such other
    information as the Register of
    Copyrights shall require by regulation.
    ``(iii) <>  Format and
    maintenance of reports.--Reports of usage provided
    by digital music providers to the mechanical
    licensing collective shall be in a machine-
    readable format that is compatible with the
    information technology systems of the mechanical
    licensing collective and meets the requirements of
    regulations adopted by the Register of Copyrights.
    The Register shall also adopt regulations setting
    forth requirements under which records of use
    shall be maintained and made available to the
    mechanical licensing collective by digital music
    providers engaged in covered activities under a
    blanket license.

    [[Page 3701]]

    ``(iv) Adoption of regulations.--The Register
    of Copyrights shall adopt regulations--
    ``(I) setting forth requirements
    under which records of use shall be
    maintained and made available to the
    mechanical licensing collective by
    digital music providers engaged in
    covered activities under a blanket
    license; and
    ``(II) regarding adjustments to
    reports of usage by digital music
    providers, including mechanisms to
    account for overpayment and underpayment
    of royalties in prior periods.
    ``(B) Collection of sound recording information.--A
    digital music provider shall engage in good-faith,
    commercially reasonable efforts to obtain from sound
    recording copyright owners and other licensors of sound
    recordings made available through the service of such
    digital music provider information concerning--
    ``(i) sound recording copyright owners,
    producers, international standard recording codes,
    and other information commonly used in the
    industry to identify sound recordings and match
    them to the musical works the sound recordings
    embody; and
    ``(ii) the authorship and ownership of musical
    works, including songwriters, publisher names,
    ownership shares, and international standard
    musical work codes.
    ``(C) Payment of administrative assessment.--A
    digital music provider and any significant nonblanket
    licensee shall pay the administrative assessment
    established under paragraph (7)(D) in accordance with
    this subsection and applicable regulations.
    ``(D) Verification of payments by digital music
    providers.--
    ``(i) Verification process.--
    <> The mechanical licensing
    collective may conduct an audit of a digital music
    provider operating under the blanket license to
    verify the accuracy of royalty payments by the
    digital music provider to the mechanical licensing
    collective as follows:
    ``(I) <>  The
    mechanical licensing collective may
    commence an audit of a digital music
    provider not more frequently than once
    in any 3-calendar-year period to cover a
    verification period of not more than the
    3 full calendar years preceding the date
    of commencement of the audit, and such
    audit may not audit records for any such
    3-year verification period more than
    once.
    ``(II) The audit shall be conducted
    by a qualified auditor, who shall
    perform the audit during the ordinary
    course of business by examining the
    books, records, and data of the digital
    music provider, according to generally
    accepted auditing standards and subject
    to applicable confidentiality
    requirements prescribed by the Register
    of Copyrights under paragraph (12)(C).
    ``(III) The digital music provider
    shall make such books, records, and data
    available to the

    [[Page 3702]]

    qualified auditor and respond to
    reasonable requests for relevant
    information, and shall use commercially
    reasonable efforts to provide access to
    relevant information maintained with
    respect to a digital music provider by
    third parties.
    ``(IV) <>  To
    commence the audit, the mechanical
    licensing collective shall file with the
    Copyright Office a notice of intent to
    conduct an audit of the digital music
    provider, identifying the period of time
    to be audited, and shall simultaneously
    deliver a copy of such notice to the
    digital music provider. <>  The
    Register of Copyrights shall cause the
    notice of audit to be published in the
    Federal Register not later than 45
    calendar days after the date on which
    notice is received.

    ``(V) <>
    The qualified auditor shall determine
    the accuracy of royalty payments,
    including whether an underpayment or
    overpayment of royalties was made by the
    digital music provider to the mechanical
    licensing collective, except that,
    before providing a final audit report to
    the mechanical licensing collective, the
    qualified auditor shall provide a
    tentative draft of the report to the
    digital music provider and allow the
    digital music provider a reasonable
    opportunity to respond to the findings,
    including by clarifying issues and
    correcting factual errors.
    ``(VI) The mechanical licensing
    collective shall pay the cost of the
    audit, unless the qualified auditor
    determines that there was an
    underpayment by the digital music
    provider of not less than 10 percent, in
    which case the digital music provider
    shall bear the reasonable costs of the
    audit, in addition to paying the amount
    of any underpayment to the mechanical
    licensing collective. In case of an
    overpayment by the digital music
    provider, the mechanical licensing
    collective shall provide a credit to the
    account of the digital music provider.
    ``(VII) <>  A
    digital music provider may not assert
    section 507 or any other Federal or
    State statute of limitations, doctrine
    of laches or estoppel, or similar
    provision as a defense to a legal action
    arising from an audit under this
    subparagraph if such legal action is
    commenced not more than 6 years after
    the commencement of the audit that is
    the basis for such action.
    ``(ii) Alternative verification procedures.--
    Nothing in this subparagraph shall preclude the
    mechanical licensing collective and a digital
    music provider from agreeing to audit procedures
    different from those described in this
    subparagraph, except that a notice of the audit
    shall be provided to and published by the
    Copyright Office as described in clause (i)(IV).
    ``(E) Default under blanket license.--

    [[Page 3703]]

    ``(i) Conditions of default.--A digital music
    provider shall be in default under a blanket
    license if the digital music provider--
    ``(I) fails to provide 1 or more
    monthly reports of usage to the
    mechanical licensing collective when
    due;
    ``(II) fails to make a monthly
    royalty or late fee payment to the
    mechanical licensing collective when
    due, in all or material part;
    ``(III) provides 1 or more monthly
    reports of usage to the mechanical
    licensing collective that, on the whole,
    is or are materially deficient as a
    result of inaccurate, missing, or
    unreadable data, where the correct data
    was available to the digital music
    provider and required to be reported
    under this section and applicable
    regulations;
    ``(IV) fails to pay the
    administrative assessment as required
    under this subsection and applicable
    regulations; or
    ``(V) <>  after
    being provided written notice by the
    mechanical licensing collective, refuses
    to comply with any other material term
    or condition of the blanket license
    under this section for a period of not
    less than 60 calendar days.
    ``(ii) Notice of default and termination.--In
    case of a default by a digital music provider, the
    mechanical licensing collective may proceed to
    terminate the blanket license of the digital music
    provider as follows:
    ``(I) <>  The
    mechanical licensing collective shall
    provide written notice to the digital
    music provider describing with
    reasonable particularity the default and
    advising that unless such default is
    cured not later than 60 calendar days
    after the date of the notice, the
    blanket license will automatically
    terminate at the end of that period.
    ``(II) If the digital music provider
    fails to remedy the default before the
    end of the 60-day period described in
    subclause (I), the license shall
    terminate without any further action on
    the part of the mechanical licensing
    collective. Such termination renders the
    making of all digital phonorecord
    deliveries of all musical works (and
    shares thereof) covered by the blanket
    license for which the royalty or
    administrative assessment has not been
    paid actionable as acts of infringement
    under section 501 and subject to the
    remedies provided by sections 502
    through 506.
    ``(iii) Notice to copyright owners.--The
    mechanical licensing collective shall provide
    written notice of any termination under this
    subparagraph to copyright owners of affected
    works.
    ``(iv) Review by federal district court.--
    <> A digital music provider that
    believes a blanket license was improperly
    terminated by the mechanical licensing collective
    may seek review of such termination in an
    appropriate district court of the United
    States. <>  The

    [[Page 3704]]

    district court shall determine the matter de novo
    based on the record before the mechanical
    licensing collective and any additional supporting
    evidence presented by the parties.
    ``(5) Digital licensee coordinator.--
    ``(A) In general.--The digital licensee coordinator
    shall be a single entity that--
    ``(i) is a nonprofit, not owned by any other
    entity, that is created to carry out
    responsibilities under this subsection;
    ``(ii) is endorsed by and enjoys substantial
    support from digital music providers and
    significant nonblanket licensees that together
    represent the greatest percentage of the licensee
    market for uses of musical works in covered
    activities, as measured over the preceding 3
    calendar years;
    ``(iii) is able to demonstrate that it has, or
    will have prior to the license availability date,
    the administrative capabilities to perform the
    required functions of the digital licensee
    coordinator under this subsection; and
    ``(iv) has been designated by the Register of
    Copyrights, with the approval of the Librarian of
    Congress pursuant to section 702, in accordance
    with subparagraph (B).
    ``(B) Designation of digital licensee coordinator.--
    ``(i) Initial designation.--
    <> The Register of Copyrights
    shall initially designate the digital licensee
    coordinator not later than 270 days after the
    enactment date, in accordance with the same
    procedure described for designation of the
    mechanical licensing collective in paragraph
    (3)(B)(i).
    ``(ii) Periodic review of designation.--
    <> Following the initial
    designation of the digital licensee coordinator,
    the Register of Copyrights shall, every 5 years,
    beginning with the fifth full calendar year to
    commence after the initial designation, determine
    whether the existing designation should be
    continued, or a different entity meeting the
    criteria described in clauses (i) through (iii) of
    subparagraph (A) should be designated, in
    accordance with the same procedure described for
    the mechanical licensing collective in paragraph
    (3)(B)(ii).
    ``(iii) Inability to designate.--If the
    Register of Copyrights is unable to identify an
    entity that fulfills each of the qualifications
    described in clauses (i) through (iii) of
    subparagraph (A) to serve as the digital licensee
    coordinator, the Register may decline to designate
    a digital licensee coordinator. The determination
    of the Register not to designate a digital
    licensee coordinator shall not negate or otherwise
    affect any provision of this subsection except to
    the limited extent that a provision references the
    digital licensee coordinator. In such case, the
    reference to the digital licensee coordinator
    shall be without effect unless and until a new
    digital licensee coordinator is designated.

    [[Page 3705]]

    ``(C) Authorities and functions.--
    ``(i) In general.--The digital licensee
    coordinator is authorized to perform the following
    functions, subject to more particular requirements
    as described in this subsection:
    ``(I) <>  Establish
    a governance structure, criteria for
    membership, and any dues to be paid by
    its members.
    ``(II) Engage in efforts to enforce
    notice and payment obligations with
    respect to the administrative
    assessment, including by receiving
    information from and coordinating with
    the mechanical licensing collective.
    ``(III) <>
    Initiate and participate in proceedings
    before the Copyright Royalty Judges to
    establish the administrative assessment
    under this subsection.
    ``(IV) <>
    Initiate and participate in proceedings
    before the Copyright Office with respect
    to activities under this subsection.
    ``(V) Gather and provide
    documentation for use in proceedings
    before the Copyright Royalty Judges to
    set rates and terms under this section.
    ``(VI) Maintain records of its
    activities.
    ``(VII) Assist in publicizing the
    existence of the mechanical licensing
    collective and the ability of copyright
    owners to claim royalties for unmatched
    musical works (and shares of works)
    through the collective.
    ``(VIII) Engage in such other
    activities as may be necessary or
    appropriate to fulfill its
    responsibilities under this subsection.
    ``(ii) Restriction on lobbying.--The digital
    licensee coordinator may not engage in government
    lobbying activities, but may engage in the
    activities described in subclauses (III), (IV),
    and (V) of clause (i).
    ``(iii) Assistance with publicity for
    unclaimed royalties.--The digital licensee
    coordinator shall make reasonable, good-faith
    efforts to assist the mechanical licensing
    collective in the efforts of the collective to
    locate and identify copyright owners of unmatched
    musical works (and shares of such works) by
    encouraging digital music providers to publicize
    the existence of the collective and the ability of
    copyright owners to claim unclaimed accrued
    royalties, including by--
    ``(I) <>
    posting contact information for the
    collective at reasonably prominent
    locations on digital music provider
    websites and applications; and
    ``(II) conducting in-person outreach
    activities with songwriters.
    ``(6) Requirements for significant nonblanket licensees.--
    ``(A) In general.--
    ``(i) Notice of activity.--
    <> Not later than 45 calendar
    days after the license availability date, or 45

    [[Page 3706]]

    calendar days after the end of the first full
    calendar month in which an entity initially
    qualifies as a significant nonblanket licensee,
    whichever occurs later, a significant nonblanket
    licensee shall submit a notice of nonblanket
    activity to the mechanical licensing
    collective. <>
    The notice of nonblanket activity shall comply in
    form and substance with requirements that the
    Register of Copyrights shall establish by
    regulation, and a copy shall be made available to
    the digital licensee coordinator.
    ``(ii) Reporting and payment obligations.--The
    notice of nonblanket activity submitted to the
    mechanical licensing collective shall be
    accompanied by a report of usage that contains the
    information described in paragraph (4)(A)(ii), as
    well as any payment of the administrative
    assessment required under this subsection and
    applicable regulations. Thereafter, subject to
    clause (iii), a significant nonblanket licensee
    shall continue to provide monthly reports of
    usage, accompanied by any required payment of the
    administrative assessment, to the mechanical
    licensing collective. Such reports and payments
    shall be submitted not later than 45 calendar days
    after the end of the calendar month being
    reported.
    ``(iii) Discontinuation of obligations.--
    <> An entity that has
    submitted a notice of nonblanket activity to the
    mechanical licensing collective that has ceased to
    qualify as a significant nonblanket licensee may
    so notify the collective in writing. In such case,
    as of the calendar month in which such notice is
    provided, such entity shall no longer be required
    to provide reports of usage or pay the
    administrative assessment, but if such entity
    later qualifies as a significant nonblanket
    licensee, such entity shall again be required to
    comply with clauses (i) and (ii).
    ``(B) Reporting by mechanical licensing collective
    to digital licensee coordinator.--
    ``(i) Monthly reports of noncompliant
    licensees.--The mechanical licensing collective
    shall provide monthly reports to the digital
    licensee coordinator setting forth any significant
    nonblanket licensees of which the collective is
    aware that have failed to comply with subparagraph
    (A).
    ``(ii) Treatment of confidential
    information.--The mechanical licensing collective
    and digital licensee coordinator shall take
    appropriate steps to safeguard the confidentiality
    and security of financial and other sensitive data
    shared under this subparagraph, in accordance with
    the confidentiality requirements prescribed by the
    Register of Copyrights under paragraph (12)(C).
    ``(C) Legal enforcement efforts.--
    ``(i) Federal court action.--Should the
    mechanical licensing collective or digital
    licensee coordinator become aware that a
    significant nonblanket licensee has failed to
    comply with subparagraph (A), either may commence
    an action in an appropriate district

    [[Page 3707]]

    court of the United States for damages and
    injunctive relief. If the significant nonblanket
    licensee is found liable, the court shall, absent
    a finding of excusable neglect, award damages in
    an amount equal to three times the total amount of
    the unpaid administrative assessment and,
    notwithstanding anything to the contrary in
    section 505, reasonable attorney's fees and costs,
    as well as such other relief as the court
    determines appropriate. In all other cases, the
    court shall award relief as appropriate. Any
    recovery of damages shall be payable to the
    mechanical licensing collective as an offset to
    the collective total costs.
    ``(ii) Statute of limitations for enforcement
    action.--Any action described in this subparagraph
    shall be commenced within the time period
    described in section 507(b).
    ``(iii) Other rights and remedies preserved.--
    The ability of the mechanical licensing collective
    or digital licensee coordinator to bring an action
    under this subparagraph shall in no way alter,
    limit or negate any other right or remedy that may
    be available to any party at law or in equity.
    ``(7) Funding of mechanical licensing collective.--
    ``(A) In general.--The collective total costs shall
    be funded by--
    ``(i) an administrative assessment, as such
    assessment is established by the Copyright Royalty
    Judges pursuant to subparagraph (D) from time to
    time, to be paid by--
    ``(I) digital music providers that
    are engaged, in all or in part, in
    covered activities pursuant to a blanket
    license; and
    ``(II) significant nonblanket
    licensees; and
    ``(ii) voluntary contributions from digital
    music providers and significant nonblanket
    licensees as may be agreed with copyright owners.
    ``(B) Voluntary contributions.--
    ``(i) Agreements concerning contributions.--
    Except as provided in clause (ii), voluntary
    contributions by digital music providers and
    significant nonblanket licensees shall be
    determined by private negotiation and agreement,
    and the following conditions apply:
    ``(I) The date and amount of each
    voluntary contribution to the mechanical
    licensing collective shall be documented
    in a writing signed by an authorized
    agent of the mechanical licensing
    collective and the contributing party.
    ``(II) Such agreement shall be made
    available as required in proceedings
    before the Copyright Royalty Judges to
    establish or adjust the administrative
    assessment in accordance with applicable
    statutory and regulatory provisions and
    rulings of the Copyright Royalty Judges.
    ``(ii) Treatment of contributions.--Each
    voluntary contribution described in clause (i)
    shall be treated for purposes of an administrative
    assessment

    [[Page 3708]]

    proceeding as an offset to the collective total
    costs that would otherwise be recovered through
    the administrative assessment. Any allocation or
    reallocation of voluntary contributions between or
    among individual digital music providers or
    significant nonblanket licensees shall be a matter
    of private negotiation and agreement among such
    parties and outside the scope of the
    administrative assessment proceeding.
    ``(C) Interim application of accrued royalties.--In
    the event that the administrative assessment, together
    with any funding from voluntary contributions as
    provided in subparagraphs (A) and (B), is inadequate to
    cover current collective total costs, the collective,
    with approval of its board of directors, may apply
    unclaimed accrued royalties on an interim basis to
    defray such costs, subject to future reimbursement of
    such royalties from future collections of the
    assessment.
    ``(D) Determination of administrative assessment.--
    ``(i) Administrative assessment to cover
    collective total costs.--The administrative
    assessment shall be used solely and exclusively to
    fund the collective total costs.
    ``(ii) Separate proceeding before copyright
    royalty judges.--The amount and terms of the
    administrative assessment shall be determined and
    established in a separate and independent
    proceeding before the Copyright Royalty Judges,
    according to the procedures described in clauses
    (iii) and (iv). The administrative assessment
    determined in such proceeding shall--
    ``(I) be wholly independent of
    royalty rates and terms applicable to
    digital music providers, which shall not
    be taken into consideration in any
    manner in establishing the
    administrative assessment;
    ``(II) be established by the
    Copyright Royalty Judges in an amount
    that is calculated to defray the
    reasonable collective total costs;
    ``(III) be assessed based on usage
    of musical works by digital music
    providers and significant nonblanket
    licensees in covered activities under
    both compulsory and nonblanket licenses;
    ``(IV) may be in the form of a
    percentage of royalties payable under
    this section for usage of musical works
    in covered activities (regardless of
    whether a different rate applies under a
    voluntary license), or any other usage-
    based metric reasonably calculated to
    equitably allocate the collective total
    costs across digital music providers and
    significant nonblanket licensees engaged
    in covered activities, and shall include
    as a component a minimum fee for all
    digital music providers and significant
    nonblanket licensees; and
    ``(V) take into consideration
    anticipated future collective total
    costs and collections of the
    administrative assessment, including, as
    applicable--

    [[Page 3709]]

    ``(aa) any portion of past
    actual collective total costs of
    the mechanical licensing
    collective not funded by
    previous collections of the
    administrative assessment or
    voluntary contributions because
    such collections or
    contributions together were
    insufficient to fund such costs;
    ``(bb) any past collections
    of the administrative assessment
    and voluntary contributions that
    exceeded past actual collective
    total costs, resulting in a
    surplus; and
    ``(cc) the amount of any
    voluntary contributions by
    digital music providers or
    significant nonblanket licensees
    in relevant periods, described
    in subparagraphs (A) and (B) of
    paragraph (7).
    ``(iii) Initial administrative assessment.--
    <> The procedure for
    establishing the initial administrative assessment
    shall be as follows:

    `` <> (I)
    Not later than 270 days after the
    enactment date, the Copyright Royalty
    Judges shall commence a proceeding to
    establish the initial administrative
    assessment by publishing a notice in the
    Federal Register seeking petitions to
    participate.
    ``(II) The mechanical licensing
    collective and digital licensee
    coordinator shall participate in the
    proceeding described in subclause (I),
    along with any interested copyright
    owners, digital music providers or
    significant nonblanket licensees that
    have notified the Copyright Royalty
    Judges of their desire to participate.

    ``(III) <>
    The Copyright Royalty Judges shall
    establish a schedule for submission by
    the parties of information that may be
    relevant to establishing the
    administrative assessment, including
    actual and anticipated collective total
    costs of the mechanical licensing
    collective, actual and anticipated
    collections from digital music providers
    and significant nonblanket licensees,
    and documentation of voluntary
    contributions, as well as a schedule for
    further proceedings, which shall include
    a hearing, as the Copyright Royalty
    Judges determine appropriate.
    `` <> (IV)
    The initial administrative assessment
    shall be determined, and such
    determination shall be published in the
    Federal Register by the Copyright
    Royalty Judges, not later than 1 year
    after commencement of the proceeding
    described in this clause. The
    determination shall be supported by a
    written record. <>  The initial administrative
    assessment shall be effective as of the
    license availability date, and shall
    continue in effect unless and until an
    adjusted administrative assessment is
    established pursuant to an adjustment
    proceeding under clause (iv).

    [[Page 3710]]

    ``(iv) <>  Adjustment of administrative
    assessment.--The administrative assessment may be
    adjusted by the Copyright Royalty Judges
    periodically, in accordance with the following
    procedures:
    `` <> (I) Not earlier than 1 year
    after the most recent publication of a
    determination of the administrative
    assessment by the Copyright Royalty
    Judges, the mechanical licensing
    collective, the digital licensee
    coordinator, or one or more interested
    copyright owners, digital music
    providers, or significant nonblanket
    licensees, may file a petition with the
    Copyright Royalty Judges in the month of
    May to commence a proceeding to adjust
    the administrative assessment.
    `` <> (II) Notice of
    the commencement of such proceeding
    shall be published in the Federal
    Register in the month of June following
    the filing of any petition, with a
    schedule of requested information and
    additional proceedings, as described in
    clause (iii)(III). The mechanical
    licensing collective and digital
    licensee coordinator shall participate
    in such proceeding, along with any
    interested copyright owners, digital
    music providers, or significant
    nonblanket licensees that have notified
    the Copyright Royalty Judges of their
    desire to participate.
    ``(III) <>
    The determination of the adjusted
    administrative assessment, which shall
    be supported by a written record, shall
    be published in the Federal Register
    during June of the calendar year
    following the commencement of the
    proceeding. <>
    The adjusted administrative assessment
    shall take effect January 1 of the year
    following such publication.
    ``(v) Adoption of voluntary agreements.--In
    lieu of reaching their own determination based on
    evaluation of relevant data, the Copyright Royalty
    Judges shall approve and adopt a negotiated
    agreement to establish the amount and terms of the
    administrative assessment that has been agreed to
    by the mechanical licensing collective and the
    digital licensee coordinator (or if none has been
    designated, interested digital music providers and
    significant nonblanket licensees representing more
    than half of the market for uses of musical works
    in covered activities), except that the Copyright
    Royalty Judges shall have the discretion to reject
    any such agreement for good cause shown.
    An <> administrative
    assessment adopted under this clause shall apply
    to all digital music providers and significant
    nonblanket licensees engaged in covered activities
    during the period the administrative assessment is
    in effect.
    ``(vi) Continuing authority to amend.--
    <> The
    Copyright Royalty Judges shall retain continuing
    authority to amend a determination of an
    administrative assessment to correct technical or
    clerical errors, or modify the terms of
    implementation, for good cause,

    [[Page 3711]]

    with any such amendment to be published in the
    Federal Register.
    ``(vii) <>  Appeal of
    administrative assessment.--The
    determination <>  of an administrative assessment by
    the Copyright Royalty Judges shall be appealable,
    not later than 30 calendar days after publication
    in the Federal Register, to the Court of Appeals
    for the District of Columbia Circuit by any party
    that fully participated in the proceeding. The
    administrative assessment as established by the
    Copyright Royalty Judges shall remain in effect
    pending the final outcome of any such appeal, and
    the mechanical licensing collective, digital
    licensee coordinator, digital music providers, and
    significant nonblanket licensees shall implement
    appropriate financial or other measures not later
    than 90 days after any modification of the
    assessment to reflect and account for such
    outcome.
    ``(viii) Regulations.--The Copyright Royalty
    Judges may adopt regulations to govern the conduct
    of proceedings under this paragraph.
    ``(8) Establishment of rates and terms under blanket
    license.--
    ``(A) Restrictions on ratesetting participation.--
    Neither the mechanical licensing collective nor the
    digital licensee coordinator shall be a party to a
    proceeding described in subsection (c)(1)(E), except
    that the mechanical licensing collective or the digital
    licensee coordinator may gather and provide financial
    and other information for the use of a party to such a
    proceeding and comply with requests for information as
    required under applicable statutory and regulatory
    provisions and rulings of the Copyright Royalty Judges.
    ``(B) Application of late fees.--In any proceeding
    described in subparagraph (A) in which the Copyright
    Royalty Judges establish a late fee for late payment of
    royalties for uses of musical works under this section,
    such fee shall apply to covered activities under blanket
    licenses, as follows:
    ``(i) Late fees for past due royalty payments
    shall accrue from the due date for payment until
    payment is received by the mechanical licensing
    collective.
    ``(ii) The availability of late fees shall in
    no way prevent a copyright owner or the mechanical
    licensing collective from asserting any other
    rights or remedies to which such copyright owner
    or the mechanical licensing collective may be
    entitled under this title.
    ``(C) Interim rate agreements in general.--For any
    covered activity for which no rate or terms have been
    established by the Copyright Royalty Judges, the
    mechanical licensing collective and any digital music
    provider may agree to an interim rate and terms for such
    activity under the blanket license, and any such rate
    and terms--
    ``(i) shall be treated as nonprecedential and
    not cited or relied upon in any ratesetting
    proceeding before the Copyright Royalty Judges or
    any other tribunal; and

    [[Page 3712]]

    ``(ii) shall automatically expire upon the
    establishment of a rate and terms for such covered
    activity by the Copyright Royalty Judges, under
    subsection (c)(1)(E).
    ``(D) Adjustments for interim rates.--The rate and
    terms established by the Copyright Royalty Judges for a
    covered activity to which an interim rate and terms have
    been agreed under subparagraph (C) shall supersede the
    interim rate and terms and apply retroactively to the
    inception of the activity under the blanket
    license. <>  In such case, not later
    than 90 days after the effective date of the rate and
    terms established by the Copyright Royalty Judges--
    ``(i) if the rate established by the Copyright
    Royalty Judges exceeds the interim rate, the
    digital music provider shall pay to the mechanical
    licensing collective the amount of any
    underpayment of royalties due; or
    ``(ii) if the interim rate exceeds the rate
    established by the Copyright Royalty Judges, the
    mechanical licensing collective shall credit the
    account of the digital music provider for the
    amount of any overpayment of royalties due.
    ``(9) Transition to blanket licenses.--
    ``(A) Substitution of blanket license.--On the
    license availability date, a blanket license shall,
    without any interruption in license authority enjoyed by
    such digital music provider, be automatically
    substituted for and supersede any existing compulsory
    license previously obtained under this section by the
    digital music provider from a copyright owner to engage
    in 1 or more covered activities with respect to a
    musical work, except that such substitution shall not
    apply to any authority obtained from a record company
    pursuant to a compulsory license to make and distribute
    permanent downloads unless and until such record company
    terminates such authority in writing to take effect at
    the end of a monthly reporting period, with a copy to
    the mechanical licensing collective.
    ``(B) Expiration of existing licenses.--Except to
    the extent provided in subparagraph (A), on and after
    the license availability date, licenses other than
    individual download licenses obtained under this section
    for covered activities prior to the license availability
    date shall no longer continue in effect.
    ``(C) Treatment of voluntary licenses.--A voluntary
    license for a covered activity in effect on the license
    availability date will remain in effect unless and until
    the voluntary license expires according to the terms of
    the voluntary license, or the parties agree to amend or
    terminate the voluntary license. In a case where a
    voluntary license for a covered activity entered into
    before the license availability date incorporates the
    terms of this section by reference, the terms so
    incorporated (but not the rates) shall be those in
    effect immediately prior to the license availability
    date, and those terms shall continue

    [[Page 3713]]

    to apply unless and until such voluntary license is
    terminated or amended, or the parties enter into a new
    voluntary license.
    ``(D) Further acceptance of notices for covered
    activities by copyright office.--On and after the
    enactment date--
    ``(i) the Copyright Office shall no longer
    accept notices of intention with respect to
    covered activities; and
    ``(ii) notices of intention filed before the
    enactment date will no longer be effective or
    provide license authority with respect to covered
    activities, except that, before the license
    availability date, there shall be no liability
    under section 501 for the reproduction or
    distribution of a musical work (or share thereof)
    in covered activities if a valid notice of
    intention was filed for such work (or share)
    before the enactment date.
    ``(10) Prior unlicensed uses.--
    ``(A) Limitation on liability in general.--A
    copyright owner that commences an action under section
    501 on or after January 1, 2018, against a digital music
    provider for the infringement of the exclusive rights
    provided by paragraph (1) or (3) of section 106 arising
    from the unauthorized reproduction or distribution of a
    musical work by such digital music provider in the
    course of engaging in covered activities prior to the
    license availability date, shall, as the copyright
    owner's sole and exclusive remedy against the digital
    music provider, be eligible to recover the royalty
    prescribed under subsection (c)(1)(C) and chapter 8,
    from the digital music provider, provided that such
    digital music provider can demonstrate compliance with
    the requirements of subparagraph (B), as applicable. In
    all other cases the limitation on liability under this
    subparagraph shall not apply.
    ``(B) <>
    Requirements for limitation on liability.--The following
    requirements shall apply on the enactment date and
    through the end of the period that expires 90 days after
    the license availability date to digital music providers
    seeking to avail themselves of the limitation on
    liability described in subparagraph (A):
    ``(i) <>  Not later than 30
    calendar days after first making a particular
    sound recording of a musical work available
    through its service via one or more covered
    activities, or 30 calendar days after the
    enactment date, whichever occurs later, a digital
    music provider shall engage in good-faith,
    commercially reasonable efforts to identify and
    locate each copyright owner of such musical work
    (or share thereof). Such required matching efforts
    shall include the following:
    ``(I) Good-faith, commercially
    reasonable efforts to obtain from the
    owner of the corresponding sound
    recording made available through the
    digital music provider's service the
    following information:
    ``(aa) Sound recording name,
    featured artist, sound recording
    copyright owner, producer,
    international standard recording
    code,

    [[Page 3714]]

    and other information commonly
    used in the industry to identify
    sound recordings and match them
    to the musical works they
    embody.
    ``(bb) Any available musical
    work ownership information,
    including each songwriter and
    publisher name, percentage
    ownership share, and
    international standard musical
    work code.
    ``(II) Employment of 1 or more bulk
    electronic matching processes that are
    available to the digital music provider
    through a third-party vendor on
    commercially reasonable terms, except
    that a digital music provider may rely
    on its own bulk electronic matching
    process if that process has capabilities
    comparable to or better than those
    available from a third-party vendor on
    commercially reasonable terms.
    ``(ii) The required matching efforts shall be
    repeated by the digital music provider not less
    than once per month for so long as the copyright
    owner remains unidentified or has not been
    located.
    ``(iii) <>  If the required matching
    efforts are successful in identifying and locating
    a copyright owner of a musical work (or share
    thereof) by the end of the calendar month in which
    the digital music provider first makes use of the
    work, the digital music provider shall provide
    statements of account and pay royalties to such
    copyright owner in accordance with this section
    and applicable regulations.
    ``(iv) If the copyright owner is not
    identified or located by the end of the calendar
    month in which the digital music provider first
    makes use of the work, the digital music provider
    shall accrue and hold royalties calculated under
    the applicable statutory rate in accordance with
    usage of the work, from initial use of the work
    until the accrued royalties can be paid to the
    copyright owner or are required to be transferred
    to the mechanical licensing collective, as
    follows:
    ``(I) Accrued royalties shall be
    maintained by the digital music provider
    in accordance with generally accepted
    accounting principles.
    ``(II) <>
    If a copyright owner of an unmatched
    musical work (or share thereof) is
    identified and located by or to the
    digital music provider before the
    license availability date, the digital
    music provider shall--
    ``(aa) <>
    not later than 45 calendar days
    after the end of the calendar
    month during which the copyright
    owner was identified and
    located, pay the copyright owner
    all accrued royalties, such
    payment to be accompanied by a
    cumulative statement of account
    that includes all of the
    information that would have been
    provided to the copyright owner
    had the digital music provider
    been providing monthly
    statements of account to the
    copyright owner

    [[Page 3715]]

    from initial use of the work in
    accordance with this section and
    applicable regulations,
    including the requisite
    certification under subsection
    (c)(2)(I);
    ``(bb) beginning with the
    accounting period following the
    calendar month in which the
    copyright owner was identified
    and located, and for all other
    accounting periods prior to the
    license availability date,
    provide monthly statements of
    account and pay royalties to the
    copyright owner as required
    under this section and
    applicable regulations; and
    ``(cc) beginning with the
    monthly royalty reporting period
    commencing on the license
    availability date, report usage
    and pay royalties for such
    musical work (or share thereof)
    for such reporting period and
    reporting periods thereafter to
    the mechanical licensing
    collective, as required under
    this subsection and applicable
    regulations.
    ``(III) If a copyright owner of an
    unmatched musical work (or share
    thereof) is not identified and located
    by the license availability date, the
    digital music provider shall--

    ``( <> aa) not later than 45
    calendar days after the license
    availability date, transfer all
    accrued royalties to the
    mechanical licensing collective,
    such payment to be accompanied
    by a cumulative statement of
    account that includes all of the
    information that would have been
    provided to the copyright owner
    had the digital music provider
    been serving monthly statements
    of account on the copyright
    owner from initial use of the
    work in accordance with this
    section and applicable
    regulations, including the
    requisite certification under
    subsection (c)(2)(I), and
    accompanied by an additional
    certification by a duly
    authorized officer of the
    digital music provider that the
    digital music provider has
    fulfilled the requirements of
    clauses (i) and (ii) of
    subparagraph (B) but has not
    been successful in locating or
    identifying the copyright owner;
    and
    ``(bb) <>  beginning with the
    monthly royalty reporting period
    commencing on the license
    availability date, report usage
    and pay royalties for such
    musical work (or share thereof)
    for such period and reporting
    periods thereafter to the
    mechanical licensing collective,
    as required under this
    subsection and applicable
    regulations.
    ``(v) A digital music provider that complies
    with the requirements of this subparagraph with
    respect to unmatched musical works (or shares of
    works) shall not be liable for or accrue late fees
    for late payments of royalties for such works
    until such time as the digital music provider is
    required to begin paying

    [[Page 3716]]

    monthly royalties to the copyright owner or the
    mechanical licensing collective, as applicable.
    ``(C) Adjusted statute of
    limitations <> .--Notwithstanding
    anything to the contrary in section 507(b), with respect
    to any claim of infringement of the exclusive rights
    provided by paragraphs (1) and (3) of section 106
    against a digital music provider arising from the
    unauthorized reproduction or distribution of a musical
    work by such digital music provider in the course of
    engaging in covered activities that accrued not more
    than 3 years prior to the license availability date,
    such action may be commenced not later than the later
    of--
    ``(i) 3 years after the date on which the
    claim accrued; or
    ``(ii) 2 years after the license availability
    date.
    ``(D) Other rights and remedies preserved.--Except
    as expressly provided in this paragraph, nothing in this
    paragraph shall be construed to alter, limit, or negate
    any right or remedy of a copyright owner with respect to
    unauthorized use of a musical work.
    ``(11) Legal protections for licensing activities.--
    ``(A) <>  Exemption for
    compulsory license activities.--The antitrust exemption
    described in subsection (c)(1)(D) shall apply to
    negotiations and agreements between and among copyright
    owners and persons entitled to obtain a compulsory
    license for covered activities, and common agents acting
    on behalf of such copyright owners or persons, including
    with respect to the administrative assessment
    established under this subsection.
    ``(B) Limitation on common agent exemption.--
    Notwithstanding the antitrust exemption provided in
    subsection (c)(1)(D) and subparagraph (A) of this
    paragraph (except for the administrative assessment
    referenced in such subparagraph (A) and except as
    provided in paragraph (8)(C)), neither the mechanical
    licensing collective nor the digital licensee
    coordinator shall serve as a common agent with respect
    to the establishment of royalty rates or terms under
    this section.
    ``(C) Antitrust exemption for administrative
    activities.--Notwithstanding any provision of the
    antitrust laws, copyright owners and persons entitled to
    obtain a compulsory license under this section may
    designate the mechanical licensing collective to
    administer voluntary licenses for the reproduction or
    distribution of musical works in covered activities on
    behalf of such copyright owners and persons, subject to
    the following conditions:
    ``(i) Each copyright owner shall establish the
    royalty rates and material terms of any such
    voluntary license individually and not in
    agreement, combination, or concert with any other
    copyright owner.
    ``(ii) Each person entitled to obtain a
    compulsory license under this section shall
    establish the royalty rates and material terms of
    any such voluntary license individually and not in
    agreement, combination, or concert with any other
    digital music provider.
    ``(iii) The mechanical licensing collective
    shall maintain the confidentiality of the
    voluntary licenses

    [[Page 3717]]

    in accordance with the confidentiality provisions
    prescribed by the Register of Copyrights under
    paragraph (12)(C).
    ``(D) Liability for good-faith activities.--The
    mechanical licensing collective shall not be liable to
    any person or entity based on a claim arising from its
    good-faith administration of policies and procedures
    adopted and implemented to carry out the
    responsibilities described in subparagraphs (J) and (K)
    of paragraph (3), except to the extent of correcting an
    underpayment or overpayment of royalties as provided in
    paragraph (3)(L)(i)(VI), but the collective may
    participate in a legal proceeding as a stakeholder party
    if the collective is holding funds that are the subject
    of a dispute between copyright
    owners. <>  For purposes of this
    subparagraph, the term `good-faith administration' means
    administration in a manner that is not grossly
    negligent.
    ``(E) Preemption of state property laws.--The
    holding and distribution of funds by the mechanical
    licensing collective in accordance with this subsection
    shall supersede and preempt any State law (including
    common law) concerning escheatment or abandoned
    property, or any analogous provision, that might
    otherwise apply.
    ``(F) Rule of construction.--Except as expressly
    provided in this subsection, nothing in this subsection
    shall negate or limit the ability of any person to
    pursue an action in Federal court against the mechanical
    licensing collective or any other person based upon a
    claim arising under this title or other applicable law.
    ``(12) Regulations.--
    ``(A) Adoption by register of copyrights and
    copyright royalty judges.--The Register of Copyrights
    may conduct such proceedings and adopt such regulations
    as may be necessary or appropriate to effectuate the
    provisions of this subsection, except for regulations
    concerning proceedings before the Copyright Royalty
    Judges to establish the administrative assessment, which
    shall be adopted by the Copyright Royalty Judges.
    ``(B) Judicial review of regulations.--Except as
    provided in paragraph (7)(D)(vii), regulations adopted
    under this subsection shall be subject to judicial
    review pursuant to chapter 7 of title 5.
    ``(C) Protection of confidential information.--The
    Register of Copyrights shall adopt regulations to
    provide for the appropriate procedures to ensure that
    confidential, private, proprietary, or privileged
    information contained in the records of the mechanical
    licensing collective and digital licensee coordinator is
    not improperly disclosed or used, including through any
    disclosure or use by the board of directors or personnel
    of either entity, and specifically including the
    unclaimed royalties oversight committee and the dispute
    resolution committee of the mechanical licensing
    collective.
    ``(13) Savings clauses.--
    ``(A) <>  Limitation on
    activities and rights covered.--This subsection applies
    solely to uses of musical works subject to licensing
    under this section. The blanket license

    [[Page 3718]]

    shall not be construed to extend or apply to activities
    other than covered activities or to rights other than
    the exclusive rights of reproduction and distribution
    licensed under this section, or serve or act as the
    basis to extend or expand the compulsory license under
    this section to activities and rights not covered by
    this section on the day before the enactment date.
    ``(B) Rights of public performance not affected.--
    The rights, protections, and immunities granted under
    this subsection, the data concerning musical works
    collected and made available under this subsection, and
    the definitions under subsection (e) shall not extend
    to, limit, or otherwise affect any right of public
    performance in a musical work.''; and
    (5) by adding at the end the following:

    ``(e) Definitions.--As used in this section:
    ``(1) Accrued interest.--The term `accrued interest' means
    interest accrued on accrued royalties, as described in
    subsection (d)(3)(H)(ii).
    ``(2) Accrued royalties.--The term `accrued royalties' means
    royalties accrued for the reproduction or distribution of a
    musical work (or share thereof) in a covered activity,
    calculated in accordance with the applicable royalty rate under
    this section.
    ``(3) Administrative assessment.--The term `administrative
    assessment' means the fee established pursuant to subsection
    (d)(7)(D).
    ``(4) Audit.--The term `audit' means a royalty compliance
    examination to verify the accuracy of royalty payments, or the
    conduct of such an examination, as applicable.
    ``(5) Blanket license.--The term `blanket license' means a
    compulsory license described in subsection (d)(1)(A) to engage
    in covered activities.
    ``(6) Collective total costs.--The term `collective total
    costs'--
    ``(A) means the total costs of establishing,
    maintaining, and operating the mechanical licensing
    collective to fulfill its statutory functions,
    including--
    ``(i) startup costs;
    ``(ii) financing, legal, audit, and insurance
    costs;
    ``(iii) investments in information technology,
    infrastructure, and other long-term resources;
    ``(iv) outside vendor costs;
    ``(v) costs of licensing, royalty
    administration, and enforcement of rights;
    ``(vi) costs of bad debt; and
    ``(vii) costs of automated and manual efforts
    to identify and locate copyright owners of musical
    works (and shares of such musical works) and match
    sound recordings to the musical works the sound
    recordings embody; and
    ``(B) does not include any added costs incurred by
    the mechanical licensing collective to provide services
    under voluntary licenses.
    ``(7) Covered activity.--The term `covered activity' means
    the activity of making a digital phonorecord delivery of a
    musical work, including in the form of a permanent download,

    [[Page 3719]]

    limited download, or interactive stream, where such activity
    qualifies for a compulsory license under this section.
    ``(8) Digital music provider.--The term `digital music
    provider' means a person (or persons operating under the
    authority of that person) that, with respect to a service
    engaged in covered activities--
    ``(A) has a direct contractual, subscription, or
    other economic relationship with end users of the
    service, or, if no such relationship with end users
    exists, exercises direct control over the provision of
    the service to end users;
    ``(B) is able to fully report on any revenues and
    consideration generated by the service; and
    ``(C) is able to fully report on usage of sound
    recordings of musical works by the service (or procure
    such reporting).
    ``(9) Digital licensee coordinator.--The term `digital
    licensee coordinator' means the entity most recently designated
    pursuant to subsection (d)(5).
    ``(10) Digital phonorecord delivery.--The term `digital
    phonorecord delivery' means each individual delivery of a
    phonorecord by digital transmission of a sound recording that
    results in a specifically identifiable reproduction by or for
    any transmission recipient of a phonorecord of that sound
    recording, regardless of whether the digital transmission is
    also a public performance of the sound recording or any musical
    work embodied therein, and includes a permanent download, a
    limited download, or an interactive stream. A digital
    phonorecord delivery does not result from a real-time,
    noninteractive subscription transmission of a sound recording
    where no reproduction of the sound recording or the musical work
    embodied therein is made from the inception of the transmission
    through to its receipt by the transmission recipient in order to
    make the sound recording audible. A digital phonorecord delivery
    does not include the digital transmission of sounds accompanying
    a motion picture or other audiovisual work as defined in section
    101.
    ``(11) Enactment date.--The term `enactment date' means the
    date of the enactment of the Musical Works Modernization Act.
    ``(12) Individual download license.--The term `individual
    download license' means a compulsory license obtained by a
    record company to make and distribute, or authorize the making
    and distribution of, permanent downloads embodying a specific
    individual musical work.
    ``(13) Interactive stream.--The term `interactive stream'
    means a digital transmission of a sound recording of a musical
    work in the form of a stream, where the performance of the sound
    recording by means of such transmission is not exempt under
    section 114(d)(1) and does not in itself, or as a result of a
    program in which it is included, qualify for statutory licensing
    under section 114(d)(2). An interactive stream is a digital
    phonorecord delivery.
    ``(14) Interested.--The term `interested', as applied to a
    party seeking to participate in a proceeding under subsection
    (d)(7)(D), is a party as to which the Copyright Royalty Judges
    have not determined that the party lacks a significant interest
    in such proceeding.

    [[Page 3720]]

    ``(15) License availability date.--The term `license
    availability date' means January 1 following the expiration of
    the 2-year period beginning on the enactment date.
    ``(16) Limited download.--The term `limited download' means
    a digital transmission of a sound recording of a musical work in
    the form of a download, where such sound recording is accessible
    for listening only for a limited amount of time or specified
    number of times.
    ``(17) Matched.--The term `matched', as applied to a musical
    work (or share thereof), means that the copyright owner of such
    work (or share thereof) has been identified and located.
    ``(18) Mechanical licensing collective.--The term
    `mechanical licensing collective' means the entity most recently
    designated as such by the Register of Copyrights under
    subsection (d)(3).
    ``(19) Mechanical licensing collective budget.--The term
    `mechanical licensing collective budget' means a statement of
    the financial position of the mechanical licensing collective
    for a fiscal year or quarter thereof based on estimates of
    expenditures during the period and proposals for financing those
    expenditures, including a calculation of the collective total
    costs.
    ``(20) Musical works database.--The term `musical works
    database' means the database described in subsection (d)(3)(E).
    ``(21) Nonprofit.--The term `nonprofit' means a nonprofit
    created or organized in a State.
    ``(22) Notice of license.--The term `notice of license'
    means a notice from a digital music provider provided under
    subsection (d)(2)(A) for purposes of obtaining a blanket
    license.
    ``(23) Notice of nonblanket activity.--The term `notice of
    nonblanket activity' means a notice from a significant
    nonblanket licensee provided under subsection (d)(6)(A) for
    purposes of notifying the mechanical licensing collective that
    the licensee has been engaging in covered activities.
    ``(24) Permanent download.--The term `permanent download'
    means a digital transmission of a sound recording of a musical
    work in the form of a download, where such sound recording is
    accessible for listening without restriction as to the amount of
    time or number of times it may be accessed.
    ``(25) Qualified auditor.--The term `qualified auditor'
    means an independent, certified public accountant with
    experience performing music royalty audits.
    ``(26) Record company.--The term `record company' means an
    entity that invests in, produces, and markets sound recordings
    of musical works, and distributes such sound recordings for
    remuneration through multiple sales channels, including a
    corporate affiliate of such an entity engaged in distribution of
    sound recordings.
    ``(27) Report of usage.--The term `report of usage' means a
    report reflecting an entity's usage of musical works in covered
    activities described in subsection (d)(4)(A).
    ``(28) Required matching efforts.--The term `required
    matching efforts' means efforts to identify and locate copyright
    owners of musical works as described in subsection
    (d)(10)(B)(i).
    ``(29) Service.--The term `service', as used in relation to
    covered activities, means any site, facility, or offering by or

    [[Page 3721]]

    through which sound recordings of musical works are digitally
    transmitted to members of the public.
    ``(30) Share.--The term `share', as applied to a musical
    work, means a fractional ownership interest in such work.
    ``(31) Significant nonblanket licensee.--The term
    `significant nonblanket licensee'--
    ``(A) means an entity, including a group of entities
    under common ownership or control that, acting under the
    authority of one or more voluntary licenses or
    individual download licenses, offers a service engaged
    in covered activities, and such entity or group of
    entities--
    ``(i) is not currently operating under a
    blanket license and is not obligated to provide
    reports of usage reflecting covered activities
    under subsection (d)(4)(A);
    ``(ii) has a direct contractual, subscription,
    or other economic relationship with end users of
    the service or, if no such relationship with end
    users exists, exercises direct control over the
    provision of the service to end users; and
    ``(iii) either--
    ``(I) on any day in a calendar
    month, makes more than 5,000 different
    sound recordings of musical works
    available through such service; or
    ``(II) derives revenue or other
    consideration in connection with such
    covered activities greater than $50,000
    in a calendar month, or total revenue or
    other consideration greater than
    $500,000 during the preceding 12
    calendar months; and
    ``(B) does not include--
    ``(i) an entity whose covered activity
    consists solely of free-to-the-user streams of
    segments of sound recordings of musical works that
    do not exceed 90 seconds in length, are offered
    only to facilitate a licensed use of musical works
    that is not a covered activity, and have no
    revenue directly attributable to such streams
    constituting the covered activity; or
    ``(ii) a `public broadcasting entity' as
    defined in section 118(f).
    ``(32) Songwriter.--The term `songwriter' means the author
    of all or part of a musical work, including a composer or
    lyricist.
    ``(33) State.--The term `State' means each State of the
    United States, the District of Columbia, and each territory or
    possession of the United States.
    ``(34) Unclaimed accrued royalties.--The term `unclaimed
    accrued royalties' means accrued royalties eligible for
    distribution under subsection (d)(3)(J).
    ``(35) Unmatched.--The term `unmatched', as applied to a
    musical work (or share thereof), means that the copyright owner
    of such work (or share thereof) has not been identified or
    located.
    ``(36) Voluntary license.--The term `voluntary license'
    means a license for use of a musical work (or share thereof)
    other than a compulsory license obtained under this section.''.

    (b) Technical and Conforming Amendments to Section 801.--Section
    801(b) of title 17, United States Code, is amended--
    (1) by redesignating paragraph (8) as paragraph (9); and

    [[Page 3722]]

    (2) by inserting after paragraph (7) the following:
    ``(8) To determine the administrative assessment to be paid
    by digital music providers under section 115(d). The provisions
    of section 115(d) shall apply to the conduct of proceedings by
    the Copyright Royalty Judges under section 115(d) and not the
    procedures described in this section, or section 803, 804, or
    805.''.

    (c) Effective Date of Amended Rate Setting Standard. <> --The amendments made by subsection (a)(3) and section
    103(g)(2) shall apply to any proceeding before the Copyright Royalty
    Judges that is commenced on or after the date of the enactment of this
    Act.

    (d) Technical and Conforming Amendments to Title 37, Part 385 of the
    Code of Federal Regulations.-- <> Not
    later than 270 days after the date of enactment of this Act, the
    Copyright Royalty Judges shall amend the regulations for section 115 of
    title 17, United States Code, in part 385 of title 37, Code of Federal
    Regulations, to conform the definitions used in such part to the
    definitions of the same terms described in section 115(e) of title 17,
    United States Code, as added by subsection (a). In so doing, the
    Copyright Royalty Judges shall make adjustments to the language of the
    regulations as necessary to achieve the same purpose and effect as the
    original regulations with respect to the rates and terms previously
    adopted by the Copyright Royalty Judges.

    (e) Copyright Office Activities.-- <> The
    Register of Copyrights shall engage in public outreach and educational
    activities--
    (1) regarding the amendments made by subsection (a) to
    section 115 of title 17, United States Code, including the
    responsibilities of the mechanical licensing collective
    designated under those amendments;
    (2) which shall include educating songwriters and other
    interested parties with respect to the process established under
    section 115(d)(3)(C)(i)(V) of title 17, United States Code, as
    added by subsection (a), by which--
    (A) a copyright owner may claim ownership of musical
    works (and shares of such works); and
    (B) royalties for works for which the owner is not
    identified or located shall be equitably distributed to
    known copyright owners; and
    (3) <>  which the Register shall make
    available online.

    (f) <>  Unclaimed Royalties Study and
    Recommendations.--
    (1) <>  In general.--Not later
    than 2 years after the date on which the Register of Copyrights
    initially designates the mechanical licensing collective under
    section 115(d)(3)(B)(i) of title 17, United States Code, as
    added by subsection (a)(4), the Register, in consultation with
    the Comptroller General of the United States, and after
    soliciting and reviewing comments and relevant information from
    music industry participants and other interested parties, shall
    submit to the Committee on the Judiciary of the Senate and the
    Committee on the Judiciary of the House of Representatives a
    report that recommends best practices that the collective may
    implement in order to--
    (A) identify and locate musical work copyright
    owners with unclaimed accrued royalties held by the
    collective;
    (B) encourage musical work copyright owners to claim
    the royalties of those owners; and
    (C) reduce the incidence of unclaimed royalties.

    [[Page 3723]]

    (2) Consideration of recommendations.--The mechanical
    licensing collective shall carefully consider, and give
    substantial weight to, the recommendations submitted by the
    Register of Copyrights under paragraph (1) when establishing the
    procedures of the collective with respect to the--
    (A) identification and location of musical work
    copyright owners; and
    (B) distribution of unclaimed royalties.
    SEC. 103. AMENDMENTS TO SECTION 114.

    (a) Uniform Rate Standard.--Section 114(f) of title 17, United
    States Code, is amended--
    (1) by striking paragraphs (1) and (2) and inserting the
    following:
    ``(1)(A) <>  Proceedings under chapter 8
    shall determine reasonable rates and terms of royalty payments
    for transmissions subject to statutory licensing under
    subsection (d)(2) during the 5-year period beginning on January
    1 of the second year following the year in which the proceedings
    are to be commenced pursuant to subparagraph (A) or (B) of
    section 804(b)(3), as the case may be, or such other period as
    the parties may agree. The parties to each proceeding shall bear
    their own costs.
    ``(B) The schedule of reasonable rates and terms determined
    by the Copyright Royalty Judges shall, subject to paragraph (2),
    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 period as the parties may agree. Such rates and terms
    shall distinguish among the different types of services then in
    operation and shall include a minimum fee for each such type of
    service, such differences to be based on criteria including 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. The 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 Royalty Judges--
    ``(i) shall base their 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 the copyright
    owner's 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; and
    ``(ii) may consider the rates and terms for
    comparable types of audio transmission services and
    comparable circumstances under voluntary license
    agreements.

    [[Page 3724]]

    ``(C) The procedures under subparagraphs (A) and (B) shall
    also be initiated pursuant to a petition filed by any sound
    recording copyright owner or any transmitting entity indicating
    that a new type of 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
    eligible nonsubscription services and new subscription services,
    or preexisting subscription services and preexisting satellite
    digital audio radio 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.''; and
    (2) by redesignating paragraphs (3), (4), and (5) as
    paragraphs (2), (3), and (4), respectively.

    (b) Repeal.--Subsection (i) of section 114 of title 17, United
    States Code, is repealed.
    (c) <>  Use in Musical Work Proceedings.--
    (1) In general.--License fees payable for the public
    performance of sound recordings under section 106(6) of title
    17, United States Code, shall not be taken into account in any
    administrative, judicial, or other governmental proceeding to
    set or adjust the royalties payable to musical work copyright
    owners for the public performance of their works except in such
    a proceeding to set or adjust royalties for the public
    performance of musical works by means of a digital audio
    transmission other than a transmission by a broadcaster, and may
    be taken into account only with respect to such digital audio
    transmission.
    (2) Definitions.--In this subsection:
    (A) Transmission by a broadcaster.--The term
    ``transmission by a broadcaster'' means a
    nonsubscription digital transmission made by a
    terrestrial broadcast station on its own behalf, or on
    the behalf of a terrestrial broadcast station under
    common ownership or control, that is not part of an
    interactive service or a music-intensive service
    comprising the transmission of sound recordings
    customized for or customizable by recipients or service
    users.
    (B) Terrestrial broadcast station.--The term
    ``terrestrial broadcast station'' means a terrestrial,
    over-the-air radio or television broadcast station,
    including an FM translator (as defined in section
    74.1201 of title 47, Code of Federal Regulations, and
    licensed as such by the Federal Communications
    Commission) whose primary business activities are
    comprised of, and whose revenues are generated through,
    terrestrial, over-the-air broadcast transmissions, or
    the simultaneous or substantially-simultaneous digital
    retransmission by the terrestrial, over-the-air
    broadcast station of its over-the-air broadcast
    transmissions.

    (d) Rule of Construction.-- <> Subsection
    (c)(2) shall not be given effect in interpreting provisions of title 17,
    United States Code.

    (e) Use in Sound Recording Proceedings.-- <> The repeal of section 114(i) of title 17, United States Code, by
    subsection (b) shall not be taken into account in any proceeding to set
    or adjust

    [[Page 3725]]

    the rates and fees payable for the use of sound recordings under section
    112(e) or 114(f) of such title that is pending on, or commenced on or
    after, the date of enactment of this Act.

    (f) Decisions and Precedents Not Affected.-- <> The repeal of section 114(i) of title 17, United States Code, by
    subsection (b) shall not have any effect upon the decisions, or the
    precedents established or relied upon, in any proceeding to set or
    adjust the rates and fees payable for the use of sound recordings under
    section 112(e) or 114(f) of such title before the date of enactment of
    this Act.

    (g) Technical and Conforming Amendments.--
    (1) Section 114.--Section 114(f) of title 17, United States
    Code, as amended by subsection (a), is further amended in
    paragraph (4)(C), as so redesignated, in the first sentence, by
    striking ``under paragraph (4)'' and inserting ``under paragraph
    (3)''.
    (2) Section 801.--Section 801(b) of title 17, United States
    Code, is amended--
    (A) in paragraph (1), by striking ``The rates
    applicable'' and all that follows though ``prevailing
    industry practices.''; and
    (B) in paragraph (7)(B), by striking ``114(f)(3)''
    and inserting ``114(f)(2)''.
    (3) Section 803.--Section 803(c)(2)(E)(i)(II) of title 17,
    United States Code, is amended--
    (A) by striking ``or 114(f)(2)(C)''; and
    (B) by striking ``114(f)(4)(B)'' and inserting
    ``114(f)(3)(B)''.
    (4) Section 804.--Section 804(b)(3)(C) of title 17, United
    States Code, is amended--
    (A) in clause (i), by striking ``and 114(f)(2)(C)'';
    (B) in clause (iii)(II), by striking
    ``114(f)(4)(B)(ii)'' and inserting ``114(f)(3)(B)(ii)'';
    and
    (C) in clause (iv), by striking ``or 114(f)(2)(C),
    as the case may be''.

    (h) Effective Date of Amended Rate Setting Standard. <> --The amendments made by subsection (a)(1) shall apply to
    any proceeding before the Copyright Royalty Judges that is commenced on
    or after the date of the enactment of this Act.

    (i) Timing of Rate Determinations.--Section 804(b)(3)(B) of title
    17, United States Code, is amended, in the third sentence, by inserting
    the following after ``fifth calendar year'': ``, except that--(i) with
    respect to preexisting subscription services, the terms and rates
    finally determined for the rate period ending on December 31, 2022,
    shall remain in effect through December 31, 2027, and there shall be no
    proceeding to determine terms and rates for preexisting subscription
    services for the period beginning on January 1, 2023, and ending on
    December 31, 2027; and'' ``(ii) with respect to pre-existing satellite
    digital audio radio services, the terms and rates set forth by the
    Copyright Royalty Judges on December 14, 2017, in their initial
    determination for the rate period ending on December 31, 2022, shall be
    in effect through December 31, 2027, without any change based on a
    rehearing under section 803(c)(2) and without the possibility of appeal
    under section 803(d), and there shall be no proceeding to determine
    terms and rates for preexisting satellite digital audio radio services
    for

    [[Page 3726]]

    the period beginning on January 1, 2023, and ending on December 31,
    2027''.
    SEC. 104. RANDOM ASSIGNMENT OF RATE COURT PROCEEDINGS.

    Section 137 of title 28, United States Code, is amended--
    (1) by striking ``The business'' and inserting ``(a) In
    General.--The business''; and
    (2) by adding at the end the following:

    ``(b) Random Assignment of Rate Court Proceedings.--
    ``(1) In general.--
    ``(A) Definition.--In this paragraph, the term
    `performing rights society' has the meaning given the
    term in section 101 of title 17.
    ``(B) Determination of license fee.--Except as
    provided in subparagraph (C), in the case of any
    performing rights society subject to a consent decree,
    any application for the determination of a license fee
    for the public performance of music in accordance with
    the applicable consent decree shall be made in the
    district court with jurisdiction over that consent
    decree and randomly assigned to a judge of that district
    court according to the rules of that court for the
    division of business among district judges, provided
    that any such application shall not be assigned to--
    ``(i) a judge to whom continuing jurisdiction
    over any performing rights society for any
    performing rights society consent decree is
    assigned or has previously been assigned; or
    ``(ii) a judge to whom another proceeding
    concerning an application for the determination of
    a reasonable license fee is assigned at the time
    of the filing of the application.
    ``(C) Exception.--Subparagraph (B) does not apply to
    an application to determine reasonable license fees made
    by individual proprietors under section 513 of title 17.
    ``(2) Rule of construction.--Nothing in paragraph (1) shall
    modify the rights of any party to a consent decree or to a
    proceeding to determine reasonable license fees, to make an
    application for the construction of any provision of the
    applicable consent decree. Such application shall be referred to
    the judge to whom continuing jurisdiction over the applicable
    consent decree is currently assigned. If any such application is
    made in connection with a rate proceeding, such rate proceeding
    shall be stayed until the final determination of the
    construction application. Disputes in connection with a rate
    proceeding about whether a licensee is similarly situated to
    another licensee shall not be subject to referral to the judge
    with continuing jurisdiction over the applicable consent
    decree.''.
    SEC. 105. <>  PERFORMING RIGHTS SOCIETY
    CONSENT DECREES.

    (a) Definition.--In this section, the term ``performing rights
    society'' has the meaning given the term in section 101 of title 17,
    United States Code.
    (b) Notification of Review.--
    (1) In general.-- <> The Department of
    Justice shall provide timely briefings upon request of any
    Member of the Committee on the Judiciary of the Senate and the
    Committee on the Judiciary of the House of Representatives
    regarding the status

    [[Page 3727]]

    of a review in progress of a consent decree between the United
    States and a performing rights society.
    (2) Confidentiality and deliberative process.--In accordance
    with applicable rules relating to confidentiality and agency
    deliberative process, the Department of Justice shall share with
    such Members of Congress detailed and timely information and
    pertinent documents related to the consent decree review.

    (c) Action Before Motion to Terminate.--
    (1) In general.--Before filing with the appropriate district
    court of the United States a motion to terminate a consent
    decree between the United States and a performing rights
    society, including a motion to terminate a consent decree after
    the passage of a specified period of time, the Department of
    Justice shall--
    (A) <>  notify Members of
    Congress and committees of Congress described in
    subsection (b); and
    (B) provide to such Members of Congress and
    committees information regarding the impact of the
    proposed termination on the market for licensing the
    public performance of musical works should the motion be
    granted.
    (2) Notification.--
    (A) In general.--During the notification described
    in paragraph (1), and not later than a reasonable time
    before the date on which the Department of Justice files
    with the appropriate district court of the United States
    a motion to terminate a consent decree between the
    United States and a performing rights society, the
    Department of Justice should submit to the chairmen and
    ranking members of the Committee on the Judiciary of the
    Senate and the Committee on the Judiciary of the House
    of Representatives a written notification of the intent
    of the Department of Justice to file the motion.
    (B) Contents.-- <> The notification
    provided in subparagraph (A) shall include a written
    report to the chairmen and ranking members of the
    Committee on the Judiciary of Senate and the Committee
    on the Judiciary of the House of Representatives setting
    forth--
    (i) an explanation of the process used by the
    Department of Justice to review the consent
    decree;
    (ii) <>  a summary of the
    public comments received by the Department of
    Justice during the review by the Department; and
    (iii) other information provided to Congress
    under paragraph (1)(B).

    (d) Scope.--This section applies only to a consent decree between
    the United States and a performing rights society.
    SEC. 106. <>  EFFECTIVE DATE.

    This title, and the amendments made by this title, shall take effect
    on the date of enactment of this Act.

    [[Page 3728]]

    TITLE II-- <> CLASSICS
    PROTECTION AND ACCESS
    SEC. 201. <>  SHORT TITLE.

    This title may be cited as the ``Classics Protection and Access
    Act''.
    SEC. 202. UNAUTHORIZED USE OF PRE-1972 SOUND RECORDINGS.

    (a) Preemption of State Law Rights; Protection for Unauthorized
    Use.--Title 17, United States Code, is amended--
    (1) in section 301, by striking subsection (c) and inserting
    the following:

    ``(c) Notwithstanding the provisions of section 303, and in
    accordance with chapter 14, no sound recording fixed before February 15,
    1972, shall be subject to copyright under this
    title. <>  With respect to sound recordings fixed
    before February 15, 1972, the preemptive provisions of subsection (a)
    shall apply to activities that are commenced on and after the date of
    enactment of the Classics Protection and Access Act. <>  Nothing in this subsection may be construed to affirm or
    negate the preemption of rights and remedies pertaining to any cause of
    action arising from the nonsubscription broadcast transmission of sound
    recordings under the common law or statutes of any State for activities
    that do not qualify as covered activities under chapter 14 undertaken
    during the period between the date of enactment of the Classics
    Protection and Access Act and the date on which the term of prohibition
    on unauthorized acts under section 1401(a)(2) expires for such sound
    recordings. <>  Any potential preemption of rights
    and remedies related to such activities undertaken during that period
    shall apply in all respects as it did the day before the date of
    enactment of the Classics Protection and Access Act.''; and
    (2) by adding at the end the following:

    ``CHAPTER 14-- <> UNAUTHORIZED USE OF PRE-1972
    SOUND RECORDINGS

    ``Sec.
    ``1401. Unauthorized use of pre-1972 sound recordings.

    ``Sec. 1401. <> Unauthorized use of pre-1972
    sound recordings

    ``(a) In General.--
    ``(1) Unauthorized acts.--Anyone who, on or before the last
    day of the applicable transition period under paragraph (2), and
    without the consent of the rights owner, engages in covered
    activity with respect to a sound recording fixed before February
    15, 1972, shall be subject to the remedies provided in sections
    502 through 505 and 1203 to the same extent as an infringer of
    copyright or a person that engages in unauthorized activity
    under chapter 12.
    ``(2) Term of prohibition.--
    ``(A) In general.--The prohibition under paragraph
    (1)--
    ``(i) subject to clause (ii), shall apply to a
    sound recording described in that paragraph--
    ``(I) through December 31 of the
    year that is 95 years after the year of
    first publication; and

    [[Page 3729]]

    ``(II) for a further transition
    period as prescribed under subparagraph
    (B) of this paragraph; and
    ``(ii) shall not apply to any sound recording
    after February 15, 2067.
    ``(B) Transition periods.--
    ``(i) Pre-1923 recordings.--In the case of a
    sound recording first published before January 1,
    1923, the transition period described in
    subparagraph (A)(i)(II) shall end on December 31
    of the year that is 3 years after the date of
    enactment of this section.
    ``(ii) 1923-1946 recordings.--In the case of a
    sound recording first published during the period
    beginning on January 1, 1923, and ending on
    December 31, 1946, the transition period described
    in subparagraph (A)(i)(II) shall end on the date
    that is 5 years after the last day of the period
    described in subparagraph (A)(i)(I).
    ``(iii) 1947-1956 recordings.--In the case of
    a sound recording first published during the
    period beginning on January 1, 1947, and ending on
    December 31, 1956, the transition period described
    in subparagraph (A)(i)(II) shall end on the date
    that is 15 years after the last day of the period
    described in subparagraph (A)(i)(I).
    ``(iv) Post-1956 recordings.--In the case of a
    sound recording fixed before February 15, 1972,
    that is not described in clause (i), (ii), or
    (iii), the transition period described in
    subparagraph (A)(i)(II) shall end on February 15,
    2067.
    ``(3) Rule of construction.-- <> For the
    purposes of this subsection, the term `anyone' includes any
    State, any instrumentality of a State, and any officer or
    employee of a State or instrumentality of a State acting in the
    official capacity of the officer or employee, as applicable.

    ``(b) Certain Authorized Transmissions and Reproductions.--A public
    performance by means of a digital audio transmission of a sound
    recording fixed before February 15, 1972, or a reproduction in an
    ephemeral phonorecord or copy of a sound recording fixed before February
    15, 1972, shall, for purposes of subsection (a), be considered to be
    authorized and made with the consent of the rights owner if--
    ``(1) the transmission or reproduction would satisfy the
    requirements for statutory licensing under section 112(e)(1) or
    section 114(d)(2), or would be exempt under section 114(d)(1),
    as the case may be, if the sound recording were fixed on or
    after February 15, 1972; and
    ``(2) the transmitting entity pays the statutory royalty for
    the transmission or reproduction pursuant to the rates and terms
    adopted under sections 112(e) and 114(f), and complies with
    other obligations, in the same manner as required by regulations
    adopted by the Copyright Royalty Judges under sections 112(e)
    and 114(f) for sound recordings that are fixed on or after
    February 15, 1972, except in the case of a transmission that
    would be exempt under section 114(d)(1).

    ``(c) Certain Noncommercial Uses of Sound Recordings That Are Not
    Being Commercially Exploited.--

    [[Page 3730]]

    ``(1) In general.--Noncommercial use of a sound recording
    fixed before February 15, 1972, that is not being commercially
    exploited by or under the authority of the rights owner shall
    not violate subsection (a) if--
    ``(A) the person engaging in the noncommercial use,
    in order to determine whether the sound recording is
    being commercially exploited by or under the authority
    of the rights owner, makes a good faith, reasonable
    search for, but does not find, the sound recording--
    ``(i) in the records of schedules filed in the
    Copyright Office as described in subsection
    (f)(5)(A); and
    ``(ii) on services offering a comprehensive
    set of sound recordings for sale or streaming;
    ``(B) the person engaging in the noncommercial use
    files a notice identifying the sound recording and the
    nature of the use in the Copyright Office in accordance
    with the regulations issued under paragraph (3)(B); and
    ``(C) <>  during the 90-day
    period beginning on the date on which the notice
    described in subparagraph (B) is indexed into the public
    records of the Copyright Office, the rights owner of the
    sound recording does not, in its discretion, opt out of
    the noncommercial use by filing notice thereof in the
    Copyright Office in accordance with the regulations
    issued under paragraph (5).
    ``(2) Rules of construction.--For purposes of this
    subsection--
    ``(A) merely recovering costs of production and
    distribution of a sound recording resulting from a use
    otherwise permitted under this subsection does not
    itself necessarily constitute a commercial use of the
    sound recording;
    ``(B) the fact that a person engaging in the use of
    a sound recording also engages in commercial activities
    does not itself necessarily render the use commercial;
    and
    ``(C) the fact that a person files notice of a
    noncommercial use of a sound recording in accordance
    with the regulations issued under paragraph (3)(B) does
    not itself affect any limitation on the exclusive rights
    of a copyright owner described in section 107, 108, 109,
    110, or 112(f) as applied to a claim under subsection
    (a) of this section pursuant to subsection (f)(1)(A) of
    this section.
    ``(3) Notice of covered activity.--
    <> Not later than 180 days after
    the date of enactment of this section, the Register of
    Copyrights shall issue regulations that--
    ``(A) provide specific, reasonable steps that, if
    taken by a filer, are sufficient to constitute a good
    faith, reasonable search under paragraph (1)(A) to
    determine whether a recording is being commercially
    exploited, including the services that satisfy the good
    faith, reasonable search requirement under paragraph
    (1)(A) for purposes of the safe harbor described in
    paragraph (4)(A); and
    ``(B) establish the form, content, and procedures
    for the filing of notices under paragraph (1)(B).
    ``(4) Safe harbor.--
    ``(A) In general.--A person engaging in a
    noncommercial use of a sound recording otherwise
    permitted under this subsection who establishes that the
    person made a

    [[Page 3731]]

    good faith, reasonable search under paragraph (1)(A)
    without finding commercial exploitation of the sound
    recording by or under the authority of the rights owner
    shall not be found to be in violation of subsection (a).
    ``(B) Steps sufficient but not necessary.--Taking
    the specific, reasonable steps identified by the
    Register of Copyrights in the regulations issued under
    paragraph (3)(A) shall be sufficient, but not necessary,
    for a filer to satisfy the requirement to conduct a good
    faith, reasonable search under paragraph (1)(A) for
    purposes of subparagraph (A) of this paragraph.
    ``(5) Opting out of covered activity.--
    ``(A) In general.--
    <> Not later
    than 180 days after the date of enactment of this
    section, the Register of Copyrights shall issue
    regulations establishing the form, content, and
    procedures for the rights owner of a sound recording
    that is the subject of a notice under paragraph (1)(B)
    to, in its discretion, file notice opting out of the
    covered activity described in the notice under paragraph
    (1)(B) during the 90-day period beginning on the date on
    which the notice under paragraph (1)(B) is indexed into
    the public records of the Copyright Office.
    ``(B) Rule of construction.--The fact that a rights
    holder opts out of a noncommercial use of a sound
    recording by filing notice thereof in the Copyright
    Office in accordance with the regulations issued under
    subparagraph (A) does not itself enlarge or diminish any
    limitation on the exclusive rights of a copyright owner
    described in section 107, 108, 109, 110, or 112(f) as
    applied to a claim under subsection (a) of this section
    pursuant to subsection (f)(1)(A) of this section.
    ``(6) Civil penalties for certain acts.--
    ``(A) Filing of notices of noncommercial use.--Any
    person who willfully engages in a pattern or practice of
    filing a notice of noncommercial use of a sound
    recording as described in paragraph (1)(B) fraudulently
    describing the use proposed, or knowing that the use
    proposed is not permitted under this subsection, shall
    be assessed a civil penalty in an amount that is not
    less than $250, and not more than $1000, for each such
    notice, in addition to any other remedies that may be
    available under this title based on the actual use made.
    ``(B) Filing of opt-out notices.--
    ``(i) In general.--Any person who files an
    opt-out notice as described in paragraph (1)(C),
    knowing that the person is not the rights owner or
    authorized to act on behalf of the rights owner of
    the sound recording to which the notice pertains,
    shall be assessed a civil penalty in an amount not
    less than $250, and not more than $1,000, for each
    such notice.
    ``(ii) Pattern or practice.--Any person who
    engages in a pattern or practice of making filings
    as described in clause (i) shall be assessed a
    civil penalty in an amount not less than $10,000
    for each such filing.
    ``(C) Definition.--For purposes of this paragraph,
    the term `knowing'--

    [[Page 3732]]

    ``(i) does not require specific intent to
    defraud; and
    ``(ii) with respect to information about
    ownership of the sound recording in question,
    means that the person--
    ``(I) has actual knowledge of the
    information;
    ``(II) acts in deliberate ignorance
    of the truth or falsity of the
    information; or
    ``(III) acts in grossly negligent
    disregard of the truth or falsity of the
    information.

    ``(d) Payment of Royalties for Transmissions of Performances by
    Direct Licensing of Statutory Services.--
    ``(1) In general.--A public performance by means of a
    digital audio transmission of a sound recording fixed before
    February 15, 1972, shall, for purposes of subsection (a), be
    considered to be authorized and made with the consent of the
    rights owner if the transmission is made pursuant to a license
    agreement voluntarily negotiated at any time between the rights
    owner and the entity performing the sound recording.
    ``(2) Payment of royalties to nonprofit collective under
    certain license agreements.--
    ``(A) Licenses entered into on or after date of
    enactment.--To the extent that a license agreement
    described in paragraph (1) entered into on or after the
    date of enactment of this section extends to a public
    performance by means of a digital audio transmission of
    a sound recording fixed before February 15, 1972, that
    meets the conditions of subsection (b)--
    ``(i) the licensee shall, with respect to such
    transmission, pay to the collective designated to
    distribute receipts from the licensing of
    transmissions in accordance with section 114(f),
    50 percent of the performance royalties for that
    transmission due under the license; and
    ``(ii) the royalties paid under clause (i)
    shall be fully credited as payments due under the
    license.
    ``(B) <>  Certain agreements
    entered into before enactment.--To the extent that a
    license agreement described in paragraph (1), entered
    into during the period beginning on January 1 of the
    year in which this section is enacted and ending on the
    day before the date of enactment of this section, or a
    settlement agreement with a preexisting satellite
    digital audio radio service (as defined in section
    114(j)) entered into during the period beginning on
    January 1, 2015, and ending on the day before the date
    of enactment of this section, extends to a public
    performance by means of a digital audio transmission of
    a sound recording fixed before February 15, 1972, that
    meets the conditions of subsection (b)--
    ``(i) the rights owner shall, with respect to
    such transmission, pay to the collective
    designated to distribute receipts from the
    licensing of transmissions in accordance with
    section 114(f) an amount that is equal to the
    difference between--
    ``(I) 50 percent of the difference
    between--
    ``(aa) the rights owner's
    total gross performance royalty
    fee receipts or settlement

    [[Page 3733]]

    monies received for all such
    transmissions covered under the
    license or settlement agreement,
    as applicable; and
    ``(bb) the rights owner's
    total payments for outside legal
    expenses, including any payments
    of third-party claims, that are
    directly attributable to the
    license or settlement agreement,
    as applicable; and
    ``(II) the amount of any royalty
    receipts or settlement monies under the
    agreement that are distributed by the
    rights owner to featured and nonfeatured
    artists before the date of enactment of
    this section; and
    ``(ii) the royalties paid under clause (i)
    shall be fully credited as payments due under the
    license or settlement agreement, as applicable.
    ``(3) Distribution of royalties and settlement monies by
    collective.--The collective described in paragraph (2) shall, in
    accordance with subparagraphs (B) through (D) of section
    114(g)(2), and paragraphs (5) and (6) of section 114(g),
    distribute the royalties or settlement monies received under
    paragraph (2) under a license or settlement described in
    paragraph (2), which shall be the only payments to which
    featured and nonfeatured artists are entitled by virtue of the
    transmissions described in paragraph (2), except for settlement
    monies described in paragraph (2) that are distributed by the
    rights owner to featured and nonfeatured artists before the date
    of enactment of this section.
    ``(4) Payment of royalties under license agreements entered
    before enactment or not otherwise described in paragraph (2).--
    ``(A) In general.--To the extent that a license
    agreement described in paragraph (1) entered into before
    the date of enactment of this section, or any other
    license agreement not as described in paragraph (2),
    extends to a public performance by means of a digital
    audio transmission of a sound recording fixed before
    February 15, 1972, that meets the conditions of
    subsection (b), the payments made by the licensee
    pursuant to the license shall be made in accordance with
    the agreement.
    ``(B) Additional payments not required.--To the
    extent that a licensee has made, or will make in the
    future, payments pursuant to a license as described in
    subparagraph (A), the provisions of paragraphs (2) and
    (3) shall not require any additional payments from, or
    additional financial obligations on the part of, the
    licensee.
    ``(C) Rule of construction.--Nothing in this
    subsection may be construed to prohibit the collective
    designated to distribute receipts from the licensing of
    transmissions in accordance with section 114(f) from
    administering royalty payments under any license not
    described in paragraph (2).

    ``(e) Preemption With Respect to Certain Past Acts.--
    ``(1) In general.--This section preempts any claim of common
    law copyright or equivalent right under the laws of

    [[Page 3734]]

    any State arising from a digital audio transmission or
    reproduction that is made before the date of enactment of this
    section of a sound recording fixed before February 15, 1972,
    if--
    ``(A) the digital audio transmission would have
    satisfied the requirements for statutory licensing under
    section 114(d)(2) or been exempt under section
    114(d)(1), or the reproduction would have satisfied the
    requirements of section 112(e)(1), as the case may be,
    if the sound recording were fixed on or after February
    15, 1972; and
    ``(B) either--
    ``(i) <>  except in
    the case of a transmission that would have been
    exempt under section 114(d)(1), not later than 270
    days after the date of enactment of this section,
    the transmitting entity pays statutory royalties
    and provides notice of the use of the relevant
    sound recordings in the same manner as required by
    regulations adopted by the Copyright Royalty
    Judges for sound recordings that are fixed on or
    after February 15, 1972, for all the digital audio
    transmissions and reproductions satisfying the
    requirements for statutory licensing under
    sections 112(e)(1) and 114(d)(2) during the 3
    years before that date of enactment; or
    ``(ii) an agreement voluntarily negotiated
    between the rights owner and the entity performing
    the sound recording (including a litigation
    settlement agreement entered into before the date
    of enactment of this section) authorizes or waives
    liability for any such transmission or
    reproduction and the transmitting entity has paid
    for and reported such digital audio transmission
    under that agreement.
    ``(2) Rule of construction for common law copyright.--For
    purposes of paragraph (1), a claim of common law copyright or
    equivalent right under the laws of any State includes a claim
    that characterizes conduct subject to that paragraph as an
    unlawful distribution, act of record piracy, or similar
    violation.
    ``(3) Rule of construction for public performance rights.--
    Nothing in this section may be construed to recognize or negate
    the existence of public performance rights in sound recordings
    under the laws of any State.

    ``(f) <>  Limitations on Remedies.--
    ``(1) Fair use; uses by libraries, archives, and educational
    institutions.--
    ``(A) In general.--The limitations on the exclusive
    rights of a copyright owner described in sections 107,
    108, 109, 110, and 112(f) shall apply to a claim under
    subsection (a) with respect to a sound recording fixed
    before February 15, 1972.
    ``(B) Rule of construction for section 108(h).--With
    respect to the application of section 108(h) to a claim
    under subsection (a) with respect to a sound recording
    fixed before February 15, 1972, the phrase `during the
    last 20 years of any term of copyright of a published
    work' in such section 108(h) shall be construed to mean
    at any time after the date of enactment of this section.

    [[Page 3735]]

    ``(2) Actions.--The limitations on actions described in
    section 507 shall apply to a claim under subsection (a) with
    respect to a sound recording fixed before February 15, 1972.
    ``(3) Material online.--Section 512 shall apply to a claim
    under subsection (a) with respect to a sound recording fixed
    before February 15, 1972.
    ``(4) Principles of equity.--Principles of equity apply to
    remedies for a violation of this section to the same extent as
    such principles apply to remedies for infringement of copyright.
    ``(5) Filing requirement for statutory damages and
    attorneys' fees.--
    ``(A) Filing of information on sound recordings.--
    ``(i) Filing requirement.--Except in the case
    of a transmitting entity that has filed contact
    information for that transmitting entity under
    subparagraph (B), in any action under this
    section, an award of statutory damages or of
    attorneys' fees under section 504 or 505 may be
    made with respect to an unauthorized use of a
    sound recording under subsection (a) only if--
    ``(I) <>  the
    rights owner has filed with the
    Copyright Office a schedule that
    specifies the title, artist, and rights
    owner of the sound recording and
    contains such other information, as
    practicable, as the Register of
    Copyrights prescribes by regulation; and
    ``(II) <>  the
    use occurs after the end of the 90-day
    period beginning on the date on which
    the information described in subclause
    (I) is indexed into the public records
    of the Copyright Office.
    ``(ii) Regulations.-- <> Not
    later than 180 days after the date of enactment of
    this section, the Register of Copyrights shall
    issue regulations that--
    ``(I) establish the form, content,
    and procedures for the filing of
    schedules under clause (i);
    ``(II) provide that a person may
    request that the person receive timely
    notification of a filing described in
    subclause (I); and
    ``(III) set forth the manner in
    which a person may make a request under
    subclause (II).
    ``(B) Filing of contact information for transmitting
    entities.--
    ``(i) Filing requirement.--
    <> Not later than 30
    days after the date of enactment of this section,
    the Register of Copyrights shall issue regulations
    establishing the form, content, and procedures for
    the filing of contact information by any entity
    that, as of the date of enactment of this section,
    performs a sound recording fixed before February
    15, 1972, by means of a digital audio
    transmission.
    ``(ii) Time limit on filings.--The Register of
    Copyrights may accept filings under clause (i)
    only until the 180th day after the date of
    enactment of this section.
    ``(iii) Limitation on statutory damages and
    attorneys' fees.--

    [[Page 3736]]

    ``(I) Limitation.-- <> An award of statutory
    damages or of attorneys' fees under
    section 504 or 505 may not be made
    against an entity that has filed contact
    information for that entity under clause
    (i) with respect to an unauthorized use
    by that entity of a sound recording
    under subsection (a) if the use occurs
    before the end of the 90-day period
    beginning on the date on which the
    entity receives a notice that--
    ``(aa) is sent by or on
    behalf of the rights owner of
    the sound recording;
    ``(bb) states that the
    entity is not legally authorized
    to use that sound recording
    under subsection (a); and
    ``(cc) identifies the sound
    recording in a schedule
    conforming to the requirements
    prescribed by the regulations
    issued under subparagraph
    (A)(ii).
    ``(II) Undeliverable notices.--In
    any case in which a notice under
    subclause (I) is sent to an entity by
    mail or courier service and the notice
    is returned to the sender because the
    entity either is no longer located at
    the address provided in the contact
    information filed under clause (i) or
    has refused to accept delivery, or the
    notice is sent by electronic mail and is
    undeliverable, the 90-day period under
    subclause (I) shall begin on the date of
    the attempted delivery.
    ``(C) Section 412.--Section 412 shall not limit an
    award of statutory damages under section 504(c) or
    attorneys' fees under section 505 with respect to a
    covered activity in violation of subsection (a).
    ``(6) Applicability of other provisions.--
    ``(A) In general.--Subject to subparagraph (B), no
    provision of this title shall apply to or limit the
    remedies available under this section except as
    otherwise provided in this section.
    ``(B) Applicability of definitions.--Any term used
    in this section that is defined in section 101 shall
    have the meaning given that term in section 101.

    ``(g) Application of Section 230 Safe Harbor.--For purposes of
    section 230 of the Communications Act of 1934 (47 U.S.C. 230),
    subsection (a) shall be considered to be a `law pertaining to
    intellectual property' under subsection (e)(2) of such section 230.
    ``(h) Application to Rights Owners.--
    ``(1) Transfers.--With respect to a rights owner described
    in subsection (l)(2)(B)--
    ``(A) subsections (d) and (e) of section 201 and
    section 204 shall apply to a transfer described in
    subsection (l)(2)(B) to the same extent as with respect
    to a transfer of copyright ownership; and
    ``(B) notwithstanding section 411, that rights owner
    may institute an action with respect to a violation of
    this section to the same extent as the owner of an
    exclusive right under a copyright may institute an
    action under section 501(b).

    [[Page 3737]]

    ``(2) Application of other provisions.--The following
    provisions shall apply to a rights owner under this section to
    the same extent as any copyright owner:
    ``(A) Section 112(e)(2).
    ``(B) Section 112(e)(7).
    ``(C) Section 114(e).
    ``(D) Section 114(h).

    ``(i) Ephemeral Recordings.--An authorized reproduction made under
    this section shall be subject to section 112(g) to the same extent as a
    reproduction of a sound recording fixed on or after February 15, 1972.
    ``(j) Rule of Construction.--A rights owner of, or featured
    recording artist who performs on, a sound recording under this chapter
    shall be deemed to be an interested copyright party, as defined in
    section 1001, to the same extent as a copyright owner or featured
    recording artist under chapter 10.
    ``(k) Treatment of States and State Instrumentalities, Officers, and
    Employees.--Any State, and any instrumentality, officer, or employee
    described in subsection (a)(3), shall be subject to the provisions of
    this section in the same manner and to the same extent as any
    nongovernmental entity.
    ``(l) Definitions.--In this section:
    ``(1) Covered activity.--The term `covered activity' means
    any activity that the copyright owner of a sound recording would
    have the exclusive right to do or authorize under section 106 or
    602, or that would violate section 1201 or 1202, if the sound
    recording were fixed on or after February 15, 1972.
    ``(2) Rights owner.--The term `rights owner' means--
    ``(A) the person that has the exclusive right to
    reproduce a sound recording under the laws of any State,
    as of the day before the date of enactment of this
    section; or
    ``(B) any person to which a right to enforce a
    violation of this section may be transferred, in whole
    or in part, after the date of enactment of this section,
    under--
    ``(i) subsections (d) and (e) of section 201;
    and
    ``(ii) section 204.''.

    (b) Conforming Amendment.--The table of chapters for title 17,
    United States Code, <> is amended by adding at
    the end the following:

    ``14.  Unauthorized use of pre-1972 sound recordings.............1401''.

    TITLE III-- <> ALLOCATION FOR
    MUSIC PRODUCERS
    SEC. 301. <>  SHORT TITLE.

    This title may be cited as the ``Allocation for Music Producers
    Act'' or the ``AMP Act''.
    SEC. 302. PAYMENT OF STATUTORY PERFORMANCE ROYALTIES.

    (a) Letter of Direction.--Section 114(g) of title 17, United States
    Code, is amended by adding at the end the following:
    ``(5) Letter of direction.--
    ``(A) In general.-- <> A nonprofit
    collective designated by the Copyright Royalty Judges to
    distribute receipts from the licensing of transmissions
    in accordance with subsection

    [[Page 3738]]

    (f) shall adopt and reasonably implement a policy that
    provides, in circumstances determined by the collective
    to be appropriate, for acceptance of instructions from a
    payee identified under subparagraph (A) or (D) of
    paragraph (2) to distribute, to a producer, mixer, or
    sound engineer who was part of the creative process that
    created a sound recording, a portion of the payments to
    which the payee would otherwise be entitled from the
    licensing of transmissions of the sound recording. In
    this section, such instructions shall be referred to as
    a `letter of direction'.
    ``(B) Acceptance of letter.--To the extent that a
    collective described in subparagraph (A) accepts a
    letter of direction under that subparagraph, the person
    entitled to payment pursuant to the letter of direction
    shall, during the period in which the letter of
    direction is in effect and carried out by the
    collective, be treated for all purposes as the owner of
    the right to receive such payment, and the payee
    providing the letter of direction to the collective
    shall be treated as having no interest in such payment.
    ``(C) Authority of collective.--This paragraph shall
    not be construed in such a manner so that the collective
    is not authorized to accept or act upon payment
    instructions in circumstances other than those to which
    this paragraph applies.''.

    (b) Additional Provisions for Recordings Fixed Before November 1,
    1995.--Section 114(g) of title 17, United States Code, as amended by
    subsection (a), is further amended by adding at the end the following:
    ``(6) Sound recordings fixed before november 1, 1995.--
    ``(A) Payment absent letter of direction.--A
    nonprofit collective designated by the Copyright Royalty
    Judges to distribute receipts from the licensing of
    transmissions in accordance with subsection (f) (in this
    paragraph referred to as the `collective') shall adopt
    and reasonably implement a policy that provides, in
    circumstances determined by the collective to be
    appropriate, for the deduction of 2 percent of all the
    receipts that are collected from the licensing of
    transmissions of a sound recording fixed before November
    1, 1995, but which is withdrawn from the amount
    otherwise payable under paragraph (2)(D) to the
    recording artist or artists featured on the sound
    recording (or the persons conveying rights in the
    artists' performance in the sound recording), and the
    distribution of such amount to 1 or more persons
    described in subparagraph (B) of this paragraph, after
    deduction of costs described in paragraph (3) or (4), as
    applicable, if each of the following requirements is
    met:
    ``(i) <>  Certification
    of attempt to obtain a letter of direction.--The
    person described in subparagraph (B) who is to
    receive the distribution has certified to the
    collective, under penalty of perjury, that--
    ``(I) for a period of not less than
    120 days, that person made reasonable
    efforts to contact the artist payee for
    such sound recording to request and
    obtain a letter of direction instructing
    the collective to pay to that person a
    portion of the

    [[Page 3739]]

    royalties payable to the featured
    recording artist or artists; and
    ``(II) during the period beginning
    on the date on which that person began
    the reasonable efforts described in
    subclause (I) and ending on the date of
    that person's certification to the
    collective, the artist payee did not
    affirm or deny in writing the request
    for a letter of direction.
    ``(ii) <>  Collective
    attempt to contact artist.--After receipt of the
    certification described in clause (i) and for a
    period of not less than 120 days before the first
    distribution by the collective to the person
    described in subparagraph (B), the collective
    attempts, in a reasonable manner as determined by
    the collective, to notify the artist payee of the
    certification made by the person described in
    subparagraph (B).
    ``(iii) No objection received.-- <> The artist payee does not, as of the
    date that was 10 business days before the date on
    which the first distribution is made, submit to
    the collective in writing an objection to the
    distribution.
    ``(B) Eligibility for payment.--A person shall be
    eligible for payment under subparagraph (A) if the
    person--
    ``(i) is a producer, mixer, or sound engineer
    of the sound recording;
    ``(ii) <>  has entered into
    a written contract with a record company involved
    in the creation or lawful exploitation of the
    sound recording, or with the recording artist or
    artists featured on the sound recording (or the
    persons conveying rights in the artists'
    performance in the sound recording), under which
    the person seeking payment is entitled to
    participate in royalty payments that are based on
    the exploitation of the sound recording and are
    payable from royalties otherwise payable to the
    recording artist or artists featured on the sound
    recording (or the persons conveying rights in the
    artists' performance in the sound recording);
    ``(iii) made a creative contribution to the
    creation of the sound recording; and
    ``(iv) submits to the collective--
    ``(I) <>  a
    written certification stating, under
    penalty of perjury, that the person
    meets the requirements in clauses (i)
    through (iii); and
    ``(II) a true copy of the contract
    described in clause (ii).
    ``(C) Multiple certifications.-- <> Subject to subparagraph (D), in a case in
    which more than 1 person described in subparagraph (B)
    has met the requirements for a distribution under
    subparagraph (A) with respect to a sound recording as of
    the date that is 10 business days before the date on
    which the distribution is made, the collective shall
    divide the 2 percent distribution equally among all such
    persons.
    ``(D) Objection to payment.--
    <> Not later than 10 business days
    after the date on which the collective receives from the
    artist payee a written objection to a distribution

    [[Page 3740]]

    made pursuant to subparagraph (A), the collective shall
    cease making any further payment relating to such
    distribution. In any case in which the collective has
    made 1 or more distributions pursuant to subparagraph
    (A) to a person described in subparagraph (B) before the
    date that is 10 business days after the date on which
    the collective receives from the artist payee an
    objection to such distribution, the objection shall not
    affect that person's entitlement to any distribution
    made before the collective ceases such distribution
    under this subparagraph.
    ``(E) Ownership of the right to receive payments.--
    To the extent that the collective determines that a
    distribution will be made under subparagraph (A) to a
    person described in subparagraph (B), such person shall,
    during the period covered by such distribution, be
    treated for all purposes as the owner of the right to
    receive such payments, and the artist payee to whom such
    payments would otherwise be payable shall be treated as
    having no interest in such payments.
    ``(F) Artist payee defined.--In this paragraph, the
    term `artist payee' means a person, other than a person
    described in subparagraph (B), who owns the right to
    receive all or part of the receipts payable under
    paragraph (2)(D) with respect to a sound recording. In a
    case in which there are multiple artist payees with
    respect to a sound recording, an objection by 1 such
    payee shall apply only to that payee's share of the
    receipts payable under paragraph (2)(D), and shall not
    preclude payment under subparagraph (A) from the share
    of an artist payee that does not so object.''.

    (c) Technical and Conforming Amendments.--Section 114(g) of title
    17, United States Code, as amended by subsections (a) and (b), is
    further amended--
    (1) in paragraph (2), by striking ``An agent designated''
    and inserting ``Except as provided for in paragraph (6), a
    nonprofit collective designated by the Copyright Royalty
    Judges'';
    (2) in paragraph (3)--
    (A) by striking ``nonprofit agent designated'' and
    inserting ``nonprofit collective designated by the
    Copyright Royalty Judges'';
    (B) by striking ``another designated agent'' and
    inserting ``another designated nonprofit collective'';
    and
    (C) by striking ``agent'' and inserting
    ``collective'' each subsequent place it appears;
    (3) in paragraph (4)--
    (A) by striking ``designated agent'' and inserting
    ``nonprofit collective''; and
    (B) by striking ``agent'' and inserting
    ``collective'' each subsequent place it appears; and
    (4) by adding at the end the following:
    ``(7) Preemption of state property laws.--The holding and
    distribution of receipts under section 112 and this section by a
    nonprofit collective designated by the Copyright Royalty Judges
    in accordance with this subsection and regulations adopted by
    the Copyright Royalty Judges, or by an independent administrator
    pursuant to subparagraphs (B) and (C) of section 114(g)(2),
    shall supersede and preempt any State law (including

    [[Page 3741]]

    common law) concerning escheatment or abandoned property, or any
    analogous provision, that might otherwise apply.''.
    SEC. 303. <>  EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this title
    and the amendments made by this title shall take effect on the date of
    enactment of this Act.
    (b) Delayed Effective Date.--Paragraphs (5)(B) and (6)(E) of section
    114(g) of title 17, United States Code, as added by section 302, shall
    take effect on January 1, 2020.

    TITLE IV--SEVERABILITY

    SEC. 401. <>  SEVERABILITY.

    If any provision of this Act or any amendment made by this Act, or
    any application of such provision or amendment to any person or
    circumstance, is held to be unconstitutional, the remainder of the
    provisions of this Act and the amendments made by this Act, and the
    application of the provision or amendment to any other person or
    circumstance, shall not be affected.

    Approved October 11, 2018.

    LEGISLATIVE HISTORY--H.R. 1551:
    ---------------------------------------------------------------------------

    HOUSE REPORTS: No. 115-183 (Comm. on Ways and Means).
    CONGRESSIONAL RECORD:
    Vol. 163 (2017):
    June 20, considered and passed
    House.
    Vol. 164 (2018):
    Sept. 18, considered and passed
    Senate, amended.
    Sept. 25, House concurred in Senate
    amendment.
    DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2018):
    Oct. 11, Presidential remarks and statement.