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S 28 IS

To amend title 17, United States Code, with respect to certain exemptions from copyright, and for other purposes.

January 21, 1997

Mr. THURMOND (for himself and Mr. HELMS) introduced the following bill; which was read twice and referred to the Committee on the Judiciary

To amend title 17, United States Code, with respect to certain exemptions from copyright, and for other purposes.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Fairness in Musical Licensing Act of 1997'.

SEC. 2. EXEMPTION OF CERTAIN MUSIC USES FROM COPYRIGHT PROTECTION.

(a) BUSINESS EXEMPTION- Section 110(5) of title 17, United States Code, is amended to read as follows:

`(5) communication by electronic device of a transmission embodying a performance or display of a nondramatic musical work by the reception of a broadcast, cable, satellite, or other transmission, unless--

`(A) an admission fee is charged specifically to see or hear the transmission, or

`(B) the transmission is not properly licensed;'.

(b) AGRICULTURAL EVENTS- Section 110(6) of title 17, United States Code, is amended to read as follows:

`(6) performance of a nondramatic musical work by a governmental body or a nonprofit agricultural or horticultural organization, in the course of an agricultural or horticultural fair, convention, meeting, event, or exhibition conducted by such body or organization; the exception provided by this paragraph shall extend to any liability for copyright infringement that would otherwise be imposed on such body or organization, including under the doctrines of vicarious liability, contributory infringement, or related infringement, for a performance by a concessionaire, business establishment, or other person at such fair, convention, meeting, event, or exhibition, but shall not excuse any such person from liability for the performance;'.

(c) EXEMPTION RELATING TO PROMOTION- Section 110(7) of title 17, United States Code, is amended--

(1) by striking `vending';

(2) by striking `sole';

(3) by inserting `or of the audio, video or other devices utilized in the performance,' after `phonorecords of the work,'; and

(4) by striking `and is within the immediate area where the sale is occurring'.

(d) PERFORMANCES AT CHILDREN'S CAMPS- Section 110 of title 17, United States Code, is amended--

(1) by striking the periods at the end of paragraphs (8) and (9) and inserting semicolons;

(2) in paragraph (10) by striking the period at the end and inserting `; and'; and

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

`(11) performance of a nondramatic musical work at an organized children's camp, if children in attendance sing all or a portion of the work, children in attendance engage in games or dance to the accompaniment of all or a portion of the work, or the performance is of an instructional nature.'.

SEC. 3. BINDING ARBITRATION OF RATE DISPUTES INVOLVING PERFORMING RIGHTS SOCIETIES.

(a) IN GENERAL- Section 504 of title 17, United States Code, is amended by adding at the end the following new subsection:

`(d) PERFORMING RIGHTS SOCIETIES; BINDING ARBITRATION-

`(1) ARBITRATION OF DISPUTES PRIOR TO COURT ACTION-

`(A) ARBITRATION- (i) If a general music user and a performing rights society are unable to agree on the appropriate fee to be paid for the user's past or future performance of musical works in the repertoire of the performing rights society, the general music user shall, in lieu of any other dispute-resolution mechanism established by any judgment or decree governing the operation of the performing rights society, be entitled to binding arbitration of such disagreement pursuant to the rules of the American Arbitration Association. The music user may initiate such arbitration.

`(ii) The arbitrator in such binding arbitration shall determine a fair and reasonable fee for the general music user's past and future performance of musical works in such society's repertoire and shall determine whether the user's past performances of such musical works, if any, infringed the copyrights of works in the society's repertoire. If the arbitrator determines that the general music user's past performances of such musical works infringed the copyrights of works in the society's repertoire, the arbitrator shall impose a penalty for such infringement. Such penalty shall not exceed the arbitrator's determination of the fair and reasonable license fee for the performances at issue.

`(B) DEFINITIONS- (i) For purposes of this paragraph, a `general music user' is any person who performs musical works publicly but is not engaged in the transmission of musical works to the general public or to subscribers through broadcast, cable, satellite, or other transmission.

`(ii) For purposes of this paragraph, transmissions within a single commercial establishment or within establishments under common ownership or control are not transmissions to the general public.

`(iii) For purposes of clause (ii), an `establishment' is a retail business, restaurant, bar, inn, tavern, or any other place of business in which the public may assemble.

`(C) ENFORCEMENT OF ARBITRATOR'S DETERMINATIONS- An arbitrator's determination under this paragraph is binding on the parties and may be enforced pursuant to sections 9 through 13 of title 9.

`(2) COURT-ANNEXED ARBITRATION- In any civil action for infringement of the right granted in section 106(4) involving a musical work that is in the repertoire of a performing rights society, if the defendant admits the prior public performance of one or more works in the repertoire of the performing rights society but contests the amount of the license fee demanded by such society for such performance, the dispute shall, if requested by the defendant, be submitted to arbitration under section 652(e) of title 28. In such arbitration proceeding, the arbitrator shall determine the amount owed by the defendant to the performing rights society for all past public performances of musical works in the society's repertoire. Such amount shall not exceed two times the amount of the blanket license fee that would be applied by the society to the defendant for the year or years in which the performances occurred. In addition, the arbitrator shall, if requested by the defendant, determine a fair and reasonable license fee for the defendant's future public performances of the musical works in such society's repertoire.

`(3) TERM OF LICENSE FEE DETERMINATION- In any arbitration proceeding initiated under this subsection, the arbitrator's determination of a fair and reasonable license fee for the performance of the music in the repertoire of the performing rights society concerned shall apply for a period of not less than 3 years nor more than 5 years after the date of the arbitrator's determination.'.

(b) ACTIONS THAT SHALL BE REFERRED TO ARBITRATION- Section 652 of title 28, United States Code, is amended by adding at the end the following:

`(e) ACTIONS THAT SHALL BE REFERRED TO ARBITRATION- In any civil action for infringement of the right granted in section 106(4) of title 17 involving a musical work that is in the repertoire of a performing rights society, if the defendant admits the public performance of any musical work in the repertoire of the performing rights society but contests the amount of the license fee demanded for such performance by the society, the district court shall, if requested by the defendant, refer the dispute

to arbitration, which shall be conducted in accordance with section 504(d)(2) of title 17. Each district court shall establish procedures by local rule authorizing the use of arbitration under this subsection. The definitions set forth in title 17 apply to the terms used in this subsection.'.

SEC. 4. RADIO PER PROGRAMMING PERIOD LICENSE.

Section 504 of title 17, United States Code, as amended by section 3 of this Act, is further amended by adding at the end thereof the following new subsection:

`(e) RADIO PER PROGRAMMING PERIOD LICENSES-

`(1) IN GENERAL- Each performing rights society shall offer, to any radio broadcaster that so requests, a per programming period license to perform nondramatic musical works in the repertoire of the performing rights society. Such license shall be offered on reasonable terms and conditions that provide an economically and administratively viable alternative to the society's blanket license for all such broadcasters.

`(2) PRICE OF PER PROGRAMMING PERIOD LICENSES- (A) The total price of a per programming period license described in paragraph (1)--

`(i) shall include separate components for incidental and feature performances, with the incidental performance component to be independent of the quantity of such performances by the broadcaster and not to exceed the relative value that the performing rights society assigns to such performances in its distribution of royalties; and

`(ii) shall not exceed the fee that would be payable by the broadcaster under the lowest price blanket license offered to radio broadcasters, and shall vary between the incidental performance component, for a broadcaster that makes only incidental performances of music in the society's repertoire, and such blanket license fee, in direct proportion to the percentage of the broadcaster's revenue attributable to programming periods containing feature performances of musical works in the society's repertoire compared to the industry average percentage of revenue attributable to programming periods containing feature performances of such musical works.

`(B) Nondramatic musical works that have been licensed directly or at the source, or whose performance constitutes fair use or is otherwise exempt from liability under this title, shall not be considered in calculating any per programming period license fee under this subsection.

`(3) IMPLEMENTATION- Any radio broadcaster entitled to a per programming period license under this subsection may bring an action to require compliance with this subsection in an appropriate United States district court, including any district court established by court order or statute as a court that resolves disputes, with respect to license rates, that may arise between performing rights societies and persons who perform musical works in the society's repertoire.

`(4) DEFINITIONS- As used in this subsection--

`(A) the term `blanket license' means a license provided by a performing rights society that authorizes the unlimited performance of musical works in the society's repertoire, for a fee that does not vary with the quantity or type of performances of musical works in the society's repertoire;

`(B) the term `incidental' means commercial jingles not exceeding 60 seconds in duration, bridges, themes or signatures, arrangements of works in the public domain, and background music, including music used in conjunction with sporting events; and

`(C) the term `programming period' means any 15-minute period of radio broadcasting commencing on the hour, or at 15, 30, or 45 minutes past the hour.'.

SEC. 5. ACCESS TO REPERTOIRE AND LICENSING INFORMATION.

Section 504 of title 17, United States Code, as amended by sections 3 and 4 of this Act, is further amended by adding at the end the following:

`(f) ACCESS TO MUSICAL REPERTOIRE-

`(1) ONLINE COMPUTER ACCESS- Each performing rights society shall make available, free of charge, to all interested persons, online computer access to copyright and licensing information for each work in its repertoire. Such access shall, for each such musical work, identify the work by title of the work, the name of the author and the copyright owner, and the names of any artists known to have performed the work. Such online computer access shall permit the efficient review of multiple musical works consistent with reasonably available technology.

`(2) DIRECTORY OF TITLES- Each performing rights society shall make available at cost, not less frequently than semiannually, a printed directory of each title in its repertoire, as of the date which is not more than 30 days before the date on which the directory is published, containing the information set forth in paragraph (1).

`(3) DOCUMENTATION OF RIGHT TO LICENSE- A performing rights society shall, upon the request of any person who performs or may perform musical works in the society's repertoire, provide to that person copies of the documentation establishing the society's right to license the public performance of such musical works.

`(4) RESTRICTIONS ON INFRINGEMENT ACTIONS-

`(A) RESTRICTIONS- A performing rights society may not institute or be a party to, or pay the costs of another party in, any action alleging the infringement of the copyright in, or charge a fee under any per programming period license for, any work in that society's repertoire that is not identified and documented as required by paragraphs (1), (2), and (3).

`(B) EXCEPTION- Subparagraph (A) shall not apply on the basis of a failure to comply with paragraph (2) with respect to a musical work first entering the society's repertoire within the 6-month period beginning 30 days before the date on which the society's last directory was published under paragraph (2), if the society establishes that such musical work was included in the online database required by paragraph (1) not less than 10 days before the performance giving rise to the alleged infringement or charge.

`(g) ACCESS TO LICENSING INFORMATION-

`(1) TERMS OF LICENSES- Each performing rights society shall provide, within 5 business days after it receives a written request from a licensee of any musical work in the society's repertoire, or from any person that is negotiating to become such a licensee--

`(A) the schedule of the society's license rates and terms of the license fees to be paid under the license agreement, including any sliding scale or schedule for any increase or decrease in rates for the duration of the license agreement;

`(B) the formulas by which the rates are derived; and

`(C) license terms under agreements executed by the performing rights society and licensees described in subparagraph (A).

`(2) COPIES OF LICENSES- Any performing rights society that receives a written request from an entity that has been requested to enter into a license agreement with the performing rights society on behalf of persons who perform or may perform musical works within that society's repertoire, shall provide to that entity, within 5 business days after receiving that request, a schedule of fees for such performances by similar persons.'.

SEC. 6. ANNUAL REPORTS.

Not later than March 1 of each year, the Attorney General of the United States shall submit a written report to the Congress on the activities of the Department of Justice during the preceding calendar year relating to the continuing supervision and enforcement by the Department of the consent decree of the American Society of Composers, Authors, and Publishers of March 14, 1950, and the consent decree of Broadcast Music, Inc. of December 29, 1966. Such report shall include a description of all issues raised or complaints filed with the Department of Justice relating to the operations of those performing rights societies, and a summary of the Department's actions or investigations undertaken by the Department in response to such issues and complaints.

SEC. 7. VICARIOUS LIABILITY PROHIBITED.

A landlord, an organizer or sponsor of a convention, exposition, or meeting, a facility owner, or any other person making space available to another party by contract, shall not be liable under any theory of vicarious or contributory infringement with respect to an infringing public performance of a copyrighted work by a tenant, lessee, subtenant, sublessee, licensee, exhibitor, or other user of such space on the ground that--

(1) a contract for such space provides the landlord, organizer or sponsor, facility owner, or other person a right or ability to control such space and compensation for the use of such space; or

(2) the landlord, organizer or sponsor, facility owner, or other person has or had at the time of the infringing performance actual control over some aspects of the use of such space,

if the contract for the use of such space prohibits infringing public performances and the landlord, organizer or sponsor, facility owner, or other person does not exercise control over the selection of works performed.

SEC. 8. CONFORMING AMENDMENTS.

Section 101 of title 17, United States Code, is amended by inserting after the undesignated paragraph relating to the definition of `perform' the following:

`A `performing rights society' is an association, corporation, or other entity that licenses the public performance of nondramatic musical works on behalf of copyright owners of such works, such as the American Society of Composers, Authors, and Publishers, Broadcast Music, Inc., and SESAC, Inc. The `repertoire' of a performing rights society consists of those works for which the society provides licenses on behalf of the owners of copyright in the works.'.

SEC. 9. CONSTRUCTION OF ACT.

Except as provided in section 504(d)(1) of title 17, United States Code, as added by section 3(a) of this Act, nothing in this Act shall be construed to relieve any performing rights society (as defined in section 101 of title 17, United States Code) of any obligation under any consent decree, State statute, or other court order governing its operation, as such decree or order is in effect on the date of the enactment of this Act, as it may be amended after such date, or as it may be issued or agreed to after such date.

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