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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 227 Introduced in Senate (IS)]

  1st Session
                                 S. 227

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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

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: Provided, 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: Provided, 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: Provided, however, 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.
                                 <all>
```