[Federal Register: March 16, 2000 (Volume 65, Number 52)]
[Proposed Rules]
[Page 14227-14229]
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LIBRARY OF CONGRESS
Copyright Office
37 CFR Part 201
[Docket No. RM 2000-3]
Public Performance of Sound Recordings: Definition of a Service
AGENCY: Copyright Office, Library of Congress.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Copyright Office is seeking comment on whether to amend
its regulation that defines a ``Service'' for purposes of the statutory
license governing the public performance of sound recordings by means
of digital audio transmissions, in order to clarify that transmissions
of a broadcast signal over a digital communications network, such as
the Internet, are not exempt from copyright liability under section
114(d)(1)(A) of the Copyright Act.
DATES: Written comments are due April 17, 2000. Reply comments are due
May 1, 2000.
ADDRESSES: If sent by mail, an original and ten copies of comments and
reply comments should be addressed to: Copyright Arbitration Royalty
Panel (CARP), P.O. Box 70977, Southwest Station, Washington, D.C.
20024. If hand delivered, they should be brought to: Office of the
General Counsel, James Madison Memorial Building, Room LM-403, First
and Independence Avenue, S.E., Washington, D.C. 20559-6000.
FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or
Tanya M. Sandros, Senior Attorney, Copyright Arbitration Royalty Panel,
P.O. Box 70977, Southwest Station, Washington, D.C. 20024. Telephone:
(202) 707-8380. Telefax: (202) 252-3423.
SUPPLEMENTARY INFORMATION:
Background
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 sound recordings by means of
certain digital audio transmissions. Among the limitations on the
performance was the creation of a new compulsory license for nonexempt,
noninteractive, digital subscription transmissions, 17 U.S.C. 114(f),
and an exemption for certain nonsubscription transmissions, 17 U.S.C.
114(d)(1)(A)(i)-(iii) (1995).
The scope of the exemption, however, has been debated since the
passage of the DPRA. Broadcasters have taken the position that any
broadcast, whether made over the air or over the Internet, falls within
the scope of the section 114(d)(1)(A) exemptions. See Reply Comments of
National Association of Broadcasters at 9-12 (dated June 20, 1997),
submitted in Docket No. RM 97-1. On the other hand, copyright owners of
the sound recordings have interpreted the scope of the exemption more
narrowly. The Recording Industry Association of America (``RIAA''), on
behalf of these copyright owners, has argued that transmissions over
the Internet, generally known as webcasts, do not fall within the scope
of the statutory exemptions and, instead, are subject to the copyright
owners' exclusive rights under section 106(6). See, e.g., RIAA Petition
and Comments of RIAA at 9-12 (dated April 28, 1997), submitted in
Docket No. RM 97-1.
Congress, however, did not consider this question when it first
addressed the problems associated with the emergence of digital audio
technology and its effects on the music industry because, at the time,
it had insufficient information on which to act. It did not understand
how nonsubscription services were utilizing the Internet to bring music
to the public or how to license such enterprises. Therefore, it focused
the initial legislation on the digital subscription services and the
interactive services that were in operation at the time.
The result was the DPRA, a law which created a licensing scheme for
the subscription services and the interactive digital audio services.
17 U.S.C. 114(d)(3) and (f) (1995). It soon became apparent, however,
that with the rapid proliferation of the use of the Internet as a
transmission medium and the confusion surrounding the question of how
the DPRA applied to some nonsubscription digital audio services,
further legislation was needed to achieve the dual purposes of the
DPRA.\1\ Staff of the House of Representatives Comm. on the Judiciary,
105th Cong., 2d Sess., Section-by-Section Analysis of H.R. 2281 as
Passed by the United States House of Representatives on August 4, 1998
at 50-51 (Comm. Print, Serial No. 6, 1998).
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\1\ Congress had a two-fold purpose for enacting the DPRA:
``first, * * * to ensure that recording artists and record companies
will be protected as new technologies affect the ways in which their
creative works are used; and second, to create fair and efficient
licensing mechanisms that address the complex issues facing
copyright owners and copyright users as a result of the rapid growth
of digital audio services.'' Staff of the House of Representatives
Comm. on the Judiciary, 105th Cong., 2d Sess., Section-by-Section
Analysis of H.R. 2281 as passed by the United States House of
Representatives on August 4, 1998 at 49 (Comm. Print, Serial No. 6,
1998).
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These changes were part of the Digital Millennium Copyright Act of
1998 (``DMCA''), Public Law 105-304, which, among other things, amended
sections 112 and 114 of the Copyright Act to clarify that ``the digital
sound recording performance right applies to nonsubscription digital
audio services such as webcasting'' and to address the licensing issues
raised by the webcasters. Id. at 50. Specifically, Congress amended
section 114 by creating a new statutory license for nonexempt eligible
nonsubscription
[[Page 14228]]
transmissions (e.g., webcasting) and nonexempt transmissions by
preexisting satellite digital audio radio services to perform publicly
sound recordings in accordance with the terms and rates of the
statutory license. 17 U.S.C. 114(f). The DMCA also amended section
114(d)(1)(A) to ``delete two exemptions that were either the cause of
confusion as to the application of the DPRA to certain nonsubscription
services (especially webcasters) or which overlapped with other
exemptions.'' H.R. Rep. No. 105-796, at 80 (1998).
On March 1, 2000, RIAA filed a petition for a rulemaking with the
Copyright Office asking that the Office determine the scope of the
section 114(d)(1)(A) exemptions. Specifically, RIAA has requested that
the Office adopt a rule ``clarifying that a broadcaster's transmissions
of its AM or FM radio station over the Internet * * * is not exempt
from copyright liability under section 114(d)(1)(A) of the Copyright
Act.'' RIAA petition at 1 (filed March 1, 2000). RIAA states in its
petition that it has attempted to negotiate voluntary agreements with
broadcasters who stream their over-the-air AM or FM radio broadcast via
the Internet or who have authorized a third party ``aggregator'' to
retransmit an over-the-air radio broadcast via the Internet. It asserts
that these discussions have not progressed beyond the initial stages
because the parties cannot agree whether transmission of a broadcast
over the Internet is subject to the digital performance right.
Consequently, it has asked the Office to interpret section 114(d)(1)(A)
and determine whether a broadcast transmission made via the Internet is
exempt from copyright liability.
The Office agrees with RIAA that the resolution of this question
has implications for both the section 112 \2\ and the section 114
statutory licenses. For example, if it is ultimately decided that a
broadcast transmission over the Internet falls outside the safe harbor
carved out by the section 114(d)(1) exemptions, the webcaster must
decide whether to make use of the statutory license under section
114(f) or whether to negotiate a private license with the copyright
owners of the sound recordings. Alternatively, if the Office decides
that a broadcast transmission which is streamed over the Internet is
exempt under section 114(d)(1)(A), parties can avoid further
negotiations over rates and terms for use of the sound recordings in
those situations.
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\2\ A transmitting organization that makes transmissions under
the section 114(f) license may also make an ephemeral recording,
under a separate statutory license, for the purpose of making the
digital audio transmissions. 17 U.S.C. 112(e).
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RIAA's Initial Arguments in Support of Its Petition
RIAA argues that the amendments to sections 112 and 114 support its
view that broadcasters who engage in transmissions over the Internet
are not exempt from copyright liability for these transmissions. First,
RIAA notes that Congress had no intention of creating any new
exemptions when it amended section 114(d)(1)(A), but merely sought to
remove those exemptions that were the source of the confusion, either
because it was unclear how the exemption applied to nonsubscription
services or because the exemption was redundant. These changes were in
no way intended to affect the provision that exempts nonsubscription
broadcast transmissions. H.R. Rep. No. 105-796, at 80 (1998).
While RIAA does not dispute that there is a recognized exemption
for over-the-air broadcast transmissions, it continues its analysis by
noting that the definition of an ``eligible nonsubscription
service,''--the entity which, by statute, may make use of the statutory
license--specifically includes retransmissions of broadcast
transmissions. Consequently, it argues that Congress never intended
that broadcasts over the Internet be exempt under the provisions of
section 114(d)(1)(B). Instead, Congress carved out specific exemptions
for retransmissions of a nonsubscription broadcast transmission, and
none of these directly address a retransmission over the Internet. 17
U.S.C. 114(d)(1)(B)(i)-(iv). Therefore, a retransmission of a
nonsubscription broadcast transmission over the Internet would have to
meet the requirements set forth in subsection (B) of section 114(d)(1)
or be subject to the section 106(6) right of public performance.
In further support of its interpretation of the statutory license,
RIAA observes that a webcaster who utilizes the section 114(d)(2)
license is also eligible for a statutory license pursuant to section
112(e)(1)--a license which allows transmitting organizations to make
one or more ephemeral recordings, depending upon the terms of the
license. The section 112 license, however, allows only two different
types of transmitting organizations to make use of the license: (1) A
transmitting organization entitled to make a transmission of a sound
recording under the section 114(f) license; or (2) A transmitting
organization that makes use of the exemption specified in section
114(d)(1)(C)(iv). These limitations on the section 112 license thus
appear to present a dilemma for the broadcasters. Namely, how do they
make the necessary ephemeral recordings incident to streaming
nonsubscription broadcast transmissions over the Internet if they
cannot take advantage of the statutory license in section 112? For this
reason, RIAA suggests that Congress did not intend to exempt
nonsubscription broadcast transmissions that are retransmitted over the
Internet under the general exemption for broadcast transmissions set
forth in section 114(d)(1)(A). Otherwise, Congress would have made
provisions for the making of the necessary ephemeral recordings used in
these transmissions.
Proposed Rule and Comments
The foregoing discussion has been presented solely for the purpose
of stating the arguments that have been made to the Office in support
of the request to conduct this rulemaking. While the Office has made no
determination on the merits of the arguments put forth by RIAA in its
petition, the Office acknowledges that there appears to be a need to
resolve the questions surrounding the applicability of the section
114(d)(1)(A) exemption to the activities of a broadcaster when it makes
a public performance of a sound recording by means of a digital audio
transmission.
The Copyright Office does not foresee any need to amend its current
rule defining the term ``Service,'' 37 CFR 201.35(b)(2), in the event
that a broadcast transmission is found to fall within the scope of the
section 114(d)(1) exemptions. On the other hand, if the Office decides
that transmissions of broadcast signals over a digital communications
network, such as the Internet, are not exempt from copyright liability
under section 114(d)(1)(A) of the Copyright Act, then it proposes
amending the rule as set forth in this notice.
All interested parties are requested to file comments and replies
with the Copyright Office in accordance with the information set forth
in this document. Comments are invited, first, on whether the Office
should address this issue in a rulemaking and, second, on whether the
Office should adopt the regulatory language set forth in the notice or
some other regulatory language in its place. The Copyright Office has
posted the RIAA petition to its website (http://www.copyright.gov/
CARP/RIAApetition.pdf) in order to facilitate the dissemination of the
information presented by RIAA in its petition.
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Statutory Authority
The Copyright Office initiates this proceeding under its authority
to establish regulations for the administration of its functions and
duties under title 17. 17 U.S.C. 702. The Office exercises its
authority under section 702 when it is necessary ``to interpret the
statute in accordance with Congress' intentions and framework and,
where Congress is silent, to provide reasonable and permissible
interpretations of the statute.'' 57 FR 3284, 3292 (January 29, 1992);
see also 63 FR 3685, 3686 (January 26, 1998) (invoking section 702
authority to determine whether a local over-the-air broadcast signal
may be retransmitted into the local market area under the provisions of
the section 119 statutory license).
List of Subjects in 37 CFR Part 201
Copyright.
In consideration of the foregoing, it is proposed that part 201 of
37 CFR be amended as follows:
PART 201--GENERAL PROVISIONS
1. The authority citation for part 201 continues to read as
follows:
Authority: 17 U.S.C. 702.
2. Section 201.35(b)(2) is revised to read as follows:
Sec. 201.35 Initial Notice of Digital Transmission of Sound Recordings
under Statutory License.
* * * * *
(b) * * *
(1) * * *
(2) A Service is an entity engaged in the digital transmission of
sound recordings, pursuant to section 114(f) of title 17 of the United
States Code, including, but not limited to, any entity that transmits
an AM/FM broadcast signal over a digital communications network such as
the Internet, regardless of whether the transmission is made by the
broadcaster that originates the AM/FM signal or by a third party, and
provided that such transmission meets the applicable requirements of
the statutory license set forth in 17 U.S.C. 114(d)(2).
* * * * *
Dated: March 10, 2000.
David O. Carson,
General Counsel.