[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.