FILE s227.is S 227 IS 104th CONGRESS 1st Session To amend title 17, United States Code, to provide an exclusive right to perform sound recordings publicly by means of digital transmissions, and for other purposes. IN THE SENATE OF THE UNITED STATES January 13 (legislative day, JANUARY 10), 1995 Mr. HATCH (for himself and Mrs. FEINSTEIN) introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To amend title 17, United States Code, to provide an exclusive right to perform sound recordings publicly by means of digital transmissions, and for other purposes. [Italic->] Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, [<-Italic] SECTION 1. SHORT TITLE. This Act may be cited as the `Digital Performance Right in Sound Recordings Act of 1995'. SEC. 2. EXCLUSIVE RIGHTS IN COPYRIGHTED WORKS. Section 106 of title 17, United States Code, is amended-- (1) in paragraph (4) by striking `and' after the semicolon; (2) in paragraph (5) by striking the period and inserting `; and'; and (3) by adding at the end the following: `(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital transmission.'. SEC. 3. SCOPE OF EXCLUSIVE RIGHTS IN SOUND RECORDINGS. Section 114 of title 17, United States Code, is amended-- (1) in subsection (a) by striking `and (3)' and replacing it with `(3) and (6)'; (2) in subsection (b) by deleting from the first sentence `phonorecords, or of copies of motion pictures and other audiovisual works,' and inserting `phonorecords or copies'; (3) by striking subsection (d) and replacing it with the following new subsection (d): `(d) LIMITATIONS ON EXCLUSIVE RIGHT- Notwithstanding the provisions of section 106(6)-- `(1) EXEMPT TRANSMISSIONS- The performance of a sound recording publicly by means of a digital transmission, other than as part of an interactive service, is not an infringement of section 106(6) if the performance is part of-- `(A) a nonsubscription transmission, such as a nonsubscription broadcast transmission; `(B) a prior or simultaneous transmission incidental to a nonsubscription transmission, such as a feed received by and then retransmitted by the nonsubscription transmitter: [Italic->] Provided, [<-Italic] That such incidental transmissions do not include any subscription transmission directly for reception by members of the public; `(C) a retransmission of a nonsubscription broadcast transmission: [Italic->] Provided, [<-Italic] That, in the case of a retransmission of a radio station's broadcast transmission, the transmission is not willfully or repeatedly retransmitted more than a radius of one hundred and fifty miles from the site of the radio broadcast transmitter; `(D) a further transmission by a business, confined to its premises or the immediately surrounding vicinity, of a transmission described in paragraphs (A) or (B) of this subsection (d)(1); or `(E) a retransmission otherwise subject to liability, if such transmission is simultaneous with the primary transmission and authorized by the primary transmitter, and the primary transmitter has been licensed to publicly perform the sound recording. `(2) SUBSCRIPTION TRANSMISSIONS- In the case of a subscription transmission, the performance of a sound recording publicly by means of a digital transmission shall be subject to statutory licensing, in accordance with subsection (f) of this section, if-- `(A) the transmission is not part of an interactive service; and `(B) the transmission does not exceed the sound recording performance complement. `(3) RIGHTS NOT OTHERWISE LIMITED- `(A) Except as expressly provided herein, this section does not limit or impair the exclusive right to perform a sound recording publicly by means of a digital 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 transmission, under section 106(4), `(ii) the exclusive rights to reproduce and distribute a sound recording or the musical work embodied therein under sections 106(1) and 106(3), including by means of a digital phonorecord delivery as defined in section 115, 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 this Act.'; and `(4) by adding after subsection (d) the following: `(e) AUTHORITY FOR NEGOTIATIONS- Any copyright owners of sound recordings and any entities performing sound recordings affected by this section may negotiate and agree upon the terms and rates of royalty payments for the performance of such sound recordings and the proportionate division of fees paid among copyright owners, and may designate common agents to negotiate, agree to, pay, or receive such royalty payments. `(f) LICENSES FOR SUBSCRIPTION TRANSMISSIONS- `(1) No later than thirty days after the enactment of this legislation, the Librarian of Congress shall cause notice to be published in the Federal Register of the initiation of voluntary negotiation proceedings for the purpose of determining reasonable terms and rates of royalty payments for the activities specified by subsection (d)(2) of this section during the period beginning on the effective date of this legislation and ending on December 31, 2000. Such terms and rates shall distinguish among the different types of digital transmission services then in operation. Any copyright owners of sound recordings or any entities performing sound recordings affected by this section may submit to the Librarian of Congress licenses covering such activities with respect to such sound recordings. The parties to each negotiation proceeding shall bear their own costs. `(2) In the absence of license agreements negotiated under paragraph (1), the Librarian of Congress shall, pursuant to chapter 8, convene a copyright arbitration royalty panel to determine and publish in the Federal Register a schedule of rates and terms which, subject to paragraph (3), shall be binding on all copyright owners of sound recordings and entities performing sound recordings. In establishing such rates and terms the copyright arbitration royalty panel may consider the rates for comparable types of digital transmission services and comparable circumstances under voluntary license agreements negotiated as provided in paragraph (1). The parties to the proceeding shall bear the entire cost thereof in such manner and proportion as the arbitration panels shall direct. The Librarian of Congress 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 by entities performing sound recordings. `(3) License agreements voluntarily negotiated at any time between one or more copyright owners of sound recordings and one or more entities performing sound recordings shall be given effect in lieu of any determination by the Librarian of Congress. `(4) the procedures specified in paragraphs (1) and (2) shall be repeated and concluded, in accordance with regulations that the Librarian of Congress shall prescribe-- `(A) within a six-month period each time that a petition is filed by any copyright owners of sound recordings or any entities performing sound recordings affected by this section indicating that a new type of digital transmission service on which sound recordings are performed is or is about to become operational, and `(B) between June 30 and December 31, 2000 and at five-year intervals thereafter. `(5) Any person who wishes to perform a sound recording publicly by means of a subscription transmission under this subsection (f) may do so without infringing the exclusive right of the copyright owner of the sound recording by complying with such notice requirements as the Register of Copyrights shall prescribe by regulation and by paying royalty fees in accordance with this subsection, or, if such royalty fees have not been set, by agreeing to pay such royalty fees as shall be determined in accordance with this subsection, and 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. `(g) PROCEEDS FROM LICENSING OF SUBSCRIPTION TRANSMISSIONS- In the case of a subscription transmission performance of a sound recording licensed under subsection (f) of this section, 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 transmission shall allocate to recording artists in the following manner its receipts from the licensing of subscription transmission performances of the sound recording in accordance with subsection (f) of this section: `(1) 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. `(2) 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. `(3) 45 percent of the receipts shall be allocated, 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). `(h) LICENSING TO AFFILIATES- Where the copyright owner of a sound recording owns a controlling interest in, or otherwise possesses the power directly or indirectly to exercise a controlling influence over the management or policies of, an entity engaging in digital transmissions covered by section 106(6) and licenses to such entity the right to publicly perform a sound recording by means of a digital transmission, the copyright owner shall make the licensed sound recording available under section 106(6) on similar terms and conditions to all other similarly-situated entities offering similar types of digital transmission services, except that such copyright owner may-- `(1) impose reasonable requirements for creditworthiness; and `(2) establish different prices, terms, and conditions to take into account the types of services offered, the duration of the license, the geographic region, the numbers of subscribers served, and any other relevant factors. `(i) NO EFFECT ON ROYALTIES FOR UNDERLYING WORKS- License fees payable for the public performance of sound recordings under clause (6) of section 106 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. `(j) DEFINITIONS- As used in this section, the following terms have the following meanings: `(1) A `broadcast transmission' is a transmission made by a broadcast station licensed as such by the Federal Communications Commission. `(2) An `interactive service' is one that enables a member of the public to receive, on request, a transmission of a particular sound recording chosen 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 does not make a service interactive. If an entity offers both interactive and non-interactive services (either concurrently or at different times), the non-interactive component shall not be treated as part of an interactive service. `(3) A `nonsubscription transmission' is any transmission that is not a subscription transmission. `(4) The `sound recording performance complement' is the transmission of no more than-- `(A) two selections each day of sound recordings embodied in any one phonorecord distributed in the United States for ultimate sale to consumers; or `(B) three selections each day of sound recordings of performances-- `(i) by the same featured recording artist, or `(ii) embodied in any set of phonorecords or compilation of sound recordings marketed together as a unit for ultimate sale to consumers. `(5) 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.'. SEC. 4. SCOPE OF EXCLUSIVE RIGHTS IN NONDRAMATIC MUSICAL WORKS: COMPULSORY LICENSE FOR MAKING AND DISTRIBUTING PHONORECORDS. Section 115 of title 17, United State Code, is amended-- (1) by inserting before the period at the end of the second sentence in subsection (a)(1) the words `including by means of a digital phonorecord delivery'; (2) by inserting in the second sentence of subsection (c)(2), after the words `For this purpose,' the words `and other than as provided in clause (3),'; (3) by redesignating clauses (3), (4) and (5) of subsection (c) as clauses (4), (5) and (6), respectively, and by inserting the following new clause: `(3)(A) 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 the sound recording of such phonorecord 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, the royalty payable by the compulsory licensee shall be the royalty prescribed under clause (2) and chapter 8 of this title. `(B) Independent of any right of public performance under section 106(4), the copyright owner of a nondramatic musical work embodied in a sound recording has the right to receive royalty payments at the rates prescribed under this subsection when the digital transmission of that sound recording constitutes a digital phonorecord delivery. Unless authorized by said copyright owner of the nondramatic musical work or by any person who has obtained a compulsory license under this section, such a digital transmission, by whomever made, shall be actionable by the copyright owner in the nondramatic musical work as an act of infringement: [Italic->] Provided, however, [<-Italic] That no such cause of action may be brought against a copyright owner of a sound recording unless it authorized the digital phonorecord delivery. Any such cause of action shall be in addition to those available to the copyright owner of the musical work under section 106(4) and the copyright owner of the sound recording with respect to digital phonorecord deliveries and under section 106(6). `(C) Nothing in section 1008 shall be construed to prevent the exercise of the rights and remedies allowed by clauses (3) and (7) 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. `(D) Nothing in this section annuls or limits in any way (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 the 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 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 this Act.'; and (4) by adding after subsection (c) the following: `(d) DEFINITIONS- As used in this section, the following term has the following meaning: A `digital phonorecord delivery' is each individual digital transmission of a sound recording which results in a specifically identified 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.'. SEC. 5. CONFORMING AMENDMENTS. (a) DEFINITIONS- Section 101 of title 17, United States Code, is amended by inserting after the definition of `device', `machine', or `process' the following: `A `digital transmission' is a transmission in whole or in part in a digital or other non-analog format.'. (b) LIMITATIONS ON EXCLUSIVE RIGHTS: SECONDARY TRANSMISSIONS- Section 111(c)(1) of title 17, United States Code, is amended in the first sentence by striking `The' and inserting `Except in the case of a performance of a sound recording in the course of a digital transmission, the'. (c) LIMITATIONS ON EXCLUSIVE RIGHTS: SECONDARY TRANSMISSIONS OF SUPERSTATIONS AND NETWORK STATIONS FOR PRIVATE HOME VIEWING- Section 119(a)(1) of title 17, United States Code, is amended by striking `Subject to' and inserting `Except in the case of a performance of a sound recording in the course of a digital transmission, and subject to'. (d) COPYRIGHT ARBITRATION ROYALTY PANELS- (1) Section 801(b)(1) of title 17, United States Code, is amended in the first and second sentences by inserting `114' before `115'. (2) Section 802(c) of title 17, United States Code, is amended in the third sentence by deleting `section 111, 116, or 119,' and inserting `section 111, 114, 116, or 119, any person entitled to a compulsory license under section 114(d), any person entitled to a compulsory license under section 115,'. (3) Section 802(g) of title 17, United States Code, is amended in the third sentence by inserting after `111' `, 114'. (4) Section 802(h)(2) of title 17, United States Code, is amended by inserting after `111' `, 114'. SEC. 6. EFFECTIVE DATE. This Act shall become effective three months after the date of enactment, except that the provisions of sections 114(e) and 114(f) shall take effect immediately upon enactment.