Digital Performance Right in Sound Recordings and Ephemeral Recordings

AGENCY:

Copyright Office, Library of Congress.

ACTION:

Initiation of voluntary negotiation period.

SUMMARY:

The Copyright Office is announcing the initiation of the voluntary negotiation period for determining reasonable rates and terms for two compulsory licenses, which in one case, allows public performances of sound recordings by means of eligible nonsubscription transmissions, and in the second instance, allows the making of an ephemeral phonorecord of a sound recording in furtherance of making a permitted public performance of the sound recording for the period beginning January 1, 2005 and ending on December 31, 2006.

EFFECTIVE DATE:

The voluntary negotiation period begins on January 6, 2004.

ADDRESSES:

Copies of voluntary license agreements and petitions, if sent by mail, should be addressed to: Copyright Arbitration Royalty Panel (CARP), P.O. Box 70977, Southwest Station, Washington, DC 20024. If hand delivered by a commercial, non-government courier or messenger, they must be delivered to: The Congressional Courier Acceptance Site, located at 2nd and D Streets, NE., between 8:30 a.m. and 4 p.m. If hand delivered by a party, copies of voluntary license agreements and petitions should be brought to: Office of the Copyright General Counsel, James Madison Memorial Building, Room 403, First and Independence Avenue, SE., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Tanya M. Sandros, Senior Attorney, Telephone: (202) 707-8380. Telefax: (202) 252-3423.

SUPPLEMENTARY INFORMATION:

In 1995, Congress enacted the Digital Performance Right in Sound Recordings Act of 1995 (“DPRA”), Public Law 104-39, which created an exclusive right for copyright owners of sound recordings, subject to certain limitations, to perform publicly the sound recordings by means of certain digital audio transmissions. Among the limitations on the performance right was the creation of a new compulsory license for nonexempt, noninteractive, digital subscription transmissions. 17 U.S.C. 114(f).

The scope of this license was expanded in 1998 upon passage of the Digital Millennium Copyright Act of 1998 (“DMCA” or “Act”), Public Law 105-304, in order to allow for the public performance of a sound recording when made in accordance with the terms and rates of the statutory license, 17 U.S.C. 114(a), by a preexisting satellite digital audio radio service or as part of an eligible nonsubscription transmission.

An “eligible nonsubscription transmission” is a noninteractive, digital audio transmission which, as the name implies, does not require a subscription for receiving the transmission. The transmission must also be made as part of a service that provides audio programming consisting in whole or in part of performances of sound recordings the purpose of which is to provide audio or entertainment programming, but not to sell, advertise, or promote particular goods or services. A “preexisting satellite digital audio radio service” is a subscription digital audio radio service that received a satellite digital audio radio service license issued by the Federal Communications Commission on or before July 31, 1998. See 17 U.S.C. 114(j)(6) and (10).

In addition to expanding the current § 114 license, the DMCA also created a new statutory license for the making of an “ephemeral recording” of a sound recording by certain transmitting organizations. 17 U.S.C. 112(e). The new statutory license allows entities that transmit performances of sound recordings to business establishments, pursuant to the limitations set forth in § 114(d)(1)(C)(iv), to make an ephemeral recording of a sound recording for purposes of a later transmission. The new license also provides a means by which a transmitting entity with a statutory license under § 114(f) can make more than the one phonorecord permitted by the exemption specified in § 112(a). 17 U.S.C. 112(e).

Determination of Reasonable Terms and Rates

The statutory scheme for establishing reasonable terms and rates is the same for both licenses. Terms and rates may be determined by voluntary agreement among the affected parties, or if necessary, through compulsory arbitration conducted pursuant to Chapter 8 of the Copyright Act. Rates and terms are set for a two-year period through this process, unless a different period is otherwise agreed upon by the parties as part of a negotiated agreement.

Parties may submit such an agreement to the Copyright Office and request that the Office publish the proposed rates and terms in the Federal Register for comment from the public. If no party with a substantial interest and an intent to participate in an arbitration proceeding files a comment opposing the negotiated rates and terms, the Librarian may adopt the proposed terms and rates without convening a copyright arbitration royalty panel. 37 CFR 251.63(b). On the other hand, if the affected parties are unable to reach an industry-wide agreement, or only certain parties negotiate private license agreements, then rates and terms for the statutory licenses are established through the arbitration process.

The arbitration process begins when an interested party files a petition with the Librarian of Congress during the 60-day period specified by the statute and requests that the rates be set through the CARP process. The petition must be filed by a party with a significant interest in the outcome of the proceeding and it must identify “the extent to which the petitioner's interest is shared by other owners or users.” 17 CFR 251.62(a). For both the section 112 and section 114 licenses, the period for filing a petition to set rates and terms for the 2005 and 2006 license period shall begin on July 1, 2004. 17 U.S.C. 112(e)(6) and 114(f)(2)(C)(ii)(II).

Initiation of Voluntary Negotiations

Unless the schedule for setting terms and rates has been readjusted by the parties in a previous rate adjustment proceeding, §§ 112(e)(6) and 114(f)(2)(C)(i)(II) of the Copyright Act require the publication of a notice in January 2000, and at 2-year intervals thereafter, initiating the voluntary negotiation periods for determining reasonable rates and terms for the statutory licenses permitting the public performance of a sound recording by means of certain digital transmissions and the making of an ephemeral recording in accordance with § 112(e). See 65 FR 2194 (January 13, 2000) and 67 FR 4472 (January 30, 2002). The publication of today's notice fulfills this requirement.

The negotiation period shall begin on January 6, 2004 and end on June 30, 2004. Parties who negotiate a voluntary license agreement during this period are encouraged to submit two copies of the agreement to the Copyright Office at the appropriate address listed above within 30 days of its execution.

Petitions

In the absence of a license agreement negotiated under 17 U.S.C. 112(e)(4) or 114(f)(2)(A), those copyright owners of sound recordings and entities availing themselves of the statutory licenses are subject to arbitration upon the filing of a petition by a party with a significant interest in establishing reasonable terms and rates for the statutory licenses. Petitions must be filed in accordance with 17 U.S.C. 112(e)(7), 114(f)(2)(C)(ii)(II), and 803(a)(1) and may be filed any time during the sixty-day period beginning on July 1, 2004. See also, 37 CFR 251.61. Parties should submit petitions to the Copyright Office at the appropriate address given in this notice. The petitioner must deliver an original and five copies to the Office.