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115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-651
======================================================================
MUSIC MODERNIZATION ACT
_______
April 25, 2018.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Goodlatte, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 5447]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 5447) to modernize copyright law, and for other
purposes, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for the Legislation.......................... 2
Hearings......................................................... 18
Committee Consideration.......................................... 18
Committee Votes.................................................. 18
Committee Oversight Findings..................................... 19
New Budget Authority and Tax Expenditures........................ 20
Congressional Budget Office Cost Estimate........................ 20
Duplication of Federal Programs.................................. 25
Disclosure of Directed Rule Makings.............................. 25
Performance Goals and Objectives................................. 25
Advisory on Earmarks............................................. 25
Section-by-Section Analysis...................................... 25
Changes in Existing Law Made by the Bill, as Reported............ 31
Purpose and Summary
H.R. 5447 updates music copyright laws by creating a new
compulsory blanket licensing system for mechanical works,
updating the rate standards applicable to music licensing,
modifying the rate setting process in the Southern District of
New York, providing copyright royalties to pre-1972 artists,
and ensuring that producers, mixers, and sound engineers are
able to receive compensation for their creativity.
Background and Need for the Legislation
A. PRIOR JUDICIARY COMMITTEE EFFORTS ON REVIEWING MUSIC COPYRIGHT LAWS
The Committee undertook a lengthy 20 hearing, 100 witness
review of all of our nation's copyright laws over a five-year
period. Two of these copyright review hearings in June 2014
were focused specifically on music copyrights and the Committee
received testimony from a total of 16 witnesses at these two
hearings. Highlighting one of the many problems of the current
music copyright law, Ms. Rosanne Cash, whose father Johnny Cash
also testified before the Committee during the enactment of the
Digital Millennium Copyright Act in September 1997, testified
at the second music hearing that ``To put a personal
perspective on this, if my father were alive today he would
receive no payment for digital performances of his song `I Walk
The Line,' written and recorded in 1956, but anyone who
rerecorded that song WOULD receive a royalty. This makes
absolutely no sense, and is patently unfair.'' In February
2015, the Committee received a detailed study of the music
licensing system from the Register of Copyrights titled
``Copyright and the Music Marketplace,'' which identified a
number of issues requiring Congressional attention. Following
the release of this report, the Committee undertook a series of
nationwide listening sessions on copyright law, travelling
first to Nashville, TN on September 22, 2015, to hear from an
additional twenty parties focused on music issues and to
undertake several music related visits in the Nashville area.
On January 26, 2018, the Committee further held a field hearing
in New York City entitled ``Music Policy Issues: A Perspective
from Those Who Make It'' during GRAMMYs weekend. The Committee
also traveled to California in November 2015 to hear from
technology and copyright industries on these and other
copyright issues.
As a result of this extensive review of music copyright, on
April 10, 2018, Chairman Bob Goodlatte and Ranking Member
Jerrold Nadler introduced H.R. 5447, the Music Modernization
Act, which combined updated versions of four previously
introduced bills. All four bills were the subject of the
Committee field hearing in New York City on January 26, 2018.
The three Titles of the legislation are based upon these
previously introduced bills:
Title I is an updated version of H.R. 4706,
the Music Modernization Act, introduced by Mr. Doug
Collins and Mr. Hakeem Jeffries, which currently has 65
cosponsors (the overall legislation now carries the
name of the original bill; Title I is now referred to
as the Musical Works Modernization Act). Title I also
has selected provisions of H.R. 1836, the Fair Play,
Fair Pay Act, introduced by Mr. Jerrold Nadler and Ms.
Marsha Blackburn, which currently has 31 cosponsors
Title II is an updated version of H.R. 3301,
the Compensating Legacy Artists for their Songs,
Service, and Important Contributions to Society Act or
CLASSICS Act, introduced by Mr. Darrell Issa and Mr.
Jerrold Nadler, which currently has 44 cosponsors
Title III of the Music Modernization Act is
an updated version of H.R. 881, the Allocation for
Music Producers, or AMP Act, introduced by Mr. Joseph
Crowley and Mr. Tom Rooney, which currently has 64
cosponsors
B. TITLE I
17 U.S.C. 115(a) Availability and scope of compulsory license clause
Clause (ii) in subparagraph (A) of paragraph (1) creates a
new method by which a digital music provider may obtain a
compulsory license for a nondramatic musical work. Under the
current 115, the musical work copyright owner has the right to
authorize the first recording of her musical work, sometimes
referred to as the ``first use'' right. Historically, the first
use was cleared by the record label, which obtained the right
to make a sound recording from the songwriter or her music
publisher and distribute the phonorecords derived from that
sound recording. A record label may continue to obtain a
compulsory license under clause (i) when it is the first to
record and distribute recordings of the musical work.
Clause (ii) applies in the situation in which a digital
music provider is the first person to make and distribute
digital phonorecord deliveries (DPDs) of a sound recording
embodying a musical work (i.e., in cases for which clause (i)
does not apply). In such instances, the digital music provider
may obtain a compulsory license if it satisfies three criteria:
(1) the first fixation of the musical work in a sound recording
is made under the authority of the musical work copyright
owner; (2) the sound recording copyright owner who first fixes
such sound recording has the authority of the musical work
copyright owner to make and distribute digital phonorecord
deliveries of such musical work to the public in the United
States; and (3) the sound recording copyright owner (or its
authorized distributor) authorizes the digital music provider
to make and distribute digital phonorecords of the sound
recording to the public in the United States.
Under the current language of 115(a)(1), a compulsory
license is available to ``any other person'' after a sound
recording embodying a musical work has been distributed to the
public in the United States under the authority of the musical
work copyright owner. The new language is intended to eliminate
any ambiguity under existing law as to whether a digital music
provider may obtain a compulsory license when the digital music
provider is the first person to distribute digital phonorecord
deliveries of such musical work. The new language makes clear
that a digital music provider may obtain a compulsory license
in those instances in which the digital music provider is the
first person to make and distribute digital phonorecord
deliveries of a sound recording embodying a musical work.
17 U.S.C. 115(b) Procedures to obtain a compulsory license
The amended 115 provides two separate means of obtaining a
compulsory mechanical license. Subsection (b)(1) maintains the
ability to obtain a compulsory license to reproduce and
distribute phonorecords other than DPDs on a work-by-work
basis. This is the historical method by which record labels
have obtained compulsory licenses.
A new subsection (b)(2) provides the blanket mechanical
license for digital music providers to make and distribute
DPDs. If the digital music provider is making and distributing
the DPDs before the date the blanket license is available,
which is defined in subsection (e)(15) as the next January 1
following the expiration of the two-year period beginning on
the date the legislation is enacted, then the digital music
provider must file a notice of intent on the musical work
copyright owner, if the identity and location of the musical
work copyright owner is known. Unlike the current section 115,
however, under the legislation, in the event the musical work
copyright owner is unknown, the digital music provider does not
file a notice of intent on the Copyright Office. Instead, the
digital music provider continues to search for the musical work
copyright owner until the license availability date and, if the
musical work copyright owner has not been located by such time,
the digital music provider is required to turn over to the
mechanical licensing collective any accrued royalties and
reports of usage for such unmatched works pursuant to
subsection (d)(10). If the digital music provider is making and
distributing DPDs after the date the blanket license is
available, then the digital music provider may obtain the
blanket license by submitting a notice of license to the
mechanical licensing collective as described in subsection
(d)(2).
Subsection (b)(3) maintains the ``pass-through'' license
for record labels to obtain and pass through mechanical license
rights for individual permanent downloads. Under the Music
Modernization Act, a record label will no longer be eligible to
obtain and pass through a Section 115 license to a digital
music provider to engage in activities related to interactive
streams or limited downloads.
Subsection (b)(4)(A) maintains the current practice whereby
record labels that fail to serve or file a notice of intent are
foreclosed from the possibility of obtaining a compulsory
license for that work. Subsection (b)(4)(B) provides penalties
for a digital music provider for failing to file a notice of
intent or notice of license. Again, this subsection
distinguishes between activities that occur prior to the date
of availability of the blanket license and activities that
occur after. Before the date of availability of the blanket
license, if the digital music provider fails to serve a notice
of intent on the musical work copyright owner (as described in
subsection (b)(2)), then the digital music provider is
foreclosed from obtaining a compulsory license for that work.
After the date the blanket license is available, if the digital
music provider fails to submit the notice of license on the
mechanical licensing collective, then the digital music
provider is foreclosed from obtaining a blanket license for
three years.
17 U.S.C. 115(c) Royalty payable under compulsory license
The amendments to subsection (c) change the current rate-
setting standard from that currently found at 801(b) to the
``willing buyer / willing seller'' standard now applicable to
setting rates for the public performance of sound recordings by
noninteractive webcasters under the 114(d)(2) and 112 statutory
licenses. Consistent with the current 115 compulsory license,
subsection (c)(2)(A) makes clear that voluntary licenses
entered into between musical work copyright owners and digital
music providers are given effect in lieu of the rates
established for the blanket license.
17 U.S.C. Sec. 115(d) Blanket license for digital uses, mechanical
licensing collective, and digital licensee coordinator
The majority of Title I creates a new Sec. 115(d) that
establishes a blanket compulsory licensing system for qualified
digital music providers. The Committee has regularly heard from
various parties in the music industry that the existing music
licensing system does not functionally work to meet the needs
of the digital music economy where commercial services strive
to have available to their customers as much music as possible.
Song-by-song licensing negotiations increase the transaction
costs to the extent that only a limited amount of music would
be worth engaging in such licensing discussions, depriving
artists of revenue for less popular works and encouraging
piracy of such works by customers looking for such music.
The new mechanical licensing collective
The new Sec. 115(d) builds upon earlier industry
discussions surrounding the Section 115 Reform Act of 2006, in
which the same parties that came together to develop that
legislation did so again, albeit with some significant changes,
most notably with the creation of a single entity from which to
seek a compulsory license, rather than a small number of such
entities as contemplated under the earlier legislation, and
that licensees will pay for the operation of the new entity,
rather than the licensors.
The Board of Directors of the new collective is required to
be composed of individuals matching specific criteria. The
detailed requirements concerning the overall framework of the
Board of Directors of the collective and its three committees,
the criteria used to select individuals to serve on them, and
the advance publication of their names and affiliations all
highlight the importance of selecting the appropriate
individuals. Service on the Board or its committees is not a
reward for past actions, but is instead a serious
responsibility that must not be underestimated. With the
advance notification requirement, the Register is expected to
allow the public to submit comments on whether the individuals
and their affiliations meet the criteria specified in the
legislation; make some effort of its own as it deems
appropriate to verify that the individuals and their
affiliations actually meet the criteria specified in the
legislation; and allow the public to submit comments on whether
they support such individuals being appointed for these
positions. During the entire discussion of the legislation, it
has been agreed to by all parties that songwriters should be
responsible for identifying and choosing the songwriter
representatives on the Board. The Committee strongly agrees
with such an approach.
Given their importance, the three committees established by
the collective must operate in a transparent manner to the
greatest extent possible in order to avoid unnecessary
litigation as well as to gain the trust of the entire music
community. Although it would be desirable that the committees
reach unanimous decisions, that will not always be possible in
which case a majority vote will control the outcome of a
decision. For the responsibilities described in subparagraphs
(J) and (K) of paragraph (3), the collective is only liable to
a party for its actions if the collective is grossly negligent
in carrying out the policies and procedures adopted by the
Board of Directors pursuant to Sec. 115(d)(11)(D). Since the
Register has broad regulatory authority under paragraph (12) of
subsection (d), it is expected that such policies and
procedures will be thoroughly reviewed by the Register to
ensure the fair treatment of interested parties in such
proceedings given the high bar in seeking redress.
The Register is allowed to re-designate an entity to serve
as the collective every five years after the initial
designation. Although there is no guarantee of a continued
designation by the collective, the Committee believes that
continuity in the collective would be beneficial to copyright
owners so long as the entity previously chosen to be the
collective has regularly demonstrated its efficient and fair
administration of the collective in a manner that respects
varying interests and concerns. In contrast, evidence of fraud,
waste, or abuse, including the failure to follow the relevant
regulations adopted by the Copyright Office, over the prior
five years should raise serious concerns within the Copyright
Office as to whether that same entity has the administrative
capabilities necessary to perform the required functions of the
collective. In such cases, where the record of fraud, waste, or
abuse is clear, the Register should give serious consideration
to the selection of a new entity even if not all criteria are
met pursuant to Sec. 115(d)(3)(B)(iii).
Reasonable cost shifting of the mechanical licensing collective
The Committee welcomes the agreement of digital music
services and musical works copyright owners to transfer the
reasonable costs of the new mechanical licensing collective to
the licensees. The Committee supports a true free market for
copyrighted works and, in the limited number of situations in
which a compulsory license exists, believes that the licensees
benefit most from the reduction in transaction costs. The
Committee strongly rejects statements that copyright owners
benefit from compulsory licenses or from paying for the costs
of collectives to administer compulsory licenses in lieu of a
free market. Therefore, the legislation directs that licensees
should bear the reasonable costs of establishing and operating
the new mechanical licensing collective. This transfer of costs
is not unlimited, however, since it is strongly cabined by the
term ``reasonable.''
The legislation directs the Copyright Royalty Judges to
undertake a proceeding to determine the amount of an
administrative assessment fee to be paid by blanket and
significant nonblanket licensees for the reasonable costs of
starting up and continuing to operate the new mechanical
licensing collective. There are several other licensing
collectives, such as SoundExchange, ASCAP, and BMI, that the
Copyright Royalty Judges should look to for comparison points,
although their expenditures are simply comparison points. The
Copyright Royalty Judges shall make their own determination(s)
based upon the evidence provided to them about the appropriate
administrative assessment for such reasonable costs that are
identified with specificity.
The Committee expects that not all reasonable expenditures
in the first years of the collective may be identifiable in
advance, especially as they relate to startup costs, but that
future reasonable costs are more likely to be able to be
determined in advance with some certainty. When anticipated
startup and operational costs are different than anticipated,
the Copyright Royalty Judges are expected to use their best
judgement as to what has or has not been a reasonable
expenditure of the collective and use their authority to adjust
the fee subject to prior under or over collection of fees for
reasonable costs, as well as lesser or greater reasonable costs
than anticipated.
The legislation is focused on the transfer of the
collective's reasonable startup and operating costs to blanket
and nonblanket licensees. It is expected that the collective
will only accrue reasonable costs and not expend unreasonable
costs either on a one-off or continuing basis. It is not the
responsibility of any other party other than the collective to
ensure that it only expends reasonable amounts of funds for its
activities. Although other parties such as the digital licensee
coordinator may choose to notify the collective of any concerns
of unreasonable spending, they do not have the legal burden to
do so and do not waive their right to object to the Copyright
Royalty Judges or a federal court of any unreasonable spending
by not notifying them of it when suspected or discovered.
Although the licensees are free to voluntarily pay some or all
unreasonable costs of the collective if they so choose, the
legislation does not require that and makes clear that all such
unreasonable costs as determined by the Copyright Royalty
Judges are not the responsibility of the licensees. Any such
unreasonable costs, to the extent that they are accrued, should
be borne by either the collective itself and/or the copyright
owners that benefit from the collective. Nor should any
unreasonable costs be offset by unmatched royalties or taken
from artist revenue.
The legislation requires that the collective pay out
accrued royalties under a set schedule. With the exception of
future adjustments to the administrative assessment, if so
determined by the Copyright Royalty Judges, once the licensees
meet the terms of the legislation in paying the applicable
royalties with the administrative assessment and providing the
accompanying usage data for the covered activities, their
obligation ends for any additional payments for such usage.
This includes any need to pay replacement royalties should the
collective engage in waste, fraud, or abuse of such royalties.
In the event that an employee of the collective engages in
fraud by diverting royalty payments, it is not the
responsibility of the licensee(s) to replace these stolen
royalties.
Because of the importance to the music community that the
collective begin operating as soon as possible, even before any
administrative assessment fees are collected, the legislation
includes provisions to allow voluntary contributions by digital
music providers to the collective to offset some or all of its
startup and operational costs, as well as the adoption of
voluntary agreements to determine the administrative
assessment. Such contributions are to be voluntarily made and
accounted for and, unless explicitly agreed to, shall not cover
expenses deemed unreasonable by the Copyright Royalty Judges.
Musical works database
The Committee welcomes the creation of a new musical works
database that is mandated by the legislation. For far too long,
it has been difficult to identify the copyright owner of most
copyrighted works, especially in the music industry where works
are routinely commercialized before all of the rights have been
cleared and documented. This has led to significant challenges
in ensuring fair and timely payment to all creators even when
the licensee can identify the proper individuals to pay.
Testimony provided by Jim Griffin at the June 10, 2014
Committee hearing highlighted the need for more robust metadata
to accompany the payment and distribution of music royalties.
With millions of songs now available to subscribers worldwide,
technology also has a role to play through digital
fingerprinting of a sound recording. However, there is no
reliable, public database to link sound recordings with their
underlying musical works. Unmatched works routinely occur as a
result of different spellings of artist names and song titles.
Even differing punctuation in the name of a work has been
enough to create unmatched works. There have been several
attempts to create a unified music database, most notably the
2008 Global Repertoire Database project that brought together
numerous music industry participants in an attempt to solve the
music industry's data problem. Despite hopes that this effort
would succeed where others had failed, this project too ended
without success due to cost and data ownership issues. Music
metadata has more often been seen as a competitive advantage
for the party that controls the database, rather than as a
resource for building an industry on. In an era in which
Americans can buy millions of products via an app on their
phone based upon the UPC code on the product, the failure of
the music industry to develop and maintain a master database
has led to significant litigation and underpaid royalties for
decades. The Committee believes that this must end so that all
artists are paid for their creations and that so-called ``black
box'' revenue is not a drain on the success of the entire
industry.
The database that is required by this legislation will
contain information such as the title of a work, its copyright
owner(s) and shares thereof, contact information for the
copyright owner(s), International Standard Recordings Codes
(ISRC) and International Standard Work Codes (ISWC), relevant
information for the sound recordings a work is embodied in, and
any other information that the Register of Copyrights may
prescribe by regulation. Using standardized, metadata such as
ISRC and ISWC codes, are a major step forward in reducing the
number of unmatched works. For example, the Register may at
some point wish to consider after an appropriate rulemaking
whether standardized identifiers for individuals would be
appropriate, or even audio fingerprints. The Register shall use
its judgement to determine what is an appropriate expansion of
the required fields, but shall not adopt new fields that have
not become reasonably accessible and used within the industry
unless there is widespread support for the inclusion of such
fields.
Given the importance of this database, the legislation
makes clear that it shall be made available to the Copyright
Office and the public without charge, with the exception of
recovery of the marginal cost of providing access in bulk to
the public. Individual lookups of works shall be free although
the collective may implement reasonable steps to block efforts
to bypass the marginal cost recovery for bulk access if it
appears that one or more entities are attempting to download
the database in bulk through repeated queries. However, there
shall be no requirement that a database user must register or
otherwise turn over personal information in order to obtain the
free access required by the legislation. The collective is
required under the legislation to routinely undertake its own
efforts to identify the musical works embodied in particular
sound recordings, as well as to identify and locate the
copyright owners of such works so that they can update the
database as appropriate. With only the exception of the
efficient and accurate collection and distribution of
royalties, such actions are the highest responsibility of the
collective.
Records of the collective
Beyond the new database, the legislation requires that the
collective's material records be kept for at least seven years
after the date of creation or receipt, whichever occurs later.
The records applicable to a particular copyright owner are to
be accessible to that copyright owner or their representative.
Beyond the seven-year limit, there are no such limitations that
apply to the access of any record by the Copyright Office.
Annual report
Not later than June 30 of each year after the first license
availability date, the mechanical licensing collective shall
publicly release an annual report that sets forth how the
collective operates, how royalties are collected and
distributed, and the collective total costs for the preceding
calendar year. The legislation does not specify in great detail
the form of such report, but the Committee expects that the
collective will create reports similar to that of other
collectives. Since several other collectives engage in lobbying
and other marketing activities that this collective will not
undertake, reports of the mechanical licensing collective are
likely to contain more substantive information than others.
Digital licensee coordinator
The legislation anticipates, but does not require, the
designation of a digital licensee coordinator to coordinate the
activities of the licensees. Similar to the collective, the
choice of the coordinator is subject to a review by the
Register of Copyrights every five years, has specified duties,
and is prohibited from engaging in lobbying. Both the
collective and the coordinator have the right to commence an
action in federal court for specified damages, injunctive
relief, attorneys' fees, costs, and other relief deemed
appropriate by a federal court against a significant nonblanket
licensee that fails to provide monthly usage reports or pay the
required administrative fee. Any financial recovery shall be
used to offset the costs of the collective's total costs.
Voluntary licenses
Although the primary focus of the legislation is the
creation of a new compulsory blanket license, voluntary
licenses remain in effect and are excluded from the blanket
license and individual licenses. However, such voluntary
licenses that rise to the threshold of a significant nonblanket
license must meet the conditions imposed upon such licensees.
Musical work copyright owners may designate the mechanical
licensing collective to administer voluntary licenses so long
as the rates and terms of the voluntary license were negotiated
individually between a musical work copyright owner and digital
music provider. Musical work copyright owners may not require
as a condition for entering into a direct license that the
mechanical licensing collective administer a voluntary license.
Transition to a blanket license
The MMA creates a transition period in order to move from
the current work-by-work license to the new blanket license.
After the date of enactment, a digital music provider will no
longer be able to serve notices of intent on the Copyright
Office for uses of musical works for which the musical work
copyright owner cannot be identified or located. Notices of
intent filed before the enactment date will no longer be
effective. However, prior to the blanket license availability
date a digital music provider is immune from copyright
infringement liability for any use of any musical work for
which the digital music provider was unable to identify or
locate the musical work copyright owner so long as the digital
music provider engages in good-faith, commercially reasonable
efforts to identify and locate musical work copyright owners.
The digital music provider is required to use one or more bulk
electronic matching processes, and must continue using these
processes, on a monthly basis for so long as the musical work
copyright owner is unidentified.
If the musical work copyright owner is identified or
located during this search process, then the digital music
provider is required to report and pay that copyright owner any
royalties owed. If the musical work copyright owner remains
unidentified between the date of enactment and the date the
blanket license is available, then the digital music provider
is required to provide a cumulative usage report and accrued
royalties to the mechanical licensing collective. There are no
late fees associated with these accrued royalties.
When the blanket license becomes available, the blanket
license will be substituted automatically for the compulsory
licenses obtained pursuant to notices of intent, without any
interruption in license authority. Because the new blanket
license replaces the previous work-by-work compulsory license,
the compulsory licenses obtained under notices of intent served
on musical work copyright owners prior to the availability of
the blanket license will no longer be valid. However, any
voluntary license agreement between a digital music provider
and a musical work copyright owner continues to be effective
and takes precedence over the blanket license until such
license expires according to its own terms.
Obtaining a blanket license
After the blanket license availability date, digital music
services interested in obtaining a blanket license shall
provide advance notice to the mechanical licensing collective.
The collective has 30 calendar days to reject such notice in
writing, listing with specificity why such notice was rejected,
either because it does meet the requirements of the legislation
or applicable regulations established the Copyright Office or
if the digital music service provider has had a blanket license
terminated by the collective within the past three years. There
is an additional 30-day cure period for a potential licensee.
Should a provider believe that their notice was improperly
rejected, they have the right to seek review in federal
district court on a de novo basis. Once obtained, the license
covers the making and distribution of server, intermediate,
archival, and incidental reproductions of musical works that
are reasonable and necessary.
Default and termination of a blanket license
Although it would be far preferable for every digital music
provider that obtains a compulsory license to meet all of the
terms of such license, there may be occasions when that will
not be the case. The legislation anticipates the imposition of
a late fee to be determined in advance by the Copyright Royalty
Judges to address late payments. However, the legislation also
recognizes that such late fees may not be enough to bring a
provider back into compliance and therefore identifies the
conditions upon which digital music providers shall be deemed
in default of such compulsory licenses, and thus allow the
collective to terminate such license automatically.
A provider that believes their blanket license was
improperly terminated has the right to seek review in federal
court on a de novo basis. However, the court should recognize
that the conditions for determining default and permitting
termination are quite specific. So long as those conditions are
met, a court may not impose additional termination requirements
or waive clear deadlines in an attempt to continue the blanket
license. If a party wants to obtain and then maintain a blanket
license, it must meet the stated terms specified in the
statute. Efforts by the collective to participate in such
proceedings, including its own reasonable attorneys' fees, are
a reasonable expense of the collective. Since the digital music
providers that benefit from the new licensing system are
responsible for paying such reasonable costs, other digital
music providers may wish to consider joining the case in
opposition to a defaulting licensee under Rule 24 of the
Federal Rules of Civil Procedure.
However, a court could determine that the collective has
attempted to impose new conditions beyond those permitted by
the legislation. Should a court make such determination, the
court has the authority to revoke such attempted termination
and any other relief it determines to be appropriate. The
Committee strongly encourages the court to make the Copyright
Office aware of such determination since any financial cost to
the collective that results from such relief or related
litigation efforts shall not be considered a reasonable cost of
the collective.
Audit rights
The legislation contains two different audit rights, one
for copyright owners due royalties from the collective and one
for the collective due royalties from licensees. Both audit
rights are subject to certain specified time limits and other
requirements including the ability to choose alternative
procedures if both parties agree. The key difference is that
only the audit right for the collective contains a shifting of
the cost of the audit to the digital music provider being
audited if there was an underpayment of 10 percent or more. The
reason for this difference is that the collective is assumed to
be operating in its members' best interests while digital music
services have no such underlying responsibility.
Significant nonblanket licensees
The legislation creates a category of licensees, identified
as significant nonblanket licensees, who operate outside the
blanket licensing context, but are required to provide notice
to the collective of their existence and to help pay for the
operation of the new collective. Such licensees are subject to
a cause of action in federal court brought by either the
mechanical licensing collective or the digital licensee
coordinator if they fail to make monthly usage reports or pay
the administrative assessment fee. This fee is made applicable
to such licensees because they are presumed to benefit from the
new database and as a way to avoid parties attempting to avoid
funding of the mechanical licensing collective by engaging in
direct deals outside the blanket license. Two specific
exceptions to the definition of a significant nonblanket
licensee are incorporated in the definition of such licensee,
one concerning certain free-to-the-user streams of less than 90
seconds and the other in regards to public broadcasting
entities.
Royalty distribution of matched works
Usage reports from digital music services must include the
number of digital phonorecord deliveries, specifying the number
of limited downloads and interactive streams. Any reports
should be consistent with then-current industry practices
regarding how such limited downloads and interactive streams
are tracked and reported. The digital music provider must also
identify all musical work copyright owners with whom the
digital music provider has an effective voluntary license and
is not relying on the blanket license. Using this information,
the collective is then required to collect and distribute
royalties on a specific schedule set forth in the legislation.
All copyright owners shall have their royalties distributed
fairly and no copyright owner may receive special treatment as
a result of their position on the Board, its committees, or for
any other reason without a reasonable basis. For example, it
may be required for the Board and its committees to focus on
specific copyright owners for legitimate, specific reasons such
as representing them in a bankruptcy proceeding that not all
copyright owners are part of. Absent such legitimate reasons,
any such special treatment should be viewed by the Register and
federal courts as waste, fraud, and abuse.
The Committee expects that over time one or more music
services will file bankruptcy and the collective may represent
its copyright owners in related court proceedings in order to
recover as much of the royalties due as possible. The Board
shall then distribute any lesser amounts of royalties collected
through such bankruptcy proceedings to copyright owners using
the best usage data available. Since a bankruptcy proceeding
may conclude long after the relevant employees at the music
service have long since departed, there may be discrepancies in
the usage data that cannot be resolved. With a recorded vote,
the Board shall determine how best to proceed with
distribution(s) related to bankrupt music services. Although
not required by the legislation, the collective may wish to
consult with the Register for his or her opinion if a
particular approach is reasonable in which case the Register
shall provide a timely response.
Royalty distribution of unmatched works
The Committee expects that there will be some percentage of
unmatched works that generate royalties that will decline over
time as the collective's database becomes more robust and the
music industry continues to recognize the importance of
obtaining and sharing proper metadata in advance of the initial
distribution of a work. Since the legislation permits the
distribution of unclaimed royalties that were accrued on
unmatched works for which the creators will not be paid, a
significantly higher bar to such distributions is required
compared to the more routine royalty distributions of matched
works.
For unmatched works, the collective must wait for the
prescribed holding period of three years before making such
distribution. This is intended to give the collective time to
actively search for the copyright owner. SoundExchange, a
collective for royalties under Section 114 of the Copyright
Act, has an admirable history of undertaking significant
efforts to locate copyright owners who may not know they are
due royalties. Despite their robust efforts, however, even
SoundExchange distributes unmatched royalties after its
detailed search efforts conclude. This legislation requires the
new collective to undertake its own efforts to locate the
copyright owner and update its database accordingly if so
identified. If such efforts fail, then the unclaimed royalties
oversight committee shall establish such policies identified in
the legislation that the Committee believes are necessary to
undertake a fair distribution of such unclaimed royalties.
These policies include gathering of required information to
make such distributions, 90 calendar days' advance public
notice, and a requirement that at least 50 percent of such
unclaimed royalties be credited or paid to the songwriter(s)
represented by that copyright owner. It is the intent of
Congress to ensure that songwriters receive their fair share of
monies distributed to copyright owners under subsection
(d)(3)(J), while at the same time respecting contractual
relationships. To that end, payments and credits to songwriters
shall be allocated in proportion to the reported usage of
individual musical works by digital music providers during the
relevant reporting periods. The 50% payment or credit to a
songwriter referenced in subsection (d)(3)(J)(iv)(II) is
intended to be treated as a floor, not a ceiling, and is not
meant to override any applicable contractual arrangement
providing for a higher payment or credit of such monies to a
songwriter.
This process ensures that copyright owners and artists
benefit. While there may be some copyright owners and/or
artists who would prefer that such money be escrowed
indefinitely until claimed, the simple way to avoid any
distribution to other copyright owners and artists is to step
forward and identify oneself and one's works to the collective,
an exceedingly low bar to claiming one's royalties.
Termination of prior litigation
The legislation contains a key component that was necessary
to bring the various parties together in an effort to reach
common ground by limiting liability for digital music providers
after January 1, 2018, so long as they undertake certain
payment and matching obligations. The Committee welcomes such
agreement since continued litigation generates unnecessary
administrative costs, diverting royalties from artists. The
Committee routinely preempts such unnecessary litigation in
other contexts and views the application here of such date as
warranted. The imposition of detailed statutory requirements
for obtaining such a limitation of liability ensure that more
artist royalties will be paid than otherwise would be the case
through continual litigation.
Copyright Office regulations
Pursuant to paragraph (12) of subsection (d), the Register
is expected to promulgate the necessary regulations required by
the legislation in a manner that balances the need to protect
the public's interest with the need to let the new collective
operate without over-regulation. The Copyright Office has the
knowledge and expertise regarding music licensing through its
past rulemakings and recent assistance to the Committee during
the drafting of this legislation. Although the legislation
provides specific criteria for the collective to operate, it is
to be expected that situations will arise that were not
contemplated by the legislation. The Office is expected to use
its best judgement in determining the appropriate steps in
those situations. The Register of Copyrights can also turn to
another legislative branch agency, the General Accountability
Office, for assistance in determining if artists are being
properly compensated for their works.
Uniform rate standards
Section 103(a) of the legislation creates a uniform willing
buyer, willing seller rate standard in Sec. 114(f). This fair
standard for sound recordings ensures that copyright owners are
appropriately compensated for their works using a standard that
most approximates the rates that would have been negotiated in
a free market. It has long been a goal of the Committee to move
towards such a standard and move beyond earlier unfair
standards, such as the now unnecessary discount for so-called
``pre-existing services.'' The Committee finds no current
justification for such 40-year old discounts that harm
copyright owners as well as competitors of such pre-existing
services. It is also in the interest of facilitating greater
competition in these areas that the Committee eliminates such
discounts. Whatever justification for the discounts has long
since vanished.
Section 103(a) of the legislation repeals Sec. 114(i), a
goal long sought by the Committee through such legislation as
the Songwriter Equity Act. The Committee has been concerned
that songwriters have not been adequately compensated for their
contributions and Sec. 114(i) prevents songwriters from
introducing potentially relevant evidence in rate court
proceedings. Section 103(a) creates a specific exception for
taking into account license fees payable for the public
performance of sound recordings under Sec. 106(6) related to
certain transmissions by broadcasters although these new
definitions are not to be given effect in interpreting other
provisions in Title 17. In addition, the repeal shall not be
taken into account when in proceedings to determine royalties
for sound recordings and has no impact upon the past precedents
of such proceedings. Furthermore, as used in this section of
the legislation, the term ``digital audio transmission'' is
intended to incorporate the definition of that term found in
Sec. 114(j)(5). Therefore, as used in this section, the term
``digital audio transmission'' does not include the
transmission of any audiovisual work.
Consent decree rate proceedings
Section 104 of the legislation modifies the selection of
rate court judges and related proceedings for performing rights
societies subject to a consent decree, currently ASCAP and BMI.
In lieu of the current system, the district court shall use a
random process, commonly known as the wheel, to determine which
judge shall hear rate setting cases involving a Performing
Rights Organization's (PRO) license fees. However, the original
judge(s) who oversees the interpretation of the consent
decree(s) shall not be permitted to oversee any rate
proceedings. Under the present situation, this would mean that
the two judges who oversee the ASCAP and the BMI consent
decrees would not hear any rate proceedings involving either
PRO. This change is not a reflection upon any past actions by
the Southern District of New York. The Committee simply
believes that rate decisions should be assigned on a random
basis to judges not involved in the underlying consent decree
cases.
C. TITLE II
The second title of H.R. 5447 is an amended version of H.R.
3301, the ``Compensating Legacy Artists for their Songs,
Service, and Important Contributions to Society, or CLASSICS,
Act.'' The legislation amends Title 17 to create royalties for
so-called ``pre-72 works'' using the same rates and
distribution system for royalties already applicable to post-72
works. These sound recordings that were fixed prior to February
15, 1972 generate no royalties for older artists who have
highlighted the negative impact upon their ability to survive
economically as they increasingly enter their retirement years,
including from testimony received at the Committee field
hearing in New York City on January 26, 2018, from Ms. Dionne
Warwick, a pre-72 recording artist. Among the few options
artists with pre-72 works have for generating income from such
works are grueling touring schedules that older artists are
increasingly less able to undertake. In contrast, artists with
post-72 works face lesser burdens since they are able to earn
royalties for such works outside of touring.
Despite this discrepancy, in royalties payable for works,
the Committee recognizes that music services have been able to
successfully operate while paying royalties for post-72 works.
Thus, the Committee believes that these same services should be
able to continue to successfully operate with a statutory
requirement to pay royalties for pre-72 works to enable older
artists and their families to benefit financially from their
creativity.
There have been several class action suits regarding pre-72
royalties in states including California, Florida, and New York
with varying outcomes. A benefit of the CLASSICS Act is that,
in addition to providing for financial income for older
artists, it will end the need for state litigation by extending
the existing federal royalty payment system for eligible,
authorized digital transmissions, as defined in new
Sec. 1401(b), for works fixed between January 1, 1923, and
February 15, 1972, while pre-empting state laws for common law
copyright or equivalent rights under the laws of any State that
would conflict with these provisions. The legislation also
leaves those existing settlements untouched.
Title II includes several limitations on remedies in the
new Sec. 1401(e), including fair use; certain uses by
libraries, archives, and educational institutions; section 507;
section 512; section 230 safe harbors; and a new filing
requirement for obtaining statutory damages and attorneys'
fees. This new filing requirement is designed to operate in
place of a formal registration requirement that normally
applies to claims involving statutory damages. In the absence
of full federalization of these pre-72 works, the new
Sec. 1401(e)(5) requires that the copyright owners file a
schedule of works subject to potential claims of statutory
damages or attorneys' fees with the Copyright Office under
regulations that it will promulgate within 180 days of
enactment. Before this system is operating, the Copyright
Office shall also be promulgated regulations within 30 days of
enactment for the filing of contact information for
transmitting entities. This contact information database will
operate up to 180 days after enactment after which the database
of works by copyright owners will control whether statutory
damages and attorneys' fees are available. Copyright owners
must provide a 90-day notice to transmitting entities about a
claim for royalties up to 180 days after enactment after which
time transmitting entities must search the new database
established by the Copyright Office for such works.
To ensure that works currently in the public domain remain
in the public domain, works fixed prior to January 1, 1923, are
specifically excluded from the payment of any royalties under
this provision.
D. TITLE III
The third title of H.R. 5447 is a modified version of H.R.
881, the ``Allocation for Music Producers, or AMP Act.''
Currently, the provisions included in this title would only
impact the one collective designated by the Copyright Royalty
Judges to distribute royalties under Sec. 114(f),
SoundExchange. SoundExchange has gained widespread industry
support with its efforts to efficiently distribute webcasting
royalties to copyright owners and artists that proactively
identify themselves as due such royalties or, in the absence of
such identification, can be identified through the efforts of
SoundExchange. The Committee appreciates the culture of
transparency that SoundExchange has brought to the music
industry and hopes that this culture will be duplicated
elsewhere, including in the new mechanical licensing collective
established by the first title of this legislation.
In order to pay certain creators, such as producers,
mixers, and sound engineers, who were not by statute receiving
royalties under Sec. 114, SoundExchange has had a policy since
2004 of honoring ``letters of direction'' to pay these creators
a portion of the featured performer's royalties. According to
information supplied by SoundExchange, approximately 2,000
active letters of direction are on file with them generating
royalties for these creators, although more such letters of
direction that do not have any royalty payments due are on file
with them. SoundExchange has received only a limited number of
letter of direction submissions that do not meet its conditions
for execution and has worked with the interested parties to
ensure proper execution of them once corrected by the creators.
Congress expects SoundExchange to continue to implement
such policies in a transparent and efficient manner, and to the
extent that any other distribution collective designated in the
future by the Copyright Royalty Judges for the distribution of
receipts from the licensing of transmissions in accordance with
Sec. 114(f), also do so. Nothing in Sec. 114(g)(5) requires
that SoundExchange modify any of its current policies in place
for letters of direction for recordings fixed on or after
November 1, 1995. Section 114(g)(5) simply makes the provision
of the letter of direction system a statutory requirement while
giving SoundExchange, and any future designated distribution
collective, the discretion necessary to operate such a system.
The effective date of Sec. 114(g)(5)(B) is set as January 1,
2020, by Section 303 of the legislation to correspond both to
the need for SoundExchange to update its internal systems and
the alignment with the beginning of a calendar tax year.
Although Section 302(a) creates a brief statutory framework
for a SoundExchange system already in operation, 302(b) creates
a more detailed statutory framework for a letter of direction
system for works fixed before November 1, 1995, which was the
date of enactment of P.L. 104-39, the Digital Performance Right
in Sound Recordings Act of 1995. Prior to this date, producers,
mixers, and sound engineers would not have contemplated or
predicted the payment of digital royalties in their contracts
with an artist. The legislation identifies the manner in which
a letter of direction for two percent of total royalties can be
submitted for such works; what additional efforts the
collective and qualifying person must make over a four-month
period to notify the featured performers in advance of any
royalty distribution to one or more producers, mixers, or sound
engineers; and the objection process to such letters of
direction. After a valid letter of direction for a specific
work goes into effect, the payout of total royalties through
SoundExchange or another collective designated in the future
for such distributions would be:
50 percent of the receipts shall be paid to
the copyright owner of the exclusive right under
Sec. 106(6) to publicly perform a sound recording by
means of a digital audio transmission.
2.5 percent of the receipts shall be
deposited in an escrow account managed by an
independent administrator jointly appointed by
copyright owners of sound recordings and the American
Federation of Musicians (or any successor entity) to be
distributed to nonfeatured musicians (whether or not
members of the American Federation of Musicians) who
have performed on sound recordings.
2.5 percent of the receipts shall be
deposited in an escrow account managed by an
independent administrator jointly appointed by
copyright owners of sound recordings and the American
Federation of Television and Radio Artists (or any
successor entity) to be distributed to nonfeatured
vocalists (whether or not members of the American
Federation of Television and Radio Artists) who have
performed on sound recordings.
43 percent of the receipts shall be paid, on
a per sound recording basis, to the recording artist or
artists featured on such sound recording (or the
persons conveying rights in the artists' performance in
the sound recordings).
2 percent of the receipts shall be paid, on
a per sound recording basis, to those eligible for
payment(s) identified in Sec. 114(g)(6)(B).
Similar to Sec. 114(g)(5)(B), section 303 of the
legislation delays the effective date of the new
Sec. 114(g)(6)(E) to January 1, 2020, to correspond both to the
need for SoundExchange to update its internal systems and the
alignment with the beginning of a calendar tax year.
Section 302(c) makes several technical and conforming
amendments to Sec. 114(g) that should have no operative impact
upon any entity operating currently or in the future.
Hearings
The Committee on the Judiciary held no hearings on H.R.
5447, but held an oversight field hearing on the music issues
addressed by H.R. 5447, on January 26, 2018. Testimony was
received from Mr. Aloe Blacc, Musician, Singer, Songwriter; Mr.
Mike Clink, Record Producer; Mr. Booker Jones, Songwriter,
Record Producer, Artist, and Arranger; Mr. Tom Douglas,
Songwriter; Mr. Neil Portnow, President, The Recording Academy;
and, Ms. Dionne Warwick, Recording Artist.
In addition, the Committee held two hearings in June 2014
that were focused specifically on music licensing under Title
17. Testimony was received from Mr. David Israelite, National
Music Publishers Association; Mr. Neil Portnow, The Recording
Academy; Mr. Michael O'Neill, BMI; Mr. Will Hoyt, TV Music
License Committee; Mr. Lee Knife, Digital Media Association;
Mr. Jim Griffin, OneHouse LLC; Mr. Lee Miller, Nashville
Songwriters Association International; Mr. Michael Huppe,
SoundExchange Inc.; Mr. Ed Christian, Radio Music License
Committee Inc. (RMLC); Mr. Charles Warfield Jr., On Behalf of
the National Association of Broadcasters (NAB); Mr. Chris
Harrison, Pandora Media Inc.; Ms. Roseanne Cash, On Behalf of
the Americana Music Association (AMA); Mr. Cary Sherman,
Recording Industry of America (RIAA); Mr. David Frear, Sirius
XM Holdings Inc.; Mr. Paul Williams, American Society of
Composers, Authors and Publishers (ASCAP); and, Mr. Darius Van
Arman, On Behalf of the American Association of Independent
Music (A2IM).
Committee Consideration
On April 11, 2018, the Committee met in open session and
ordered the bill (H.R. 5447) favorably reported, without
amendment, by a roll call vote of 32 to 0, a quorum being
present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that that
the following roll call votes occurred during the Committee's
consideration of H.R. 5447.
1. Motion to report H.R. 5447 favorably to the House.
Approved 32 to 0.
ROLLCALL NO. 1
------------------------------------------------------------------------
Ayes Nays
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman.................... X
Mr. Sensenbrenner, Jr. (WI)..................... ......
Mr. Smith (TX).................................. X
Mr. Chabot (OH)................................. ......
Mr. Issa (CA)................................... ......
Mr. King (IA)................................... ......
Mr. Gohmert (TX)................................ X
Mr. Jordan (OH)................................. X
Mr. Poe (TX).................................... X
Mr. Marino (PA)................................. X
Mr. Gowdy (SC).................................. X
Mr. Labrador (ID)............................... ......
Mr. Collins (GA)................................ X
Mr. DeSantis (FL)............................... X
Mr. Buck (CO)................................... X
Mr. Ratcliffe (TX).............................. X
Ms. Roby (AL)................................... X
Mr. Gaetz (FL).................................. X
Mr. Johnson (LA)................................ X
Mr. Biggs (AZ).................................. X
Mr. Rutherford (FL)............................. X
Ms. Handel (GA)................................. X
Mr. Nadler (NY), Ranking Member................. X
Ms. Lofgren (CA)................................ X
Ms. Jackson Lee (TX)............................ X
Mr. Cohen (TN).................................. X
Mr. Johnson (GA)................................ X
Mr. Deutch (FL)................................. X
Mr. Gutierrez (IL)..............................
Ms. Bass (CA)...................................
Mr. Richmond (LA)............................... X
Mr. Jeffries (NY)............................... X
Mr. Cicilline (RI).............................. X
Mr. Swalwell (CA)............................... X
Mr. Lieu (CA)................................... X
Mr. Raskin (MD)................................. X
Ms. Jayapal (WA)................................ X
Mr. Schneider (IL).............................. X
Ms. Demings (FL)................................ X
-----------------------
Total....................................... 32
------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to H.R. 5447, the following estimate and comparison
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 25, 2018.
Hon. Bob Goodlatte, Chairman
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5447, the Music
Modernization Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Stephen
Rabent and Jacob Fabian, who can be reached at 226-2860.
Sincerely,
Keith Hall.
Enclosure
cc:
Honorable Jerrold Nadler
Ranking Member
H.R. 5447--Music Modernization Act.
As ordered reported by the House Committee on the Judiciary on April
11, 2018.
Summary: Under current law, a digital music provider (such
as Spotify, Apple Music, or Pandora) must pay the copyright
owner a royalty fee to use a protected work of music. If it
does not otherwise have a voluntary license agreement with the
copyright owner to use the work, the music provider must file a
notice of intent--on a song-by-song or record-by-record basis--
with the copyright owner or the U.S. Copyright Office when it
seeks to use any copyrighted digital musical work.
H.R. 5447 would eliminate notice-of-intent licensing for
digital musical works and direct the Copyright Office to
designate a nonprofit entity--a mechanical licensing
collective, or MLC--to administer a new blanket-licensing
system. Under such a license, a digital music provider could
use certain copyrighted musical works without filing a notice
of intent to do so. H.R. 2447 also would require the MLC to
collect royalties from digital music providers using the
blanket license and distribute them to copyright owners.
CBO estimates that enacting H.R. 5447 would increase
deficits by $47 million over the 2021-2028 period. That amount
comprises an increase in direct spending of $222 million and an
increase in revenues of $175 million. In addition, CBO
estimates that, over the 2019-2023 period, it would cost less
than $500,000 to implement the bill, subject to the
availability of appropriated funds.
Because enacting H.R. 5447 would affect direct spending and
revenues, pay-as-you-go procedures apply.
CBO estimates that enacting H.R. 5447 would not increase
net direct spending by more than $2.5 billion or on-budget
deficits by more than $5 billion in any of the four consecutive
10-year periods beginning in 2029.
H.R. 5447 would impose intergovernmental mandates, as
defined in the Unfunded Mandates Reform Act (UMRA), in the form
of preemptions of state laws, but CBO estimates that the costs
of those mandates would fall well below the threshold
established in UMRA for intergovernmental mandates ($80 million
in 2018, adjusted annually for inflation).
The bill would impose private-sector mandates on companies
that provide digital music services by:
Requiring those companies to pay fees when
they apply for licenses issued by the MLC to cover the
administrative costs of the organization;
Requiring those companies to provide usage
reports to the MLC each month detailing the artists and
works that have been streamed; and
Changing the processes used to resolve
disputes over claims of copyright infringement in
certain cases.
Because the effect on settlements due to copyright holders
under the new dispute resolution process is uncertain, CBO
cannot determine whether the aggregate cost of the mandates on
private entities would exceed the annual threshold established
in UMRA for private-sector mandates ($160 million in 2018,
adjusted annually for inflation).
Estimated Cost to the Federal Government: The estimated
budgetary effect of H.R. 5447 is shown in the following table.
The costs of the legislation fall within budget function 370
(commerce and housing credit).
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019-2023 2019-2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
INCREASES IN DIRECT SPENDING
Estimated Budget Authority........................... 0 0 0 20 28 28 29 29 30 31 31 76 227
Estimated Outlays 0 0 0 17 27 28 29 29 30 31 31 72 222
INCREASES IN REVENUES
Estimated Revenues................................... 0 0 0 16 22 22 22 23 23 23 24 59 175
NET INCREASE IN THE DEFICIT FROM INCREASES IN DIRECT SPENDING AND REVENUES
Effect on the Deficit................................ 0 0 0 1 5 6 6 7 7 7 8 13 47
--------------------------------------------------------------------------------------------------------------------------------------------------------
CBO estimates that discretionary spending to implement H.R. 5447 would total less than $500,000 over the 2019-2023 period, subject to the availability
of appropriated funds.
Basis of estimate: For this estimate, CBO assumes that H.R.
5447 will be enacted near the end of fiscal year 2018, that the
necessary amounts will be appropriated each year, and that
estimated spending will follow historical patterns for similar
activities.
Under H.R. 5447, the Copyright Office would designate an
entity to act as the MLC and the judges of the Copyright
Royalty Board would establish an administrative assessment to
be paid by users of the blanket license and by certain other
large users of copyrighted digital musical works. That
assessment would be designed to cover the costs of
establishing, maintaining, and operating the MLC. Payment of
the assessment would be compulsory and could be enforced
through a court order. In CBO's view, in keeping with guidance
in the 1967 Report of the President's Commission on Budget
Concepts, the cash flows from the assessment and subsequent
spending should be recorded in the federal budget.\1\ Under the
bill, the initial administrative assessment would be effective
on January 1 two years after the date of enactment of the
legislation and CBO expects that collections would begin in
fiscal year 2021.
---------------------------------------------------------------------------
\1\For more information, see Congressional Budget Office, How CBO
Determines Whether to Classify an Activity as Governmental When
Estimating Its Budgetary Effects (June 2017), www.cbo.gov/publication/
52803.
---------------------------------------------------------------------------
H.R. 5447 would make several changes to royalty rates and
to protections for certain copyright holders of sound
recordings and musical works. Because royalty amounts collected
by the U.S. Copyright Office or its designated agents and later
distributed to copyright owners are not recorded in the federal
budget, CBO estimates that implementing those provisions would
have no budgetary effect.
Direct spending
H.R. 5447 would authorize the MLC to spend amounts
collected under the administrative assessment levied by the
Copyright Royalty Judges, without further appropriation, to
cover the MLC's costs. Such expenditures would be considered
direct spending. For this estimate, CBO expects that the
Copyright Royalty Judges would estimate the operating costs of
the MLC accurately and set an assessment rate to equal those
costs each year. Using information from industry experts and
the administrative costs to operate entities that engage in
similar activities, CBO estimates that expenditures by the MLC
would average $30 million annually and would total $227 million
over the 2021-2028 period.
Revenues
H.R. 5447 would authorize the Copyright Royalty Judges to
levy an assessment on digital music providers with blanket
licenses and on certain other digital music providers that
instead obtain voluntary licenses to use specific copyrighted
musical works. The assessment would be based on the entities'
use of musical works and set at a rate intended to fund the
operations of the MLC. For this estimate, CBO expects that the
assessment would be set to recover all of the allowable costs
of the MLC and would be collected in full in each year;
therefore, CBO estimates that collections would average about
$30 million annually. Those amounts would be recorded in the
budget as revenues. CBO estimates that enacting H.R. 5447 would
increase gross revenues by $227 million over the 2021-2028
period.
Because excise taxes and other indirect business taxes
(like the bill's proposed assessment) reduce the base of income
and payroll taxes, the amounts collected would lead to
reductions in revenues from income and payroll taxes.\2\ As a
result, the gross assessments under the bill would be partially
offset by a loss of receipts of 22 percent to 24 percent of
that gross amount each year. Thus, CBO estimates that enacting
H.R. 5447 would increase net revenues by $175 million over the
2021-2028 period.
---------------------------------------------------------------------------
\2\See Congressional Budget Office, The Role of the 25 Percent
Revenue Offset in Estimating the Budgetary Effects of Legislation
(January 2009), www.cbo.gov/publication/20110.
---------------------------------------------------------------------------
Spending subject to appropriation
H.R. 5447 would require the Copyright Office and Copyright
Royalty Judges to make rules that create the MLC, establish a
digital licensee coordinator, establish a blanket-licensing
system, and set new rates for royalty payments. Using
information from the Copyright Office, CBO estimates that those
activities would cost the agency less than $500,000 over the
2019-2023 period.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5447, THE MUSIC MODERNIZATION ACT, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON THE JUDICIARY ON APRIL
11, 2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2018-2023 2018-2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN THE DEFICIT
Statutory Pay-As-You-Go Impact....................... 0 0 0 1 5 6 6 6 7 7 8 13 47
Memorandum:
Changes in Outlays............................... 0 0 0 17 27 28 29 29 30 31 31 72 222
Changes in Revenues.............................. 0 0 0 16 22 22 22 23 23 23 24 59 175
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increase in long-term direct spending and deficits: CBO
estimates that enacting H.R. 5447 would not increase net direct
spending by more than $2.5 billion or on-budget deficits by
more than $5 billion in any of the four consecutive 10-year
periods beginning in 2029.
Mandates: H.R. 5447 would impose intergovernmental mandates
as defined in UMRA by preempting state property laws. The bill
would establish a new system, under the MLC, for collecting and
distributing royalties that would preempt state laws governing
unclaimed property. Under current state property laws, states
may collect royalties that remain unclaimed for a certain
period of time; H.R. 5447 would preempt those laws. Using
information from music industry sources about current levels of
unclaimed royalties and state efforts to claim them, CBO
estimates that the amount of revenue that states might forego
as a result of the preemptions would be small and below the
threshold established in UMRA for intergovernmental mandates
($80 million in 2018, adjusted annually for inflation).
Further, the bill would establish federal copyright
protections for musical works recorded prior to 1972 (which do
not exist under current law), and would preempt state property
laws that govern infringement claims regarding those works.
Although the preemption would limit the application of state
laws in these cases, it would impose no duty on states that
would result in additional spending or a loss of revenues.
The bill would impose private-sector mandates on companies
that provide digital music services. Under current law, digital
music services negotiate directly with copyright owners for the
right to use musical works, or pay fees to the U.S. Copyright
Office for the right to use music when the copyright owner
cannot be identified. H.R. 5447 would direct those companies to
pay fees instead to the MLC to administer a new blanket
licensing system. Using information from the U.S. Copyright
Office and music industry sources, CBO estimates that the total
fees companies would pay to the MLC would range from $22
million to $28 million per year over the 2019-2023 period and
that companies would begin paying fees in 2021. (Those amounts
include a small savings that would result from companies no
longer paying fees to the U.S. Copyright Office for the covered
services.)
In order to be issued a blanket license for the use of
digital music, the bill would require companies that provide
digital music services to submit usage reports to the MLC
detailing the artists and works that have been streamed each
month. Because such companies already maintain and provide
similar information under current law, CBO estimates that the
costs of complying with this requirement would not be
significant.
Finally, the bill would establish new processes for
settling legal disputes over the infringement of copyrights for
musical works by ending outstanding--or prohibiting future--
lawsuits by copyright owners in certain cases. In the case of
lawsuits alleging copyright infringement filed after January 1,
2018, the bill would terminate those lawsuits. In lieu of
settlement under the terminated lawsuits, copyright owners
would be entitled to royalties under the rates set by the MLC
for music streamed during the 3 years preceding the suit (the
federal statute of limitations on claims of copyright
infringement); in exchange, digital music companies would
receive liability protection as long as they make good-faith
efforts to aid the MLC in matching works with their copyright
owners and make timely payments of royalties that would be due.
Similarly, in the case of lawsuits involving musical works
recorded prior to 1972 and brought under state law, the bill
would nullify those claims and substitute a federal process
under which copyright holders would be entitled to 3 years'
worth of back royalties; in exchange, music companies would
receive protection from further claims.
In substituting these new processes for rights of legal
action that exist under current law (at the federal or state
level), the bill would impose mandates on copyright holders by
terminating their existing rights to make infringement claims.
The costs of the mandates would be the foregone value of awards
and settlements for those claims to the extent that the
legislation results in compensation levels that are lower than
what could have been collected under current law. CBO is
uncertain about how the value of royalties claimed by copyright
owners in lawsuits would be affected under the bill and how
much those amounts might differ relative to current law.
Consequently, CBO cannot determine whether the aggregate cost
of mandates in the bill on private entities would exceed the
annual threshold established in UMRA for private-sector
mandates ($160 million in 2018, adjusted annually for
inflation).
Estimate prepared by: Federal Costs: Stephen Rabent and
Jacob Fabian; Mandates: Jon Sperl.
Estimate reviewed by: Kim P. Cawley, Chief, Natural and
Physical Resources Cost Estimates Unit; Susan Willie, Chief,
Mandates Unit; H. Samuel Papenfuss, Deputy Assistant Director
for Budget Analysis.
Duplication of Federal Programs
No provision of H.R. 5447 establishes or reauthorizes a
program of the Federal government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee finds that H.R. 5447 contains no directed
rule making within the meaning of 5 U.S.C. Sec. 551.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 5447
is designed to update the nation's music copyright laws.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 5447 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Section 1. Short Title; Table of Contents. Section 1 sets
forth the short title of the bill as the ``Music Modernization
Act.''
TITLE I. MUSICAL WORKS MODERNIZATION ACT
Section 101. Short Title. Section 101 sets forth the short
title of Title I as the ``Musical Works Modernization Act.''
Sec. 102. Blanket License for Digital Uses and Mechanical
Licensing Collective. Section 102 comprises the vast majority
of the overall legislation.
The first part of Section 102 updates existing 17 U.S.C.
Sec. 115 (a)-(c), partly to accommodate the new provisions
added by 115(d).
Subsection 115(a) is amended to clarify what requirements
for obtaining a compulsory license exist for digital music
providers.
Subsection 115(b) is amended by removing the ability of
persons seeking to make digital phonorecord deliveries to file
a notice of intent with the Copyright Office and instead
require such notice to be filed with the copyright owner. In
the event that a party does not file such notice for non-
digital phonorecord deliveries, that party is permanently
ineligible for the compulsory licenses, although they may
obtain voluntary licenses from the copyright owner(s). In the
case of digital phonorecord deliveries, the failure to obtain a
license forecloses the ability of a party to obtain such
license for three years.
Subsection 115(c) is amended to account for the new blanket
licensing system created by the new legislation in 115(d).
The latter part of section 102 strikes the existing
Subsection 115(d) of Title 17 that currently contains only one
definition and replaces it with a significantly expanded
subsection to create a new compulsory blanket licensing system
as follows:
Paragraph 1 of the new subsection 115(d) defines the
scope of the new compulsory license and how it
interacts with other existing licenses, such as a
voluntary license. By obtaining and complying with the
terms of such license, a digital music provider is not
subject to an infringement action under paragraphs (1)
and (3) of section 106.
Paragraph 2 sets forth the availability of the
blanket license, including related Copyright Office
regulations, its effective date, and dispute resolution
in federal district court.
Paragraph 3 creates the framework of the new
mechanical licensing collective (MLC) created by the
legislation beginning with subparagraph A that
identifies the requirement for a new ``mechanical
licensing collective'' that shall meet specified
minimum criteria including being: 1) a nonprofit single
entity, 2) endorsed by and enjoys support from the
majority of musical works copyright owners as measured
over the preceding three years, and 3) able to
demonstrate that it has or will have prior to the
license availability date the necessary capabilities to
perform the required functions.
Subparagraph B sets forth the initial process for
designation of the MLC by the Register as well as
periodic opportunities every five years for re-
designation. The Register is authorized to choose a
closest alternate designation in case every condition
set forth in subparagraph (A) is not met. However,
before an initial designation is made, all members of
the Board of Directors and the various committees,
along with contact information for the collective, are
required to be identified with their affiliations so
that interested parties can submit comments to the
Register on whether the parties meet the requirements
set forth in subparagraph (D) of the bill. This
requirement is not waivable by the Register and is not
subject to the alternate designation language.
Subparagraph C identifies the authorities and
functions of the collective along with three specific
provisions: the ability for the collective to
administer voluntary licenses, a restriction of
negotiating or granting licenses for public performance
rights, and a restriction on lobbying.
Subparagraph D sets forth the governance of the
collective and a requirement for a public annual
report. Since the Board and committee member
requirements along with the annual report are statutory
in nature, these requirements are not waivable by the
Register or subject to modification by the Board.
Subparagraph E explains in detail the fields in the
new musical works database that the collective is
required to create based upon information provided to
them by digital music services and under what
conditions the information is made available to others,
including the public. The required information in the
database depends upon whether a work is considered
matched or unmatched. To the extent that information is
missing, musical works copyright owners with works in
the database are required to undertake commercially
reasonable efforts to deliver the names of the sound
recording in which their works are embodied.
Subparagraph F requires the collective to maintain
publicly accessible lists of blanket and significant
nonblanket licensees.
Subparagraph G sets forth how royalties are collected
and then distribute along with efforts to collect
royalties from bankrupt licensees.
Subparagraph H clarifies that any unmatched royalties
shall be held by the collective for at least three
years after they were first accrued and must be kept in
an interest bearing account.
Subparagraph I sets forth the claiming process for
works that are originally deemed unmatched. The
collective is required to undertake a process to
publicize the existence of a searchable database. Once
a work is claimed, the royalties and accrued interest
for such work shall be paid out and the musical works
database is updated for future matching.
Subparagraph J determines how unclaimed royalties are
distributed on a market share basis after the holding
period specified in subparagraph H. The unclaimed
royalties oversight committee shall establish policies
and procedures for such distributions subject to the
approval of the Board of Directors of the MLC.
Unclaimed royalties are to be distributed based upon
market share data that is confidentially provided to
the collective by copyright owners. Ninety calendar
days notice is required for such distributions and
songwriters must be credited at least 50 percent of the
royalty paid to their publisher.
Subparagraph K sets forth the functions of the
dispute resolution committee concerning ownership
disputes among musical works copyright owners. Pursuant
to paragraph (11)(D) the collective is only liable for
gross negligence in these functions. However, a
copyright owner has the ultimate right to seek redress
in a federal district court pursuant to paragraph
(10)(E).
Subparagraph L sets forth the verification and audit
process for copyright owners to audit the collective,
although parties may agree on alternate procedures.
Subparagraph M concerns the ability of copyright
owners and their agents to access the records of the
collective subject to confidentiality agreements
prescribed by the Register.
Paragraph 4 specifies the terms and conditions for a
blanket license.
Subparagraph A identifies the data that must be
reported to the collective by a digital music provider
along with its royalty payments due 45 calendar days
after the end of a monthly reporting period. The
Register shall specify information technology
requirements of such reports along with the maintenance
of the records of use.
Subparagraph B requires digital music providers to
engage in good-faith, commercially reasonable efforts
to obtain information from copyright owners for use by
the collective, including in its database.
Subparagraph C requires digital music providers and
significant nonblanket licensees to pay the
administrative assessment established under paragraph
(7)(D).
Subparagraph D sets forth the verification and audit
process for the collective to audit the digital music
providers, although the parties may agree on alternate
procedures.
Subparagraph E identifies the conditions by which a
digital music provider may be considered in default and
the consequences of such default. A digital music
provider may seek review of such default on a de novo
basis in a federal district court of competent
jurisdiction.
Paragraph 5 identifies the role of the digital licensee
coordinator, its initial designation and potential
redesignation, as well as its authorities and functions. Like
the collective, the coordinator is prohibited from lobbying.
However, unlike the collective, it is possible for the new
blanket licensing system to proceed in the event a digital
licensee coordinator cannot be chosen.
Paragraph 6 sets forth the requirements for significant
nonblanket licensees as defined in subsection (e)(31),
including reporting requirements and payment of the
administrative assessment. Should a significant nonblank
licensee fail to pay the assessment or submit the required
reports, either is actionable in a federal district court for
damages up to three times the amount of the unpaid assessment,
injunctive relief, costs, and attorneys' fees.
Paragraph 7 details the funding of the new collective by
the digital music providers and significant nonblanket
licensees through a combination of voluntary contributions and
an administrative assessment determined by the Copyright
Royalty Judges in a separate proceeding. The fee shall be
determined in either a percentage of royalties basis or other
usage-based formula with a minimum amount due that covers the
reasonable costs of the collective. Timelines for the adoption
of the initial and future administrative assessments are
established in this paragraph along with granting the Copyright
Royalty Judges continuing authority to amend their decisions.
Paragraph 8 provides guidance to the Copyright Royalty
Judges as to how interim rates should be established as well as
the new late fee for nonpayment of royalties to the collective
under the blanket license. Neither the mechanical licensing
collective nor the digital licensee coordinator may participate
in such rate setting activities except to provide information
to other parties in the proceeding.
Paragraph 9 identifies the process to transfer the existing
licensing system to the blanket system. Existing compulsory
licenses will automatically become blanket licenses on the
license availability date and existing voluntary licenses will
continue unchanged until they expire or parties agree to amend
or discontinue them. Immediately after enactment of the
legislation, the Copyright Office shall discontinue accepting
notices of intention with regards to works that would be
covered by the new blanket license. However, prior to the
license availability date, liability is waived if a valid
notice was filed prior to the enactment date.
Paragraph 10 provides for a limitation on liability for
prior unlicensed uses that have occurred after January 1, 2018,
so long as digital music providers engage in at least monthly
good-faith efforts to locate copyright owners and pay their
royalties prior to the license availability date. Once the
blanket license is available, any non-matched royalties must be
turned over to the collective within 45 days, along with as
much information about usage and ownership information as
possible. Late fees and infringement causes of action are also
limited subject to these conditions. Two savings clauses are
included to clarify that nothing in this paragraph limits or
alters any existing right of action and that any aggrieved
party may seek an action in federal district court if there is
an issue that is not adequately resolved by the Board.
Paragraph 11 details the legal protections for various
licensing activities, including antitrust limitations and
common agent exemptions. The collective is not liable for good-
faith activities under a grossly negligent standard, but none
of its activities are immune from suit in federal district
court. Due to the distribution of unclaimed royalties to other
copyright owners, state laws on abandoned property are
preempted.
Paragraph 12 gives the Register authority to conduct
proceedings or adopt any necessary regulations as necessary or
appropriate with the exception of the administrative assessment
that is to be determined by the Copyright Royalty Judges. Among
the regulations required to be established are those necessary
to govern business confidentiality. All such regulations are
subject to judicial review.
Paragraph 13 contains two savings clauses for limiting the
scope of the blanket license and making clear that rights of
public performance are not affected.
A new subsection 115(e) is created that contains 36 new
definitions.
Section 102(b) makes a technical amendment to existing
801(b) to clarify that the administrative assessment is to be
determined under the provisions created by this legislation,
rather than the procedures of existing law.
Section 102(c) sets the effective date of certain new
provisions.
Section 102(d) directs the Copyright Royalty Judges to
update their regulations within nine months to be consistent
with the legislation.
Sec. 103. Amendments to section 114. Section 103 creates a
uniform willing buyer, willing seller rate standard by amending
17 U.S.C. Sec. 114(f), repealing 17 U.S.C. Sec. 114(i), and
modifying 801(b), while ensuring that certain transmissions by
a broadcaster shall not take into account license fees for
public performances of sound recording under 17 U.S.C.
Sec. 106(6). The discounted ``pre-existing services'' rate
standard established in 1976 is removed in order to equalize
the rate setting process for all licensees. Further, it is
clarified that the repeal of 114(i) shall not be taken into
account for the setting of rates for sound recordings under
section 112(e) or 114(f). A series of additional technical and
conforming amendments rearranges several other provisions in
response to these changes.
Sec. 104. Random assignment of rate court proceedings.
Section 104 creates an updated system to randomly assign ASCAP
and BMI rate court cases to judges of the Southern District of
New York other than the two judges who oversee the consent
decrees. These two judges will no longer hear rate court
proceedings.
TITLE II. COMPENSATING LEGACY ARTISTS FOR THEIR SONGS, SERVICE, AND
IMPORTANT CONTRIBUTIONS TO SOCIETY (CLASSICS) ACT
Section 201. Short Title. Section 201 designates the short
title of this Title of the bill as the ``Compensating Legacy
Artists for Their Songs, Service, and Important Contributions
to Society, or CLASSICS Act.''
Sec. 202. Unauthorized digital performance of pre-1972
sound recordings. Section 202 amends Title 17 by adding a new
Chapter 14 concerning pre-1972 works titled ``Chapter 14--
Unauthorized Digital Performance of Pre-1972 Sound Recordings''
as follows:
Chapter 14 creates a remedy under section 502 through 505
for the use of works fixed between January 1, 1923, and
February 14, 1972, when no federal right existed. However,
should a transmitting entity make such transmissions as they do
for those works fixed on or after February 15, 1972, including
statutory royalties equivalent to those works, these
transmissions are considered authorized. Direct licensing of
such works from the copyright owners is recognized so long as
the collective that receives and distributes such payments is
paid 50% of the proceeds with 50% of the performance royalties
credited as payments due under the license. State common law
copyrights or other equivalent rights are preempted as are
claims under them. Fair use, library use privileges in section
108, 110(1), and 110(2) are available as a defense along with
section 512. In order to obtain statutory damages, a copyright
owner must file a schedule of pre-1972 works for which the
copyright owner is seeking royalties. No suits may arise until
90 days have passed since the works are first indexed into the
public records of the Copyright Office. Transmitting entities
must also submit their contact information to the Copyright
Office so that copyright owners can identify which services are
transmitting their works and send them a notice to stop using
such works in the event they choose not to receive webcasting
royalties. Such notice will prevent an award of statutory
damages or attorney's fees from being imposed for activities
within the first 90 days a notice is sent to the transmitter.
In case the notice is undeliverable, the 90-day period begins
on the date of the attempted delivery. Section 230 safe harbors
also apply in the use of such works.
Sec. 203. Effective date. Section 203 sets the effective
date of Title II as the date of enactment of the overall bill.
TITLE III. ALLOCATION FOR MUSIC PRODUCERS (AMP) ACT
Section 301. Short Title. Section 301 designates the short
title of this section of the bill as the ``Allocation for Music
Producers, or AMP, Act.''
Sec. 302. Payment of statutory performance royalties.
Section 302(a) codifies an existing practice of SoundExchange
to accept letters of direction in order to pay producers, sound
engineers, and mixers a portion of the webcasting royalties
that it collects. Section 302(b) expands this program to cover
new royalties for pre-1972 works that will be received by
SoundExchange due to enactment of Title II. The new program
requires, in the absence of a letter of direction, at least
four months' notice to a copyright owner with no objections
from them before a set percentage of royalties (2% of all
webcasting royalties from a particular work) are then paid to
producers, sound engineers, and mixers.
Sec. 303. Effective date. Section 303 sets the effective
date of all three Titles of the bill as the date of enactment
with the exception of certain changes to 114(g) made in Title
III.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
TITLE 17, UNITED STATES CODE
Chap. Sec.
Subject Matter and Scope of Copyright..........................101
* * * * * * *
Unauthorized digital performance of pre-1972 sound recordings.1401
CHAPTER 1--SUBJECT MATTER AND SCOPE OF COPYRIGHT
* * * * * * *
Sec. 114. Scope of exclusive rights in sound recordings
(a) The exclusive rights of the owner of copyright in a sound
recording are limited to the rights specified by clauses (1),
(2), (3) and (6) of section 106, and do not include any right
of performance under section 106(4).
(b) The exclusive right of the owner of copyright in a sound
recording under clause (1) of section 106 is limited to the
right to duplicate the sound recording in the form of
phonorecords or copies that directly or indirectly recapture
the actual sounds fixed in the recording. The exclusive right
of the owner of copyright in a sound recording under clause (2)
of section 106 is limited to the right to prepare a derivative
work in which the actual sounds fixed in the sound recording
are rearranged, remixed, or otherwise altered in sequence or
quality. The exclusive rights of the owner of copyright in a
sound recording under clauses (1) and (2) of section 106 do not
extend to the making or duplication of another sound recording
that consists entirely of an independent fixation of other
sounds, even though such sounds imitate or simulate those in
the copyrighted sound recording. The exclusive rights of the
owner of copyright in a sound recording under clauses (1), (2),
and (3) of section 106 do not apply to sound recordings
included in educational television and radio programs (as
defined in section 397 of title 47) distributed or transmitted
by or through public broadcasting entities (as defined by
section 118(f)): Provided, That copies or phonorecords of said
programs are not commercially distributed by or through public
broadcasting entities to the general public.
(c) This section does not limit or impair the exclusive right
to perform publicly, by means of a phonorecord, any of the
works specified by section 106(4).
(d) Limitations on Exclusive Right.--Notwithstanding the
provisions of section 106(6)--
(1) Exempt transmissions and retransmissions.--The
performance of a sound recording publicly by means of a
digital audio transmission, other than as a part of an
interactive service, is not an infringement of section
106(6) if the performance is part of--
(A) a nonsubscription broadcast transmission;
(B) a retransmission of a nonsubscription
broadcast transmission: Provided, That, in the
case of a retransmission of a radio station's
broadcast transmission--
(i) the radio station's broadcast
transmission is not willfully or
repeatedly retransmitted more than a
radius of 150 miles from the site of
the radio broadcast transmitter,
however--
(I) the 150 mile limitation
under this clause shall not
apply when a nonsubscription
broadcast transmission by a
radio station licensed by the
Federal Communications
Commission is retransmitted on
a nonsubscription basis by a
terrestrial broadcast station,
terrestrial translator, or
terrestrial repeater licensed
by the Federal Communications
Commission; and
(II) in the case of a
subscription retransmission of
a nonsubscription broadcast
retransmission covered by
subclause (I), the 150 mile
radius shall be measured from
the transmitter site of such
broadcast retransmitter;
(ii) the retransmission is of radio
station broadcast transmissions that
are--
(I) obtained by the
retransmitter over the air;
(II) not electronically
processed by the retransmitter
to deliver separate and
discrete signals; and
(III) retransmitted only
within the local communities
served by the retransmitter;
(iii) the radio station's broadcast
transmission was being retransmitted to
cable systems (as defined in section
111(f)) by a satellite carrier on
January 1, 1995, and that
retransmission was being retransmitted
by cable systems as a separate and
discrete signal, and the satellite
carrier obtains the radio station's
broadcast transmission in an analog
format: Provided, That the broadcast
transmission being retransmitted may
embody the programming of no more than
one radio station; or
(iv) the radio station's broadcast
transmission is made by a noncommercial
educational broadcast station funded on
or after January 1, 1995, under section
396(k) of the Communications Act of
1934 (47 U.S.C. 396(k)), consists
solely of noncommercial educational and
cultural radio programs, and the
retransmission, whether or not
simultaneous, is a nonsubscription
terrestrial broadcast retransmission;
or
(C) a transmission that comes within any of
the following categories--
(i) a prior or simultaneous
transmission incidental to an exempt
transmission, such as a feed received
by and then retransmitted by an exempt
transmitter: Provided, That such
incidental transmissions do not include
any subscription transmission directly
for reception by members of the public;
(ii) a transmission within a business
establishment, confined to its premises
or the immediately surrounding
vicinity;
(iii) a retransmission by any
retransmitter, including a multichannel
video programming distributor as
defined in section 602(12) of the
Communications Act of 1934 (47 U.S.C.
522(12)), of a transmission by a
transmitter licensed to publicly
perform the sound recording as a part
of that transmission, if the
retransmission is simultaneous with the
licensed transmission and authorized by
the transmitter; or
(iv) a transmission to a business
establishment for use in the ordinary
course of its business: Provided, That
the business recipient does not
retransmit the transmission outside of
its premises or the immediately
surrounding vicinity, and that the
transmission does not exceed the sound
recording performance complement.
Nothing in this clause shall limit the
scope of the exemption in clause (ii).
(2) Statutory licensing of certain transmissions.--
The performance of a sound recording publicly by means
of a subscription digital audio transmission not exempt
under paragraph (1), an eligible nonsubscription
transmission, or a transmission not exempt under
paragraph (1) that is made by a preexisting satellite
digital audio radio service shall be subject to
statutory licensing, in accordance with subsection (f)
if--
(A)(i) the transmission is not part of an
interactive service;
(ii) except in the case of a transmission to
a business establishment, the transmitting
entity does not automatically and intentionally
cause any device receiving the transmission to
switch from one program channel to another; and
(iii) except as provided in section 1002(e),
the transmission of the sound recording is
accompanied, if technically feasible, by the
information encoded in that 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;
(B) in the case of a subscription
transmission not exempt under paragraph (1)
that is made by a preexisting subscription
service in the same transmission medium used by
such service on July 31, 1998, or in the case
of a transmission not exempt under paragraph
(1) that is made by a preexisting satellite
digital audio radio service--
(i) the transmission does not exceed
the sound recording performance
complement; and
(ii) the transmitting entity does not
cause to be published by means of an
advance program schedule or prior
announcement the titles of the specific
sound recordings or phonorecords
embodying such sound recordings to be
transmitted; and
(C) in the case of an eligible
nonsubscription transmission or a subscription
transmission not exempt under paragraph (1)
that is made by a new subscription service or
by a preexisting subscription service other
than in the same transmission medium used by
such service on July 31, 1998--
(i) the transmission does not exceed
the sound recording performance
complement, except that this
requirement shall not apply in the case
of a retransmission of a broadcast
transmission if the retransmission is
made by a transmitting entity that does
not have the right or ability to
control the programming of the
broadcast station making the broadcast
transmission, unless--
(I) the broadcast station
makes broadcast transmissions--
(aa) in digital
format that regularly
exceed the sound
recording performance
complement; or
(bb) in analog
format, a substantial
portion of which, on a
weekly basis, exceed
the sound recording
performance complement;
and
(II) the sound recording
copyright owner or its
representative has notified the
transmitting entity in writing
that broadcast transmissions of
the copyright owner's sound
recordings exceed the sound
recording performance
complement as provided in this
clause;
(ii) the transmitting entity does not
cause to be published, or induce or
facilitate the publication, by means of
an advance program schedule or prior
announcement, the titles of the
specific sound recordings to be
transmitted, the phonorecords embodying
such sound recordings, or, other than
for illustrative purposes, the names of
the featured recording artists, except
that this clause does not disqualify a
transmitting entity that makes a prior
announcement that a particular artist
will be featured within an unspecified
future time period, and in the case of
a retransmission of a broadcast
transmission by a transmitting entity
that does not have the right or ability
to control the programming of the
broadcast transmission, the requirement
of this clause shall not apply to a
prior oral announcement by the
broadcast station, or to an advance
program schedule published, induced, or
facilitated by the broadcast station,
if the transmitting entity does not
have actual knowledge and has not
received written notice from the
copyright owner or its representative
that the broadcast station publishes or
induces or facilitates the publication
of such advance program schedule, or if
such advance program schedule is a
schedule of classical music programming
published by the broadcast station in
the same manner as published by that
broadcast station on or before
September 30, 1998;
(iii) the transmission--
(I) is not part of an
archived program of less than 5
hours duration;
(II) is not part of an
archived program of 5 hours or
greater in duration that is
made available for a period
exceeding 2 weeks;
(III) is not part of a
continuous program which is of
less than 3 hours duration; or
(IV) is not part of an
identifiable program in which
performances of sound
recordings are rendered in a
predetermined order, other than
an archived or continuous
program, that is transmitted
at--
(aa) more than 3
times in any 2-week
period that have been
publicly announced in
advance, in the case of
a program of less than
1 hour in duration, or
(bb) more than 4
times in any 2-week
period that have been
publicly announced in
advance, in the case of
a program of 1 hour or
more in duration,
except that the requirement of
this subclause shall not apply
in the case of a retransmission
of a broadcast transmission by
a transmitting entity that does
not have the right or ability
to control the programming of
the broadcast transmission,
unless the transmitting entity
is given notice in writing by
the copyright owner of the
sound recording that the
broadcast station makes
broadcast transmissions that
regularly violate such
requirement;
(iv) the transmitting entity does not
knowingly perform the sound recording,
as part of a service that offers
transmissions of visual images
contemporaneously with transmissions of
sound recordings, in a manner that is
likely to cause confusion, to cause
mistake, or to deceive, as to the
affiliation, connection, or association
of the copyright owner or featured
recording artist with the transmitting
entity or a particular product or
service advertised by the transmitting
entity, or as to the origin,
sponsorship, or approval by the
copyright owner or featured recording
artist of the activities of the
transmitting entity other than the
performance of the sound recording
itself;
(v) the transmitting entity
cooperates to prevent, to the extent
feasible without imposing substantial
costs or burdens, a transmission
recipient or any other person or entity
from automatically scanning the
transmitting entity's transmissions
alone or together with transmissions by
other transmitting entities in order to
select a particular sound recording to
be transmitted to the transmission
recipient, except that the requirement
of this clause shall not apply to a
satellite digital audio service that is
in operation, or that is licensed by
the Federal Communications Commission,
on or before July 31, 1998;
(vi) the transmitting entity takes no
affirmative steps to cause or induce
the making of a phonorecord by the
transmission recipient, and if the
technology used by the transmitting
entity enables the transmitting entity
to limit the making by the transmission
recipient of phonorecords of the
transmission directly in a digital
format, the transmitting entity sets
such technology to limit such making of
phonorecords to the extent permitted by
such technology;
(vii) phonorecords of the sound
recording have been distributed to the
public under the authority of the
copyright owner or the copyright owner
authorizes the transmitting entity to
transmit the sound recording, and the
transmitting entity makes the
transmission from a phonorecord
lawfully made under the authority of
the copyright owner, except that the
requirement of this clause shall not
apply to a retransmission of a
broadcast transmission by a
transmitting entity that does not have
the right or ability to control the
programming of the broadcast
transmission, unless the transmitting
entity is given notice in writing by
the copyright owner of the sound
recording that the broadcast station
makes broadcast transmissions that
regularly violate such requirement;
(viii) the transmitting entity
accommodates and does not interfere
with the transmission of technical
measures that are widely used by sound
recording copyright owners to identify
or protect copyrighted works, and that
are technically feasible of being
transmitted by the transmitting entity
without imposing substantial costs on
the transmitting entity or resulting in
perceptible aural or visual degradation
of the digital signal, except that the
requirement of this clause shall not
apply to a satellite digital audio
service that is in operation, or that
is licensed under the authority of the
Federal Communications Commission, on
or before July 31, 1998, to the extent
that such service has designed,
developed, or made commitments to
procure equipment or technology that is
not compatible with such technical
measures before such technical measures
are widely adopted by sound recording
copyright owners; and
(ix) the transmitting entity
identifies in textual data the sound
recording during, but not before, the
time it is performed, including the
title of the sound recording, the title
of the phonorecord embodying such sound
recording, if any, and the featured
recording artist, in a manner to permit
it to be displayed to the transmission
recipient by the device or technology
intended for receiving the service
provided by the transmitting entity,
except that the obligation in this
clause shall not take effect until 1
year after the date of the enactment of
the Digital Millennium Copyright Act
and shall not apply in the case of a
retransmission of a broadcast
transmission by a transmitting entity
that does not have the right or ability
to control the programming of the
broadcast transmission, or in the case
in which devices or technology intended
for receiving the service provided by
the transmitting entity that have the
capability to display such textual data
are not common in the marketplace.
(3) Licenses for transmissions by interactive
services.--
(A) No interactive service shall be granted
an exclusive license under section 106(6) for
the performance of a sound recording publicly
by means of digital audio transmission for a
period in excess of 12 months, except that with
respect to an exclusive license granted to an
interactive service by a licensor that holds
the copyright to 1,000 or fewer sound
recordings, the period of such license shall
not exceed 24 months: Provided, however, That
the grantee of such exclusive license shall be
ineligible to receive another exclusive license
for the performance of that sound recording for
a period of 13 months from the expiration of
the prior exclusive license.
(B) The limitation set forth in subparagraph
(A) of this paragraph shall not apply if--
(i) the licensor has granted and
there remain in effect licenses under
section 106(6) for the public
performance of sound recordings by
means of digital audio transmission by
at least 5 different interactive
services: Provided, however, That each
such license must be for a minimum of
10 percent of the copyrighted sound
recordings owned by the licensor that
have been licensed to interactive
services, but in no event less than 50
sound recordings; or
(ii) the exclusive license is granted
to perform publicly up to 45 seconds of
a sound recording and the sole purpose
of the performance is to promote the
distribution or performance of that
sound recording.
(C) Notwithstanding the grant of an exclusive
or nonexclusive license of the right of public
performance under section 106(6), an
interactive service may not publicly perform a
sound recording unless a license has been
granted for the public performance of any
copyrighted musical work contained in the sound
recording: Provided, That such license to
publicly perform the copyrighted musical work
may be granted either by a performing rights
society representing the copyright owner or by
the copyright owner.
(D) The performance of a sound recording by
means of a retransmission of a digital audio
transmission is not an infringement of section
106(6) if--
(i) the retransmission is of a
transmission by an interactive service
licensed to publicly perform the sound
recording to a particular member of the
public as part of that transmission;
and
(ii) the retransmission is
simultaneous with the licensed
transmission, authorized by the
transmitter, and limited to that
particular member of the public
intended by the interactive service to
be the recipient of the transmission.
(E) For the purposes of this paragraph--
(i) a ``licensor'' shall include the
licensing entity and any other entity
under any material degree of common
ownership, management, or control that
owns copyrights in sound recordings;
and
(ii) a ``performing rights society''
is an association or corporation that
licenses the public performance of
nondramatic musical works on behalf of
the copyright owner, such as the
American Society of Composers, Authors
and Publishers, Broadcast Music, Inc.,
and SESAC, Inc.
(4) Rights not otherwise limited.--
(A) Except as expressly provided in this
section, this section does not limit or impair
the exclusive right to perform a sound
recording publicly by means of a digital audio
transmission under section 106(6).
(B) Nothing in this section annuls or limits
in any way--
(i) the exclusive right to publicly
perform a musical work, including by
means of a digital audio transmission,
under section 106(4);
(ii) the exclusive rights in a sound
recording or the musical work embodied
therein under sections 106(1), 106(2)
and 106(3); or
(iii) any other rights under any
other clause of section 106, or
remedies available under this title, as
such rights or remedies exist either
before or after the date of enactment
of the Digital Performance Right in
Sound Recordings Act of 1995.
(C) Any limitations in this section on the
exclusive right under section 106(6) apply only
to the exclusive right under section 106(6) and
not to any other exclusive rights under section
106. Nothing in this section shall be construed
to annul, limit, impair or otherwise affect in
any way the ability of the owner of a copyright
in a sound recording to exercise the rights
under sections 106(1), 106(2) and 106(3), or to
obtain the remedies available under this title
pursuant to such rights, as such rights and
remedies exist either before or after the date
of enactment of the Digital Performance Right
in Sound Recordings Act of 1995.
(e) Authority for Negotiations.--
(1) Notwithstanding any provision of the antitrust
laws, in negotiating statutory licenses in accordance
with subsection (f), any copyright owners of sound
recordings and any entities performing sound recordings
affected by this section may negotiate and agree upon
the royalty rates and license terms and conditions for
the performance of such sound recordings 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 payments.
(2) For licenses granted under section 106(6), other
than statutory licenses, such as for performances by
interactive services or performances that exceed the
sound recording performance complement--
(A) copyright owners of sound recordings
affected by this section may designate common
agents to act on their behalf to grant licenses
and receive and remit royalty payments:
Provided, That each copyright owner shall
establish the royalty rates and material
license terms and conditions unilaterally, that
is, not in agreement, combination, or concert
with other copyright owners of sound
recordings; and
(B) entities performing sound recordings
affected by this section may designate common
agents to act on their behalf to obtain
licenses and collect and pay royalty fees:
Provided, That each entity performing sound
recordings shall determine the royalty rates
and material license terms and conditions
unilaterally, that is, not in agreement,
combination, or concert with other entities
performing sound recordings.
(f) Licenses for Certain Nonexempt Transmissions.--
[(1)(A) Proceedings under chapter 8 shall determine
reasonable rates and terms of royalty payments for
subscription transmissions by preexisting subscription
services and transmissions by preexisting satellite
digital audio radio services specified by subsection
(d)(2) during the 5-year period beginning on January 1
of the second year following the year in which the
proceedings are to be commenced, except in the case of
a different transitional period provided under section
6(b)(3) of the Copyright Royalty and Distribution
Reform Act of 2004, or such other period as the parties
may agree. Such terms and rates shall distinguish among
the different types of digital audio transmission
services then in operation. Any copyright owners of
sound recordings, preexisting subscription services, or
preexisting satellite digital audio radio services may
submit to the Copyright Royalty Judges licenses
covering such subscription transmissions with respect
to such sound recordings. 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 (3), 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), a
transitional period provided under section 6(b)(3) of
the Copyright Royalty and Distribution Reform Act of
2004, or such other period as the parties may agree. In
establishing rates and terms for preexisting
subscription services and preexisting satellite digital
audio radio services, in addition to the objectives set
forth in section 801(b)(1), the Copyright Royalty
Judges may consider the rates and terms for comparable
types of subscription digital audio transmission
services and comparable circumstances under voluntary
license agreements described in subparagraph (A).
[(C) The procedures under subparagraphs (A) and (B)
also shall be initiated pursuant to a petition filed by
any copyright owners of sound recordings, any
preexisting subscription services, or any preexisting
satellite digital audio radio services indicating that
a new type of subscription digital audio transmission
service on which sound recordings are performed is or
is about to become operational, for the purpose of
determining reasonable terms and rates of royalty
payments with respect to such new type of transmission
service for the period beginning with the inception of
such new type of service and ending on the date on
which the royalty rates and terms for subscription
digital audio transmission services most recently
determined under subparagraph (A) or (B) and chapter 8
expire, or such other period as the parties may agree.
[(2)(A) Proceedings under chapter 8 shall determine
reasonable rates and terms of royalty payments for
public performances of sound recordings by means of
eligible nonsubscription transmission services and new
subscription services specified by 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, except in the case of a different
transitional period provided under section 6(b)(3) of
the Copyright Royalty and Distribution Reform Act of
2004, or such other period as the parties may agree.
Such rates and terms shall distinguish among the
different types of eligible nonsubscription
transmission services and new subscription services
then in operation and shall include a minimum fee for
each such type of service. Any copyright owners of
sound recordings or any entities performing sound
recordings affected by this paragraph may submit to the
Copyright Royalty Judges licenses covering such
eligible nonsubscription transmissions and new
subscription services with respect to such sound
recordings. 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 (3), 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), a
transitional period provided under section 6(b)(3) of
the Copyright Royalty and Distribution Act of 2004, or
such other period as the parties may agree. Such rates
and terms shall distinguish among the different types
of eligible nonsubscription transmission services then
in operation and shall include a minimum fee for each
such type of service, such differences to be based on
criteria including, but not limited to, the quantity
and nature of the use of sound recordings and the
degree to which use of the service may substitute for
or may promote the purchase of phonorecords by
consumers. In establishing rates and terms for
transmissions by eligible nonsubscription services and
new subscription services, the Copyright 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 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 its sound
recordings; and
[(ii) the relative roles of the copyright
owner and the transmitting entity in the
copyrighted work and the service made available
to the public with respect to relative creative
contribution, technological contribution,
capital investment, cost, and risk.
In establishing such rates and terms, the Copyright
Royalty Judges may consider the rates and terms for
comparable types of digital audio transmission services
and comparable circumstances under voluntary license
agreements described in subparagraph (A).
[(C) The procedures under subparagraphs (A) and (B)
shall also be initiated pursuant to a petition filed by
any copyright owners of sound recordings or any
eligible nonsubscription service or new subscription
service indicating that a new type of eligible
nonsubscription service or new subscription service on
which sound recordings are performed is or is about to
become operational, for the purpose of determining
reasonable terms and rates of royalty payments with
respect to such new type of service for the period
beginning with the inception of such new type of
service and ending on the date on which the royalty
rates and terms for eligible nonsubscription services
and new subscription 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.]
(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.
(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 services, as the case may be,
most recently determined under subparagraph (A) or (B)
and chapter 8 expire, or such other period as the
parties may agree.
[(3)] (2) License agreements voluntarily negotiated
at any time between 1 or more copyright owners of sound
recordings and 1 or more entities performing sound
recordings shall be given effect in lieu of any
decision by the Librarian of Congress or determination
by the Copyright Royalty Judges.
[(4)] (3)(A) The Copyright Royalty Judges shall also
establish requirements by which copyright owners may
receive reasonable notice of the use of their sound
recordings under this section, and under which records
of such use shall be kept and made available by
entities performing sound recordings. The notice and
recordkeeping rules in effect on the day before the
effective date of the Copyright Royalty and
Distribution Reform Act of 2004 shall remain in effect
unless and until new regulations are promulgated by the
Copyright Royalty Judges. If new regulations are
promulgated under this subparagraph, the Copyright
Royalty Judges shall take into account the substance
and effect of the rules in effect on the day before the
effective date of the Copyright Royalty and
Distribution Reform Act of 2004 and shall, to the
extent practicable, avoid significant disruption of the
functions of any designated agent authorized to collect
and distribute royalty fees.
(B) Any person who wishes to perform a sound
recording publicly by means of a transmission eligible
for statutory licensing under this subsection may do so
without infringing the exclusive right of the copyright
owner of the sound recording--
(i) by complying with such notice
requirements as the Copyright Royalty Judges
shall prescribe by regulation and by paying
royalty fees in accordance with this
subsection; or
(ii) if such royalty fees have not been set,
by agreeing to pay such royalty fees as shall
be determined in accordance with this
subsection.
(C) Any royalty payments in arrears shall be made on
or before the twentieth day of the month next
succeeding the month in which the royalty fees are set.
[(5)] (4)(A) Notwithstanding section 112(e) and the
other provisions of this subsection, the receiving
agent may enter into agreements for the reproduction
and performance of sound recordings under section
112(e) and this section by any 1 or more commercial
webcasters or noncommercial webcasters for a period of
not more than 11 years beginning on January 1, 2005,
that, once published in the Federal Register pursuant
to subparagraph (B), shall be binding on all copyright
owners of sound recordings and other persons entitled
to payment under this section, in lieu of any
determination by the Copyright Royalty Judges. Any such
agreement for commercial webcasters may include
provisions for payment of royalties on the basis of a
percentage of revenue or expenses, or both, and include
a minimum fee. Any such agreement may include other
terms and conditions, including requirements by which
copyright owners may receive notice of the use of their
sound recordings and under which records of such use
shall be kept and made available by commercial
webcasters or noncommercial webcasters. The receiving
agent shall be under no obligation to negotiate any
such agreement. The receiving agent shall have no
obligation to any copyright owner of sound recordings
or any other person entitled to payment under this
section in negotiating any such agreement, and no
liability to any copyright owner of sound recordings or
any other person entitled to payment under this section
for having entered into such agreement.
(B) The Copyright Office shall cause to be published
in the Federal Register any agreement entered into
pursuant to subparagraph (A). Such publication shall
include a statement containing the substance of
subparagraph (C). Such agreements shall not be included
in the Code of Federal Regulations. Thereafter, the
terms of such agreement shall be available, as an
option, to any commercial webcaster or noncommercial
webcaster meeting the eligibility conditions of such
agreement.
(C) Neither subparagraph (A) nor any provisions of
any agreement entered into pursuant to subparagraph
(A), including any rate structure, fees, terms,
conditions, or notice and recordkeeping requirements
set forth therein, shall be admissible as evidence or
otherwise taken into account in any administrative,
judicial, or other government proceeding involving the
setting or adjustment of the royalties payable for the
public performance or reproduction in ephemeral
phonorecords or copies of sound recordings, the
determination of terms or conditions related thereto,
or the establishment of notice or recordkeeping
requirements by the Copyright Royalty Judges [under
paragraph (4)] under paragraph (3) or section
112(e)(4). It is the intent of Congress that any
royalty rates, rate structure, definitions, terms,
conditions, or notice and recordkeeping requirements,
included in such agreements shall be considered as a
compromise motivated by the unique business, economic
and political circumstances of webcasters, copyright
owners, and performers rather than as matters that
would have been negotiated in the marketplace between a
willing buyer and a willing seller, or otherwise meet
the objectives set forth in section 801(b). This
subparagraph shall not apply to the extent that the
receiving agent and a webcaster that is party to an
agreement entered into pursuant to subparagraph (A)
expressly authorize the submission of the agreement in
a proceeding under this subsection.
(D) Nothing in the Webcaster Settlement Act of 2008,
the Webcaster Settlement Act of 2009, or any agreement
entered into pursuant to subparagraph (A) shall be
taken into account by the United States Court of
Appeals for the District of Columbia Circuit in its
review of the determination by the Copyright Royalty
Judges of May 1, 2007, of rates and terms for the
digital performance of sound recordings and ephemeral
recordings, pursuant to sections 112 and 114.
(E) As used in this paragraph--
(i) the term ``noncommercial webcaster''
means a webcaster that--
(I) is exempt from taxation under
section 501 of the Internal Revenue
Code of 1986 (26 U.S.C. 501);
(II) has applied in good faith to the
Internal Revenue Service for exemption
from taxation under section 501 of the
Internal Revenue Code and has a
commercially reasonable expectation
that such exemption shall be granted;
or
(III) is operated by a State or
possession or any governmental entity
or subordinate thereof, or by the
United States or District of Columbia,
for exclusively public purposes;
(ii) the term ``receiving agent'' shall have
the meaning given that term in section 261.2 of
title 37, Code of Federal Regulations, as
published in the Federal Register on July 8,
2002; and
(iii) the term ``webcaster'' means a person
or entity that has obtained a compulsory
license under section 112 or 114 and the
implementing regulations therefor.
(F) The authority to make settlements pursuant to
subparagraph (A) shall expire at 11:59 p.m. Eastern
time on the 30th day after the date of the enactment of
the Webcaster Settlement Act of 2009.
(g) Proceeds From Licensing of Transmissions.--
(1) Except in the case of a transmission licensed
under a statutory license in accordance with subsection
(f) of this section--
(A) a featured recording artist who performs
on a sound recording that has been licensed for
a transmission shall be entitled to receive
payments from the copyright owner of the sound
recording in accordance with the terms of the
artist's contract; and
(B) a nonfeatured recording artist who
performs on a sound recording that has been
licensed for a transmission shall be entitled
to receive payments from the copyright owner of
the sound recording in accordance with the
terms of the nonfeatured recording artist's
applicable contract or other applicable
agreement.
(2) [An agent designated] Except as provided for in
paragraph (6), a nonprofit collective designated by the
Copyright Royalty Judges to distribute receipts from
the licensing of transmissions in accordance with
subsection (f) shall distribute such receipts as
follows:
(A) 50 percent of the receipts shall be paid
to the copyright owner of the exclusive right
under section 106(6) of this title to publicly
perform a sound recording by means of a digital
audio transmission.
(B) 2\1/2\ percent of the receipts shall be
deposited in an escrow account managed by an
independent administrator jointly appointed by
copyright owners of sound recordings and the
American Federation of Musicians (or any
successor entity) to be distributed to
nonfeatured musicians (whether or not members
of the American Federation of Musicians) who
have performed on sound recordings.
(C) 2\1/2\ percent of the receipts shall be
deposited in an escrow account managed by an
independent administrator jointly appointed by
copyright owners of sound recordings and the
American Federation of Television and Radio
Artists (or any successor entity) to be
distributed to nonfeatured vocalists (whether
or not members of the American Federation of
Television and Radio Artists) who have
performed on sound recordings.
(D) 45 percent of the receipts shall be paid,
on a per sound recording basis, to the
recording artist or artists featured on such
sound recording (or the persons conveying
rights in the artists' performance in the sound
recordings).
(3) A [nonprofit agent designated] nonprofit
collective designated by the Copyright Royalty Judges
to distribute receipts from the licensing of
transmissions in accordance with subsection (f) may
deduct from any of its receipts, prior to the
distribution of such receipts to any person or entity
entitled thereto other than copyright owners and
performers who have elected to receive royalties from
[another designated agent] another designated nonprofit
collective and have notified such nonprofit [agent]
collective in writing of such election, the reasonable
costs of such [agent] collective incurred after
November 1, 1995, in--
(A) the administration of the collection,
distribution, and calculation of the royalties;
(B) the settlement of disputes relating to
the collection and calculation of the
royalties; and
(C) the licensing and enforcement of rights
with respect to the making of ephemeral
recordings and performances subject to
licensing under section 112 and this section,
including those incurred in participating in
negotiations or arbitration proceedings under
section 112 and this section, except that all
costs incurred relating to the section 112
ephemeral recordings right may only be deducted
from the royalties received pursuant to section
112.
(4) Notwithstanding paragraph (3), any [designated
agent] nonprofit collective designated to distribute
receipts from the licensing of transmissions in
accordance with subsection (f) may deduct from any of
its receipts, prior to the distribution of such
receipts, the reasonable costs identified in paragraph
(3) of such [agent] collective incurred after November
1, 1995, with respect to such copyright owners and
performers who have entered with such [agent]
collective a contractual relationship that specifies
that such costs may be deducted from such royalty
receipts.
(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 (f)
shall adopt and reasonably implement a policy
that provides, in circumstances determined by
the collective to be appropriate, for
acceptance of instructions from an artist 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 artist 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
the collective accepts a letter of direction
under subparagraph (A), 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 artist 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.
(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 one or more persons described in
subparagraph (B), 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 at least
4 months, 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 royalties payable to the
featured recording artist or
artists; and
(II) during the period
beginning on the date 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 at least 4 months
before the collective's first
distribution to the person described in
subparagraph (B), the collective
attempted, 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 did not, as of the date
that is 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 a written certification
to the collective stating, under
penalty of perjury, that the person
meets the requirements in clauses (i)
through (iii) and includes a true copy
of the contract described in clause
(ii).
(C) Multiple certifications.--Subject to
subparagraph (D), in a case in which more than
one 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 a 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 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 one 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
one such payee shall apply only to that payee's
share of the receipts payable under paragraph
(2)(D), and does not preclude payment under
subparagraph (A) from the share of an artist
payee that does not so object.
(h) Licensing to Affiliates.--
(1) If the copyright owner of a sound recording
licenses an affiliated entity the right to publicly
perform a sound recording by means of a digital audio
transmission under section 106(6), the copyright owner
shall make the licensed sound recording available under
section 106(6) on no less favorable terms and
conditions to all bona fide entities that offer similar
services, except that, if there are material
differences in the scope of the requested license with
respect to the type of service, the particular sound
recordings licensed, the frequency of use, the number
of subscribers served, or the duration, then the
copyright owner may establish different terms and
conditions for such other services.
(2) The limitation set forth in paragraph (1) of this
subsection shall not apply in the case where the
copyright owner of a sound recording licenses--
(A) an interactive service; or
(B) an entity to perform publicly up to 45
seconds of the sound recording and the sole
purpose of the performance is to promote the
distribution or performance of that sound
recording.
[(i) No Effect on Royalties for Underlying Works.--License
fees payable for the public performance of sound recordings
under section 106(6) shall not be taken into account in any
administrative, judicial, or other governmental proceeding to
set or adjust the royalties payable to copyright owners of
musical works for the public performance of their works. It is
the intent of Congress that royalties payable to copyright
owners of musical works for the public performance of their
works shall not be diminished in any respect as a result of the
rights granted by section 106(6).]
(j) Definitions.--As used in this section, the following
terms have the following meanings:
(1) An ``affiliated entity'' is an entity engaging in
digital audio transmissions covered by section 106(6),
other than an interactive service, in which the
licensor has any direct or indirect partnership or any
ownership interest amounting to 5 percent or more of
the outstanding voting or non-voting stock.
(2) An ``archived program'' is a predetermined
program that is available repeatedly on the demand of
the transmission recipient and that is performed in the
same order from the beginning, except that an archived
program shall not include a recorded event or broadcast
transmission that makes no more than an incidental use
of sound recordings, as long as such recorded event or
broadcast transmission does not contain an entire sound
recording or feature a particular sound recording.
(3) A ``broadcast'' transmission is a transmission
made by a terrestrial broadcast station licensed as
such by the Federal Communications Commission.
(4) A ``continuous program'' is a predetermined
program that is continuously performed in the same
order and that is accessed at a point in the program
that is beyond the control of the transmission
recipient.
(5) A ``digital audio transmission'' is a digital
transmission as defined in section 101, that embodies
the transmission of a sound recording. This term does
not include the transmission of any audiovisual work.
(6) An ``eligible nonsubscription transmission'' is a
noninteractive nonsubscription digital audio
transmission not exempt under subsection (d)(1) that is
made as part of a service that provides audio
programming consisting, in whole or in part, of
performances of sound recordings, including
retransmissions of broadcast transmissions, if the
primary purpose of the service is to provide to the
public such audio or other entertainment programming,
and the primary purpose of the service is not to sell,
advertise, or promote particular products or services
other than sound recordings, live concerts, or other
music-related events.
(7) An ``interactive service'' is one that enables a
member of the public to receive a transmission of a
program specially created for the recipient, or on
request, a transmission of a particular sound
recording, whether or not as part of a program, which
is selected by or on behalf of the recipient. The
ability of individuals to request that particular sound
recordings be performed for reception by the public at
large, or in the case of a subscription service, by all
subscribers of the service, does not make a service
interactive, if the programming on each channel of the
service does not substantially consist of sound
recordings that are performed within 1 hour of the
request or at a time designated by either the
transmitting entity or the individual making such
request. If an entity offers both interactive and
noninteractive services (either concurrently or at
different times), the noninteractive component shall
not be treated as part of an interactive service.
(8) A ``new subscription service'' is a service that
performs sound recordings by means of noninteractive
subscription digital audio transmissions and that is
not a preexisting subscription service or a preexisting
satellite digital audio radio service.
(9) A ``nonsubscription'' transmission is any
transmission that is not a subscription transmission.
(10) A ``preexisting satellite digital audio radio
service'' is a subscription satellite digital audio
radio service provided pursuant to a satellite digital
audio radio service license issued by the Federal
Communications Commission on or before July 31, 1998,
and any renewal of such license to the extent of the
scope of the original license, and may include a
limited number of sample channels representative of the
subscription service that are made available on a
nonsubscription basis in order to promote the
subscription service.
(11) A ``preexisting subscription service'' is a
service that performs sound recordings by means of
noninteractive audio-only subscription digital audio
transmissions, which was in existence and was making
such transmissions to the public for a fee on or before
July 31, 1998, and may include a limited number of
sample channels representative of the subscription
service that are made available on a nonsubscription
basis in order to promote the subscription service.
(12) A ``retransmission'' is a further transmission
of an initial transmission, and includes any further
retransmission of the same transmission. Except as
provided in this section, a transmission qualifies as a
``retransmission'' only if it is simultaneous with the
initial transmission. Nothing in this definition shall
be construed to exempt a transmission that fails to
satisfy a separate element required to qualify for an
exemption under section 114(d)(1).
(13) The ``sound recording performance complement''
is the transmission during any 3-hour period, on a
particular channel used by a transmitting entity, of no
more than--
(A) 3 different selections of sound
recordings from any one phonorecord lawfully
distributed for public performance or sale in
the United States, if no more than 2 such
selections are transmitted consecutively; or
(B) 4 different selections of sound
recordings--
(i) by the same featured recording
artist; or
(ii) from any set or compilation of
phonorecords lawfully distributed
together as a unit for public
performance or sale in the United
States,
if no more than three such selections are
transmitted consecutively:
Provided, That the transmission of selections in excess
of the numerical limits provided for in clauses (A) and
(B) from multiple phonorecords shall nonetheless
qualify as a sound recording performance complement if
the programming of the multiple phonorecords was not
willfully intended to avoid the numerical limitations
prescribed in such clauses.
(14) A ``subscription'' transmission is a
transmission that is controlled and limited to
particular recipients, and for which consideration is
required to be paid or otherwise given by or on behalf
of the recipient to receive the transmission or a
package of transmissions including the transmission.
(15) A ``transmission'' is either an initial
transmission or a retransmission.
Sec. 115. Scope of exclusive rights in nondramatic musical works:
Compulsory license for making and distributing
phonorecords
In the case of nondramatic musical works, the exclusive
rights provided by clauses (1) and (3) of section 106, to make
and to distribute phonorecords of such works, are subject to
compulsory licensing under the conditions specified by this
section.
(a) Availability and Scope of Compulsory License in General._
[(1) When phonorecords of a nondramatic musical work
have been distributed to the public in the United
States under the authority of the copyright owner, any
other person, including those who make phonorecords or
digital phonorecord deliveries, may, by complying with
the provisions of this section, obtain a compulsory
license to make and distribute phonorecords of the
work. A person may obtain a compulsory license only if
his or her primary purpose in making phonorecords is to
distribute them to the public for private use,
including by means of a digital phonorecord delivery. A
person may not obtain a compulsory license for use of
the work in the making of phonorecords duplicating a
sound recording fixed by another, unless: (i) such
sound recording was fixed lawfully; and (ii) the making
of the phonorecords was authorized by the owner of
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.]
(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 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 its
authorized distributor 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.
(2) [A compulsory license] Musical arrangement._A
compulsory license includes the privilege of making a
musical arrangement of the work to the extent necessary
to conform it to the style or manner of interpretation
of the performance involved, but the arrangement shall
not change the basic melody or fundamental character of
the work, and shall not be subject to protection as a
derivative work under this title, except with the
express consent of the copyright owner.
[(b) Notice of Intention To Obtain Compulsory License.--
[(1) Any person who wishes to obtain a compulsory
license under this section shall, before or within
thirty days after making, and before distributing any
phonorecords 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 in 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) Failure to serve or file the notice required by
clause (1) forecloses the possibility of a compulsory
license and, in the absence of a negotiated license,
renders the making and distribution of phonorecords
actionable as acts of infringement under section 501
and fully subject to the remedies provided by sections
502 through 506 and 509.
[(c) Royalty Payable Under Compulsory License.--
[(1) To be entitled to receive royalties under a
compulsory license, 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.
[(2) Except as provided by clause (1), the royalty
under a compulsory license shall be payable for every
phonorecord made and distributed in accordance with the
license. For this purpose, and other than as provided
in paragraph (3), a phonorecord is considered
``distributed'' if the person exercising the compulsory
license has voluntarily and permanently parted with its
possession. With respect to each work embodied in the
phonorecord, the royalty shall be either two and three-
fourths cents, or one-half of one cent per minute of
playing time or fraction thereof, whichever amount is
larger.
[(3)(A) A compulsory license under this section
includes the right of the compulsory licensee to
distribute or authorize the distribution of a
phonorecord of a nondramatic musical work by means of a
digital transmission which constitutes a digital
phonorecord delivery, regardless of whether the digital
transmission is also a public performance of the sound
recording under section 106(6) of this title or of any
nondramatic musical work embodied therein under section
106(4) of this title. For every digital phonorecord
delivery by or under the authority of the compulsory
licensee--
[(i) on or before December 31, 1997, the
royalty payable by the compulsory licensee
shall be the royalty prescribed under paragraph
(2) and chapter 8 of this title; and
[(ii) on or after January 1, 1998, the
royalty payable by the compulsory licensee
shall be the royalty prescribed under
subparagraphs (B) through (E) and chapter 8 of
this title.
[(B) Notwithstanding any provision of the antitrust
laws, any copyright owners of nondramatic musical works
and any persons entitled to obtain a compulsory license
under subsection (a)(1) may negotiate and agree upon
the terms and rates of royalty payments under this
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 and subparagraphs
(C) through (E) and chapter 8 of this title shall next
be determined.
[(C) 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. Such terms and
rates shall distinguish between (i) digital phonorecord
deliveries where the reproduction or distribution of a
phonorecord is incidental to the transmission which
constitutes the digital phonorecord delivery, and (ii)
digital phonorecord deliveries in general. Any
copyright owners of nondramatic musical works and any
persons entitled to obtain a compulsory license under
subsection (a)(1) may submit to the Copyright Royalty
Judges licenses covering such activities. The parties
to each proceeding shall bear their own costs.
[(D) The schedule of reasonable rates and terms
determined by the Copyright Royalty Judges shall,
subject to subparagraph (E), be binding on all
copyright owners of nondramatic musical works and
persons entitled to obtain a compulsory license under
subsection (a)(1) during the period specified in
subparagraph (C), such other period as may be
determined pursuant to subparagraphs (B) and (C), or
such other period as the parties may agree. Such terms
and rates shall distinguish between (i) digital
phonorecord deliveries where the reproduction or
distribution of a phonorecord is incidental to the
transmission which constitutes the digital phonorecord
delivery, and (ii) digital phonorecord deliveries in
general. In addition to the objectives set forth in
section 801(b)(1), in establishing such rates and
terms, the Copyright Royalty Judges may consider rates
and terms under voluntary license agreements described
in subparagraphs (B) and (C). The royalty rates payable
for a compulsory license for a digital phonorecord
delivery under this section shall be established de
novo and no precedential effect shall be given to the
amount of the royalty payable by a compulsory licensee
for digital phonorecord deliveries on or before
December 31, 1997. The Copyright Royalty Judges shall
also establish requirements by which copyright owners
may receive reasonable notice of the use of their works
under this section, and under which records of such use
shall be kept and made available by persons making
digital phonorecord deliveries.
[(E)(i) License agreements voluntarily negotiated at
any time between one or more copyright owners of
nondramatic musical works and one or more persons
entitled to obtain a compulsory license under
subsection (a)(1) shall be given effect in lieu of any
determination by the Librarian of Congress and
Copyright Royalty Judges. Subject to clause (ii), the
royalty rates determined pursuant to subparagraph (C)
and (D) shall be given effect as to digital phonorecord
deliveries in lieu of any contrary royalty rates
specified in a contract pursuant to which a recording
artist who is the author of a nondramatic musical work
grants a license under that person's exclusive rights
in the musical work under paragraphs (1) and (3) of
section 106 or commits another person to grant a
license in that musical work under paragraphs (1) and
(3) of section 106, to a person desiring to fix in a
tangible medium of expression a sound recording
embodying the musical work.
[(ii) The second sentence of clause (i) shall not
apply to--
[(I) a contract entered into on or before
June 22, 1995, and not modified thereafter for
the purpose of reducing the royalty rates
determined pursuant to subparagraph (C) and (D)
or of increasing the number of musical works
within the scope of the contract covered by the
reduced rates, except if a contract entered
into on or before June 22, 1995, is modified
thereafter for the purpose of increasing the
number of musical works within the scope of the
contract, any contrary royalty rates specified
in the contract shall be given effect in lieu
of royalty rates determined pursuant to
subparagraph (C) and (D) 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.
[(F) Except as provided in section 1002(e) of this
title, a digital phonorecord delivery licensed under
this paragraph shall be accompanied by the information
encoded in the sound recording, if any, by or under the
authority of the copyright owner of that sound
recording, that identifies the title of the sound
recording, the featured recording artist who performs
on the sound recording, and related information,
including information concerning the underlying musical
work and its writer.
[(G)(i) A digital phonorecord delivery of a sound
recording is actionable as an act of infringement under
section 501, and is fully subject to the remedies
provided by sections 502 through 506, unless--
[(I) the digital phonorecord delivery has
been authorized by the copyright owner of the
sound recording; and
[(II) the owner of the copyright in the sound
recording or the entity making the digital
phonorecord delivery has obtained a compulsory
license under this section or has otherwise
been authorized by the copyright owner of the
musical work to distribute or authorize the
distribution, by means of a digital phonorecord
delivery, of each musical work embodied in the
sound recording.
[(ii) 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
subsection (c)(6) and section 106(4) and the owner of
the copyright in the sound recording under section
106(6).
[(H) The liability of the copyright owner of a sound
recording for infringement of the copyright in a
nondramatic musical work embodied in the sound
recording shall be determined in accordance with
applicable law, except that the owner of a copyright in
a sound recording shall not be liable for a digital
phonorecord delivery by a third party if the owner of
the copyright in the sound recording does not license
the distribution of a phonorecord of the nondramatic
musical work.
[(I) Nothing in section 1008 shall be construed to
prevent the exercise of the rights and remedies allowed
by this paragraph, paragraph (6), and chapter 5 in the
event of a digital phonorecord delivery, except that no
action alleging infringement of copyright may be
brought under this title against a manufacturer,
importer or distributor of a digital audio recording
device, a digital audio recording medium, an analog
recording device, or an analog recording medium, or
against a consumer, based on the actions described in
such section.
[(J) Nothing in this section annuls or limits (i) the
exclusive right to publicly perform a sound recording
or the musical work embodied therein, including by
means of a digital transmission, under sections 106(4)
and 106(6), (ii) except for compulsory licensing under
the conditions specified by this section, the exclusive
rights to reproduce and distribute the sound recording
and the musical work embodied therein under sections
106(1) and 106(3), including by means of a digital
phonorecord delivery, or (iii) any other rights under
any other provision of section 106, or remedies
available under this title, as such rights or remedies
exist either before or after the date of enactment of
the Digital Performance Right in Sound Recordings Act
of 1995.
[(K) The provisions of this section concerning
digital phonorecord deliveries shall not apply to any
exempt transmissions or retransmissions under section
114(d)(1). The exemptions created in section 114(d)(1)
do not expand or reduce the rights of copyright owners
under section 106(1) through (5) with respect to such
transmissions and retransmissions.
[(4) A compulsory license under this section includes
the right of the maker of a phonorecord of a
nondramatic musical work under subsection (a)(1) to
distribute or authorize distribution of such
phonorecord by rental, lease, or lending (or by acts or
practices in the nature of rental, lease, or lending).
In addition to any royalty payable under clause (2) and
chapter 8 of this title, a royalty shall be payable by
the compulsory licensee for every act of distribution
of a phonorecord by or in the nature of rental, lease,
or lending, by or under the authority of the compulsory
licensee. 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 clause (2) 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
clause.
[(5) 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 this section. 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.
[(6) 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
within thirty days from the date of the notice, 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.
[(d) Definition.--As used in this section, the following term
has the following meaning: A ``digital phonorecord delivery''
is each individual delivery of a phonorecord by digital
transmission of a sound recording which 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
nondramatic musical work embodied therein. A digital
phonorecord delivery does not result from a real-time, non-
interactive 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.]
(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 within 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 within 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
pho-no-re-cords 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 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) In either case described in
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.
(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)
and paragraph (2)(A) and chapter 8 of this
title. 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) and
paragraph (2)(A) and chapter 8 of this title.
(D) Authority to negotiate.--Notwithstanding
any provision of the antitrust laws, any
copyright owners of nondramatic musical works
and any persons entitled to obtain a compulsory
license under subsection (a) 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 and subparagraphs (E) and (F)
and paragraph (2)(A) and chapter 8 of this
title 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) License agreements voluntarily
negotiated at any time between one or
more copyright owners of nondramatic
musical works and one or more persons
entitled to obtain a compulsory license
under subsection (a) 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) 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) of this title, a
digital phonorecord delivery licensed under
this paragraph shall be accompanied by the
information encoded in the sound recording, if
any, by or under the authority of the copyright
owner of that sound recording, that identifies
the title of the sound recording, the featured
recording artist who performs on the sound
recording, and related information, including
information concerning the underlying musical
work and its writer.
(C) Infringement remedies.--
(i) A digital phonorecord delivery of
a sound recording is actionable as an
act of infringement under section 501,
and is fully subject to the remedies
provided by sections 502 through 506,
unless--
(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) 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 sections
106(4) and 106(6), (ii) except for compulsory
licensing under the conditions specified by
this section, the exclusive rights to reproduce
and distribute the sound recording and the
musical work embodied therein under sections
106(1) and 106(3), including by means of a
digital phonorecord delivery, or (iii) any
other rights under any other provision of
section 106, or remedies available under this
title, as such rights or remedies exist either
before or after the date of enactment of the
Digital Performance Right in Sound Recordings
Act of 1995.
(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 section 106(1) through
(5) 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 clause.
(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 subsection (b)(1), (b)(2)(A), or
(b)(3), 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 within thirty
days from the date of the notice, 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 license may be terminated as
provided in subsection (d)(4)(E).
(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 one or more copyright owners and
one 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 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
within 30 calendar days after receipt,
the blanket license shall be effective
as of the date 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
within the past 3 years
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 Federal district
court. 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 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, 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 it 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
(iv) has been designated by the
Register of Copyrights in accordance
with subparagraph (B).
(B) Designation of mechanical licensing
collective.--
(i) Initial designation.--The
Register of Copyrights shall initially
designate the mechanical licensing
collective within 9 months after the
enactment date as follows:
(I) Within 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 the
identity of and contact
information for the mechanical
licensing collective.
(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 (A) shall be
designated. Following publication of
such notice:
(I) The Register shall, 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, with any new
designation to be effective as
of the first day of a month
that is no less than 6 months
and no longer than 9 months
after the date of publication
of such notice, as specified by
the Register.
(II) If a new entity is
designated as a mechanical
licensing collective, the
Register shall 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, to support its
activities.
(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 its
activities and engage in and
respond to audits described
under this subsection.
(XIII) Engage in such other
activities as may be necessary
or appropriate to fulfill its
responsibilities under this
subsection.
(ii) Additional administrative
activities.--Subject to paragraph
(11)(C) and clause (iii), the
mechanical licensing collective may
also administer, or assist in
administering, voluntary licenses
issued by or individual download
licenses obtained from copyright owners
for uses of musical works, for which
the mechanical licensing collective
shall charge reasonable fees for such
services.
(iii) Restriction concerning public
performance rights.--The mechanical
licensing collective may, pursuant to
clause (ii), provide administration
services with respect to voluntary
licenses that include the right of
public performance in musical works,
but may not itself negotiate or grant
licenses for the right of public
performance in musical works, and may
not be the exclusive or nonexclusive
assignee or grantee of the right of
public performance in musical works.
(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 to which songwriters
have assigned exclusive rights
of reproduction and
distribution of musical works
with respect to covered
activities and no such music
publisher member 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 over the preceding 3
full calendar years.
(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) Board meetings.--The board of
directors shall meet no less than 2
times per year and discuss matters
pertinent to the operations, including
the mechanical licensing collective
budget.
(iii) Operations advisory
committee.--The board of directors of
the mechanical licensing collective
shall establish an operations advisory
committee consisting of no 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.
(iv) 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.
(v) Dispute resolution committee.--
The board of directors of the
mechanical licensing collective shall
establish and appoint a dispute
resolution committee consisting of no
fewer than 6 members, which committee
shall include an equal number of
representatives of musical work
copyright owners and professional
songwriters.
(vi) Mechanical licensing collective
annual report.--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 at least 3 years, an annual
report that sets forth how the
collective operates, how royalties are
collected and distributed, and the
collective total costs for the
preceding calendar year. At the time of
posting, a copy of the report shall be
provided to the Register of Copyrights.
(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 such owner's ownership
percentage;
(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,
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;
(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 such
owner's ownership
percentage;
(dd) identifying
information for sound
recordings in which the
work is embodied,
including sound
recording name,
featured artist, sound
recording copyright
owner, 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 member of the public,
for a fee not to exceed the
marginal cost to the mechanical
licensing collective of
providing the database to such
person.
(vi) Additional requirements.--The
Register of Copyrights shall establish
requirements by regulations 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 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
at least 3 years after the date on
which the funds were received by the
mechanical licensing collective, or at
least 3 years after the date on which
they 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 at
the Federal, short-term rate, such
interest to accrue for the benefit of
copyright owners entitled to payment of
such accrued royalties.
(I) Musical works claiming process.--The
mechanical licensing collective shall publicize
the existence of accrued royalties for
unmatched musical works (and shares of such
works) within 6 months of receiving a transfer
of accrued royalties for such works by publicly
listing the works and the procedures by which
copyright owners may identify themselves and
provide ownership, contact, and other relevant
information to the mechanical licensing
collective in order to receive payment of
accrued royalties. 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 its other records 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 paragraph (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 July 1 of the first full
calendar year to commence after
the license availability date,
with at least one 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 by royalty payments
made by digital music providers
for covered activities for the
periods in question, including,
in addition to royalty payments
made to the mechanical
licensing collective, royalty
payments made 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 royalties
received 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 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
paragraph (3)(D)(iv) 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) Advance notice of
distributions.--The mechanical
licensing collective shall publicize a
pending distribution of unclaimed
accrued royalties and accrued interest
at least 90 calendar days in advance of
such distribution.
(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
paragraph (3)(D)(v) shall address and resolve
in a timely and equitable manner disputes among
copyright owners relating to ownership
interests in musical works licensed under this
section and allocation and distribution of
royalties by the mechanical licensing
collective, according to a process approved by
the board of directors of the mechanical
licensing collective. Such process--
(i) shall include a mechanism to hold
disputed funds in accordance with the
requirements described in subparagraph
(H)(ii) pending resolution of the
dispute; and
(ii) except as provided in paragraph
(11)(D), shall not affect any legal or
equitable rights or remedies available
to any copyright owner or songwriter
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 prior 3
calendar years, 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 within
45 calendar days after receipt.
(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, but
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 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(s) 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 herein, but 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 its
operations, including those relating to
notices of license, the administration
of its claims process, 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 no
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 such owner or the owner's
authorized representative.
(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), but the monthly
reporting shall be due 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 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
reasonably available to
the digital music
provider, sound
recording copyright
owner, 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
reasonably available to
the digital music
provider, 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.
(iv) Adoption of regulations.--The
Register 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 copyright owners of
sound recordings made available through the
service of such digital music provider--
(i) sound recording copyright owners,
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) information concerning 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 no more than once in
any 3-calendar-year period to
cover a verification period of
no 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 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 within
45 calendar days after receipt.
(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, but
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 10 percent or more, 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 no 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 herein, but 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.--
(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 one 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 one 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 60 calendar days or
longer.
(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
within 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 within the 60-day
period referenced 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 Federal district
court. The 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 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 within 9 months 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 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 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 Register's
determination 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.
(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) 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).
(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 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 Federal district court 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 deems
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 such voluntary contribution shall
be treated for purposes of an
administrative assessment 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, but 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,
but also, as applicable--
(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) The Copyright Royalty
Judges shall commence a
proceeding to establish the
initial administrative
assessment within 9 months
after the enactment date by
publishing a notice in the
Federal Register seeking
petitions to participate.
(II) 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 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 they deem
appropriate.
(IV) The initial
administrative assessment shall
be determined, and such
determination shall be
published in the Federal
Register by the Copyright
Royalty Judges, within 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 (iii).
(iv) Adjustment of administrative
assessment.--The administrative
assessment may be adjusted by the
Copyright Royalty Judges periodically,
in accordance with the following
procedures:
(I) No earlier than one 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
October 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 November 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
November 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),
but 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 it 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, 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, within 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 within 3 months 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), but either
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
(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, within 3 months after
the rate and terms established by the Copyright
Royalty Judges become effective--
(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 one or more covered activities
with respect to a musical work, but the
foregoing 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 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) previously filed notices of
intention will no longer be effective
or provide license authority with
respect to covered activities, but
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 of this title, 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) No 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,
international standard
recording code, 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 one or
more bulk electronic matching
processes that are available to
the digital music provider
through a third-party vendor on
commercially reasonable terms,
but a digital music provider
may rely on its own bulk
electronic matching process if
it 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 no 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) within 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
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) within 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) Suspension of late fees.--A
digital music provider that complies
with the requirements of this paragraph
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
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 to engage in covered activities that
accrued no more than 3 years prior to the
license availability date, such action may be
commenced within 3 years of the date the claim
accrued, or up to 2 years after the license
availability date, whichever is later.
(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.
(E) Remedy in federal district court.--A
person may bring a claim in a Federal district
court of competent jurisdiction for an issue
that is not adequately resolved by the board of
directors or a committee of the mechanical
licensing collective, as applicable.
(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) (except for the administrative
assessment referenced therein 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,
but the following conditions apply:
(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 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, ``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.
(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 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 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 described in subsection (e) shall
not extend to, limit, or otherwise affect any
right of public performance in a musical work.
(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, 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, limited download, or interactive
stream, where such activity qualified 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 of this
title.
(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.
(15) License availability date.--The term ``license
availability date'' means the next January 1 following
the expiration of the two-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 them, 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 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.
* * * * * * *
CHAPTER 8--PROCEEDINGS BY COPYRIGHT ROYALTY JUDGES
Sec.
801. Copyright Royalty Judges; appointment and functions.
802. Copyright Royalty Judgeships; staff.
803. Proceedings of Copyright Royalty Judges.
804. Institution of proceedings.
805. General rule for voluntarily negotiated agreements.
Sec. 801. Copyright Royalty Judges; appointment and functions
(a) Appointment.--The Librarian of Congress shall appoint 3
full-time Copyright Royalty Judges, and shall appoint 1 of the
3 as the Chief Copyright Royalty Judge. The Librarian shall
make appointments to such positions after consultation with the
Register of Copyrights.
(b) Functions.--Subject to the provisions of this chapter,
the functions of the Copyright Royalty Judges shall be as
follows:
(1) To make determinations and adjustments of
reasonable terms and rates of royalty payments as
provided in sections 112(e), 114, 115, 116, 118, 119,
and 1004. [The rates applicable under sections
114(f)(1)(B), 115, and 116 shall be calculated to
achieve the following objectives:]
[(A) To maximize the availability of creative
works to the public.
[(B) To afford the copyright owner a fair
return for his or her creative work and the
copyright user a fair income under existing
economic conditions.
[(C) To reflect the relative roles of the
copyright owner and the copyright user in the
product made available to the public with
respect to relative creative contribution,
technological contribution, capital investment,
cost, risk, and contribution to the opening of
new markets for creative expression and media
for their communication.
[(D) To minimize any disruptive impact on the
structure of the industries involved and on
generally prevailing industry practices].
(2) To make determinations concerning the adjustment
of the copyright royalty rates under section 111 solely
in accordance with the following provisions:
(A) The rates established by section
111(d)(1)(B) may be adjusted to reflect--
(i) national monetary inflation or
deflation; or
(ii) changes in the average rates
charged cable subscribers for the basic
service of providing secondary
transmissions to maintain the real
constant dollar level of the royalty
fee per subscriber which existed as of
the date of October 19, 1976,
except that--
(I) if the average rates charged
cable system subscribers for the basic
service of providing secondary
transmissions are changed so that the
average rates exceed national monetary
inflation, no change in the rates
established by section 111(d)(1)(B)
shall be permitted; and
(II) no increase in the royalty fee
shall be permitted based on any
reduction in the average number of
distant signal equivalents per
subscriber.
The Copyright Royalty Judges may consider all
factors relating to the maintenance of such
level of payments, including, as an extenuating
factor, whether the industry has been
restrained by subscriber rate regulating
authorities from increasing the rates for the
basic service of providing secondary
transmissions.
(B) In the event that the rules and
regulations of the Federal Communications
Commission are amended at any time after April
15, 1976, to permit the carriage by cable
systems of additional television broadcast
signals beyond the local service area of the
primary transmitters of such signals, the
royalty rates established by section
111(d)(1)(B) may be adjusted to ensure that the
rates for the additional distant signal
equivalents resulting from such carriage are
reasonable in the light of the changes effected
by the amendment to such rules and regulations.
In determining the reasonableness of rates
proposed following an amendment of Federal
Communications Commission rules and
regulations, the Copyright Royalty Judges shall
consider, among other factors, the economic
impact on copyright owners and users; except
that no adjustment in royalty rates shall be
made under this subparagraph with respect to
any distant signal equivalent or fraction
thereof represented by--
(i) carriage of any signal permitted
under the rules and regulations of the
Federal Communications Commission in
effect on April 15, 1976, or the
carriage of a signal of the same type
(that is, independent, network, or
noncommercial educational) substituted
for such permitted signal; or
(ii) a television broadcast signal
first carried after April 15, 1976,
pursuant to an individual waiver of the
rules and regulations of the Federal
Communications Commission, as such
rules and regulations were in effect on
April 15, 1976.
(C) In the event of any change in the rules
and regulations of the Federal Communications
Commission with respect to syndicated and
sports program exclusivity after April 15,
1976, the rates established by section
111(d)(1)(B) may be adjusted to assure that
such rates are reasonable in light of the
changes to such rules and regulations, but any
such adjustment shall apply only to the
affected television broadcast signals carried
on those systems affected by the change.
(D) The gross receipts limitations
established by section 111(d)(1)(C) and (D)
shall be adjusted to reflect national monetary
inflation or deflation or changes in the
average rates charged cable system subscribers
for the basic service of providing secondary
transmissions to maintain the real constant
dollar value of the exemption provided by such
section, and the royalty rate specified therein
shall not be subject to adjustment.
(3)(A) To authorize the distribution, under sections
111, 119, and 1007, of those royalty fees collected
under sections 111, 119, and 1005, as the case may be,
to the extent that the Copyright Royalty Judges have
found that the distribution of such fees is not subject
to controversy.
(B) In cases where the Copyright Royalty Judges
determine that controversy exists, the Copyright
Royalty Judges shall determine the distribution of such
fees, including partial distributions, in accordance
with section 111, 119, or 1007, as the case may be.
(C) Notwithstanding section 804(b)(8), the Copyright
Royalty Judges, at any time after the filing of claims
under section 111, 119, or 1007, may, upon motion of
one or more of the claimants and after publication in
the Federal Register of a request for responses to the
motion from interested claimants, make a partial
distribution of such fees, if, based upon all responses
received during the 30-day period beginning on the date
of such publication, the Copyright Royalty Judges
conclude that no claimant entitled to receive such fees
has stated a reasonable objection to the partial
distribution, and all such claimants--
(i) agree to the partial distribution;
(ii) sign an agreement obligating them to
return any excess amounts to the extent
necessary to comply with the final
determination on the distribution of the fees
made under subparagraph (B);
(iii) file the agreement with the Copyright
Royalty Judges; and
(iv) agree that such funds are available for
distribution.
(D) The Copyright Royalty Judges and any other
officer or employee acting in good faith in
distributing funds under subparagraph (C) shall not be
held liable for the payment of any excess fees under
subparagraph (C). The Copyright Royalty Judges shall,
at the time the final determination is made, calculate
any such excess amounts.
(4) To accept or reject royalty claims filed under
sections 111, 119, and 1007, on the basis of timeliness
or the failure to establish the basis for a claim.
(5) To accept or reject rate adjustment petitions as
provided in section 804 and petitions to participate as
provided in section 803(b) (1) and (2).
(6) To determine the status of a digital audio
recording device or a digital audio interface device
under sections 1002 and 1003, as provided in section
1010.
(7)(A) To adopt as a basis for statutory terms and
rates or as a basis for the distribution of statutory
royalty payments, an agreement concerning such matters
reached among some or all of the participants in a
proceeding at any time during the proceeding, except
that--
(i) the Copyright Royalty Judges shall
provide to those that would be bound by the
terms, rates, or other determination set by any
agreement in a proceeding to determine royalty
rates an opportunity to comment on the
agreement and shall provide to participants in
the proceeding under section 803(b)(2) that
would be bound by the terms, rates, or other
determination set by the agreement an
opportunity to comment on the agreement and
object to its adoption as a basis for statutory
terms and rates; and
(ii) the Copyright Royalty Judges may decline
to adopt the agreement as a basis for statutory
terms and rates for participants that are not
parties to the agreement, if any participant
described in clause (i) objects to the
agreement and the Copyright Royalty Judges
conclude, based on the record before them if
one exists, that the agreement does not provide
a reasonable basis for setting statutory terms
or rates.
(B) License agreements voluntarily negotiated
pursuant to section 112(e)(5), 114(f)(3),
115(c)(3)(E)(i), 116(c), or 118(b)(2) that do not
result in statutory terms and rates shall not be
subject to clauses (i) and (ii) of subparagraph (A).
(C) Interested parties may negotiate and agree to,
and the Copyright Royalty Judges may adopt, an
agreement that specifies as terms notice and
recordkeeping requirements that apply in lieu of those
that would otherwise apply under regulations.
(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.
[(8)] (9) To perform other duties, as assigned by the
Register of Copyrights within the Library of Congress,
except as provided in section 802(g), at times when
Copyright Royalty Judges are not engaged in performing
the other duties set forth in this section.
(c) Rulings.--The Copyright Royalty Judges may make any
necessary procedural or evidentiary rulings in any proceeding
under this chapter and may, before commencing a proceeding
under this chapter, make any such rulings that would apply to
the proceedings conducted by the Copyright Royalty Judges.
(d) Administrative Support.--The Librarian of Congress shall
provide the Copyright Royalty Judges with the necessary
administrative services related to proceedings under this
chapter.
(e) Location in Library of Congress.--The offices of the
Copyright Royalty Judges and staff shall be in the Library of
Congress.
(f) Effective Date of Actions.--On and after the date of the
enactment of the Copyright Royalty and Distribution Reform Act
of 2004, in any case in which time limits are prescribed under
this title for performance of an action with or by the
Copyright Royalty Judges, and in which the last day of the
prescribed period falls on a Saturday, Sunday, holiday, or
other nonbusiness day within the District of Columbia or the
Federal Government, the action may be taken on the next
succeeding business day, and is effective as of the date when
the period expired.
* * * * * * *
Sec. 804. Institution of proceedings
(a) Filing of Petition.--With respect to proceedings referred
to in paragraphs (1) and (2) of section 801(b) concerning the
determination or adjustment of royalty rates as provided in
sections 111, 112, 114, 115, 116, 118, 119, and 1004, during
the calendar years specified in the schedule set forth in
subsection (b), any owner or user of a copyrighted work whose
royalty rates are specified by this title, or are established
under this chapter before or after the enactment of the
Copyright Royalty and Distribution Reform Act of 2004, may file
a petition with the Copyright Royalty Judges declaring that the
petitioner requests a determination or adjustment of the rate.
The Copyright Royalty Judges shall make a determination as to
whether the petitioner has such a significant interest in the
royalty rate in which a determination or adjustment is
requested. If the Copyright Royalty Judges determine that the
petitioner has such a significant interest, the Copyright
Royalty Judges shall cause notice of this determination, with
the reasons for such determination, to be published in the
Federal Register, together with the notice of commencement of
proceedings under this chapter. With respect to proceedings
under paragraph (1) of section 801(b) concerning the
determination or adjustment of royalty rates as provided in
sections 112 and 114, during the calendar years specified in
the schedule set forth in subsection (b), the Copyright Royalty
Judges shall cause notice of commencement of proceedings under
this chapter to be published in the Federal Register as
provided in section 803(b)(1)(A).
(b) Timing of Proceedings.--
(1) Section 111 proceedings.--(A) A petition
described in subsection (a) to initiate proceedings
under section 801(b)(2) concerning the adjustment of
royalty rates under section 111 to which subparagraph
(A) or (D) of section 801(b)(2) applies may be filed
during the year 2015 and in each subsequent fifth
calendar year.
(B) In order to initiate proceedings under section
801(b)(2) concerning the adjustment of royalty rates
under section 111 to which subparagraph (B) or (C) of
section 801(b)(2) applies, within 12 months after an
event described in either of those subsections, any
owner or user of a copyrighted work whose royalty rates
are specified by section 111, or by a rate established
under this chapter before or after the enactment of the
Copyright Royalty and Distribution Reform Act of 2004,
may file a petition with the Copyright Royalty Judges
declaring that the petitioner requests an adjustment of
the rate. The Copyright Royalty Judges shall then
proceed as set forth in subsection (a) of this section.
Any change in royalty rates made under this chapter
pursuant to this subparagraph may be reconsidered in
the year 2015, and each fifth calendar year thereafter,
in accordance with the provisions in section
801(b)(2)(B) or (C), as the case may be. A petition for
adjustment of rates established by section 111(d)(1)(B)
as a result of a change in the rules and regulations of
the Federal Communications Commission shall set forth
the change on which the petition is based.
(C) Any adjustment of royalty rates under section 111
shall take effect as of the first accounting period
commencing after the publication of the determination
of the Copyright Royalty Judges in the Federal
Register, or on such other date as is specified in that
determination.
(2) Certain section 112 proceedings.--Proceedings
under this chapter shall be commenced in the year 2007
to determine reasonable terms and rates of royalty
payments for the activities described in section
112(e)(1) relating to the limitation on exclusive
rights specified by section 114(d)(1)(C)(iv), to become
effective on January 1, 2009. Such proceedings shall be
repeated in each subsequent fifth calendar year.
(3) Section 114 and corresponding 112 proceedings.--
(A) For eligible nonsubscription services and
new subscription services.--Proceedings under
this chapter shall be commenced as soon as
practicable after the date of enactment of the
Copyright Royalty and Distribution Reform Act
of 2004 to determine reasonable terms and rates
of royalty payments under sections 114 and 112
for the activities of eligible nonsubscription
transmission services and new subscription
services, to be effective for the period
beginning on January 1, 2006, and ending on
December 31, 2010. Such proceedings shall next
be commenced in January 2009 to determine
reasonable terms and rates of royalty payments,
to become effective on January 1, 2011.
Thereafter, such proceedings shall be repeated
in each subsequent fifth calendar year.
(B) For preexisting subscription and
satellite digital audio radio services.--
Proceedings under this chapter shall be
commenced in January 2006 to determine
reasonable terms and rates of royalty payments
under sections 114 and 112 for the activities
of preexisting subscription services, to be
effective during the period beginning on
January 1, 2008, and ending on December 31,
2012, and preexisting satellite digital audio
radio services, to be effective during the
period beginning on January 1, 2007, and ending
on December 31, 2012. Such proceedings shall
next be commenced in 2011 to determine
reasonable terms and rates of royalty payments,
to become effective on January 1, 2013.
Thereafter, such proceedings shall be repeated
in each subsequent fifth calendar year.
(C)(i) Notwithstanding any other provision of
this chapter, this subparagraph shall govern
proceedings commenced pursuant to section
114(f)(1)(C) [and 114(f)(2)(C)] concerning new
types of services.
(ii) Not later than 30 days after a petition
to determine rates and terms for a new type of
service is filed by any copyright owner of
sound recordings, or such new type of service,
indicating that such new type of service is or
is about to become operational, the Copyright
Royalty Judges shall issue a notice for a
proceeding to determine rates and terms for
such service.
(iii) The proceeding shall follow the
schedule set forth in subsections (b), (c), and
(d) of section 803, except that--
(I) the determination shall be issued
by not later than 24 months after the
publication of the notice under clause
(ii); and
(II) the decision shall take effect
as provided in subsections (c)(2) and
(d)(2) of section 803 and section
[114(f)(4)(B)(ii)] 114(f)(3)(B)(ii) and
(C).
(iv) The rates and terms shall remain in
effect for the period set forth in section
114(f)(1)(C) [or 114(f)(2)(C), as the case may
be].
(4) Section 115 proceedings.--A petition described in
subsection (a) to initiate proceedings under section
801(b)(1) concerning the adjustment or determination of
royalty rates as provided in section 115 may be filed
in the year 2006 and in each subsequent fifth calendar
year, or at such other times as the parties have agreed
under section 115(c)(3) (B) and (C).
(5) Section 116 proceedings.--(A) A petition
described in subsection (a) to initiate proceedings
under section 801(b) concerning the determination of
royalty rates and terms as provided in section 116 may
be filed at any time within 1 year after negotiated
licenses authorized by section 116 are terminated or
expire and are not replaced by subsequent agreements.
(B) If a negotiated license authorized by section 116
is terminated or expires and is not replaced by another
such license agreement which provides permission to use
a quantity of musical works not substantially smaller
than the quantity of such works performed on coin-
operated phonorecord players during the 1-year period
ending March 1, 1989, the Copyright Royalty Judges
shall, upon petition filed under paragraph (1) within 1
year after such termination or expiration, commence a
proceeding to promptly establish an interim royalty
rate or rates for the public performance by means of a
coin-operated phonorecord player of nondramatic musical
works embodied in phonorecords which had been subject
to the terminated or expired negotiated license
agreement. Such rate or rates shall be the same as the
last such rate or rates and shall remain in force until
the conclusion of proceedings by the Copyright Royalty
Judges, in accordance with section 803, to adjust the
royalty rates applicable to such works, or until
superseded by a new negotiated license agreement, as
provided in section 116(b).
(6) Section 118 proceedings.--A petition described in
subsection (a) to initiate proceedings under section
801(b)(1) concerning the determination of reasonable
terms and rates of royalty payments as provided in
section 118 may be filed in the year 2006 and in each
subsequent fifth calendar year.
(7) Section 1004 proceedings.--A petition described
in subsection (a) to initiate proceedings under section
801(b)(1) concerning the adjustment of reasonable
royalty rates under section 1004 may be filed as
provided in section 1004(a)(3).
(8) Proceedings concerning distribution of royalty
fees.--With respect to proceedings under section
801(b)(3) concerning the distribution of royalty fees
in certain circumstances under section 111, 119, or
1007, the Copyright Royalty Judges shall, upon a
determination that a controversy exists concerning such
distribution, cause to be published in the Federal
Register notice of commencement of proceedings under
this chapter.
* * * * * * *
CHAPTER 14--UNAUTHORIZED DIGITAL PERFORMANCE OF PRE-1972 SOUND
RECORDINGS
Sec.
1401. Unauthorized digital performance of pre-1972 sound recordings.
Sec. 1401. Unauthorized digital performance of pre-1972 sound
recordings
(a) Unauthorized Acts.--Anyone who, before February 15, 2067,
and without the consent of the rights owner, performs publicly,
by means of a digital audio transmission, a sound recording
fixed on or after January 1, 1923, and before February 15,
1972, shall be subject to the remedies provided in sections 502
through 505 to the same extent as an infringer of copyright.
(b) Certain Authorized Transmissions.--A digital audio
transmission of a sound recording fixed on or after January 1,
1923, and 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 is made by a transmitting entity
that is publicly performing sound recordings fixed on
or after February 15, 1972, by means of digital audio
transmissions subject to section 114;
(2) the transmission would satisfy the requirements
for statutory licensing under section 114(d)(2), or
would be exempt under section 114(d)(1), if the sound
recording were fixed on or after February 15, 1972;
(3) in the case of a transmission that would not be
exempt under section 114(d)(1) as described in
paragraph (2), the transmitting entity pays statutory
royalties and provides notice of its use of the
relevant sound recordings in the same manner as is
required by regulations adopted by the Copyright
Royalty Judges for sound recordings fixed on or after
February 15, 1972; and
(4) in the case of a transmission that would not be
exempt under section 114(d)(1) as described in
paragraph (2), the transmitting entity otherwise
satisfies the requirements for statutory licensing
under section 114(f)(4)(B).
(c) Transmissions by Direct Licensing of Statutory
Services.--
(1) In general.--A transmission of a sound recording
fixed on or after January 1, 1923, and 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 such transmission is included in
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.--To
the extent that such a license agreement entered into
on or after the date of the enactment of this section
extends to digital audio transmissions of a sound
recording fixed on or after January 1, 1923, and before
February 15, 1972, that meet the conditions of
subsection (b), the licensee shall 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 the
transmissions due under the license, with such
royalties fully credited as payments due under the
license.
(3) Distribution of royalties 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 received
under paragraph (2) under the license described in
paragraph (2). Such payments shall be the only payments
to which featured and nonfeatured artists are entitled
by virtue of the transmissions described in paragraph
(2) under the license.
(4) Rule of construction.--This section does not
prohibit any other license from directing the licensee
to pay other royalties due to featured and nonfeatured
artists for such transmissions to the collective
designated to distribute receipts from the licensing of
transmissions in accordance with section 114(f).
(d) Relationship to State Law.--
(1) In general.--Nothing in this section shall be
construed to annul or limit any rights or remedies
under the common law or statutes of any State for sound
recordings fixed before February 15, 1972, except,
notwithstanding section 301(c), for the following:
(A) This section preempts any claim of common
law copyright or equivalent right under the
laws of any State arising from any digital
audio transmission that is made, on and after
the date of the enactment of this section, of a
sound recording fixed on or after January 1,
1923, and before February 15, 1972.
(B) This section preempts any claim of common
law copyright or equivalent right under the
laws of any State arising from any reproduction
that is made, on and after the date of the
enactment of this section, of a sound recording
fixed on or after January 1, 1923, and before
February 15, 1972, and that would satisfy the
requirements for statutory licensing under
paragraphs (1) and (6) of section 112(e), if
the sound recording were fixed on or after
February 15, 1972.
(C) This section preempts any claim of common
law copyright or equivalent right under the
laws of any State arising from any digital
audio transmission or reproduction that is
made, before the date of the enactment of this
section, of a sound recording fixed on or after
January 1, 1923, and before February 15, 1972,
if--
(i) 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
(ii) except in the case of
transmissions that would have been
exempt under section 114(d)(1), the
transmitting entity, before the end of
the 270-day period beginning on the
date of the enactment of this section,
pays statutory royalties and provides
notice of the use of the relevant sound
recordings in the same manner as is
required by regulations adopted by the
Copyright Royalty Judges for sound
recordings that are protected under
this title for all the digital audio
transmissions and reproductions
satisfying the requirements for
statutory licensing under section
114(d)(2) and section 112(e)(1) during
the 3 years prior to the date of the
enactment of this section.
(2) Rule of construction for common law copyright.--
For purposes of subparagraphs (A) through (C) 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 such
subparagraphs as an unlawful distribution, act of
record piracy, or similar violation.
(3) Rule of construction for public performance
rights.--Nothing in this section shall be construed to
recognize or negate the existence of public performance
rights in sound recordings under the laws of any State.
(e) Limitations on Remedies.--
(1) Fair use; uses by libraries, archives, and
educational institutions.--The limitations on the
exclusive rights of a copyright owner described in
sections 107, 108, and 110(1) and (2) shall apply to a
claim under subsection (a) for the unauthorized
performance of a sound recording fixed on or after
January 1, 1923, and before February 15, 1972.
(2) Actions.--The limitations on actions described in
section 507 shall apply to a claim under subsection (a)
for the unauthorized performance of a sound recording
fixed on or after January 1, 1923, and before February
15, 1972.
(3) Material online.--Section 512 shall apply to a
claim under subsection (a) for the unauthorized
performance of a sound recording fixed on or after
January 1, 1923, and 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 transmission 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 transmission is made
after the end of the 90-day
period beginning on the date on
which the information filed
under subclause (I) is indexed
into the public records of the
Copyright Office.
(ii) Regulations.--The Register of
Copyrights shall, before the end of the
180-day period beginning on the date of
the enactment of this section, issue
regulations establishing the form,
content, and procedures for the filing
of schedules under clause (i). Such
regulations shall provide that persons
may request that they receive timely
notification of such filings, and shall
set forth the manner in which such
requests may be made.
(B) Filing of contact information for
transmitting entities.--
(i) Filing requirement.--The Register
of Copyrights shall, before the end of
the 30-day period beginning on the date
of the enactment of this section, issue
regulations establishing the form,
content, and procedures for the filing,
by any entity that, as of the date of
the enactment of this section, performs
sound recordings fixed before February
15, 1972, by means of digital audio
transmissions, of contact information
for such entity.
(ii) Time limit on filings.--The
Register of Copyrights may accept
filings under clause (i) only until the
180th day after the date of the
enactment of this section.
(iii) Limitation on statutory damages
and attorneys' fees.--
(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
transmission by that entity of
a sound recording under
subsection (a) if the
transmission is made 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 transmit
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 an unauthorized transmission of
a sound recording under 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.
(f) 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.
(g) Rights Owner Defined.--In this section, the term ``rights
owner'' means the person who has the exclusive right to
reproduce a sound recording under the laws of any State.
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TITLE 28, UNITED STATES CODE
* * * * * * *
PART I--ORGANIZATION OF COURTS
* * * * * * *
CHAPTER 5--DISTRICT COURTS
* * * * * * *
Sec. 137. Division of business among district judges
[The business] (A) In General. The business of a court
having more than one judge shall be divided among the judges as
provided by the rules and orders of the court.
The chief judge of the district court shall be responsible
for the observance of such rules and orders, and shall divide
the business and assign the cases so far as such rules and
orders do not otherwise prescribe.
If the district judges in any district are unable to agree
upon the adoption of rules or orders for that purpose the
judicial council of the circuit shall make the necessary
orders.
(b) Random Assignment of Rate Court Proceedings.--
(1) In general.--
(A) Determination of license fee.--Except as
provided in subparagraph (B), 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 that
court's rules for the division of business
among district judges currently in effect or as
may be amended from time to time, 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.
(B) Exception.--Subparagraph (A) 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.
* * * * * * *