I 
112TH CONGRESS 
2D SESSION 
H. R. 6480 
To adopt fair standards and procedures by which determinations of Copyright 
Royalty Judges are made with respect to webcasting, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 21, 2012 
Mr. CHAFFETZ (for himself, Mr. POLIS, Mr. ISSA, and Ms. ZOE LOFGREN of 
California) introduced the following bill; which was referred to the Com-
mittee on the Judiciary 
A BILL 
To adopt fair standards and procedures by which determina-
tions of Copyright Royalty Judges are made with respect 
to webcasting, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Internet Radio Fair-
ness Act of 2012’’. 
SEC. 2. APPOINTMENT OF COPYRIGHT ROYALTY JUDGES 
AND QUALIFICATIONS. 
Chapter 8 of title 17, United States Code, is amend-
ed— 
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(1) in section 801(a)— 
(A) in the first sentence, by striking ‘‘Li-
brarian of Congress’’ and inserting ‘‘President 
of the United States, by and with the advice 
and consent of the Senate,’’; and 
(B) by striking the second sentence; and 
(2) in section 802— 
(A) in subsection (a)(1), by striking 
‘‘Each’’ and all that follows through ‘‘econom-
ics.’’ and inserting the following: ‘‘Each Copy-
right Royalty Judge shall be an attorney who 
has not fewer than 10 years of legal experience 
and has significant experience in adjudicating 
arbitrations or court trials. The Chief Copyright 
Royalty Judge shall have not fewer than 7 
years of experience in adjudicating court trials 
in civil cases.’’; and 
(B) in subsection (d)— 
(i) in paragraph (1), in the first sen-
tence, by striking ‘‘Librarian’’ and all that 
follows through ‘‘section.’’ and inserting 
‘‘President of the United States shall act 
expeditiously to fill the vacancy.’’; and 
(ii) in paragraph (2), by striking ‘‘Li-
brarian of Congress’’ and inserting ‘‘Presi-
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dent of the United States, by and with the 
advise and consent of the Senate,’’. 
SEC. 3. COMPUTATION OF ROYALTY FEES FOR INTERNET 
RADIO SERVICES OFFERING DIGITAL PER-
FORMANCES OF SOUND RECORDINGS AND 
REPORTING OBLIGATIONS. 
(a) STANDARD
FOR
DETERMINING
RATES
AND 
TERMS; BURDEN OF PROOF.— 
(1) EPHEMERAL RECORDINGS.—Section 112(e) 
of title 17, United States Code, is amended— 
(A) in paragraph (3), by striking the sec-
ond sentence and inserting the following: ‘‘Such 
rates may include a minimum annual fee for 
each type of service offered by the transmitting 
organization.’’; 
(B) in paragraph (4), by striking ‘‘Such 
rates shall’’ and all that follows through ‘‘para-
graphs (2) and (3).’’ and inserting the fol-
lowing: ‘‘In establishing rates and terms under 
this paragraph, the Copyright Royalty Judges 
shall apply the objectives set forth in section 
801(b)(1), in accordance with subparagraphs 
(C) and (D) of section 114(f)(1). In any pro-
ceeding under this paragraph, the burden of 
proof shall be on the copyright owners of sound 
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recordings to establish that the fees and terms 
that they seek satisfy the requirements of this 
paragraph, and do not exceed the fees to which 
most copyright owners and users would agree 
under competitive market circumstances. To the 
extent the Copyright Royalty Judges consider 
marketplace benchmarks to be relevant, they 
shall limit those benchmarks to benchmarks re-
flecting the rates and terms that have been 
agreed under competitive market circumstances 
by most copyright users.’’; and 
(C) in paragraph (5), by striking ‘‘in lieu 
of any’’ and all that follows and inserting the 
following: ‘‘and be binding upon the parties to 
any such agreements in lieu of any determina-
tion by the Copyright Royalty Judges.’’. 
(2) DIGITAL
SOUND
RECORDING
PERFORM-
ANCES.—Section 114(f) of title 17, United States 
Code, is amended— 
(A) in paragraph (1)— 
(i) in subparagraph (A)— 
(I) in the first sentence— 
(aa) by striking ‘‘subscrip-
tion transmissions by preexisting 
subscription services and trans-
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missions by preexisting satellite 
digital audio radio’’; and 
(bb) by striking ‘‘, except in 
the case of a different transi-
tional period provided under sec-
tion 6(b)(3) of the Copyright 
Royalty and Distribution Reform 
Act of 2004,’’; and 
(II) by striking ‘‘Such terms and 
rates’’ and all that follows and insert-
ing the following: ‘‘Such terms and 
rates shall distinguish among the dif-
ferent types of digital audio trans-
mission services then in operation and 
may take into account the different 
characteristics of such services, and 
may include a minimum annual fee of 
not more than $500 for each provider 
of services that is subject to such 
rates and terms, which may be the 
only minimum fee for such provider 
and may be assessed only once annu-
ally to that provider. Any copyright 
owners of sound recordings or any en-
tities performing sound recordings af-
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digital performances of sound recordings; 
and 
‘‘(II) the income necessary to provide 
a reasonable return on all relevant invest-
ments, including investments in prior peri-
ods for which returns have not been 
earned. 
‘‘(ii) To the extent the Copyright Royalty 
Judges consider marketplace benchmarks to be 
relevant, the Copyright Royalty Judges shall 
limit those benchmarks to benchmarks reflect-
ing the rates and terms that have been agreed 
under competitive market circumstances by 
most copyright users. 
‘‘(D) In applying the objectives set forth in 
section 
801(b)(1), 
the 
Copyright 
Royalty 
Judges— 
‘‘(i) shall not disfavor percentage of 
revenue-based fees; 
‘‘(ii) shall establish license fee struc-
tures that foster competition among the 
licensors of sound recording performances 
and between sound recording performances 
and other programming, including per-use 
or per-program fees, or percentage of rev-
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enue or other fees that include carve-outs 
on a pro-rata basis for sound recordings 
the performance of which have been li-
censed either directly with the copyright 
owner or at the source, or for which a li-
cense is not necessary; 
‘‘(iii) shall give full consideration for 
the value of any promotional benefit or 
other non-monetary benefit conferred on 
the copyright owner by the performance; 
‘‘(iv) shall give full consideration to 
the contributions made by the digital audio 
transmission service to the content and 
value of its programming; and 
‘‘(v) shall not take into account either 
the rates and terms provided in licenses for 
interactive services or the determinations 
rendered by the Copyright Royalty Judges 
prior to the enactment of the Internet 
Radio Fairness Act of 2012.’’; and 
(v) by amending subparagraph (E), as 
so redesignated, to read as follows: 
‘‘(E) The procedures under subparagraph 
(A) may also be initiated pursuant to a petition 
filed by any copyright owners of sound record-
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ings, or any entity performing sound recordings 
affected by this paragraph, indicating that a 
new type of digital audio transmission service 
engaged in the public performance of sound re-
cordings is or is about to become operational, 
for the purpose of determining reasonable terms 
and rates of royalty payments with respect to 
such new type of transmission service for the 
period beginning with the inception of such new 
type of service and ending on the date on which 
the royalty rates and terms for the most com-
parable digital audio transmission services most 
recently determined under subparagraph (A) 
and chapter 8 expire, or such other period as 
the parties may agree.’’; 
(B) by striking paragraph (2); 
(C) by redesignating paragraphs (3), (4), 
and (5) as paragraphs (2), (3), and (4), respec-
tively; and 
(D) in paragraph (2), as so redesignated— 
(i) by inserting ‘‘or their authorized 
representatives’’ after ‘‘owners of sound re-
cordings’’; and 
(ii) by striking ‘‘in lieu of any’’ and 
all that follows and inserting the following: 
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‘‘and be binding upon the parties to any 
such agreements in lieu of any determina-
tion by the Copyright Royalty Judges.’’. 
(3) DEFINITION.—Section 114(j) of title 17, 
United States Code, is amended— 
(A) 
by 
redesignating 
paragraphs 
(4) 
through (15) as paragraphs (5) through (16), 
respectively; and 
(B) by inserting after paragraph (3) the 
following: 
‘‘(4) ‘Competitive market circumstances’ are 
circumstances in which a licensee enters into a li-
cense for the noninteractive performance of sound 
recordings with a licensor that does not possess mar-
ket power resulting from the aggregation of copy-
rights, either by a licensing collective or individual 
copyright owners.’’. 
(b) PRECEDENTIAL VALUE OF SETTLEMENTS.—Sec-
tion 114(f)(4) of title 17, United States Code, as so redes-
ignated by subsection (a)(2), is amended— 
(1) in subparagraph (B), by striking the second 
sentence; 
(2) by striking subparagraphs (C) and (F); 
(3) by redesignating subparagraphs (D) and 
(E) as subparagraphs (C) and (D), respectively; and 
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(4) by adding at the end the following: 
‘‘(E) The rates and terms of any settle-
ments made pursuant to the amendments made 
by the Webcaster Settlement Act of 2009 (Pub-
lic Law 111–36; 123 Stat. 1926) that were to 
expire before December 31, 2015, shall be ex-
tended through December 31, 2015, according 
to the rates and terms applicable to 2014.’’. 
(c) TECHNICAL AND CONFORMING AMENDMENTS.— 
Chapter 8 of title 17, United States Code, is amended— 
(1) 
in 
section 
801(b)(7)(B), 
by 
striking 
‘‘114(f)(3)’’ and inserting ‘‘114(f)(2)’’; 
(2) in section 803(c)(2)(E)(i)(II)— 
(A) by striking ‘‘section 114(f)(1)(C) or 
114(f)(2)(C)’’ 
and 
inserting 
‘‘section 
114(f)(1)(E)’’; and 
(B) by striking ‘‘section 114(f)(4)(B)’’ and 
inserting ‘‘section 114(f)(3)(B)’’; and 
(3) in section 804(b)(3)(C)— 
(A) in clause (i), by striking ‘‘section 
114(f)(1)(C) and 114(f)(2)(C)’’ and inserting 
‘‘section 114(f)(1)(E)’’; 
(B) in clause (iii)(II), by striking ‘‘section 
114(f)(4)(B)(ii) and (C)’’ and inserting ‘‘sub-
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paragraphs 
(B)(ii) 
and 
(C) 
of 
section 
114(f)(3)’’; and 
(C) in clause (iv), by striking ‘‘section 
114(f)(1)(C) or 114(f)(2)(C)’’ and inserting 
‘‘section 114(f)(1)(E)’’. 
SEC. 4. MODERNIZATION OF CONDITIONS GOVERNING 
EPHEMERAL RECORDING EXEMPTION AND 
STATUTORY LICENSES. 
(a) EPHEMERAL RECORDING EXEMPTION.—Section 
112(a)(1) of title 17, United States Code, is amended by 
striking ‘‘no more than’’ and all that follows and inserting 
the following: ‘‘1 or more copies or phonorecords embody-
ing the performance or display, if— 
‘‘(A) the copies or phonorecords are re-
tained and used solely by the transmitting orga-
nization that made them, and no further copies 
or phonorecords are reproduced from them, ex-
cept as may be incidental to the operation of 
the transmission technology used by the trans-
mitting organization; and 
‘‘(B) the copies or phonorecords are used 
solely for the transmitting organization’s own 
transmissions originating in the United States, 
or for purposes of archival preservation or secu-
rity.’’. 
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censes or clearances to make the transmission 
in the medium, or for advertisements contained 
in the broadcast transmission;’’; and 
(5) by amending clause (ix) to read as follows: 
‘‘(ix) the transmitting entity identifies 
in textual data the sound recording during, 
but not before, the time it is performed, in-
cluding the title of the sound recording 
and the featured recording artist, in a 
manner to permit it to be displayed to the 
transmission recipient by the device or 
technology intended for receiving the serv-
ice provided by the transmitting entity, ex-
cept that the obligation in this clause shall 
not apply to the extent that the transmit-
ting entity does not have the technology or 
information necessary to provide such tex-
tual data.’’. 
SEC. 5. PROMOTION OF A COMPETITIVE MARKETPLACE. 
(a) LIMITATION OF ANTITRUST EXEMPTIONS.— 
(1) 
EPHEMERAL
RECORDINGS.—Section 
112(e)(2) of title 17, United States Code, is amend-
ed— 
(A) by inserting ‘‘, on a nonexclusive 
basis,’’ after ‘‘common agents’’; and 
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(B) by adding at the end the following: 
‘‘Nothing in this paragraph shall be construed 
to permit any copyright owners of sound re-
cordings acting jointly, or any common agent or 
collective representing such copyright owners, to 
take any action that would prohibit, interfere 
with, or impede direct licensing by copyright 
owners of sound recordings in competition with 
licensing by any common agent or collective, 
and any such action that affects interstate com-
merce shall be deemed a contract, combination 
or conspiracy in restraint of trade in violation 
of section 1 of the Sherman Act (15 U.S.C. 
1).’’. 
(2) DIGITAL
SOUND
RECORDING
PERFORM-
ANCES.—Section 114(e) of title 17, United States 
Code, is amended by adding at the end the fol-
lowing: 
‘‘(3) Nothing in this subsection shall be con-
strued to permit any copyright owners of sound re-
cordings acting jointly, or any common agent or col-
lective representing such copyright owners, to take 
any action that would prohibit, interfere with, or im-
pede direct licensing by copyright owners of sound 
recordings in competition with licensing by any com-
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mon agent or collective, and any such action that af-
fects interstate commerce shall be deemed a con-
tract, combination or conspiracy in restraint of trade 
in violation of section 1 of the Sherman Act (15 
U.S.C. 1). 
‘‘(4) In order to obtain the benefits of para-
graph (1), a common agent or collective representing 
copyright owners of sound recordings must make 
available at no charge through publicly accessible 
computer access through the Internet the most cur-
rent available list of sound recording copyright own-
ers represented by the organization and the most 
current list of sound recordings licensed by the orga-
nization.’’. 
SEC. 6. PROCEEDINGS OF THE COPYRIGHT ROYALTY 
JUDGES AND JUDICIAL REVIEW. 
(a) PROCEEDINGS
AND PRECEDENTIAL VALUE.— 
Section 803(a)(1) of title 17, United States Code, is 
amended— 
(1) by striking the first sentence and inserting 
the following: ‘‘ ‘In carrying out the purposes set 
forth in section 801, all proceedings of the Copyright 
Royalty Judges shall be conducted in accordance 
with this title and, unless contrary to a procedure 
set forth in subsection (b), according to the Federal 
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Rules of Civil Procedure and the Federal Rules of 
Evidence.’’; and 
(2) by adding at the end the following: ‘‘Not-
withstanding the preceding sentence, in any rate-set-
ting proceeding under section 112(e)(4) or section 
114(f)(2)(B), the Copyright Royalty Judges may 
only consider as precedent and act in accordance 
with determinations and interpretations that are 
made under the objectives set forth in section 801(b) 
for the statutory licenses under sections 112(e) and 
114(d)(2).’’. 
(b) REGULATIONS.—Section 803(b)(6) of title 17, 
United States Code, is amended— 
(1) in subparagraph (C), by striking ‘‘RE-
QUIREMENTS.—Regulations’’ and inserting ‘‘RE-
QUIREMENTS
IN
CASES
NOT
INVOLVING
DIGITAL 
PERFORMANCES OF SOUND RECORDINGS.—In pro-
ceedings other than proceedings to determine terms 
and rates of royalty payments under section 112 or 
114, regulations’’; and 
(2) by adding at the end the following: 
‘‘(D) REQUIREMENTS IN PROCEEDINGS IN-
VOLVING
DIGITAL
PERFORMANCES
OF
SOUND 
RECORDINGS.—In proceedings to determine 
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terms and rates of royalty payments under sec-
tion 112 or 114, the following shall apply: 
‘‘(i) INITIAL DISCLOSURES.—Not later 
than 30 days after the date on which the 
voluntary negotiation period is initiated 
pursuant to paragraph (3)(A)(i), each par-
ticipant shall make an initial disclosure to 
the other participants by providing cop-
ies— 
‘‘(I) of all license agreements en-
tered into by that participant, its 
members, or any licensor or licensee 
represented in the proceeding by that 
participant during the applicable 5- 
year period or covering any portion of 
the period for which the rates are to 
be set, relating to— 
‘‘(aa) in a proceeding under 
section 
112, 
the 
making 
of 
ephemeral recordings; or 
‘‘(bb) in a proceeding under 
section 114, the public perform-
ance of musical works, sound re-
cordings, or audiovisual works in-
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corporating 
recorded 
musical 
works; or 
‘‘(II) of any other license agree-
ment or document upon which the 
participant intends to rely, in whole or 
in part, in its ratemaking proposal, as 
well as all license agreements entered 
into by the participant, its members, 
or any licensor or licensee represented 
in the proceeding by that participant 
for the same or similar rights during 
the applicable 5-year period or cov-
ering any portion of the period for 
which the rates are to be set. 
‘‘(ii) 
PROTECTIVE
ORDER; 
SANC-
TIONS.—Disclosures under clause (i) and 
other confidential information produced by 
a participant or third party during dis-
covery, or used during the proceeding, 
shall be subject to a protective order, en-
tered by the Copyright Royalty Judges in 
the proceeding, that prohibits use of the 
disclosures and the confidential informa-
tion for any purpose other than the pro-
ceeding and that prohibits disclosure of the 
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licenses or other documents included in the 
disclosure or of other confidential informa-
tion to any person that is not counsel of 
record in the proceeding. The Copyright 
Royalty Judges may impose appropriate 
sanctions for failure to comply in a timely 
manner with the matters required to be 
disclosed under clause (i). 
‘‘(iii) STATEMENTS OF THE CASE.— 
Statements of the case shall be filed by a 
date specified by the Copyright Royalty 
Judges, which for licensor participants 
shall be no earlier than the end of the 90- 
day period beginning on the date on which 
the voluntary negotiation period concludes, 
and for licensee participants shall be no 
earlier than the end of the 60-day period 
beginning on the date on which the state-
ments of the case are required to be sub-
mitted by licensor participants. 
‘‘(iv) SUBPOENA POWER.—The Copy-
right Royalty Judges shall have the power 
to issue subpoenas at the request of a par-
ticipant to non-participants, subject to the 
Federal Rules of Civil Procedure. Orders 
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by the Copyright Royalty Judges to en-
force such subpoenas may be enforced by 
the requesting participant in an action in 
the district court in which the subpoenaed 
party resides. 
‘‘(v) SCHEDULING
CONFERENCE.— 
The Copyright Royalty Judges shall order 
a scheduling conference no sooner than 45 
days following the submission to the Copy-
right Royalty Judges of the statement of 
the case of the licensee participants. Par-
ticipants shall submit jointly a proposed 
discovery plan no later than 21 days before 
the conference. Following the conference, 
the Copyright Royalty Judges shall issue 
an initial scheduling order governing pre-
trial procedures, and permitting discovery 
that is reasonable and sufficient, giving 
due consideration to the proposals of the 
participants and the magnitude of the po-
tential royalty payments at issue during 
the license period covered by the pro-
ceeding. The period to conduct discovery 
shall be no shorter than 90 days, plus the 
time needed to complete discovery ordered 
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by the Copyright Royalty Judges in con-
nection with the resolution of motions, or-
ders, and disputes pending at the end of 
such period. 
‘‘(vi) SETTLEMENT
CONFERENCE.— 
The Copyright Royalty Judges shall order 
a settlement conference among the partici-
pants in the proceeding to facilitate the 
presentation of offers of settlement among 
the participants. The settlement conference 
shall be held during the 21-day period be-
ginning on the day after the last day of the 
discovery period ordered pursuant to clause 
(iv) and shall take place outside the pres-
ence of the Copyright Royalty Judges. 
‘‘(vii) JOINT
PRETRIAL
ORDER.—If 
the conference required in clause (v) does 
not result in a settlement among all par-
ties, not later than 60 days after the last 
day of the settlement conference, the re-
maining participants shall propose a joint 
pretrial order— 
‘‘(I) stating the rates and terms 
proposed by each participant and set-
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ting forth, in detail, the grounds for 
such proposals; 
‘‘(II) setting forth admissions 
and stipulations about facts and docu-
ments; 
‘‘(III) avoiding unnecessary proof 
and cumulative evidence and limiting 
the use of testimony under rule 702 of 
the Federal Rules of Evidence; 
‘‘(IV) identifying the witnesses to 
be offered by each party, and attach-
ing all witness statements, testimony, 
and exhibits to be presented in the 
proceeding and such other information 
that is necessary to establish terms 
and rates; 
‘‘(V) listing the evidence to be of-
fered by each party, and identifying 
any objections to any such evidence; 
‘‘(VI) identifying any pending 
motions, including motions in limine 
and attaching any such motions that 
have not yet been filed; 
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‘‘(VII) proposing a reasonable 
limit on the time allowed to present 
evidence; and 
‘‘(VIII) proposing other ways to 
facilitate the just, speedy, and inex-
pensive disposition of the proceeding. 
‘‘(viii) PRETRIAL ORDER.—The Copy-
right Royalty Judges shall hold a pre-
hearing conference to address the issues 
set forth in the proposed joint pretrial 
order, and shall issue an order reciting the 
action taken. The order shall allocate to 
the licensor participants and licensee par-
ticipants sufficient, reasonable, and equal 
time in which to present their respective 
cases, and shall afford each set of partici-
pants an opportunity for rebuttal. The 
order issued by the Copyright Royalty 
Judges under this clause shall control the 
course of the action unless the Judges 
modify it. 
‘‘(ix) DEFINITIONS.—In this subpara-
graph: 
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‘‘(I) APPLICABLE
5-YEAR
PE-
RIOD.—The term ‘applicable 5-year 
period’ means— 
‘‘(aa) the period of 5 cal-
endar years preceding the year in 
which the applicable voluntary 
negotiation period begins; and 
‘‘(bb) the period of the cur-
rent calendar year through the 
date on which the initial disclo-
sure under clause (i) is made. 
‘‘(II) LICENSEE.—The term ‘li-
censee’ means a person or entity that 
exercises rights under a statutory li-
cense under section 112 or 114. 
‘‘(III) LICENSEE PARTICIPANT.— 
The term ‘licensee participant’ means 
a participant that is, or is an author-
ized representative of, a licensee. 
‘‘(IV) LICENSOR.—The term ‘li-
censor’ means a person or entity enti-
tled to receive royalty payments under 
section 112 or 114. 
‘‘(V) LICENSOR PARTICIPANT.— 
The term ‘licensor participant’ means 
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21:11 Sep 24, 2012
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srobinson on DSK4SPTVN1PROD with BILLS