I 

109TH CONGRESS 

2D SESSION H. R. 5553 

To amend section 115 of title 17, United States Code, to provide for licensing 

of digital delivery of musical works, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 8, 2006 

Mr. SMITH of Texas (for himself and Mr. BERMAN) introduced the following 

bill; which was referred to the Committee on the Judiciary 

A BILL 

To amend section 115 of title 17, United States Code, to 

provide for licensing of digital delivery of musical works, 

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 ‘‘Section 115 Reform 

5 Act of 2006’’. 

6 SEC. 2. STATUTORY LICENSES FOR DIGITAL DELIVERY OF 

7 MUSICAL WORKS. 

8 Section 115 of title 17, United States Code, is 

9 amended by adding at the end the following new sub10 section: 


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1 ‘‘(e) LICENSES FOR DIGITAL USES OF MUSICAL

2 WORKS.— 

3 ‘‘(1) IN GENERAL.—The compulsory license for 

4 digital phonorecord deliveries and hybrid offerings 

5 shall be governed by this subsection, in addition to 

6 subsections (a), (c), and (d). The license under this 

7 subsection covers— 

8 ‘‘(A) the making and distribution of gen9 eral and incidental digital phonorecord deliv10 eries in the form of full downloads, limited 

11 downloads, interactive streams, and any other 

12 form constituting a digital phonorecord delivery 

13 or hybrid offering; and 

14 ‘‘(B) all reproduction and distribution 

15 rights necessary to engage in activities de16 scribed in subparagraph (A), solely for the pur17 pose of engaging in such activities under the li18 cense, including— 

19 ‘‘(i) the making of reproductions by 

20 and for end users; 

21 ‘‘(ii) reproductions made on servers 

22 under the authority of the licensee; and 

23 ‘‘(iii) incidental reproductions made 

24 under the authority of the license in the 

25 normal course of engaging in activities deVerDate Aug 31 2005 00:34 Jun 10, 2006 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5553.IH H5553

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1 scribed in subparagraph (A), including 

2 cached, network, and RAM buffer repro3 ductions. 

4 ‘‘(2) BLANKET LICENSES.—A person may ob5 tain a compulsory license to engage in activities sub6 ject to this subsection only from a designated agent 

7 under paragraph (4) and only if the person is a dig8 ital music provider. A person may engage in activi9 ties subject to this subsection under authority of a 

10 compulsory license only— 

11 ‘‘(A) if the license was obtained by a dig12 ital music provider; and 

13 ‘‘(B) with respect to end users with which 

14 the digital music provider meets the require15 ments of paragraph (14)(C). 

16 ‘‘(3) ROYALTY-FREE LICENSE.— 

17 ‘‘(A) IN GENERAL.—A compulsory license 

18 shall be available for the making of server and 

19 incidental reproductions to facilitate noninter20 active streaming. 

21 ‘‘(B) ACTIVITIES COVERED.—Each des22 ignated agent shall grant a license under this 

23 subsection for the making of server and inci24 dental reproductions to facilitate noninteractive 

25 streaming at a royalty-free rate. The designated 


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1 agent may charge only a filing fee of not more 

2 than $30 to administer the issuance of the li3 cense. The license shall cover reproductions 

4 made on servers under authority of the licensee 

5 and incidental reproductions made under the 

6 authority of the licensee in the course of the 

7 noninteractive streaming, including cached, net8 work, and RAM buffer reproductions, to the ex9 tent reasonably necessary for, and solely for the 

10 purpose of, engaging in noninteractive stream11 ing under the license in a technologically rea12 sonable and efficient matter. 

13 ‘‘(C) EXCLUDED ACTIVITIES.—The license 

14 under subparagraph (A) does not extend to any 

15 server or incidental reproductions used to en16 able a streaming service (or any other type of 

17 service) that takes affirmative steps to author18 ize, enable, cause, or induce the making of re19 productions of musical works by or for end 

20 users that are accessible by those end users for 

21 future listening, unless a valid license for repro22 duction and distribution rights has otherwise 

23 been obtained by the streaming or other type of 

24 service permitting the server or incidental re25 productions to be used for that activity. 


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1 ‘‘(4) APPLICATIONS FOR LICENSES.—Any dig2 ital music provider seeking a license under this sub3 section may apply to a designated agent for the li4 cense, identifying in the application each type of 

5 qualifying activity for which the license is sought. 

6 Any digital music provider that has a license under 

7 this subsection and seeks to engage in any activity 

8 covered by this subsection that is not identified in 

9 the license may engage in that activity only upon fil10 ing a new application identifying the additional ac11 tivity. 

12 ‘‘(5) LICENSES.—All activities specified in an 

13 application filed under paragraph (4) for which a li14 cense is available under this subsection shall be li15 censed by the designated agent. The license shall be 

16 effective, upon the filing of the application, for all 

17 copyrighted nondramatic musical works (or shares of 

18 such musical works) represented by the designated 

19 agent. 

20 ‘‘(6) RETROACTIVE ROYALTY PAYMENTS.— 

21 ‘‘(A) RETROACTIVE PAYMENTS.—A digital 

22 music provider that has obtained a license from 

23 a designated agent under this subsection for— 

24 ‘‘(i) the making and distribution of 

25 limited downloads, or 


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1 ‘‘(ii) the making or distribution of 

2 interactive streams, 

3 may report to the designated agent activity au4 thorized by the license that the digital music 

5 provider engaged in during the period beginning 

6 January 1, 2001, and ending on January 1, 

7 2008, and pay to the designated agent royalties 

8 applicable to that activity. Such reporting and 

9 payments shall be made not later than March 

10 1, 2008, in accordance with the regulations 

11 issued under paragraph (10) regarding report12 ing and payments. 

13 ‘‘(B) LIMITATION ON LIABILITY.—A dig14 ital music provider that reports activity and 

15 makes payments under this paragraph for an 

16 activity under this paragraph shall not be sub17 ject to an action for copyright infringement al18 leging violation of reproduction or distribution 

19 rights to the extent such action is based on ac20 tivity so reported for which all payments due 

21 have been made. 

22 ‘‘(C) EFFECT ON ROYALTY-FREE LI23 CENSE.—A digital music provider that complies 

24 with the requirements of this paragraph is enti25 tled to a royalty-free license under paragraph 


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1 (3)(A) for the activity reported under subpara2 graph (A), retroactive to January 1, 2001. 

3 ‘‘(7) LICENSE NOT TRANSFERABLE.—A license 

4 granted to a digital music provider under this sub5 section may not be transferred to any other person 

6 or entity. 

7 ‘‘(8) ROYALTY RATES AND TERMS.— 

8 ‘‘(A) IN GENERAL.—Except as provided in 

9 this paragraph, the Copyright Royalty Judges 

10 shall determine reasonable rates and terms for 

11 digital phonorecord deliveries and hybrid offer12 ings as provided under subsection (c) and chap13 ter 8, except for server and incidental reproduc14 tions for noninteractive streaming that are eligi15 ble for royalty-free licenses under this sub16 section. 

17 ‘‘(B) RATES AND TERMS IN EFFECT.— 

18 Rates and terms in effect under subsection (c) 

19 on the effective date of the Section 115 Reform 

20 Act of 2006 for any activity for which a license 

21 is available under this section shall continue to 

22 apply to that activity on and after that date 

23 until a new rate is determined under subsection 

24 (c) and chapter 8. 


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1 ‘‘(C) PAYMENT.—Licensees under this 

2 subsection shall make payments of royalty rates 

3 and terms to the designated agents as directed 

4 by the Copyright Royalty Judges. 

5 ‘‘(D) RATES AND TERMS FOR NEW LI6 CENSE ACTIVITIES.— 

7 ‘‘(i) IN GENERAL.—Not later than 

8 December 1, 2007, the Copyright Royalty 

9 Judges shall initiate a ratemaking pro10 ceeding, pursuant to the procedures set 

11 forth in chapter 8, to determine a final 

12 rate and terms for any activity for which 

13 a license is available under this subsection 

14 if— 

15 ‘‘(I) a final rate and terms have 

16 not been established for the activity as 

17 of that date; or 

18 ‘‘(II) the activity is not the sub19 ject of a proceeding to set a final rate 

20 and terms under subsection (c) that is 

21 pending before the Copyright Royalty 

22 Judges on that date. 

23 ‘‘(ii) PENDING PROCEEDINGS.—In 

24 any case in which a proceeding is pending 

25 before the Copyright Royalty Judges, on 


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1 December 1, 2007, to determine final rates 

2 and terms under subsection (c) for any ac3 tivity for which a license is available under 

4 this subsection, the Copyright Royalty 

5 Judges may expand and adjust the sched6 ule of the proceeding to cover rates and 

7 terms for any activity described in clause 

8 (i), in lieu of initiating a proceeding under 

9 clause (i) with respect to that activity, if so 

10 expanding and adjusting the schedule of 

11 the proceeding will not unduly prejudice 

12 any party to the proceeding and will not 

13 delay the final determination of rates and 

14 terms by the Copyright Royalty Judges by 

15 more than 90 days. 

16 ‘‘(iii) PARTICIPATION OF DESIGNATED

17 AGENTS.—All designated agents, and any 

18 other parties who have a significant inter19 est, within the meaning of section 804(a), 

20 in the applicable royalty rate, are entitled 

21 to participate in a proceeding under this 

22 subparagraph relating to activities licensed 

23 under this subsection. 

24 ‘‘(E) INTERIM RATES.— 


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1 ‘‘(i) IN GENERAL.—For any activity 

2 for which a license is available under this 

3 subsection and for which a rate and terms 

4 have not been determined under subsection 

5 (c), a digital music provider shall, upon fil6 ing a valid application with the relevant 

7 designated agent, have a license under this 

8 subsection to engage in the activity, sub9 ject to clause (ii). 

10 ‘‘(ii) INTERIM RATES AND TERMS.— 

11 Upon the filing of an application under 

12 clause (i)— 

13 ‘‘(I) the digital music provider 

14 and the designated agent may nego15 tiate an interim rate and terms that 

16 will apply to the activity under the li17 cense; or 

18 ‘‘(II) the digital music provider 

19 or the designated agent, or both, may 

20 apply to the Copyright Royalty 

21 Judges for an interim rate and terms, 

22 in which case— 

23 ‘‘(aa) the Copyright Royalty 

24 Judges shall, not later than 15 

25 days after the application is 


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1 made, publish notice of an expe2 dited proceeding to determine the 

3 interim rate and terms; and 

4 ‘‘(bb) the Judges shall de5 termine the interim rate and 

6 terms not less than 30 days and 

7 not more than 60 days after pub8 lishing the notice, through the 

9 expedited proceeding. 

10 ‘‘(iii) APPLICABILITY OF INTERIM

11 RATES AND TERMS.—(I) An interim rate 

12 and terms negotiated under clause (ii)(I) 

13 or established under clause (ii)(II) shall 

14 apply to the activity under the license con15 cerned until a final rate and terms for the 

16 activity are determined under subpara17 graph (D), or as otherwise agreed by the 

18 parties. 

19 ‘‘(II) An interim rate and terms de20 scribed in clause (i) with respect to an ac21 tivity by a digital music provider shall not 

22 be treated as precedent in a final rate23 making proceeding. If the Copyright Roy24 alty Judges have established an interim 

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1 ject to clause (iv), that rate and those 

2 terms shall apply to the same activity en3 gaged in by any digital music provider, ex4 cept as otherwise agreed to by the parties. 

5 ‘‘(iv) SINGLE PROCEEDING FOR EACH

6 ACTIVITY.—Unless the Copyright Royalty 

7 Judges determine that there is good cause 

8 to review an interim rate established under 

9 clause (ii)(II), the Judges may conduct 

10 only 1 proceeding to determine an interim 

11 rate and terms for an activity for which a 

12 license is available under this subsection. 

13 ‘‘(v) ADJUSTMENT OF INTERIM

14 RATES.—After a determination of a final 

15 rate and terms that will apply to an activ16 ity for which a license is available under 

17 this subsection has been made under sub18 paragraph (D), the final rate and terms 

19 shall be retroactive to the inception of the 

20 activity under all licenses to which such 

21 rate and terms apply, unless an agreement 

22 between the parties to a license provides 

23 otherwise. Not later than 60 days after the 

24 determination of the final rate becomes ef25 fective— 


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1 ‘‘(I) the digital music provider 

2 shall pay to the designated agent any 

3 amounts due from underpayment of 

4 fees by the digital music provider be5 cause the final rate exceeds the in6 terim rate; or 

7 ‘‘(II) the designated agent shall 

8 refund to the digital music provider 

9 the amounts of any overpayment of 

10 fees by the digital music provider be11 cause the interim rate exceed the final 

12 rate, or, at the election of the digital 

13 music provider, the designated agent 

14 shall credit such overpayment against 

15 future payments by the digital music 

16 provider to the designated agent 

17 under this subsection. 

18 ‘‘(9) DESIGNATED AGENTS.— 

19 ‘‘(A) IN GENERAL.—Designated agents 

20 under this subsection are the General Des21 ignated Agent and additional designated agents. 

22 ‘‘(B) GENERAL DESIGNATED AGENT.— 

23 ‘‘(i) DESIGNATION AND PURPOSE.— 

24 (I) Not later than August 1, 2007, the 

25 Register of Copyrights shall designate a 


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1 mechanical licensing and collection agency 

2 representing music publishing entities that 

3 represent the greatest share of the music 

4 publishing market, as measured by the 

5 amount of royalties collected during the 

6 preceding 3 full calendar years with re7 spect to the use of copyrighted musical 

8 works pursuant to this section, to establish 

9 and operate the General Designated Agent. 

10 ‘‘(II) The General Designated Agent 

11 shall grant and administer licenses and col12 lect and distribute royalties payable for the 

13 use of musical works licensed under this 

14 subsection. 

15 ‘‘(III) The General Designated Agent 

16 shall be governed by a board of directors 

17 consisting of representatives of at least 5 

18 music publishing entities. 

19 ‘‘(ii) DECERTIFICATION.—The Reg20 ister of Copyrights may disqualify the Gen21 eral Designated Agent upon a showing 

22 that it fails to meet the qualifications 

23 under this subparagraph or otherwise fails 

24 to meet the requirements under this para25 graph. In such a case, the Register of 


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1 Copyrights shall designate another General 

2 Designated Agent that most closely meets 

3 the requirements of clause (i)(I). 

4 ‘‘(C) ADDITIONAL DESIGNATED AGENTS.— 

5 ‘‘(i) CERTIFICATION.—The Register of 

6 Copyrights shall certify as an additional 

7 designated agent to represent copyright 

8 owners for purposes of licenses under this 

9 subsection any entity that demonstrates 

10 that— 

11 ‘‘(I) upon certification, it will 

12 represent music publishing entities 

13 that represent at least a 15 percent 

14 share of the music publishing market, 

15 as measured by the amount of royal16 ties collected during the preceding 3 

17 full calendar years with respect to the 

18 use of copyrighted musical works pur19 suant to this section; and 

20 ‘‘(II) it has the capability to per21 form the required functions of a des22 ignated agent under this subsection. 

23 ‘‘(ii) DUTIES.—(I) Upon certification 

24 under clause (i), an additional designated 

25 agent shall represent any copyright owners 


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1 of musical works who elect to have the ad2 ditional designated agent represent them 

3 and the musical works (or shares of musi4 cal works) owned or controlled by such 

5 copyright owners for purposes of the li6 censes under this subsection. 

7 ‘‘(II) Each additional designated 

8 agent shall notify the General Designated 

9 Agent and any other additional designated 

10 agent of each copyright owner, and the 

11 musical works (or shares of musical works) 

12 owned or controlled by the copyright 

13 owner, that the additional designated agent 

14 represents pursuant to subclause (I). 

15 ‘‘(III) Any election under subclause 

16 (I) is effective only if it is made in writing, 

17 a copy of which shall be made available to 

18 any other designated agent upon a reason19 able request therefor. 

20 ‘‘(iii) DECERTIFICATION.—The Reg21 ister of Copyrights may remove the certifi22 cation of any additional designated agent 

23 upon a showing that it fails to meet the 

24 qualifications under this subparagraph or 


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1 otherwise fails to meet the requirements 

2 under this paragraph. 

3 ‘‘(D) AUTHORITIES OF DESIGNATED

4 AGENTS.—A designated agent may— 

5 ‘‘(i) engage in activities pursuant to 

6 this subsection; 

7 ‘‘(ii) engage in such additional activi8 ties in the interest of music publishers and 

9 songwriters as the designated agent con10 siders appropriate, including industry ne11 gotiations, ratesetting proceedings, litiga12 tion, and legislative efforts; and 

13 ‘‘(iii) apply any administrative fees or 

14 other funds it collects to support the activi15 ties described in clauses (i) and (ii). 

16 ‘‘(E) ELECTIONS BY COPYRIGHT OWN17 ERS.— 

18 ‘‘(i) REPRESENTATION BY SINGLE

19 DESIGNATED AGENT.—Each copyright 

20 owner, and the musical works (or shares of 

21 musical works) that the copyright owner 

22 owns or controls, may be represented by 

23 only one designated agent during any cal24 endar year. 


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1 ‘‘(ii) ANNUAL ENROLLMENT PE2 RIOD.— 

3 ‘‘(I) IN GENERAL.—Each copy4 right owner may, during the month of 

5 September of each year, elect to 

6 change the designated agent to rep7 resent the owner and the musical 

8 works (or shares of musical works) re9 ferred to in clause (i), beginning on 

10 January 1 of the succeeding calendar 

11 year. 

12 ‘‘(II) SELECTION.—A copyright 

13 owner may choose only one designated 

14 agent during the month of September 

15 of each year. If the designated agent 

16 chosen is not certified pursuant to 

17 subparagraph (C)(i) or is decertified 

18 pursuant to subparagraph (C)(iii), the 

19 copyright owner and the musical 

20 works (or shares) referred to in clause 

21 (i) shall be represented by the General 

22 Designated Agent for the succeeding 

23 calendar year. 

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1 cal works (and shares of musical works) of 

2 any copyright owner who elects to change 

3 designated agents under clause (ii) shall 

4 terminate on December 31 of the year in 

5 which the election is made, after which the 

6 musical works (and shares of musical 

7 works) of the copyright owner will become 

8 subject to the licenses in effect with the 

9 designated agent selected under clause (ii). 

10 ‘‘(iv) DEFAULT REPRESENTATION BY

11 GENERAL DESIGNATED AGENT.—If a copy12 right owner does not choose to be rep13 resented by an additional designated agent, 

14 the General Designated Agent shall rep15 resent the copyright owner and musical 

16 works (or shares of musical works) owned 

17 or controlled by the copyright owner. 

18 ‘‘(v) VOLUNTARY AGREEMENTS.—A 

19 copyright owner and a digital music pro20 vider may enter into a voluntary license 

21 agreement pursuant to subsection 

22 (c)(3)(E)(i) to cover activities licensed 

23 under this subsection. Any such agreement 

24 shall apply in lieu of a blanket license 

25 under this subsection with respect to those 


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1 musical works (or shares of musical works) 

2 and activities covered by the agreement 

3 during the period that the agreement is in 

4 effect. The royalty fees due for usage of 

5 musical works (or shares of musical works) 

6 under a blanket license under this sub7 section shall be reduced in proportion to 

8 the usage covered under such a voluntary 

9 license agreement. Each designated agent 

10 shall establish procedures by which copy11 right owners and licensees shall be re12 quired to notify the designated agent of 

13 the existence of voluntary license agree14 ments upon which they are relying in lieu 

15 of the blanket license. Such procedures 

16 shall include appropriate measures to pro17 tect confidential information of licensees. 

18 ‘‘(F) NOTICE OF DESIGNATED AGENTS.— 

19 At least 90 days before beginning operations, 

20 the General Designated Agent and any inter21 ested party wishing to serve as a designated 

22 agent shall file with the Copyright Office a no23 tice of intent to operate as a designated agent 

24 under this subsection. The notice shall contain 

25 such contact information, and such information 


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1 concerning applications for licenses under this 

2 subsection and access to the electronic database 

3 of the designated agent (described in subpara4 graph (H)(i)) identifying musical works (or 

5 shares of musical works) represented by the 

6 designated agent, as required in regulations 

7 issued to carry out this subsection. The Copy8 right Office shall make each notice filed under 

9 this subparagraph available to the public on the 

10 Internet. 

11 ‘‘(G) TERMINATION OF DESIGNATED

12 AGENT.— 

13 ‘‘(i) NOTICE AND TRANSFER OF

14 RECORDS.—At least 180 days before termi15 nating operations, a designated agent 

16 shall— 

17 ‘‘(I) notify the Copyright Office, 

18 all of its licensees under this sub19 section, all of the copyright owners 

20 represented by the designated agent 

21 for the purposes of this subsection, 

22 and all other designated agents of its 

23 intent to terminate operations; and 

24 ‘‘(II) transfer electronic and 

25 other copies of all relevant records to 


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1 the existing General Designated Agent 

2 or, in the case of the termination of 

3 the General Designated Agent, to the 

4 successor General Designated Agent. 

5 ‘‘(ii) ASSUMPTION OF DUTIES BY

6 GDA.—Upon the termination of operations 

7 of a designated agent, the General Des8 ignated Agent or successor General Des9 ignated Agent, as the case may be, shall 

10 assume the administration of the musical 

11 works and rights previously administered 

12 by the terminated designated agent, re13 gardless of whether the terminated agent 

14 has complied with clause (i). 

15 ‘‘(H) MUSICAL WORKS DATA.— 

16 ‘‘(i) AVAILABILITY.—The General 

17 Designated Agent and each additional des18 ignated agent shall maintain and make 

19 available to licensees, free of charge, a 

20 searchable electronic database of informa21 tion from which licensees can determine 

22 which musical works (or shares of musical 

23 works) are available for licensing under 

24 this subsection through that designated 

25 agent. Any musical work (or shares of a 


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1 musical work) not identified as being rep2 resented by the General Designated Agent 

3 or any additional designated agent in any 

4 such database may be presumed by licens5 ees to be represented by the General Des6 ignated Agent. 

7 ‘‘(ii) USE OF DATABASE BY DES8 IGNATED AGENTS AND LICENSEES.—Sub9 ject to the public access described under 

10 clause (iii), the database required by clause 

11 (i) may be used by designated agents and 

12 licensees only for purposes of determining 

13 the identity and availability of musical 

14 works for licenses under this subsection, 

15 obtaining such licenses, reporting of use of 

16 musical works, payment of royalties, and 

17 otherwise to comply with licenses under 

18 this subsection, except that a designated 

19 agent may use or make the database it 

20 maintains available for other purposes re21 lating to musical works or music pub22 lishers. The Copyright Royalty Judges 

23 shall, in establishing cost-sharing amounts 

24 pursuant to paragraph (12), consider the 

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1 poses to the designated agent and the 

2 copyright owners it represents. The use of 

3 any such database shall be subject to rea4 sonable confidentiality and security stand5 ards prescribed in regulations to carry out 

6 this subsection. 

7 ‘‘(iii) PUBLIC ACCESS TO DATA8 BASE.—The General Designated Agent 

9 and each designated agent shall make rel10 evant portions of the database required by 

11 clause (i) available free of charge to the 

12 general public to access information con13 cerning specific musical works that are 

14 represented by the designated agent, sub15 ject to reasonable terms and conditions of 

16 use as may be prescribed by the Register 

17 of Copyrights. 

18 ‘‘(I) LETTERS OF DIRECTION.— 

19 ‘‘(i) IN GENERAL.—A designated 

20 agent shall comply with a letter of direc21 tion submitted under clause (ii) or (iii) 

22 which instructs the designated agent to 

23 pay all or part of the royalties otherwise 

24 payable to the copyright owner to another 

25 person. 


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1 ‘‘(ii) RECOUPMENT OF ADVANCE.—A 

2 copyright owner that receives an advance 

3 payment from a sound recording company 

4 under a contract entered into before June 

5 1, 2006, that has not been recouped by the 

6 sound recording company shall, at the re7 quest of the sound recording company, 

8 submit a letter of direction to a designated 

9 agent instructing the designated agent to 

10 pay royalties otherwise payable to the 

11 copyright owner to the sound recording 

12 company until such time as the advance 

13 payment made by the sound recording 

14 company to the copyright owner is re15 couped by the sound recording company. 

16 ‘‘(iii) MISSING COPYRIGHT OWNER.— 

17 In any case in which a sound recording 

18 company is, after reasonable efforts, un19 able to locate a copyright owner that re20 ceived an advance payment from the sound 

21 recording company that has not fully been 

22 recouped by the sound recording company, 

23 the sound recording company may submit 

24 a letter of direction to a designated agent 

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1 alties that would be due the copyright 

2 owner to the sound recording company. 

3 ‘‘(10) ROYALTY REPORTING AND COMPLI4 ANCE.— 

5 ‘‘(A) REQUIREMENTS.— 

6 ‘‘(i) IN GENERAL.—Each licensee 

7 under this subsection shall, on a quarterly 

8 basis and in electronic format, report its 

9 usage of musical works under the license, 

10 and make royalty payments by reason of 

11 such usage, to the applicable designated 

12 agent. 

13 ‘‘(ii) LIMITATION ON DISCLOSURE.— 

14 ‘‘(I) IN GENERAL.—A designated 

15 agent may disclose information re16 ceived under clause (i) to a recipient 

17 of royalty payments made by a li18 censee only with respect to musical 

19 works owned or controlled by the re20 cipient. The designated agent may not 

21 disclose such information to any other 

22 person in a form that can be readily 

23 associated with a licensee except to 

24 the extent permitted by written agree25 ment of the licensee. 


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1 ‘‘(II) EXCEPTION.—Subclause (I) 

2 does not prevent a designated agent 

3 from providing information with re4 spect to a licensee— 

5 ‘‘(aa) to the legal and finan6 cial advisors of the designated 

7 agent or to an accountant or 

8 auditor rendering services relat9 ing to this subsection; or 

10 ‘‘(bb) to the extent nec11 essary in connection with a bona 

12 fide dispute or legal claim or pro13 ceeding. 

14 ‘‘(iii) INTEREST.— 

15 ‘‘(I) IN GENERAL.—A licensee 

16 who has failed to make a payment re17 quired under this subsection by the 

18 due date to a designated agent (in19 cluding as specified in a notice of pay20 ment deficiency or default, as deter21 mined in a royalty compliance exam22 ination under subparagraph (B), or as 

23 required by a determination of the 

24 Copyright Royalty Judges), shall pay 

25 to the designated agent interest on 


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1 the overdue amount, at the Federal 

2 funds rate plus 5 percent, such inter3 est to accrue monthly from the date 

4 payment was due until the date pay5 ment is received by the designated 

6 agent. 

7 ‘‘(II) DEFINITION.—In this 

8 clause, the term ‘Federal funds rate’ 

9 means the interest rate established by 

10 the Federal Reserve at which deposi11 tory institutions lend balances at the 

12 Federal Reserve to other depository 

13 institutions overnight. The Federal 

14 funds rate for any 1-month period 

15 during which interest accrues under 

16 clause (i) is the Federal funds rate in 

17 effect on the first day of that 1-month 

18 period. 

19 ‘‘(iv) PROMOTIONAL USE.—A licensee 

20 under this subsection shall not be required 

21 to report or pay under this subsection for 

22 a free promotional use of a musical work 

23 that is authorized by the copyright owner 

24 of the musical work. 


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1 ‘‘(B) ROYALTY COMPLIANCE EXAMINA2 TIONS.—A designated agent may, upon pro3 viding written notice to its licensee under this 

4 subsection, conduct a royalty compliance exam5 ination of the licensee, subject to the following: 

6 ‘‘(i) A designated agent may conduct 

7 only 1 examination of any licensee in a cal8 endar year, and may conduct an examina9 tion of a licensee with respect to a report10 ing period only once. A designated agent 

11 may conduct an examination jointly with 

12 one or more other designated agents. 

13 ‘‘(ii) The examination may begin only 

14 within 18 months after the end of the pe15 riod being examined and may only cover a 

16 period of not less than 2 and not more 

17 than 4 consecutive years, except that an 

18 examination may cover a period of— 

19 ‘‘(I) more than 4 years if the ex20 amination includes activities subject 

21 to retroactive payments under para22 graph (6); 

23 ‘‘(II) a period of less than 2 

24 years if— 


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1 ‘‘(aa) the licensee’s license 

2 has been terminated; 

3 ‘‘(bb) the licensee has de4 faulted in its reporting or pay5 ments under this paragraph; or 

6 ‘‘(cc) the licensee has termi7 nated or is about to terminate 

8 operations, has filed or indicated 

9 an intent to file for bankruptcy, 

10 or has transferred or indicated 

11 an intent to transfer its assets to 

12 a third party; or 

13 ‘‘(III) a period of less than 2 

14 years or more than 4 years, if for 

15 other good cause the examination can16 not reasonably cover a period of 2 to 

17 4 years. 

18 ‘‘(iii) At the conclusion of the exam19 ination, the designated agent shall, after 

20 considering any written rebuttal provided 

21 by the licensee during the examination, 

22 provide a written notice to the licensee set23 ting forth the designated agent’s final de24 termination of the claim, if any, resulting 

25 from the examination. 


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1 ‘‘(iv) The designated agent shall bear 

2 the costs of the examination, except that, 

3 if the licensee underpaid royalty fees by 10 

4 percent or more, the licensee shall bear the 

5 reasonable costs of the examination. 

6 ‘‘(v) A licensee may not assert section 

7 507 of this title or any other Federal or 

8 State statute of limitations, doctrine of 

9 laches or estoppel, or similar provision to 

10 avoid a royalty examination under this 

11 subparagraph, or as a defense to a legal 

12 action arising from such a royalty exam13 ination, if the legal action is commenced 

14 within 18 months after the final deter15 mination by the designated agent of the 

16 claim (as stated in the written notice under 

17 clause (iii)) resulting from the examination 

18 that is the basis for such action. 

19 ‘‘(C) FAILURE TO REPORT OR PAY ROYAL20 TIES.— 

21 ‘‘(i) IN GENERAL.—If a licensee under 

22 this subsection— 

23 ‘‘(I) fails to provide a quarterly 

24 report when due or fails to provide a 


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1 quarterly report in compliance with 

2 the error tolerance standard, or 

3 ‘‘(II) fails to make all quarterly 

4 royalty payments when due or fails to 

5 pay royalties due for reported usage, 

6 the designated agent may provide written 

7 notice to the licensee describing the default 

8 under subclause (I) or (II) and providing 

9 that if the default is not remedied within 

10 30 days after receipt of the notice, the li11 cense will automatically terminate upon the 

12 expiration of that 30-day period. Upon 

13 such termination, the licensee will be sub14 ject to an infringement action as provided 

15 in subsection (c)(6) with respect to the 

16 uses of the musical works that are the sub17 ject of the default. 

18 ‘‘(ii) FAILURE WITH RESPECT TO IN19 DIVIDUAL WORK.— 

20 ‘‘(I) EXCLUSION FROM LI21 CENSE.—If a licensee with an other22 wise valid license under this sub23 section— 

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1 ments under subparagraph (A)(i) 

2 for a musical work covered by the 

3 license, or 

4 ‘‘(bb) upon being sent writ5 ten notice from the designated 

6 agent of a valid reporting or pay7 ment deficiency with respect to 

8 the use of a musical work, fails 

9 to remedy that deficiency within 

10 the specified cure period, 

11 that work is excluded from the scope 

12 of the license until such time as the li13 censee provides all the reports that 

14 are past due, and makes all royalty 

15 payments that are past due, to the 

16 designated agent for that work, or the 

17 designated agent otherwise identifies 

18 the work, determines the usage of the 

19 work, and has received from the li20 censee all royalty payments for the 

21 work that are past due. 

22 ‘‘(II) SPECIFIED CURE PE23 RIOD.—For purposes of subclause 

24 (I)(bb), the ‘‘specified cure period’’ 

25 means, with respect to a licensee— 


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1 ‘‘(aa) 90 days, during the 

2 first 12 month-period in which 

3 the licensee engages in activities 

4 under a license under this sub5 section; 

6 ‘‘(bb) 60 days, during the 

7 succeeding 12-month period in 

8 which a licensee engages in ac9 tivities under a license under this 

10 subsection; and 

11 ‘‘(cc) 30 days, during any 

12 period thereafter. 

13 ‘‘(III) EXCEPTION.—If the li14 censee demonstrates to the designated 

15 agent with respect to a musical work 

16 that is the subject of a notice of defi17 ciency described in subclause (I)(bb) 

18 that the deficiency cannot be remedied 

19 because it is due to missing informa20 tion that, notwithstanding a diligent 

21 search by the licensee, is actually and 

22 objectively unobtainable by the li23 censee from any known source, then 

24 the license shall not be invalidated 


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1 with respect to that work, if all royal2 ties due for that work have been paid. 

3 ‘‘(iii) OBTAINING SUBSEQUENT LI4 CENSES.—A licensee whose license is ter5 minated by a designated agent under 

6 clause (i) and who fully remedies the de7 fault within 60 days after the date on 

8 which the license terminates, may apply for 

9 and obtain a new license from that des10 ignated agent, if, during the 5-year period 

11 ending on the date of such termination, the 

12 licensee has not previously had a license 

13 terminated by the designated agent. In any 

14 other case in which a license is validly ter15 minated by a designated agent, the des16 ignated agent may require the licensee to 

17 meet reasonable credit or advance require18 ments or to demonstrate the capability to 

19 report and make royalty payments in com20 pliance with this subsection before obtain21 ing a new license. 

22 ‘‘(11) DISTRIBUTION OF ROYALTIES, UN23 CLAIMED FUNDS, AND DISPUTE RESOLUTION.— 

24 ‘‘(A) DISTRIBUTION OF ROYALTIES.—Each 

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1 tributing royalties collected from licensees 

2 under this subsection to any copyright owner 

3 whom the designated agent represents and who 

4 has provided the designated agent with suffi5 cient information to identify and pay that copy6 right owner (or the copyright owner’s designee). 

7 ‘‘(B) UNCLAIMED FUNDS.— 

8 ‘‘(i) IN GENERAL.—If a designated 

9 agent is unable, after a reasonably diligent 

10 search, to identify or locate a copyright 

11 owner entitled to receive royalties under 

12 subparagraph (A), the designated agent 

13 may deposit the undistributed royalties (in 

14 this subparagraph referred to as ‘un15 claimed funds’) into an unclaimed funds 

16 account that earns interest, accrued 

17 monthly, at the Federal short term rate 

18 determined under section 1274(d)(1)(C)(i) 

19 of the Internal Revenue Code of 1986. In20 terest accrued on unclaimed funds shall be 

21 payable to a copyright owner upon dis22 tribution of the unclaimed funds to such 

23 copyright owner. 

24 ‘‘(ii) HOLDING AND DISTRIBUTION.— 


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1 ‘‘(I) HOLDING.—A designated 

2 agent with unclaimed funds shall hold 

3 the funds for a period of at least 3 

4 years after the date on which the li5 censee paid the funds. The designated 

6 agent shall make reasonably diligent 

7 efforts to publicize the existence of the 

8 unclaimed funds and the procedures 

9 by which copyright owners may claim 

10 such funds from the designated agent. 

11 ‘‘(II) LICENSING ADMINISTRA12 TIVE COSTS.—At the end of the pe13 riod in which funds are held under 

14 subclause (I), the designated agent 

15 may apply the funds to offset licens16 ing administrative costs. 

17 ‘‘(III) DISTRIBUTION OF RE18 MAINDER.—Any unclaimed funds not 

19 applied to offset licensing administra20 tive costs under subclause (II) shall 

21 be distributed as follows: 

22 ‘‘(aa) The designated agent 

23 shall pay to every other des24 ignated agent its pro rata share 

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1 mined on the basis of the propor2 tionate distribution of royalties 

3 by each designated agent to copy4 right owners for the reporting pe5 riods during which the funds 

6 were collected. 

7 ‘‘(bb) Each designated agent 

8 shall distribute, on an equitable 

9 basis, its pro rata share of the 

10 unclaimed funds to the copyright 

11 owners that the designated agent 

12 represents under this subsection 

13 (other than those that cannot be 

14 identified or located). 

15 ‘‘(iii) PREEMPTION.—This subpara16 graph preempts any State law (including 

17 common law) that would otherwise apply 

18 concerning escheatment or abandoned or 

19 unclaimed property. 

20 ‘‘(C) DISPUTES.—Each designated agent 

21 shall establish a committee that includes an 

22 equal number of— 

23 ‘‘(i) representatives of music pub24 lishing entities represented by the des25 ignated agent, and 


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•HR 5553 IH

1 ‘‘(ii) songwriters with musical works 

2 represented by the designated agent who 

3 are not members of the board of directors, 

4 governing body, or management of the des5 ignated agent, 

6 for the purpose of addressing any dispute raised 

7 by a copyright owner relating to the allocation 

8 and payment by the designated agent of royal9 ties to such copyright owner under a license ob10 tained from the designated agent under this 

11 subsection. The dispute resolution process shall 

12 not affect any other legal or equitable rights or 

13 remedies available to any copyright owner or 

14 the designated agent. 

15 ‘‘(D) PROCEDURES.—The Register of 

16 Copyrights shall establish by regulation the pro17 cedures for the holding by a designated agent 

18 of unclaimed funds and royalties paid under 

19 this subsection that are attributable to musical 

20 works that are the subject of a legal dispute or 

21 proceeding. A designated agent that complies 

22 with the requirements of this paragraph and 

23 such regulations shall not be subject to a legal 

24 claim based upon or arising from unclaimed 


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•HR 5553 IH

1 funds or an ownership dispute or legal pro2 ceeding. 

3 ‘‘(E) DOCUMENTATION.—A songwriter 

4 whose musical works (or shares thereof) are ad5 ministered by a music publisher for licensing 

6 under this subsection (including those rep7 resented through default representation pursu8 ant to paragraph (9)(E)(iv)) may request from 

9 a designated agent a copy of the relevant por10 tions of any royalty statement that the des11 ignated agent provided, within the preceding 4 

12 calendar years, to that publisher, and that 

13 shows all data provided by the designated agent 

14 to the publisher regarding the use and royalties 

15 distributed to the publisher in connection with 

16 those works (or shares thereof). A designated 

17 agent shall provide the information requested 

18 by the songwriter within a reasonable time after 

19 receiving the request. A songwriter may make 

20 such a request of a particular designated agent 

21 not more than once each calendar year. 

22 ‘‘(F) WITHHOLDING OF INTERIM ROYAL23 TIES.—Each designated agent may withhold 

24 reasonable reserves from the distribution of in25 terim royalties collected under this subsection 


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1 to allow for the possibility of a lower final stat2 utory rate. Upon final determination of the 

3 statutory rate, to the extent such reserves are 

4 not required to be returned or credited to the 

5 licensee, the designated agent shall distribute to 

6 copyright owners such reserves with interest. 

7 ‘‘(12) COST SHARING FEES.— 

8 ‘‘(A) IN GENERAL.—The Copyright Roy9 alty Judges shall determine, under such proce10 dures as they may establish, an appropriate 

11 cost-sharing mechanism and cost-sharing 

12 amounts to be paid by licensees under this sub13 section to designated agents. Not later than 

14 February 1, 2007, the Copyright Royalty 

15 Judges shall initiate a proceeding to determine, 

16 not later than May 1, 2007, appropriate interim 

17 cost-sharing amounts to apply pending the es18 tablishment of final cost-sharing amounts. Any 

19 cost-sharing mechanism or cost-sharing 

20 amounts shall be equitably applied to all des21 ignated agents. In determining a cost-sharing 

22 mechanism or cost-sharing amount under this 

23 paragraph, the Copyright Royalty Judges shall 

24 consider— 


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•HR 5553 IH

1 ‘‘(i)(I) the actual, reasonable costs of 

2 creating and maintaining an infrastructure 

3 for activities of designated agents under 

4 this subsection; 

5 ‘‘(II) any nonmonetary contributions 

6 by the parties to such infrastructures, in7 cluding contributions of data and services; 

8 ‘‘(III) the actual, reasonable costs to 

9 designated agents specifically associated 

10 with the administration of licenses under 

11 this subsection; 

12 ‘‘(IV) the nature and value of any col13 lateral benefits that any party may realize 

14 from the blanket license and blanket li15 cense system created by this subsection; 

16 and 

17 ‘‘(V) any other factors deemed rel18 evant by the Copyright Royalty Judges. 

19 ‘‘(B) COST-SHARING NOT A FACTOR IN

20 ROYALTY RATES.—The Copyright Royalty 

21 Judges, in establishing royalty rates for statu22 tory licenses, may not take into account the 

23 cost-sharing mechanism or cost-sharing 

24 amounts under subparagraph (A). 

25 ‘‘(13) EXCLUSION FROM BLANKET LICENSES.— 


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1 ‘‘(A) IN GENERAL.—A sound recording 

2 company may, by written notice to the appro3 priate designated agent, exclude a musical work 

4 from a compulsory license under paragraph (2) 

5 if the musical work is the subject of a contract 

6 described in subsection (c)(3)(E)(ii). 

7 ‘‘(B) EXCLUSION ERRORS.— 

8 ‘‘(i) NOT EXCLUDED.—In any case in 

9 which a musical work could have been ex10 cluded pursuant to subparagraph (A) but 

11 was not due to uncertainty concerning 

12 ownership of the copyright of the musical 

13 work or the application of a contract de14 scribed in subsection (c)(3)(E)(ii), or in 

15 any case in which a digital music provider 

16 makes payments to a designated agent for 

17 use of a musical work excluded under sub18 paragraph (A), the designated agent shall 

19 make payments to the appropriate person 

20 as if the exclusion under subparagraph (A) 

21 had applied on the date of the enactment 

22 of the Section 115 Reform Act of 2006, 

23 unless an agreement between the des24 ignated agent and the appropriate person 

25 provides otherwise. 


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1 ‘‘(ii) EXCLUDED.—In any case in 

2 which a musical work was excluded pursu3 ant to subparagraph (A) in error— 

4 ‘‘(I) a sound recording company 

5 acting in good faith with regards to 

6 the exclusion shall only be liable for 

7 the payment of amounts that other8 wise would have been payable under 

9 this subsection plus interest as de10 scribed in (10)(A)(iii)(II); and 

11 ‘‘(II) a licensee acting in good 

12 faith with regards to the exclusion 

13 shall not be liable. 

14 ‘‘(14) DEFINITIONS.—In this subsection: 

15 ‘‘(A) ADMINISTRATIVE FEES.—The term 

16 ‘administrative fees’ means any fees that are 

17 collected or deducted by a designated agent to 

18 cover licensing administrative costs or other ad19 ministrative costs. 

20 ‘‘(B) COPYRIGHT OWNER.—The term 

21 ‘copyright owner’ means a natural person or le22 gally recognized entity that owns or controls an 

23 interest in one or more copyrighted nondra24 matic musical works subject to licensing under 

25 this section. 


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1 ‘‘(C) DIGITAL MUSIC PROVIDER.—The 

2 term ‘digital music provider’ means a person 

3 that— 

4 ‘‘(i) with respect to a service engaging 

5 in activities licensed under this sub6 section— 

7 ‘‘(I) contracts with or has a di8 rect economic relationship with the 

9 end users of the service, and controls 

10 what end users pay for the service; 

11 ‘‘(II) controls how content is 

12 bundled and offered through the serv13 ice; 

14 ‘‘(III) is able to fully report on 

15 all revenues and consideration gen16 erated by the service; and 

17 ‘‘(IV) is able to fully report on all 

18 elements of music usage by the service 

19 (or procure such reporting); or 

20 ‘‘(ii) makes and distributes a hybrid 

21 offering. 

22 ‘‘(D) ERROR TOLERANCE STANDARD.— 

23 The term ‘error tolerance standard’ means the 

24 maximum percentage, of all data that a licensee 

25 is required to report under this subsection 


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1 under its license in any statutory reporting pe2 riod, that is permitted to be inaccurate, 

3 unreadable, or missing, or any combination 

4 thereof, as determined under regulations issued 

5 to carry out this subsection. 

6 ‘‘(E) FULL DOWNLOAD.—The term ‘full 

7 download’ means a digital phonorecord delivery 

8 of a sound recording of a musical work that is 

9 not limited in availability for listening by the 

10 end user either to a period of time or a number 

11 of times the sound recording can be played. 

12 ‘‘(F) HYBRID OFFERING.—The term ‘hy13 brid offering’ means a reproduction or distribu14 tion of a phonorecord in physical form subject 

15 to a compulsory license under this section 

16 where— 

17 ‘‘(i) a digital transmission of data by 

18 or under the authority of the licensee is re19 quired to render the sound recording em20 bodied on the phonorecord audible to the 

21 end user or to enable the continued ren22 dering of the sound recording after a finite 

23 period of time or a specified number of 

24 times rendered; or 


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1 ‘‘(ii) the phonorecord is made by or 

2 under the authority of the licensee at the 

3 request of a user for distribution to that 

4 user or the user’s designee. 

5 ‘‘(G) INTERACTIVE STREAM.—The term 

6 ‘interactive stream’— 

7 ‘‘(i) means a stream of a sound re8 cording of a musical work that does not 

9 qualify for a statutory license under sec10 tion 114(d)(2) with respect to the sound 

11 recording embodied therein; and 

12 ‘‘(ii) subject to clause (i), includes a 

13 stream of a particular sound recording of 

14 a musical work that an end user has se15 lected, and is transmitted to such end user, 

16 to listen to at or substantially at the time 

17 of making such selection or at some future 

18 time, whether or not as a part of a pro19 gram specially created for the end user. 

20 ‘‘(H) LICENSING ADMINISTRATIVE

21 COSTS.—The term ‘licensing administrative 

22 costs’ means the actual costs to a designated 

23 agent that are attributable to the issuance and 

24 administration of licenses under this subsection, 

25 including— 


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1 ‘‘(i) costs in connection with the col2 lection and distribution of royalties under 

3 this subsection; 

4 ‘‘(ii) the costs of identifying and locat5 ing copyright owners and administering a 

6 claims system for unidentified copyright 

7 owners; 

8 ‘‘(iii) the costs of royalty examinations 

9 and other royalty compliance efforts; and 

10 ‘‘(iv) the costs of creating and main11 taining an infrastructure for the activities 

12 described in clauses (i), (ii), and (iii). 

13 ‘‘(I) LIMITED DOWNLOAD.—the term ‘lim14 ited download’ means a digital phonorecord de15 livery of a sound recording of a musical work 

16 that is only available for listening for— 

17 ‘‘(i) a definite period of time (includ18 ing a period of time defined by ongoing 

19 subscription payments made by an end 

20 user); or 

21 ‘‘(ii) a specified number of times. 

22 ‘‘(J) NONINTERACTIVE STREAMING.—The 

23 term ‘noninteractive streaming’ means the 

24 radio-style streaming of sound recordings of 

25 musical works for which a statutory license is 


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•HR 5553 IH

1 available with respect to the sound recordings 

2 under section 114(d)(2). 

3 ‘‘(K) OTHER ADMINISTRATIVE COSTS.— 

4 The term ‘Other administrative costs’ means all 

5 expenses, expenditures, retained earnings, and 

6 reserves of a designated agent, other than li7 censing administrative costs, that are author8 ized by the board of directors of the designated 

9 agent. 

10 ‘‘(L) SONGWRITER.—The term ‘songwriter’ 

11 means the author of a musical work. 

12 ‘‘(M) SOUND RECORDING COMPANY.—The 

13 term ‘sound recording company’ means a per14 son who is— 

15 ‘‘(i) a copyright owner or who has 

16 similar rights to a sound recording of a 

17 musical work under the common law or 

18 statues of any State with respect to a 

19 sound recording fixed before February 15, 

20 1972; 

21 ‘‘(ii) an exclusive licensee of a sound 

22 recording of a musical work; or 

23 ‘‘(iii) performing the functions of mar24 keting and authorizing the distribution of 

25 a sound recording of a musical work under 


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1 the authority of the copyright owner of the 

2 musical work. 

3 ‘‘(N) STREAM.—(i) The term ‘stream’ 

4 means the digital transmission of a sound re5 cording embodying a musical work for one-time 

6 listening by the end user using technology such 

7 that the transmission is not intended or de8 signed to result in a substantially complete re9 production of the sound recording, other than 

10 an incidental reproduction made in the normal 

11 course of such activity, including a cached, net12 work, or RAM buffer reproduction, to permit 

13 such one-time listening. 

14 ‘‘(ii) The term ‘streaming’ means the proc15 ess of making and distributing streams. 

16 ‘‘(15) REGULATIONS.—The Register of Copy17 rights shall issue such regulations as are necessary 

18 to carry out this subsection, including— 

19 ‘‘(A) specifying the requirements and pro20 cedures for reporting and making payments, 

21 and conducting royalty compliance examina22 tions, under paragraph (10); 

23 ‘‘(B) specifying the procedures for expe24 dited proceedings under paragraph 

25 (8)(D)(ii)(II)(bb); 


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1 ‘‘(C) specifying the form of a letter of di2 rection under paragraph (9)(I)(i); and 

3 ‘‘(D) facilitating exclusions from the blan4 ket license under paragraph (13).’’. 

5 SEC. 3. PERFORMANCE RIGHT PRESERVED. 

6 Section 115 of title 17, United States Code, is 

7 amended by adding at the end the following new sub8 section: 

9 ‘‘(f) PERFORMANCE RIGHT PRESERVED.—The rights 

10 granted under subsection (e) shall not include, limit, or 

11 otherwise affect any right of public performance of a musi12 cal work. The third sentence of subsection (e)(9)(E)(v) 

13 and the definitions contained in paragraph (14) of sub14 section (e) shall not be taken into account in any adminis15 trative, judicial, or other governmental proceeding to set 

16 or adjust the royalties payable to copyright owners of mu17 sical works for, the right of public performance of their 

18 works.’’. 

19 SEC. 4. INTERIM RATE PROCESS. 

20 Section 115(c) of title 17, United States Code, is 

21 amended by adding at the end the following new para22 graph: 

23 ‘‘(7) INTERIM RATES.— 

24 ‘‘(A) IN GENERAL.—For any activity for 

25 which a license is available under this section, 


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1 other than an activity for which a license is 

2 available under subsection (e), for which a rate 

3 and terms have not been determined, any per4 son shall, upon serving notice to the copyright 

5 owner, have a license under this subsection to 

6 engage in the activity, subject to subparagraph 

7 (B). 

8 ‘‘(B) INTERIM RATES.—Upon the filing of 

9 an application under subparagraph (A)— 

10 ‘‘(i) the parties may negotiate an in11 terim rate and terms that will apply to the 

12 activity under the license; or 

13 ‘‘(ii) either party or both parties may 

14 apply to the Copyright Royalty Judges for 

15 an interim rate and terms, in which case— 

16 ‘‘(I) the Copyright Royalty 

17 Judges shall, not later than 15 days 

18 after the application is made, publish 

19 notice of an expedited proceeding to 

20 determine the interim rate and terms; 

21 and 

22 ‘‘(II) the Judges shall determine 

23 the interim rate and terms not less 

24 than 30 days and not more than 60 


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1 days after publishing the notice, 

2 through the expedited proceeding. 

3 ‘‘(C) APPLICABILITY OF INTERIM

4 RATES.—(i) Interim rates and terms negotiated 

5 under subparagraph (B)(i) or established under 

6 subparagraph (B)(ii) shall apply to the activity 

7 under the license concerned until a rate and 

8 terms for the activity are determined under 

9 paragraph (3)(C) and chapter 8, or as other10 wise agreed by the parties. 

11 ‘‘(ii) Interim rates and terms described in 

12 subparagraph (A) with respect to an activity by 

13 an applicant shall not be treated as precedent 

14 in a final ratemaking proceeding. If the Copy15 right Royalty Judges have established an in16 terim rate and terms under subparagraph 

17 (B)(ii), subject to subparagraph (D), that rate 

18 and those terms shall apply to the same activity 

19 engaged in by any person, except as otherwise 

20 agreed to by the parties. 

21 ‘‘(D) SINGLE PROCEEDING FOR EACH AC22 TIVITY.—Unless the Copyright Royalty Judges 

23 determine that there is good cause to review an 

24 interim rate or terms established under sub25 paragraph (B)(ii), the Copyright Royalty 


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1 Judges may conduct only 1 proceeding to deter2 mine an interim rate and terms for an activity 

3 for which a license is available under this sub4 section. 

5 ‘‘(E) ADJUSTMENT OF INTERIM RATES.— 

6 After a final determination of rates and terms 

7 that will apply to an activity for which a license 

8 is available under this subsection has been 

9 made under paragraph (3)(C) and chapter 8, 

10 the final rate and terms shall be retroactive to 

11 the inception of the activity under a license be12 tween a person and a copyright owner to which 

13 the rate and terms apply, unless an agreement 

14 between the parties to the license provides oth15 erwise. Not later than 60 days after the deter16 mination of the final rate and terms becomes 

17 effective— 

18 ‘‘(i) the person shall pay to the copy19 right owner any amounts due from under20 payment of fees by the person because the 

21 final rate exceeds the interim rate; or 

22 ‘‘(ii) the copyright owner shall refund 

23 to the person the amounts of any overpay24 ment of fees by the person because the in25 terim rate exceed the final rate, or, at the 


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1 election of the person, the copyright owner 

2 shall credit such overpayment against fu3 ture payments by the person to the copy4 right owner under this subsection.’’. 

5 SEC. 5. TECHNICAL AMENDMENTS. 

6 (a) DEFINITION.—Section 115(d) of title 17, United 

7 States Code, is amended— 

8 (1) in the first sentence, by striking ‘‘As used’’ 

9 and inserting by adding at the end the following: ‘‘.’’ 

10 ‘‘(1) IN GENERAL.—As used’’; 

11 (2) by moving the remaining text 2 ems to the 

12 right; and 

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

14 ‘‘(2) INCLUDED ACTIVITIES.—The term ‘digital 

15 phonorecord delivery’ includes— 

16 ‘‘(A) an interactive stream (as such term is 

17 defined in subsection (e)(16)(F)) of nondra18 matic musical works; and 

19 ‘‘(B) server and incidental reproductions of 

20 nondramatic musical works made to facilitate 

21 the deliveries of phonorecords by digital trans22 mission described in subparagraph (A) and 

23 paragraph (1).’’. 

24 (b) CONFORMING AMENDMENTS.—Section 115(c) of 

25 title 17, United States Code, is amended— 


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1 (1) in paragraph (3)— 

2 (A) in the first sentence of subparagraph 

3 (A), by striking ‘‘or authorize the distribution 

4 of’’; 

5 (B) in subparagraph (C), by striking 

6 ‘‘Such terms and rates shall distinguish’’ and 

7 all that follows through the end of the sentence; 

8 and 

9 (C) in subparagraph (D), by striking 

10 ‘‘Such terms and rates shall distinguish’’ and 

11 all that follows through the end of the sentence; 

12 and 

13 (2) in paragraph (5)— 

14 (A) by striking ‘‘(5) Royalty payments’’ 

15 and inserting ‘‘(5)(A) Subject to subparagraph 

16 (B), royalty payments’’; and 

17 (B) by adding at the end the following: 

18 ‘‘(B) Payments under the license provided for 

19 under subsection (e) shall be governed by that sub20 section in lieu of subparagraph (A).’’. 

21 SEC. 6. EFFECTIVE DATE. 

22 (a) IN GENERAL.—Subject to subsection (b), this Act 

23 and the amendments made by this Act take effect on the 

24 date of the enactment of this Act. 


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1 (b) DELAY OF LICENSES.—No license under sub2 section (e) of section 115 of title 17, United States Code, 

3 may take effect before January 1, 2008. 

4 SEC. 7. SAVINGS CLAUSES. 

5 (a) LICENSE NOT REQUIRED.—This Act and the 

6 amendments made by this Act shall not be construed to 

7 indicate whether an activity for which a license under sec8 tion 115 of title 17, United States Code, is available, if 

9 not licensed or otherwise authorized by the copyright 

10 owner, would constitute an act of copyright infringement. 

11 (b) FAIR USE.—Nothing in this Act shall affect any 

12 right, limitation, or defense to copyright infringement, in13 cluding fair use, under title 17, United States Code. 

Æ 


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