II

104TH CONGRESS

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Digital Performance

5 Right in Sound Recordings Act of 1995’’.

6 SEC. 2. EXCLUSIVE RIGHTS IN COPYRIGHTED WORKS.

7 Section 106 of title 17, United States Code, is

8 amended—
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1 (1) in paragraph (4) by striking ‘‘and’’ after

2 the semicolon;

3 (2) in paragraph (5) by striking the period and

4 inserting ‘‘; and’’; and

5 (3) by adding at the end the following:

6 ‘‘(6) in the case of sound recordings, to perform

7 the copyrighted work publicly by means of a digital

8 transmission.’’.

9 SEC. 3. SCOPE OF EXCLUSIVE RIGHTS IN SOUND RECORD10 INGS.

11 Section 114 of title 17, United States Code, is

12 amended—

13 (1) in subsection (a) by striking ‘‘and (3)’’ and

14 replacing it with ‘‘(3) and (6)’’;

15 (2) in subsection (b) by deleting from the first

16 sentence ‘‘phonorecords, or of copies of motion pic17 tures and other audiovisual works,’’ and inserting

18 ‘‘phonorecords or copies’’;

19 (3) by striking subsection (d) and replacing it

20 with the following new subsection (d):

21 ‘‘(d) LIMITATIONS ON EXCLUSIVE RIGHT.—Notwith22 standing the provisions of section 106(6)—

23 ‘‘(1) EXEMPT TRANSMISSIONS.—The perform24 ance of a sound recording publicly by means of a

25 digital transmission, other than as part of an inter-
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1 active service, is not an infringement of section

2 106(6) if the performance is part of—

3 ‘‘(A) a nonsubscription transmission, such

4 as a nonsubscription broadcast transmission;

5 ‘‘(B) a prior or simultaneous transmission

6 incidental to a nonsubscription transmission,

7 such as a feed received by and then

8 retransmitted by the nonsubscription transmit9 ter: Provided, That such incidental trans10 missions do not include any subscription trans11 mission directly for reception by members of

12 the public;

13 ‘‘(C) a retransmission of a nonsubscription

14 broadcast transmission: Provided, That, in the

15 case of a retransmission of a radio station’s

16 broadcast transmission, the transmission is not

17 willfully or repeatedly retransmitted more than

18 a radius of one hundred and fifty miles from

19 the site of the radio broadcast transmitter;

20 ‘‘(D) a further transmission by a business,

21 confined to its premises or the immediately sur22 rounding vicinity, of a transmission described in

23 paragraphs (A) or (B) of this subsection (d)(1);

24 or
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1 ‘‘(E) a retransmission otherwise subject to

2 liability, if such transmission is simultaneous

3 with the primary transmission and authorized

4 by the primary transmitter, and the primary

5 transmitter has been licensed to publicly per6 form the sound recording.

7 ‘‘(2) SUBSCRIPTION TRANSMISSIONS.—In the

8 case of a subscription transmission, the performance

9 of a sound recording publicly by means of a digital

10 transmission shall be subject to statutory licensing,

11 in accordance with subsection (f) of this section, if—

12 ‘‘(A) the transmission is not part of an

13 interactive service; and

14 ‘‘(B) the transmission does not exceed the

15 sound recording performance complement.

16 ‘‘(3) RIGHTS NOT OTHERWISE LIMITED.—

17 ‘‘(A) Except as expressly provided herein,

18 this section does not limit or impair the exclu19 sive right to perform a sound recording publicly

20 by means of a digital transmission under sec21 tion 106(6).

22 ‘‘(B) Nothing in this section annuls or lim23 its in any way—

24 ‘‘(i) the exclusive right to publicly per25 form a musical work, including by means
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1 of a digital transmission, under section

2 106(4),

3 ‘‘(ii) the exclusive rights to reproduce

4 and distribute a sound recording or the

5 musical work embodied therein under sec6 tions 106(1) and 106(3), including by

7 means of a digital phonorecord delivery as

8 defined in section 115, or

9 ‘‘(iii) any other rights under any other

10 clause of section 106, or remedies available

11 under this title, as such rights or remedies

12 exist either before or after the date of en13 actment of this Act.’’; and

14 ‘‘(4) by adding after subsection (d) the follow15 ing:

16 ‘‘(e) AUTHORITY FOR NEGOTIATIONS.—Any copy17 right owners of sound recordings and any entities perform18 ing sound recordings affected by this section may nego19 tiate and agree upon the terms and rates of royalty pay20 ments for the performance of such sound recordings and

21 the proportionate division of fees paid among copyright

22 owners, and may designate common agents to negotiate,

23 agree to, pay, or receive such royalty payments.

24 ‘‘(f) LICENSES FOR SUBSCRIPTION TRANS25 MISSIONS.—
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1 ‘‘(1) No later than thirty days after the enact2 ment of this legislation, the Librarian of Congress

3 shall cause notice to be published in the Federal

4 Register of the initiation of voluntary negotiation

5 proceedings for the purpose of determining reason6 able terms and rates of royalty payments for the ac7 tivities specified by subsection (d)(2) of this section

8 during the period beginning on the effective date of

9 this legislation and ending on December 31, 2000.

10 Such terms and rates shall distinguish among the

11 different types of digital transmission services then

12 in operation. Any copyright owners of sound record13 ings or any entities performing sound recordings af14 fected by this section may submit to the Librarian

15 of Congress licenses covering such activities with re16 spect to such sound recordings. The parties to each

17 negotiation proceeding shall bear their own costs.

18 ‘‘(2) In the absence of license agreements nego19 tiated under paragraph (1), the Librarian of Con20 gress shall, pursuant to chapter 8, convene a copy21 right arbitration royalty panel to determine and pub22 lish in the Federal Register a schedule of rates and

23 terms which, subject to paragraph (3), shall be bind24 ing on all copyright owners of sound recordings and

25 entities performing sound recordings. In establishing
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1 such rates and terms the copyright arbitration roy2 alty panel may consider the rates for comparable

3 types of digital transmission services and comparable

4 circumstances under voluntary license agreements

5 negotiated as provided in paragraph (1). The parties

6 to the proceeding shall bear the entire cost thereof

7 in such manner and proportion as the arbitration

8 panels shall direct. The Librarian of Congress shall

9 also establish requirements by which copyright own10 ers may receive reasonable notice of the use of their

11 sound recordings under this section, and under

12 which records of such use shall be kept by entities

13 performing sound recordings.

14 ‘‘(3) License agreements voluntarily negotiated

15 at any time between one or more copyright owners

16 of sound recordings and one or more entities per17 forming sound recordings shall be given effect in lieu

18 of any determination by the Librarian of Congress.

19 ‘‘(4) the procedures specified in paragraphs (1)

20 and (2) shall be repeated and concluded, in accord21 ance with regulations that the Librarian of Congress

22 shall prescribe—

23 ‘‘(A) within a six-month period each time

24 that a petition is filed by any copyright owners

25 of sound recordings or any entities performing
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1 sound recordings affected by this section indi2 cating that a new type of digital transmission

3 service on which sound recordings are per4 formed is or is about to become operational,

5 and

6 ‘‘(B) between June 30 and December 31,

7 2000 and at five-year intervals thereafter.

8 ‘‘(5) Any person who wishes to perform a sound

9 recording publicly by means of a subscription trans10 mission under this subsection (f) may do so without

11 infringing the exclusive right of the copyright owner

12 of the sound recording by complying with such no13 tice requirements as the Register of Copyrights shall

14 prescribe by regulation and by paying royalty fees in

15 accordance with this subsection, or, if such royalty

16 fees have not been set, by agreeing to pay such roy17 alty fees as shall be determined in accordance with

18 this subsection, and any royalty payments in arrears

19 shall be made on or before the twentieth day of the

20 month next succeeding the month in which the roy21 alty fees are set.

22 ‘‘(g) PROCEEDS FROM LICENSING OF SUBSCRIPTION

23 TRANSMISSIONS.—In the case of a subscription trans24 mission performance of a sound recording licensed under

25 subsection (f) of this section, the copyright owner of the
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1 exclusive right under section 106(6) of this title to publicly

2 perform a sound recording by means of a digital trans3 mission shall allocate to recording artists in the following

4 manner its receipts from the licensing of subscription

5 transmission performances of the sound recording in ac6 cordance with subsection (f) of this section:

‘‘(1) 21 7 ⁄2 percent of the receipts shall be depos8 ited in an escrow account managed by an independ9 ent administrator jointly appointed by copyright

10 owners of sound recordings and the American Fed11 eration of Musicians (or any successor entity) to be

12 distributed to nonfeatured musicians (whether or not

13 members of the American Federation of Musicians)

14 who have performed on sound recordings.

‘‘(2) 21 15 ⁄2 percent of the receipts shall be depos16 ited in an escrow account managed by an independ17 ent administrator jointly appointed by copyright

18 owners of sound recordings and the American Fed19 eration of Television and Radio Artists (or any suc20 cessor entity) to be distributed to nonfeatured vocal21 ists (whether or not members of the American Fed22 eration of Television and Radio Artists) who have

23 performed on sound recordings.

24 ‘‘(3) 45 percent of the receipts shall be allo25 cated, on a per sound recording basis, to the record-
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1 ing artist or artists featured on such sound record2 ing (or the persons conveying rights in the artists’

3 performance in the sound recordings).

4 ‘‘(h) LICENSING TO AFFILIATES.—Where the copy5 right owner of a sound recording owns a controlling inter6 est in, or otherwise possesses the power directly or indi7 rectly to exercise a controlling influence over the manage8 ment or policies of, an entity engaging in digital trans9 missions covered by section 106(6) and licenses to such

10 entity the right to publicly perform a sound recording by

11 means of a digital transmission, the copyright owner shall

12 make the licensed sound recording available under section

13 106(6) on similar terms and conditions to all other simi14 larly-situated entities offering similar types of digital

15 transmission services, except that such copyright owner

16 may—

17 ‘‘(1) impose reasonable requirements for credit18 worthiness; and

19 ‘‘(2) establish different prices, terms, and con20 ditions to take into account the types of services of21 fered, the duration of the license, the geographic re22 gion, the numbers of subscribers served, and any

23 other relevant factors.

24 ‘‘(i) NO EFFECT ON ROYALTIES FOR UNDERLYING

25 WORKS.—License fees payable for the public performance
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1 of sound recordings under clause (6) of section 106 shall

2 not be taken into account in any administrative, judicial

3 or other governmental proceeding to set or adjust the roy4 alties payable to copyright owners of musical works for

5 the public performance of their works.

6 ‘‘(j) DEFINITIONS.—As used in this section, the fol7 lowing terms have the following meanings:

8 ‘‘(1) A ‘broadcast transmission’ is a trans9 mission made by a broadcast station licensed as such

10 by the Federal Communications Commission.

11 ‘‘(2) An ‘interactive service’ is one that enables

12 a member of the public to receive, on request, a

13 transmission of a particular sound recording chosen

14 by or on behalf of the recipient. The ability of indi15 viduals to request that particular sound recordings

16 be performed for reception by the public at large

17 does not make a service interactive. If an entity of18 fers both interactive and non-interactive services (ei19 ther concurrently or at different times), the non20 interactive component shall not be treated as part of

21 an interactive service.

22 ‘‘(3) A ‘nonsubscription transmission’ is any

23 transmission that is not a subscription transmission.

24 ‘‘(4) The ‘sound recording performance com25 plement’ is the transmission of no more than—
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1 ‘‘(A) two selections each day of sound re2 cordings embodied in any one phonorecord dis3 tributed in the United States for ultimate sale

4 to consumers; or

5 ‘‘(B) three selections each day of sound re6 cordings of performances—

7 ‘‘(i) by the same featured recording

8 artist, or

9 ‘‘(ii) embodied in any set of

10 phonorecords or compilation of sound re11 cordings marketed together as a unit for

12 ultimate sale to consumers.

13 ‘‘(5) A ‘subscription transmission’ is a trans14 mission that is controlled and limited to particular

15 recipients, and for which consideration is required to

16 be paid or otherwise given by or on behalf of the re17 cipient to receive the transmission or a package of

18 transmissions including the transmission.’’.

19 SEC. 4. SCOPE OF EXCLUSIVE RIGHTS IN NONDRAMATIC

20 MUSICAL WORKS: COMPULSORY LICENSE

21 FOR MAKING AND DISTRIBUTING

22 PHONORECORDS.

23 Section 115 of title 17, United State Code, is amend24 ed—
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1 (1) by inserting before the period at the end of

2 the second sentence in subsection (a)(1) the words

3 ‘‘including by means of a digital phonorecord deliv4 ery’’;

5 (2) by inserting in the second sentence of sub6 section (c)(2), after the words ‘‘For this purpose,’’

7 the words ‘‘and other than as provided in clause

8 (3),’’;

9 (3) by redesignating clauses (3), (4) and (5) of

10 subsection (c) as clauses (4), (5) and (6), respec11 tively, and by inserting the following new clause:

12 ‘‘(3)(A) A compulsory license under this section

13 includes the right of the maker of a phonorecord of

14 a nondramatic musical work under subsection (a)(1)

15 to distribute or authorize distribution of the sound

16 recording of such phonorecord by means of a digital

17 transmission which constitutes a digital phonorecord

18 delivery, regardless of whether the digital trans19 mission is also a public performance of the sound re20 cording under section 106(6) of this title or of any

21 nondramatic musical work embodied therein under

22 section 106(4) of this title. For every digital phono23 record delivery by or under the authority of the com24 pulsory licensee, the royalty payable by the compul-
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1 sory licensee shall be the royalty prescribed under

2 clause (2) and chapter 8 of this title.

3 ‘‘(B) Independent of any right of public per4 formance under section 106(4), the copyright owner

5 of a nondramatic musical work embodied in a sound

6 recording has the right to receive royalty payments

7 at the rates prescribed under this subsection when

8 the digital transmission of that sound recording con9 stitutes a digital phonorecord delivery. Unless au10 thorized by said copyright owner of the nondramatic

11 musical work or by any person who has obtained a

12 compulsory license under this section, such a digital

13 transmission, by whomever made, shall be actionable

14 by the copyright owner in the nondramatic musical

15 work as an act of infringement: Provided, however,

16 That no such cause of action may be brought

17 against a copyright owner of a sound recording un18 less it authorized the digital phonorecord delivery.

19 Any such cause of action shall be in addition to

20 those available to the copyright owner of the musical

21 work under section 106(4) and the copyright owner

22 of the sound recording with respect to digital phono23 record deliveries and under section 106(6).

24 ‘‘(C) Nothing in section 1008 shall be construed

25 to prevent the exercise of the rights and remedies al-
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1 lowed by clauses (3) and (7) and chapter 5 in the

2 event of a digital phonorecord delivery, except that

3 no action alleging infringement of copyright may be

4 brought under this title against a manufacturer, im5 porter or distributor of a digital audio recording de6 vice, a digital audio recording medium, an analog re7 cording device, or an analog recording medium, or

8 against a consumer, based on the actions described

9 in such section.

10 ‘‘(D) Nothing in this section annuls or limits in

11 any way (i) the exclusive right to publicly perform

12 a sound recording or the musical work embodied

13 therein, including by means of a digital trans14 mission, under sections 106(4) and 106(6), (ii) ex15 cept for the compulsory licensing under the condi16 tions specified by this section, the exclusive rights to

17 reproduce and distribute the sound recording and

18 the musical work embodied therein under sections

19 106(1) and 106(3), including by means of a digital

20 phonorecord delivery, or (iii) any other rights under

21 any other clause of section 106, or remedies avail22 able under this title, as such rights or remedies exist

23 either before or after the date of enactment of this

24 Act.’’; and

25 (4) by adding after subsection (c) the following:
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1 ‘‘(d) DEFINITIONS.—As used in this section, the fol2 lowing term has the following meaning: A ‘digital phono3 record delivery’ is each individual digital transmission of

4 a sound recording which results in a specifically identified

5 reproduction by or for any transmission recipient of a pho6 norecord of that sound recording, regardless of whether

7 the digital transmission is also a public performance of

8 the sound recording or any nondramatic musical work em9 bodied therein.’’.

10 SEC. 5. CONFORMING AMENDMENTS.

11 (a) DEFINITIONS.—Section 101 of title 17, United

12 States Code, is amended by inserting after the definition

13 of ‘‘device’’, ‘‘machine’’, or ‘‘process’’ the following:

14 ‘‘A ‘digital transmission’ is a transmission in

15 whole or in part in a digital or other non-analog for16 mat.’’.

17 (b) LIMITATIONS ON EXCLUSIVE RIGHTS: SECOND18 ARY TRANSMISSIONS.—Section 111(c)(1) of title 17,

19 United States Code, is amended in the first sentence by

20 striking ‘‘The’’ and inserting ‘‘Except in the case of a per21 formance of a sound recording in the course of a digital

22 transmission, the’’.

23 (c) LIMITATIONS ON EXCLUSIVE RIGHTS: SECOND24 ARY TRANSMISSIONS OF SUPERSTATIONS AND NETWORK

25 STATIONS FOR PRIVATE HOME VIEWING.—Section
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1 119(a)(1) of title 17, United States Code, is amended by

2 striking ‘‘Subject to’’ and inserting ‘‘Except in the case

3 of a performance of a sound recording in the course of

4 a digital transmission, and subject to’’.

5 (d) COPYRIGHT ARBITRATION ROYALTY PANELS.—

6 (1) Section 801(b)(1) of title 17, United States

7 Code, is amended in the first and second sentences

8 by inserting ‘‘114’’ before ‘‘115’’.

9 (2) Section 802(c) of title 17, United States

10 Code, is amended in the third sentence by deleting

11 ‘‘section 111, 116, or 119,’’ and inserting ‘‘section

12 111, 114, 116, or 119, any person entitled to a com13 pulsory license under section 114(d), any person en14 titled to a compulsory license under section 115,’’.

15 (3) Section 802(g) of title 17, United States

16 Code, is amended in the third sentence by inserting

17 after ‘‘111’’ ‘‘, 114’’.

18 (4) Section 802(h)(2) of title 17, United States

19 Code, is amended by inserting after ‘‘111’’ ‘‘, 114’’.

20 SEC. 6. EFFECTIVE DATE.

21 This Act shall become effective three months after

22 the date of enactment, except that the provisions of sec23 tions 114(e) and 114(f) shall take effect immediately upon

24 enactment.

Æ