EHF18470 S.L.C. AMENDMENT NO.llll Calendar No.lll Purpose: In the nature of a substitute. IN THE SENATE OF THE UNITED STATES—115th Cong., 2d Sess. H. R. 1551 To amend the Internal Revenue Code of 1986 to modify the credit for production from advanced nuclear power facilities. Referred to the Committee on llllllllll and ordered to be printed Ordered to lie on the table and to be printed AMENDMENT IN THE NATURE OF A SUBSTITUTE intended to be proposed by Mr. HATCH (for himself, Mr. GRASSLEY, Mrs. FEINSTEIN, Mr. ALEXANDER, Mr. WHITEHOUSE, and Mr. COONS) Viz: 1 Strike all after the enacting clause and insert the fol- 2 lowing: 3 4 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE.—This Act may be cited as the 5 ‘‘Music Modernization Act’’. 6 (b) TABLE OF CONTENTS.—The table of contents for 7 this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Customs user fees. TITLE I—MUSIC LICENSING MODERNIZATION Sec. 101. Short title. Sec. 102. Blanket license for digital uses and mechanical licensing collective. EHF18470 S.L.C. 2 Sec. Sec. Sec. Sec. 103. 104. 105. 106. Amendments to section 114. Random assignment of rate court proceedings. Performing rights society consent decrees. Effective date. TITLE II—CLASSICS PROTECTION AND ACCESS Sec. 201. Short title. Sec. 202. Unauthorized use of pre-1972 sound recordings. TITLE III—ALLOCATION FOR MUSIC PRODUCERS Sec. 301. Short title. Sec. 302. Payment of statutory performance royalties. Sec. 303. Effective date. TITLE IV—SEVERABILITY Sec. 401. Severability. 1 2 SEC. 2. CUSTOMS USER FEES. Section 13031(j)(3)(A) of the Consolidated Omnibus 3 Budget Reconciliation Act of 1985 (19 U.S.C. 4 58c(j)(3)(A)) is amended by striking ‘‘October 13, 2027’’ 5 and inserting ‘‘October 20, 2027’’. 6 7 8 9 TITLE I—MUSIC LICENSING MODERNIZATION SEC. 101. SHORT TITLE. This title may be cited as the ‘‘Musical Works Mod- 10 ernization Act’’. 11 12 13 SEC. 102. BLANKET LICENSE FOR DIGITAL USES AND MECHANICAL LICENSING COLLECTIVE. (a) AMENDMENT.—Section 115 of title 17, United 14 States Code, is amended— 15 (1) in subsection (a)— EHF18470 S.L.C. 3 1 (A) in the subsection heading, by inserting 2 ‘‘IN 3 SCOPE 4 GENERAL’’ OF AND (B) by striking paragraph (1) and inserting the following: 6 ‘‘(1) 7 CENSE.— 9 ‘‘AVAILABILITY COMPULSORY LICENSE’’; 5 8 after ELIGIBILITY FOR ‘‘(A) CONDITIONS CENSE.—A COMPULSORY LI- FOR COMPULSORY LI- person may by complying with the 10 provisions of this section obtain a compulsory li- 11 cense to make and distribute phonorecords of a 12 nondramatic musical work, including by means 13 of digital phonorecord delivery. A person may 14 obtain a compulsory license only if the primary 15 purpose in making phonorecords of the musical 16 work is to distribute them to the public for pri- 17 vate use, including by means of digital phono- 18 record delivery, and— 19 ‘‘(i) phonorecords of such musical 20 work have previously been distributed to 21 the public in the United States under the 22 authority of the copyright owner of the 23 work, including by means of digital phono- 24 record delivery; or EHF18470 S.L.C. 4 1 ‘‘(ii) in the case of a digital music 2 provider seeking to make and distribute 3 digital phonorecord deliveries of a sound 4 recording embodying a musical work under 5 a compulsory license for which clause (i) 6 does not apply— 7 ‘‘(I) the first fixation of such 8 sound recording was made under the 9 authority of the musical work copy- 10 right owner, and the sound recording 11 copyright owner has the authority of 12 the musical work copyright owner to 13 make and distribute digital phono- 14 record deliveries embodying such work 15 to the public in the United States; 16 and 17 ‘‘(II) the sound recording copy- 18 right owner, or the authorized dis- 19 tributor of the sound recording copy- 20 right owner, has authorized the digital 21 music provider to make and distribute 22 digital phonorecord deliveries of the 23 sound recording to the public in the 24 United States. EHF18470 S.L.C. 5 1 ‘‘(B) DUPLICATION OF SOUND RECORD- 2 ING.—A 3 cense for the use of the work in the making of 4 phonorecords duplicating a sound recording 5 fixed by another, including by means of digital 6 phonorecord delivery, unless— 7 person may not obtain a compulsory li- ‘‘(i) such sound recording was fixed 8 lawfully; and 9 ‘‘(ii) the making of the phonorecords 10 was authorized by the owner of the copy- 11 right in the sound recording or, if the 12 sound recording was fixed before February 13 15, 1972, by any person who fixed the 14 sound recording pursuant to an express li- 15 cense from the owner of the copyright in 16 the musical work or pursuant to a valid 17 compulsory license for use of such work in 18 a sound recording.’’; and 19 (C) in paragraph (2), by striking ‘‘A com- 20 pulsory license’’ and inserting ‘‘MUSICAL 21 RANGEMENT.—A 22 (2) by striking subsection (b) and inserting the compulsory license’’; 23 following: 24 ‘‘(b) PROCEDURES TO OBTAIN 25 CENSE.— AR- A COMPULSORY LI- EHF18470 S.L.C. 6 1 ‘‘(1) PHONORECORDS 2 PHONORECORD DELIVERIES.—A 3 obtain a compulsory license under subsection (a) to 4 make and distribute phonorecords of a musical work 5 other than by means of digital phonorecord delivery 6 shall, before, or not later than 30 calendar days 7 after, making, and before distributing, any phono- 8 record of the work, serve notice of intention to do 9 so on the copyright owner. If the registration or 10 other public records of the Copyright Office do not 11 identify the copyright owner and include an address 12 at which notice can be served, it shall be sufficient 13 to file the notice of intention with the Copyright Of- 14 fice. The notice shall comply, in form, content, and 15 manner of service, with requirements that the Reg- 16 ister of Copyrights shall prescribe by regulation. 17 ‘‘(2) DIGITAL OTHER THAN DIGITAL person who seeks to PHONORECORD DELIVERIES.—A 18 person who seeks to obtain a compulsory license 19 under subsection (a) to make and distribute 20 phonorecords of a musical work by means of digital 21 phonorecord delivery— 22 ‘‘(A) prior to the license availability date, 23 shall, before, or not later than 30 calendar days 24 after, first making any such digital phonorecord 25 delivery, serve a notice of intention to do so on EHF18470 S.L.C. 7 1 the copyright owner (but may not file the notice 2 with the Copyright Office, even if the public 3 records of the Office do not identify the owner 4 or the owner’s address), and such notice shall 5 comply, in form, content, and manner of serv- 6 ice, with requirements that the Register of 7 Copyrights shall prescribe by regulation; or 8 ‘‘(B) on or after the license availability 9 date, shall, before making any such digital pho- 10 norecord delivery, follow the procedure de- 11 scribed in subsection (d)(2), except as provided 12 in paragraph (3). 13 ‘‘(3) RECORD COMPANY INDIVIDUAL DOWNLOAD 14 LICENSES.—Notwithstanding 15 record company may, on or after the license avail- 16 ability date, obtain an individual download license in 17 accordance with the notice requirements described in 18 paragraph (2)(A) (except for the requirement that 19 notice occur prior to the license availability date). A 20 record company that obtains an individual download 21 license as permitted under this paragraph shall pro- 22 vide statements of account and pay royalties as pro- 23 vided in subsection (c)(2)(I). 24 ‘‘(4) FAILURE paragraph (2)(B), a TO OBTAIN LICENSE.— EHF18470 S.L.C. 8 1 ‘‘(A) PHONORECORDS OTHER THAN DIG- 2 ITAL PHONORECORD DELIVERIES.—In 3 of phonorecords made and distributed other 4 than by means of digital phonorecord delivery, 5 the failure to serve or file the notice of inten- 6 tion required by paragraph (1) forecloses the 7 possibility of a compulsory license under para- 8 graph (1). In the absence of a voluntary license, 9 the failure to obtain a compulsory license ren- the case 10 ders 11 phonorecords actionable as acts of infringement 12 under section 501 and subject to the remedies 13 provided by sections 502 through 506. 14 15 16 the ‘‘(B) making DIGITAL and distribution PHONORECORD of DELIV- ERIES.— ‘‘(i) IN GENERAL.—In the case of 17 phonorecords made and distributed by 18 means of digital phonorecord delivery: 19 ‘‘(I) The failure to serve the no- 20 tice of intention required by para- 21 graph (2)(A) or paragraph (3), as ap- 22 plicable, forecloses the possibility of a 23 compulsory license under such para- 24 graph. EHF18470 S.L.C. 9 1 ‘‘(II) The failure to comply with 2 paragraph (2)(B) forecloses the possi- 3 bility of a blanket license for a period 4 of 3 years after the last calendar day 5 on which the notice of license was re- 6 quired to be submitted to the mechan- 7 ical licensing collective under such 8 paragraph. 9 ‘‘(ii) EFFECT OF FAILURE.—In either 10 case described in subclause (I) or (II) of 11 clause (i), in the absence of a voluntary li- 12 cense, the failure to obtain a compulsory li- 13 cense renders the making and distribution 14 of phonorecords by means of digital phono- 15 record delivery actionable as acts of in- 16 fringement under section 501 and subject 17 to the remedies provided by sections 502 18 through 506.’’; 19 (3) by amending subsection (c) to read as fol- 20 lows: 21 ‘‘(c) GENERAL CONDITIONS APPLICABLE 22 23 24 PULSORY TO COM- LICENSE.— ‘‘(1) ROYALTY LICENSE.— PAYABLE UNDER COMPULSORY EHF18470 S.L.C. 10 1 ‘‘(A) IDENTIFICATION REQUIREMENT.—To 2 be entitled to receive royalties under a compul- 3 sory license obtained under subsection (b)(1) 4 the copyright owner must be identified in the 5 registration or other public records of the Copy- 6 right Office. The owner is entitled to royalties 7 for phonorecords made and distributed after 8 being so identified, but is not entitled to recover 9 for any phonorecords previously made and dis- 10 11 tributed. ‘‘(B) ROYALTY FOR PHONORECORDS 12 OTHER THAN DIGITAL PHONORECORD DELIV- 13 ERIES.—Except 14 (A), for every phonorecord made and distrib- 15 uted under a compulsory license under sub- 16 section (a) other than by means of digital pho- 17 norecord delivery, with respect to each work 18 embodied in the phonorecord, the royalty shall 19 be the royalty prescribed under subparagraphs 20 (D) through (F), paragraph (2)(A), and chap- 21 ter 8. For purposes of this subparagraph, a 22 phonorecord is considered ‘distributed’ if the 23 person exercising the compulsory license has 24 voluntarily and permanently parted with its 25 possession. as provided by subparagraph EHF18470 S.L.C. 11 1 ‘‘(C) ROYALTY FOR DIGITAL PHONO- 2 RECORD DELIVERIES.—For 3 record delivery of a musical work made under 4 a compulsory license under this section, the roy- 5 alty payable shall be the royalty prescribed 6 under subparagraphs (D) through (F), para- 7 graph (2)(A), and chapter 8. 8 ‘‘(D) AUTHORITY every digital phono- TO NEGOTIATE.—Not- 9 withstanding any provision of the antitrust 10 laws, any copyright owners of nondramatic mu- 11 sical works and any persons entitled to obtain 12 a compulsory license under subsection (a) may 13 negotiate and agree upon the terms and rates 14 of royalty payments under this section and the 15 proportionate division of fees paid among copy- 16 right owners, and may designate common 17 agents on a nonexclusive basis to negotiate, 18 agree to, pay or receive such royalty payments. 19 Such authority to negotiate the terms and rates 20 of royalty payments includes, but is not limited 21 to, the authority to negotiate the year during 22 which the royalty rates prescribed under this 23 subparagraph, subparagraphs (E) and (F), 24 paragraph (2)(A), and chapter 8 shall next be 25 determined. EHF18470 S.L.C. 12 1 ‘‘(E) DETERMINATION OF REASONABLE 2 RATES AND TERMS.—Proceedings 3 ter 8 shall determine reasonable rates and 4 terms of royalty payments for the activities 5 specified by this section during the period be- 6 ginning with the effective date of such rates 7 and terms, but not earlier than January 1 of 8 the second year following the year in which the 9 petition requesting the proceeding is filed, and 10 ending on the effective date of successor rates 11 and terms, or such other period as the parties 12 may agree. Any copyright owners of nondra- 13 matic musical works and any persons entitled 14 to obtain a compulsory license under subsection 15 (a) may submit to the Copyright Royalty 16 Judges licenses covering such activities. The 17 parties to each proceeding shall bear their own 18 costs. under chap- 19 ‘‘(F) 20 RATES.—The 21 terms determined by the Copyright Royalty 22 Judges shall, subject to paragraph (2)(A), be 23 binding on all copyright owners of nondramatic 24 musical works and persons entitled to obtain a 25 compulsory license under subsection (a) during SCHEDULE OF REASONABLE schedule of reasonable rates and EHF18470 S.L.C. 13 1 the period specified in subparagraph (E), such 2 other period as may be determined pursuant to 3 subparagraphs (D) and (E), or such other pe- 4 riod as the parties may agree. The Copyright 5 Royalty Judges shall establish rates and terms 6 that most clearly represent the rates and terms 7 that would have been negotiated in the market- 8 place between a willing buyer and a willing sell- 9 er. In determining such rates and terms for dig- 10 ital phonorecord deliveries, the Copyright Roy- 11 alty Judges shall base their decision on eco- 12 nomic, competitive, and programming informa- 13 tion presented by the parties, including— 14 ‘‘(i) whether use of the compulsory li- 15 censee’s service may substitute for or may 16 promote the sales of phonorecords or oth- 17 erwise may interfere with or may enhance 18 the musical work copyright owner’s other 19 streams of revenue from its musical works; 20 and 21 ‘‘(ii) the relative roles of the copyright 22 owner and the compulsory licensee in the 23 copyrighted work and the service made 24 available to the public with respect to the 25 relative creative contribution, technological EHF18470 S.L.C. 14 1 contribution, capital investment, cost, and 2 risk. 3 4 5 6 ‘‘(2) ADDITIONAL TERMS AND CONDITIONS.— ‘‘(A) VOLUNTARY LICENSES AND CON- TRACTUAL ROYALTY RATES.— ‘‘(i) IN GENERAL.—License agree- 7 ments voluntarily negotiated at any time 8 between one or more copyright owners of 9 nondramatic musical works and one or 10 more persons entitled to obtain a compul- 11 sory license under subsection (a) shall be 12 given effect in lieu of any determination by 13 the Copyright Royalty Judges. Subject to 14 clause (ii), the royalty rates determined 15 pursuant to subparagraphs (E) and (F) of 16 paragraph (1) shall be given effect as to 17 digital phonorecord deliveries in lieu of any 18 contrary royalty rates specified in a con- 19 tract pursuant to which a recording artist 20 who is the author of a nondramatic musi- 21 cal work grants a license under that per- 22 son’s exclusive rights in the musical work 23 under paragraphs (1) and (3) of section 24 106 or commits another person to grant a 25 license in that musical work under para- EHF18470 S.L.C. 15 1 graphs (1) and (3) of section 106, to a 2 person desiring to fix in a tangible medium 3 of expression a sound recording embodying 4 the musical work. 5 ‘‘(ii) APPLICABILITY.—The second 6 sentence of clause (i) shall not apply to— 7 ‘‘(I) a contract entered into on or 8 before June 22, 1995, and not modi- 9 fied thereafter for the purpose of re- 10 ducing the royalty rates determined 11 pursuant to subparagraphs (E) and 12 (F) of paragraph (1) or of increasing 13 the number of musical works within 14 the scope of the contract covered by 15 the reduced rates, except if a contract 16 entered into on or before June 22, 17 1995, is modified thereafter for the 18 purpose of increasing the number of 19 musical works within the scope of the 20 contract, any contrary royalty rates 21 specified in the contract shall be given 22 effect in lieu of royalty rates deter- 23 mined pursuant to subparagraphs (E) 24 and (F) of paragraph (1) for the 25 number of musical works within the EHF18470 S.L.C. 16 1 scope of the contract as of June 22, 2 1995; and 3 ‘‘(II) a contract entered into 4 after the date that the sound record- 5 ing is fixed in a tangible medium of 6 expression substantially in a form in- 7 tended for commercial release, if at 8 the time the contract is entered into, 9 the recording artist retains the right 10 to grant licenses as to the musical 11 work under paragraphs (1) and (3) of 12 section 106. 13 ‘‘(B) SOUND RECORDING INFORMATION.— 14 Except as provided in section 1002(e), a digital 15 phonorecord delivery licensed under this para- 16 graph shall be accompanied by the information 17 encoded in the sound recording, if any, by or 18 under the authority of the copyright owner of 19 that sound recording, that identifies the title of 20 the sound recording, the featured recording art- 21 ist who performs on the sound recording, and 22 related information, including information con- 23 cerning the underlying musical work and its 24 writer. 25 ‘‘(C) INFRINGEMENT REMEDIES.— EHF18470 S.L.C. 17 1 ‘‘(i) IN GENERAL.—A digital phono- 2 record delivery of a sound recording is ac- 3 tionable as an act of infringement under 4 section 501, and is fully subject to the 5 remedies provided by sections 502 through 6 506, unless— 7 ‘‘(I) the digital phonorecord de- 8 livery has been authorized by the 9 sound recording copyright owner; and 10 ‘‘(II) the entity making the dig- 11 ital phonorecord delivery has obtained 12 a compulsory license under subsection 13 (a) or has otherwise been authorized 14 by the musical work copyright owner, 15 or by a record company pursuant to 16 an individual download license, to 17 make and distribute phonorecords of 18 each musical work embodied in the 19 sound recording by means of digital 20 phonorecord delivery. 21 ‘‘(ii) OTHER REMEDIES.—Any cause 22 of action under this subparagraph shall be 23 in addition to those available to the owner 24 of the copyright in the nondramatic musi- 25 cal work under subparagraph (J) and sec- EHF18470 S.L.C. 18 1 tion 106(4) and the owner of the copyright 2 in the sound recording under section 3 106(6). 4 ‘‘(D) LIABILITY OF SOUND RECORDING 5 OWNERS.—The 6 of a sound recording for infringement of the 7 copyright in a nondramatic musical work em- 8 bodied in the sound recording shall be deter- 9 mined in accordance with applicable law, except 10 that the owner of a copyright in a sound re- 11 cording shall not be liable for a digital phono- 12 record delivery by a third party if the owner of 13 the copyright in the sound recording does not 14 license the distribution of a phonorecord of the 15 nondramatic musical work. 16 ‘‘(E) RECORDING liability of the copyright owner DEVICES AND MEDIA.— 17 Nothing in section 1008 shall be construed to 18 prevent the exercise of the rights and remedies 19 allowed by this paragraph, subparagraph (J), 20 and chapter 5 in the event of a digital phono- 21 record delivery, except that no action alleging 22 infringement of copyright may be brought 23 under this title against a manufacturer, im- 24 porter or distributor of a digital audio recording 25 device, a digital audio recording medium, an EHF18470 S.L.C. 19 1 analog recording device, or an analog recording 2 medium, or against a consumer, based on the 3 actions described in such section. 4 5 ‘‘(F) PRESERVATION OF RIGHTS.—Noth- ing in this section annuls or limits— 6 ‘‘(i) the exclusive right to publicly per- 7 form a sound recording or the musical 8 work embodied therein, including by means 9 of a digital transmission, under paragraphs 10 (4) and (6) of section 106; 11 ‘‘(ii) except for compulsory licensing 12 under the conditions specified by this sec- 13 tion, the exclusive rights to reproduce and 14 distribute the sound recording and the mu- 15 sical work embodied therein under para- 16 graphs (1) and (3) of section 106, includ- 17 ing by means of a digital phonorecord de- 18 livery; or 19 ‘‘(iii) any other rights under any other 20 provision of section 106, or remedies avail- 21 able under this title, as such rights or rem- 22 edies exist before, on, or after the date of 23 enactment of the Digital Performance 24 Right in Sound Recordings Act of 1995. EHF18470 S.L.C. 20 1 ‘‘(G) EXEMPT TRANSMISSIONS AND RE- 2 TRANSMISSIONS.—The 3 concerning digital phonorecord deliveries shall 4 not apply to any exempt transmissions or re- 5 transmissions under section 114(d)(1). The ex- 6 emptions created in section 114(d)(1) do not 7 expand or reduce the rights of copyright owners 8 under paragraphs (1) through (5) of section 9 106 with respect to such transmissions and re- 10 11 provisions of this section transmissions. ‘‘(H) DISTRIBUTION BY RENTAL, LEASE, 12 OR LENDING.—A 13 under subsection (b)(1) to make and distribute 14 phonorecords includes the right of the maker of 15 such a phonorecord to distribute or authorize 16 distribution of such phonorecord, other than by 17 means of a digital phonorecord delivery, by 18 rental, lease, or lending (or by acts or practices 19 in the nature of rental, lease, or lending). With 20 respect to each nondramatic musical work em- 21 bodied in the phonorecord, the royalty shall be 22 a proportion of the revenue received by the 23 compulsory licensee from every such act of dis- 24 tribution of the phonorecord under this clause 25 equal to the proportion of the revenue received compulsory license obtained EHF18470 S.L.C. 21 1 by the compulsory licensee from distribution of 2 the 3 (a)(1)(A)(ii)(II) that is payable by a compulsory 4 licensee under that clause and under chapter 8. 5 The Register of Copyrights shall issue regula- 6 tions to carry out the purpose of this subpara- 7 graph. 8 9 phonorecord ‘‘(I) PAYMENT under subsection OF ROYALTIES AND STATE- MENTS OF ACCOUNT.—Except as provided in 10 paragraphs (4)(A)(i) and (10)(B) of subsection 11 (d), royalty payments shall be made on or be- 12 fore the twentieth day of each month and shall 13 include all royalties for the month next pre- 14 ceding. Each monthly payment shall be made 15 under oath and shall comply with requirements 16 that the Register of Copyrights shall prescribe 17 by regulation. The Register shall also prescribe 18 regulations under which detailed cumulative an- 19 nual statements of account, certified by a cer- 20 tified public accountant, shall be filed for every 21 compulsory license under subsection (a). The 22 regulations covering both the monthly and the 23 annual statements of account shall prescribe 24 the form, content, and manner of certification EHF18470 S.L.C. 22 1 with respect to the number of records made and 2 the number of records distributed. 3 ‘‘(J) NOTICE OF DEFAULT AND TERMI- 4 NATION 5 case of a license obtained under paragraph (1), 6 (2)(A), or (3) of subsection (b), if the copyright 7 owner does not receive the monthly payment 8 and the monthly and annual statements of ac- 9 count when due, the owner may give written no- 10 tice to the licensee that, unless the default is 11 remedied not later than 30 days after the date 12 on which the notice is sent, the compulsory li- 13 cense will be automatically terminated. Such 14 termination renders either the making or the 15 distribution, or both, of all phonorecords for 16 which the royalty has not been paid, actionable 17 as acts of infringement under section 501 and 18 fully subject to the remedies provided by sec- 19 tions 502 through 506. In the case of a license 20 obtained under subsection (b)(2)(B), license au- 21 thority under the compulsory license may be 22 terminated 23 (d)(4)(E).’’; 24 (4) by amending subsection (d) to read as fol- 25 lows: OF COMPULSORY as provided LICENSE.—In in the subsection EHF18470 S.L.C. 23 1 ‘‘(d) BLANKET LICENSE 2 CHANICAL 3 CENSEE 4 5 FOR DIGITAL USES, ME- LICENSING COLLECTIVE, AND DIGITAL LI- COORDINATOR.— ‘‘(1) BLANKET ‘‘(A) IN LICENSE FOR DIGITAL USES.— GENERAL.—A digital music pro- 6 vider that qualifies for a compulsory license 7 under subsection (a) may, by complying with 8 the terms and conditions of this subsection, ob- 9 tain a blanket license from copyright owners 10 through the mechanical licensing collective to 11 make and distribute digital phonorecord deliv- 12 eries of musical works through one or more cov- 13 ered activities. 14 15 ‘‘(B) INCLUDED ACTIVITIES.—A blanket li- cense— 16 ‘‘(i) covers all musical works (or 17 shares of such works) available for compul- 18 sory licensing under this section for pur- 19 poses of engaging in covered activities, ex- 20 cept as provided in subparagraph (C); 21 ‘‘(ii) includes the making and dis- 22 tribution of server, intermediate, archival, 23 and incidental reproductions of musical 24 works that are reasonable and necessary 25 for the digital music provider to engage in EHF18470 S.L.C. 24 1 covered activities licensed under this sub- 2 section, solely for the purpose of engaging 3 in such covered activities; and 4 ‘‘(iii) does not cover or include any 5 rights or uses other than those described 6 in clauses (i) and (ii). 7 ‘‘(C) OTHER LICENSES.—A voluntary li- 8 cense for covered activities entered into by or 9 under the authority of 1 or more copyright 10 owners and 1 or more digital music providers, 11 or authority to make and distribute permanent 12 downloads of a musical work obtained by a dig- 13 ital music provider from a sound recording 14 copyright owner pursuant to an individual 15 download license, shall be given effect in lieu of 16 a blanket license under this subsection with re- 17 spect to the musical works (or shares thereof) 18 covered by such voluntary license or individual 19 download authority and the following conditions 20 apply: 21 ‘‘(i) Where a voluntary license or indi- 22 vidual download license applies, the license 23 authority provided under the blanket li- 24 cense shall exclude any musical works (or EHF18470 S.L.C. 25 1 shares thereof) subject to the voluntary li- 2 cense or individual download license. 3 ‘‘(ii) An entity engaged in covered ac- 4 tivities under a voluntary license or author- 5 ity obtained pursuant to an individual 6 download license that is a significant non- 7 blanket licensee shall comply with para- 8 graph (6)(A). 9 ‘‘(iii) The rates and terms of any vol- 10 untary license shall be subject to the sec- 11 ond sentence of clause (i) and clause (ii) of 12 subsection (c)(2)(A) and paragraph (9)(C), 13 as applicable. 14 ‘‘(D) PROTECTION AGAINST INFRINGE- 15 MENT ACTIONS.—A 16 obtains and complies with the terms of a valid 17 blanket license under this subsection shall not 18 be subject to an action for infringement of the 19 exclusive rights provided by paragraphs (1) and 20 (3) of section 106 under this title arising from 21 use of a musical work (or share thereof) to en- 22 gage in covered activities authorized by such li- 23 cense, subject to paragraph (4)(E). digital music provider that 24 ‘‘(E) OTHER 25 TIONS APPLY.—Except REQUIREMENTS AND CONDI- as expressly provided in EHF18470 S.L.C. 26 1 this subsection, each requirement, limitation, 2 condition, privilege, right, and remedy otherwise 3 applicable to compulsory licenses under this sec- 4 tion shall apply to compulsory blanket licenses 5 under this subsection. 6 ‘‘(2) AVAILABILITY 7 OF BLANKET LICENSE.— ‘‘(A) PROCEDURE FOR OBTAINING LI- 8 CENSE.—A 9 blanket license by submitting a notice of license 10 to the mechanical licensing collective that speci- 11 fies the particular covered activities in which 12 the digital music provider seeks to engage, as 13 follows: digital music provider may obtain a 14 ‘‘(i) The notice of license shall comply 15 in form and substance with requirements 16 that the Register of Copyrights shall estab- 17 lish by regulation. 18 ‘‘(ii) Unless rejected in writing by the 19 mechanical licensing collective not later 20 than 30 calendar days after the date on 21 which the mechanical licensing collective 22 receives the notice, the blanket license shall 23 be effective as of the date on which the no- 24 tice of license was sent by the digital music EHF18470 S.L.C. 27 1 provider, as shown by a physical or elec- 2 tronic record. 3 ‘‘(iii) A notice of license may only be 4 rejected by the mechanical licensing collec- 5 tive if— 6 ‘‘(I) the digital music provider or 7 notice of license does not meet the re- 8 quirements of this section or applica- 9 ble regulations, in which case the re- 10 quirements at issue shall be specified 11 with reasonable particularity in the 12 notice of rejection; or 13 ‘‘(II) the digital music provider 14 has had a blanket license terminated 15 by the mechanical licensing collective 16 during the 3-year period preceding the 17 date on which the mechanical licens- 18 ing collective receives the notice pur- 19 suant to paragraph (4)(E). 20 ‘‘(iv) If a notice of license is rejected 21 under clause (iii)(I), the digital music pro- 22 vider shall have 30 calendar days after re- 23 ceipt of the notice of rejection to cure any 24 deficiency and submit an amended notice 25 of license to the mechanical licensing col- EHF18470 S.L.C. 28 1 lective. If the deficiency has been cured, 2 the mechanical licensing collective shall so 3 confirm in writing, and the license shall be 4 effective as of the date that the original 5 notice of license was provided by the dig- 6 ital music provider. 7 ‘‘(v) A digital music provider that be- 8 lieves a notice of license was improperly re- 9 jected by the mechanical licensing collec- 10 tive may seek review of such rejection in 11 an appropriate district court of the United 12 States. The district court shall determine 13 the matter de novo based on the record be- 14 fore the mechanical licensing collective and 15 any additional evidence presented by the 16 parties. 17 ‘‘(B) BLANKET LICENSE EFFECTIVE 18 DATE.—Blanket 19 by the mechanical licensing collective on and 20 after the license availability date. No such li- 21 cense shall be effective prior to the license avail- 22 ability date. 23 ‘‘(3) MECHANICAL 24 ‘‘(A) IN 25 licenses shall be made available LICENSING COLLECTIVE.— GENERAL.—The mechanical li- censing collective shall be a single entity that— EHF18470 S.L.C. 29 1 ‘‘(i) is a nonprofit entity, not owned 2 by any other entity, that is created by 3 copyright owners to carry out responsibil- 4 ities under this subsection; 5 ‘‘(ii) is endorsed by, and enjoys sub- 6 stantial support from, musical work copy- 7 right owners that together represent the 8 greatest percentage of the licensor market 9 for uses of such works in covered activities, 10 as measured over the preceding 3 full cal- 11 endar years; 12 ‘‘(iii) is able to demonstrate to the 13 Register of Copyrights that the entity has, 14 or will have prior to the license availability 15 date, the administrative and technological 16 capabilities to perform the required func- 17 tions of the mechanical licensing collective 18 under this subsection and that is governed 19 by a board of directors in accordance with 20 subparagraph (D)(i); and 21 ‘‘(iv) has been designated by the Reg- 22 ister of Copyrights, with the approval of 23 the Librarian of Congress pursuant to sec- 24 tion 702, in accordance with subparagraph 25 (B). EHF18470 S.L.C. 30 1 ‘‘(B) DESIGNATION 2 CENSING COLLECTIVE.— 3 ‘‘(i) INITIAL OF MECHANICAL LI- DESIGNATION.—Not later 4 than 270 days after the enactment date, 5 the Register of Copyrights shall initially 6 designate the mechanical licensing collec- 7 tive as follows: 8 ‘‘(I) Not later than 90 calendar 9 days after the enactment date, the 10 Register shall publish notice in the 11 Federal Register soliciting informa- 12 tion to assist in identifying the appro- 13 priate entity to serve as the mechan- 14 ical licensing collective, including the 15 name and affiliation of each member 16 of the board of directors described 17 under subparagraph (D)(i) and each 18 committee established pursuant to 19 clauses (iii), (iv), and (v) of subpara- 20 graph (D). 21 ‘‘(II) After reviewing the infor- 22 mation requested under subclause (I) 23 and making a designation, the Reg- 24 ister shall publish notice in the Fed- 25 eral Register setting forth— EHF18470 S.L.C. 31 1 ‘‘(aa) the identity of and 2 contact information for the me- 3 chanical licensing collective; and 4 5 6 ‘‘(bb) the reasons for the designation. ‘‘(ii) PERIODIC REVIEW OF DESIGNA- 7 TION.—Following 8 the mechanical licensing collective, the 9 Register shall, every 5 years, beginning 10 with the fifth full calendar year to com- 11 mence after the initial designation, publish 12 notice in the Federal Register in the 13 month of January soliciting information 14 concerning whether the existing designa- 15 tion should be continued, or a different en- 16 tity meeting the criteria described in 17 clauses (i) through (iii) of subparagraph 18 (A) shall be designated. Following publica- 19 tion of such notice, the Register shall— the initial designation of 20 ‘‘(I) after reviewing the informa- 21 tion submitted and conducting addi- 22 tional 23 publish notice in the Federal Register 24 of a continuing designation or new 25 designation of the mechanical licens- proceedings as appropriate, EHF18470 S.L.C. 32 1 ing collective, as the case may be, and 2 the reasons for such a designation, 3 with any new designation to be effec- 4 tive as of the first day of a month 5 that is not less than 6 months and 6 not longer than 9 months after the 7 date on which the Register publishes 8 the notice, as specified by the Reg- 9 ister; and 10 ‘‘(II) if a new entity is designated 11 as the mechanical licensing collective, 12 adopt regulations to govern the trans- 13 fer of licenses, funds, records, data, 14 and 15 from the existing mechanical licensing 16 collective to the new entity. 17 ‘‘(iii) CLOSEST administrative responsibilities ALTERNATIVE DES- 18 IGNATION.—If 19 identify an entity that fulfills each of the 20 qualifications set forth in clauses (i) 21 through (iii) of subparagraph (A), the Reg- 22 ister shall designate the entity that most 23 nearly fulfills such qualifications for pur- 24 poses of carrying out the responsibilities of 25 the mechanical licensing collective. the Register is unable to EHF18470 S.L.C. 33 1 2 ‘‘(C) AUTHORITIES ‘‘(i) IN AND FUNCTIONS.— GENERAL.—The mechanical li- 3 censing collective is authorized to perform 4 the following functions, subject to more 5 particular requirements as described in 6 this subsection: 7 ‘‘(I) Offer and administer blanket 8 licenses, including receipt of notices of 9 license and reports of usage from dig- 10 ital music providers. 11 ‘‘(II) Collect and distribute royal- 12 ties from digital music providers for 13 covered activities. 14 ‘‘(III) Engage in efforts to iden- 15 tify musical works (and shares of such 16 works) embodied in particular sound 17 recordings, and to identify and locate 18 the copyright owners of such musical 19 works (and shares of such works). 20 ‘‘(IV) Maintain the musical 21 works database and other information 22 relevant to the administration of li- 23 censing activities under this section. 24 ‘‘(V) Administer a process by 25 which copyright owners can claim EHF18470 S.L.C. 34 1 ownership of musical works (and 2 shares of such works), and a process 3 by which royalties for works for which 4 the owner is not identified or located 5 are equitably distributed to known 6 copyright owners. 7 ‘‘(VI) Administer collections of 8 the administrative assessment from 9 digital music providers and significant 10 nonblanket licensees, including receipt 11 of notices of nonblanket activity. 12 ‘‘(VII) Invest in relevant re- 13 sources, and arrange for services of 14 outside vendors and others, to support 15 the activities of the mechanical licens- 16 ing collective. 17 ‘‘(VIII) Engage in legal and 18 other efforts to enforce rights and ob- 19 ligations under this subsection, includ- 20 ing by filing bankruptcy proofs of 21 claims for amounts owed under li- 22 censes, and acting in coordination 23 with the digital licensee coordinator. 24 ‘‘(IX) Initiate and participate in 25 proceedings before the Copyright Roy- EHF18470 S.L.C. 35 1 alty Judges to establish the adminis- 2 trative assessment under this sub- 3 section. 4 ‘‘(X) Initiate and participate in 5 proceedings before the Copyright Of- 6 fice with respect to activities under 7 this subsection. 8 ‘‘(XI) Gather and provide docu- 9 mentation for use in proceedings be- 10 fore the Copyright Royalty Judges to 11 set rates and terms under this section. 12 ‘‘(XII) Maintain records of the 13 activities of the mechanical licensing 14 collective and engage in and respond 15 to audits described in this subsection. 16 ‘‘(XIII) Engage in such other ac- 17 tivities as may be necessary or appro- 18 priate to fulfill the responsibilities of 19 the mechanical licensing collective 20 under this subsection. 21 ‘‘(ii) RESTRICTIONS CONCERNING LI- 22 CENSING 23 TIES.—With 24 of licenses, except as provided in clauses (i) AND ADMINISTRATIVE ACTIVI- respect to the administration EHF18470 S.L.C. 36 1 and (iii) and subparagraph (E)(v), the me- 2 chanical licensing collective may only— 3 ‘‘(I) issue blanket licenses pursu- 4 ant to subsection (d)(1); and 5 ‘‘(II) administer blanket licenses 6 for reproduction or distribution rights 7 in musical works for covered activi- 8 ties, including collecting and distrib- 9 uting royalties, pursuant to blanket li- 10 censes. 11 ‘‘(iii) ADDITIONAL ADMINISTRATIVE 12 ACTIVITIES.—Subject 13 (11)(C), the mechanical licensing collective 14 may also administer, including by col- 15 lecting and distributing royalties, voluntary 16 licenses issued by, or individual download 17 licenses obtained from, copyright owners 18 only for reproduction or distribution rights 19 in musical works for covered activities, for 20 which the mechanical licensing collective 21 shall charge reasonable fees for such serv- 22 ices. 23 ‘‘(iv) RESTRICTION to paragraph ON LOBBYING.— 24 The mechanical licensing collective may 25 not engage in government lobbying activi- EHF18470 S.L.C. 37 1 ties, but may engage in the activities de- 2 scribed in subclauses (IX), (X), and (XI) 3 of clause (i). 4 ‘‘(D) GOVERNANCE.— 5 ‘‘(i) BOARD OF DIRECTORS.—The me- 6 chanical licensing collective shall have a 7 board of directors consisting of 14 voting 8 members and 3 nonvoting members, as fol- 9 lows: 10 11 ‘‘(I) Ten voting members shall be representatives of music publishers— 12 ‘‘(aa) to which songwriters 13 have assigned exclusive rights of 14 reproduction and distribution of 15 musical works with respect to 16 covered activities; and 17 ‘‘(bb) none of which may be 18 owned by, or under common con- 19 trol with, any other board mem- 20 ber. 21 ‘‘(II) Four voting members shall 22 be professional songwriters who have 23 retained and exercise exclusive rights 24 of reproduction and distribution with 25 respect to covered activities with re- EHF18470 S.L.C. 38 1 spect to musical works they have au- 2 thored. 3 ‘‘(III) One nonvoting member 4 shall be a representative of the non- 5 profit trade association of music pub- 6 lishers that represents the greatest 7 percentage of the licensor market for 8 uses of musical works in covered ac- 9 tivities, as measured for the 3-year 10 period preceding the date on which 11 the member is appointed. 12 ‘‘(IV) One nonvoting member 13 shall be a representative of the digital 14 licensee coordinator, provided that a 15 digital licensee coordinator has been 16 designated pursuant to paragraph 17 (5)(B). 18 member shall be the nonprofit trade 19 association of digital licensees that 20 represents the greatest percentage of 21 the licensee market for uses of musi- 22 cal works in covered activities, as 23 measured over the preceding 3 full 24 calendar years. Otherwise, the nonvoting EHF18470 S.L.C. 39 1 ‘‘(V) One nonvoting member 2 shall be a representative of a nation- 3 ally recognized nonprofit trade asso- 4 ciation whose primary mission is advo- 5 cacy on behalf of songwriters in the 6 United States. 7 ‘‘(ii) BYLAWS.— 8 ‘‘(I) ESTABLISHMENT.—Not 9 later than 1 year after the date on 10 which the mechanical licensing collec- 11 tive is initially designated by the Reg- 12 ister of Copyrights under subpara- 13 graph (B)(i), the collective shall estab- 14 lish bylaws to determine issues relat- 15 ing to the governance of the collective, 16 including, but not limited to— 17 ‘‘(aa) the length of the term 18 for each member of the board of 19 directors; 20 ‘‘(bb) the staggering of the 21 terms of the members of the 22 board of directors; 23 ‘‘(cc) a process for filling a 24 seat on the board of directors 25 that is vacated before the end of EHF18470 S.L.C. 40 1 the term with respect to that 2 seat; 3 ‘‘(dd) a process for electing 4 a member to the board of direc- 5 tors; and 6 ‘‘(ee) a management struc- 7 ture for daily operation of the 8 collective. 9 ‘‘(II) PUBLIC AVAILABILITY.— 10 The mechanical licensing collective 11 shall make the bylaws established 12 under subclause (I) available to the 13 public. 14 ‘‘(iii) BOARD MEETINGS.—The board 15 of directors shall meet not less frequently 16 than biannually and discuss matters perti- 17 nent to the operations of the mechanical li- 18 censing collective, including the mechanical 19 licensing collective budget. 20 ‘‘(iv) OPERATIONS ADVISORY COM- 21 MITTEE.—The 22 mechanical licensing collective shall estab- 23 lish an operations advisory committee con- 24 sisting of not fewer than 6 members to 25 make recommendations to the board of di- board of directors of the EHF18470 S.L.C. 41 1 rectors concerning the operations of the 2 mechanical licensing collective, including 3 the efficient investment in and deployment 4 of information technology and data re- 5 sources. Such committee shall have an 6 equal number of members of the committee 7 who are— 8 ‘‘(I) musical work copyright own- 9 ers who are appointed by the board of 10 directors of the mechanical licensing 11 collective; and 12 ‘‘(II) representatives of digital 13 music providers who are appointed by 14 the digital licensee coordinator. 15 ‘‘(v) UNCLAIMED ROYALTIES OVER- 16 SIGHT COMMITTEE.—The 17 tors of the mechanical licensing collective 18 shall establish and appoint an unclaimed 19 royalties oversight committee consisting of 20 10 members, 5 of which shall be musical 21 work copyright owners and 5 of which 22 shall be professional songwriters whose 23 works are used in covered activities. 24 ‘‘(vi) 25 MITTEE.—The DISPUTE board of direc- RESOLUTION COM- board of directors of the EHF18470 S.L.C. 42 1 mechanical licensing collective shall estab- 2 lish and appoint a dispute resolution com- 3 mittee that shall— 4 5 ‘‘(I) consist of not fewer than 6 members; and 6 ‘‘(II) include an equal number of 7 representatives of musical work copy- 8 right owners and professional song- 9 writers. 10 ‘‘(vii) MECHANICAL 11 LECTIVE ANNUAL REPORT.— 12 ‘‘(I) IN LICENSING COL- GENERAL.—Not later 13 than June 30 of each year com- 14 mencing after the license availability 15 date, the mechanical licensing collec- 16 tive shall post, and make available on- 17 line for a period of not less than 3 18 years, an annual report that sets forth 19 information regarding— 20 ‘‘(aa) the operational and li- 21 censing practices of the collective; 22 ‘‘(bb) how royalties are col- 23 24 25 lected and distributed; ‘‘(cc) budgeting and expenditures; EHF18470 S.L.C. 43 1 ‘‘(dd) the collective total 2 costs for the preceding calendar 3 year; 4 ‘‘(ee) the projected annual 5 mechanical 6 budget; 7 8 9 licensing collective ‘‘(ff) aggregated royalty receipts and payments; ‘‘(gg) expenses that are 10 more than 10 percent of the an- 11 nual mechanical licensing collec- 12 tive budget; and 13 ‘‘(hh) the efforts of the col- 14 lective to locate and identify 15 copyright owners of unmatched 16 musical works (and shares of 17 works). 18 ‘‘(II) SUBMISSION.—On the date 19 on which the mechanical licensing col- 20 lective posts each report required 21 under subclause (I), the collective 22 shall provide a copy of the report to 23 the Register of Copyrights. 24 ‘‘(viii) INDEPENDENT 25 OFFICERS.—An individual serving as an officer of the me- EHF18470 S.L.C. 44 1 chanical licensing collective may not, at the 2 same time, also be an employee or agent of 3 any member of the board of directors of 4 the collective or any entity represented by 5 a member of the board of directors, as de- 6 scribed in clause (i). 7 8 9 10 ‘‘(ix) OVERSIGHT AND ACCOUNT- ABILITY.— ‘‘(I) IN GENERAL.—The mechan- ical licensing collective shall— 11 ‘‘(aa) ensure that the poli- 12 cies and practices of the collective 13 are transparent and accountable; 14 ‘‘(bb) identify a point of 15 contact for publisher inquiries 16 and complaints with timely re- 17 dress; and 18 ‘‘(cc) establish an anti-co- 19 mingling policy for funds not col- 20 lected under this section and roy- 21 alties collected under this section. 22 ‘‘(II) AUDITS.— 23 ‘‘(aa) IN GENERAL.—Begin- 24 ning in the fourth full calendar 25 year that begins after the initial EHF18470 S.L.C. 45 1 designation of the mechanical li- 2 censing collective by the Register 3 of Copyrights under subpara- 4 graph (B)(i), and in every fifth 5 calendar year thereafter, the col- 6 lective shall retain a qualified 7 auditor that shall— 8 9 10 ‘‘(AA) examine the books, records, and operations of the collective; 11 ‘‘(BB) prepare a report 12 for the board of directors of 13 the collective with respect to 14 the matters described in 15 item (bb); and 16 ‘‘(CC) not later than 17 December 31 of the year in 18 which the qualified auditor 19 is retained, deliver the re- 20 port described in subitem 21 (BB) to the board of direc- 22 tors of the collective. 23 ‘‘(bb) MATTERS AD- 24 DRESSED.—Each 25 under item (aa) shall address the report prepared EHF18470 S.L.C. 46 1 implementation and efficacy of 2 procedures of the mechanical li- 3 censing collective— 4 ‘‘(AA) for the receipt, 5 handling, and distribution of 6 royalty funds, including any 7 amounts held as unclaimed 8 royalties; 9 ‘‘(BB) to guard against 10 fraud, abuse, waste, and the 11 unreasonable use of funds; 12 and 13 ‘‘(CC) to protect the 14 confidentiality of financial, 15 proprietary, and other sen- 16 sitive information. 17 ‘‘(cc) PUBLIC AVAIL- 18 ABILITY.—With 19 report prepared under item (aa), 20 the mechanical licensing collective 21 shall— respect to each 22 ‘‘(AA) submit the re- 23 port to the Register of Copy- 24 rights; and EHF18470 S.L.C. 47 1 2 3 4 ‘‘(BB) make the report available to the public. ‘‘(E) MUSICAL WORKS DATABASE.— ‘‘(i) ESTABLISHMENT AND MAINTE- 5 NANCE OF DATABASE.—The 6 censing collective shall establish and main- 7 tain a database containing information re- 8 lating to musical works (and shares of 9 such works) and, to the extent known, the 10 identity and location of the copyright own- 11 ers of such works (and shares thereof) and 12 the sound recordings in which the musical 13 works are embodied. In furtherance of 14 maintaining such database, the mechanical 15 licensing collective shall engage in efforts 16 to identify the musical works embodied in 17 particular sound recordings, as well as to 18 identify and locate the copyright owners of 19 such works (and shares thereof), and up- 20 date such data as appropriate. 21 ‘‘(ii) MATCHED mechanical li- WORKS.—With respect 22 to musical works (and shares thereof) that 23 have been matched to copyright owners, 24 the musical works database shall include— 25 ‘‘(I) the title of the musical work; EHF18470 S.L.C. 48 1 ‘‘(II) the copyright owner of the 2 work (or share thereof), and the own- 3 ership percentage of that owner; 4 5 ‘‘(III) contact information for such copyright owner; 6 ‘‘(IV) to the extent reasonably 7 available to the mechanical licensing 8 collective— 9 ‘‘(aa) the international 10 standard musical work code for 11 the work; and 12 ‘‘(bb) identifying informa- 13 tion for sound recordings in 14 which the musical work is em- 15 bodied, including the name of the 16 sound recording, featured artist, 17 sound recording copyright owner, 18 producer, international standard 19 recording code, and other infor- 20 mation commonly used to assist 21 in associating sound recordings 22 with musical works; and 23 ‘‘(V) such other information as 24 the Register of Copyrights may pre- 25 scribe by regulation. EHF18470 S.L.C. 49 1 ‘‘(iii) UNMATCHED WORKS.—With re- 2 spect to unmatched musical works (and 3 shares of works) in the database, the musi- 4 cal works database shall include— 5 ‘‘(I) to the extent reasonably 6 available to the mechanical licensing 7 collective— 8 9 ‘‘(aa) the title of the musical work; 10 ‘‘(bb) the ownership percent- 11 age for which an owner has not 12 been identified; 13 ‘‘(cc) if a copyright owner 14 has been identified but not lo- 15 cated, the identity of such owner 16 and the ownership percentage of 17 that owner; 18 ‘‘(dd) identifying informa- 19 tion for sound recordings in 20 which the work is embodied, in- 21 cluding sound recording name, 22 featured artist, sound recording 23 copyright owner, producer, inter- 24 national standard recording code, 25 and other information commonly EHF18470 S.L.C. 50 1 used to assist in associating 2 sound recordings with musical 3 works; and 4 ‘‘(ee) any additional infor- 5 mation reported to the mechan- 6 ical licensing collective that may 7 assist in identifying the work; 8 and 9 ‘‘(II) such other information re- 10 lating to the identity and ownership of 11 musical works (and shares of such 12 works) as the Register of Copyrights 13 may prescribe by regulation. 14 ‘‘(iv) SOUND RECORDING INFORMA- 15 TION.—Each 16 owner with any musical work listed in the 17 musical works database shall engage in 18 commercially reasonable efforts to deliver 19 to the mechanical licensing collective, in- 20 cluding for use in the musical works data- 21 base, to the extent such information is not 22 then available in the database, information 23 regarding the names of the sound record- 24 ings in which that copyright owner’s musi- musical work copyright EHF18470 S.L.C. 51 1 cal works (or shares thereof) are embodied, 2 to the extent practicable. 3 ‘‘(v) ACCESSIBILITY OF DATABASE.— 4 The musical works database shall be made 5 available to members of the public in a 6 searchable, online format, free of charge. 7 The mechanical licensing collective shall 8 make such database available in a bulk, 9 machine-readable format, through a widely 10 available software application, to the fol- 11 lowing entities: 12 ‘‘(I) Digital music providers oper- 13 ating under the authority of valid no- 14 tices of license, free of charge. 15 ‘‘(II) Significant nonblanket li- 16 censees in compliance with their obli- 17 gations under paragraph (6), free of 18 charge. 19 ‘‘(III) Authorized vendors of the 20 entities described in subclauses (I) 21 and (II), free of charge. 22 ‘‘(IV) The Register of Copy- 23 rights, free of charge (but the Reg- 24 ister shall not treat such database or EHF18470 S.L.C. 52 1 any information therein as a Govern- 2 ment record). 3 ‘‘(V) Any other person or entity 4 for a fee not to exceed the marginal 5 cost to the mechanical licensing collec- 6 tive of providing the database to such 7 person or entity. 8 ‘‘(vi) ADDITIONAL REQUIREMENTS.— 9 The Register of Copyrights shall establish 10 requirements by regulations to ensure the 11 usability, interoperability, and usage re- 12 strictions of the musical works database. 13 ‘‘(F) NOTICES 14 15 OF LICENSE AND NON- BLANKET ACTIVITY.— ‘‘(i) NOTICES OF LICENSES.—The me- 16 chanical licensing collective shall receive, 17 review, and confirm or reject notices of li- 18 cense from digital music providers, as pro- 19 vided in paragraph (2)(A). The collective 20 shall maintain a current, publicly acces- 21 sible list of blanket licenses that includes 22 contact information for the licensees and 23 the effective dates of such licenses. 24 25 ‘‘(ii) NOTICES TIVITY.—The OF NONBLANKET AC- mechanical licensing collec- EHF18470 S.L.C. 53 1 tive shall receive notices of nonblanket ac- 2 tivity from significant nonblanket licensees, 3 as provided in paragraph (6)(A). The col- 4 lective shall maintain a current, publicly 5 accessible list of notices of nonblanket ac- 6 tivity that includes contact information for 7 significant nonblanket licensees and the 8 dates of receipt of such notices. 9 ‘‘(G) COLLECTION 10 11 AND DISTRIBUTION OF ROYALTIES.— ‘‘(i) IN GENERAL.—Upon receiving re- 12 ports of usage and payments of royalties 13 from digital music providers for covered 14 activities, the mechanical licensing collec- 15 tive shall— 16 ‘‘(I) engage in efforts to— 17 ‘‘(aa) identify the musical 18 works embodied in sound record- 19 ings reflected in such reports, 20 and the copyright owners of such 21 musical works (and shares there- 22 of); 23 ‘‘(bb) confirm uses of musi- 24 cal works subject to voluntary li- 25 censes and individual download EHF18470 S.L.C. 54 1 licenses, and the corresponding 2 pro rata amounts to be deducted 3 from royalties that would other- 4 wise be due under the blanket li- 5 cense; and 6 ‘‘(cc) confirm proper pay- 7 ment of royalties due; 8 ‘‘(II) distribute royalties to copy- 9 right owners in accordance with the 10 usage and other information contained 11 in such reports, as well as the owner- 12 ship and other information contained 13 in the records of the collective; and 14 ‘‘(III) deposit into an interest- 15 bearing account, as provided in sub- 16 paragraph (H)(ii), royalties that can- 17 not be distributed due to— 18 ‘‘(aa) an inability to identify 19 or locate a copyright owner of a 20 musical work (or share thereof); 21 or 22 ‘‘(bb) a pending dispute be- 23 fore the dispute resolution com- 24 mittee of the mechanical licens- 25 ing collective. EHF18470 S.L.C. 55 1 ‘‘(ii) OTHER COLLECTION EFFORTS.— 2 Any royalties recovered by the mechanical 3 licensing collective as a result of efforts to 4 enforce rights or obligations under a blan- 5 ket license, including through a bankruptcy 6 proceeding or other legal action, shall be 7 distributed to copyright owners based on 8 available usage information and in accord- 9 ance with the procedures described in sub- 10 clauses (I) and (II) of clause (i), on a pro 11 rata basis in proportion to the overall per- 12 centage recovery of the total royalties 13 owed, with any pro rata share of royalties 14 that cannot be distributed deposited in an 15 interest-bearing account as provided in 16 subparagraph (H)(ii). 17 ‘‘(H) 18 19 HOLDING ACCRUED ROYAL- PERIOD.—The mechan- OF TIES.— ‘‘(i) HOLDING 20 ical licensing collective shall hold accrued 21 royalties associated with particular musical 22 works (and shares of works) that remain 23 unmatched for a period of not less than 3 24 years after the date on which the funds 25 were received by the mechanical licensing EHF18470 S.L.C. 56 1 collective, or not less than 3 years after the 2 date on which the funds were accrued by 3 a digital music provider that subsequently 4 transferred such funds to the mechanical 5 licensing collective pursuant to paragraph 6 (10)(B), whichever period expires sooner. 7 ‘‘(ii) INTEREST-BEARING ACCOUNT.— 8 Accrued royalties for unmatched works 9 (and shares thereof) shall be maintained 10 by the mechanical licensing collective in an 11 interest-bearing account that earns month- 12 ly interest— 13 14 ‘‘(I) at the Federal, short-term rate; and 15 ‘‘(II) that accrues for the benefit 16 of copyright owners entitled to pay- 17 ment of such accrued royalties. 18 ‘‘(I) MUSICAL WORKS CLAIMING PROC- 19 ESS.—When 20 matched work (or share of a work) has been 21 identified and located in accordance with the 22 procedures of the mechanical licensing collec- 23 tive, the collective shall— a copyright owner of an un- EHF18470 S.L.C. 57 1 ‘‘(i) update the musical works data- 2 base and the other records of the collective 3 accordingly; and 4 ‘‘(ii) provided that accrued royalties 5 for the musical work (or share thereof) 6 have not yet been included in a distribution 7 pursuant to subparagraph (J)(i), pay such 8 accrued royalties and a proportionate 9 amount of accrued interest associated with 10 that work (or share thereof) to the copy- 11 right owner, accompanied by a cumulative 12 statement of account reflecting usage of 13 such work and accrued royalties based on 14 information provided by digital music pro- 15 viders to the mechanical licensing collec- 16 tive. 17 ‘‘(J) DISTRIBUTION 18 19 OF UNCLAIMED AC- CRUED ROYALTIES.— ‘‘(i) DISTRIBUTION PROCEDURES.— 20 After the expiration of the prescribed hold- 21 ing period for accrued royalties provided in 22 subparagraph (H)(i), the mechanical li- 23 censing collective shall distribute such ac- 24 crued royalties, along with a proportionate 25 share of accrued interest, to copyright EHF18470 S.L.C. 58 1 owners identified in the records of the col- 2 lective, subject to the following require- 3 ments, and in accordance with the policies 4 and procedures established under clause 5 (ii): 6 ‘‘(I) The first such distribution 7 shall occur on or after January 1 of 8 the second full calendar year to com- 9 mence after the license availability 10 date, with not less than 1 such dis- 11 tribution to take place during each 12 calendar year thereafter. 13 ‘‘(II) Copyright owners’ payment 14 shares for unclaimed accrued royalties 15 for particular reporting periods shall 16 be determined in a transparent and 17 equitable manner based on data indi- 18 cating the relative market shares of 19 such copyright owners as reflected in 20 reports of usage provided by digital 21 music providers for covered activities 22 for the periods in question, including, 23 in addition to usage data provided to 24 the mechanical licensing collective, 25 usage data provided to copyright own- EHF18470 S.L.C. 59 1 ers under voluntary licenses and indi- 2 vidual download licenses for covered 3 activities, to the extent such informa- 4 tion is available to the mechanical li- 5 censing collective. In furtherance of 6 the determination of equitable market 7 shares under this subparagraph— 8 ‘‘(aa) the mechanical licens- 9 ing collective may require copy- 10 right owners seeking distribu- 11 tions of unclaimed accrued royal- 12 ties to provide, or direct the pro- 13 vision of, information concerning 14 the usage of musical works under 15 voluntary licenses and individual 16 download licenses for covered ac- 17 tivities; and 18 ‘‘(bb) the mechanical licens- 19 ing collective shall take appro- 20 priate steps to safeguard the con- 21 fidentiality and security of usage, 22 financial, 23 data used to compute market 24 shares in accordance with the 25 confidentiality and other sensitive provisions pre- EHF18470 S.L.C. 60 1 scribed by the Register of Copy- 2 rights under paragraph (12)(C). 3 ‘‘(ii) ESTABLISHMENT OF DISTRIBU- 4 TION POLICIES.—The 5 oversight committee established under sub- 6 paragraph (D)(v) shall establish policies 7 and procedures for the distribution of un- 8 claimed accrued royalties and accrued in- 9 terest in accordance with this subpara- 10 graph, including the provision of usage 11 data to copyright owners to allocate pay- 12 ments and credits to songwriters pursuant 13 to clause (iv), subject to the approval of 14 the board of directors of the mechanical li- 15 censing collective. 16 ‘‘(iii) PUBLIC unclaimed royalties NOTICE OF UNCLAIMED 17 ACCRUED ROYALTIES.—The 18 censing collective shall— mechanical li- 19 ‘‘(I) maintain a publicly acces- 20 sible online facility with contact infor- 21 mation for the collective that lists un- 22 matched musical works (and shares of 23 works), through which a copyright 24 owner may assert an ownership claim EHF18470 S.L.C. 61 1 with respect to such a work (and a 2 share of such a work); 3 ‘‘(II) engage in diligent, good- 4 faith efforts to publicize, throughout 5 the music industry— 6 ‘‘(aa) the existence of the 7 collective and the ability to claim 8 unclaimed accrued royalties for 9 unmatched musical works (and 10 shares of such works) held by the 11 collective; 12 ‘‘(bb) the procedures by 13 which 14 identify themselves and provide 15 contact, ownership, and other rel- 16 evant information to the collec- 17 tive in order to receive payments 18 of accrued royalties; copyright owners may 19 ‘‘(cc) any transfer of ac- 20 crued royalties for musical works 21 under paragraph (10)(B), not 22 later than 180 days after the 23 date on which the transfer is re- 24 ceived; and EHF18470 S.L.C. 62 1 ‘‘(dd) any pending distribu- 2 tion of unclaimed accrued royal- 3 ties and accrued interest, not less 4 than 90 days before the date on 5 which the distribution is made; 6 and 7 ‘‘(III) as appropriate, participate 8 in music industry conferences and 9 events for the purpose of publicizing 10 the matters described in subclause 11 (II). 12 ‘‘(iv) SONGWRITER PAYMENTS.— 13 Copyright owners that receive a distribu- 14 tion of unclaimed accrued royalties and ac- 15 crued interest shall pay or credit a portion 16 to songwriters (or the authorized agents of 17 songwriters) on whose behalf the copyright 18 owners license or administer musical works 19 for covered activities, in accordance with 20 applicable contractual terms, but notwith- 21 standing any agreement to the contrary— 22 ‘‘(I) such payments and credits 23 to songwriters shall be allocated in 24 proportion to reported usage of indi- 25 vidual musical works by digital music EHF18470 S.L.C. 63 1 providers during the reporting periods 2 covered by the distribution from the 3 mechanical licensing collective; and 4 ‘‘(II) in no case shall the pay- 5 ment or credit to an individual song- 6 writer be less than 50 percent of the 7 payment received by the copyright 8 owner attributable to usage of musical 9 works (or shares of works) of that 10 11 songwriter. ‘‘(K) DISPUTE RESOLUTION.—The dispute 12 resolution committee established under subpara- 13 graph (D)(vi) shall establish policies and proce- 14 dures— 15 ‘‘(i) for copyright owners to address in 16 a timely and equitable manner disputes re- 17 lating to ownership interests in musical 18 works licensed under this section and allo- 19 cation and distribution of royalties by the 20 mechanical licensing collective, subject to 21 the approval of the board of directors of 22 the mechanical licensing collective; 23 ‘‘(ii) that shall include a mechanism 24 to hold disputed funds in accordance with 25 the requirements described in subpara- EHF18470 S.L.C. 64 1 graph (H)(ii) pending resolution of the dis- 2 pute; and 3 ‘‘(iii) except as provided in paragraph 4 (11)(D), that shall not affect any legal or 5 equitable rights or remedies available to 6 any copyright owner or songwriter con- 7 cerning ownership of, and entitlement to 8 royalties for, a musical work. 9 ‘‘(L) VERIFICATION 10 11 OF PAYMENTS BY ME- CHANICAL LICENSING COLLECTIVE.— ‘‘(i) VERIFICATION PROCESS.—A 12 copyright owner entitled to receive pay- 13 ments of royalties for covered activities 14 from the mechanical licensing collective 15 may, individually or with other copyright 16 owners, conduct an audit of the mechanical 17 licensing collective to verify the accuracy of 18 royalty payments by the mechanical licens- 19 ing collective to such copyright owner, as 20 follows: 21 ‘‘(I) A copyright owner may 22 audit the mechanical licensing collec- 23 tive only once in a year for any or all 24 of the 3 calendar years preceding the 25 year in which the audit is commenced, EHF18470 S.L.C. 65 1 and may not audit records for any 2 calendar year more than once. 3 ‘‘(II) The audit shall be con- 4 ducted by a qualified auditor, who 5 shall perform the audit during the or- 6 dinary course of business by exam- 7 ining the books, records, and data of 8 the mechanical licensing collective, ac- 9 cording to generally accepted auditing 10 standards and subject to applicable 11 confidentiality 12 scribed by the Register of Copyrights 13 under paragraph (12)(C). requirements pre- 14 ‘‘(III) The mechanical licensing 15 collective shall make such books, 16 records, and data available to the 17 qualified auditor and respond to rea- 18 sonable requests for relevant informa- 19 tion, and shall use commercially rea- 20 sonable efforts to facilitate access to 21 relevant information maintained by 22 third parties. 23 ‘‘(IV) To commence the audit, 24 any copyright owner shall file with the 25 Copyright Office a notice of intent to EHF18470 S.L.C. 66 1 conduct an audit of the mechanical li- 2 censing collective, identifying the pe- 3 riod of time to be audited, and shall 4 simultaneously deliver a copy of such 5 notice to the mechanical licensing col- 6 lective. The Register of Copyrights 7 shall cause the notice of audit to be 8 published in the Federal Register not 9 later than 45 calendar days after the 10 date on which the notice is received. 11 ‘‘(V) The qualified auditor shall 12 determine the accuracy of royalty pay- 13 ments, including whether an under- 14 payment or overpayment of royalties 15 was made by the mechanical licensing 16 collective to each auditing copyright 17 owner, except that, before providing a 18 final audit report to any such copy- 19 right owner, the qualified auditor 20 shall provide a tentative draft of the 21 report to the mechanical licensing col- 22 lective and allow the mechanical li- 23 censing collective a reasonable oppor- 24 tunity to respond to the findings, in- EHF18470 S.L.C. 67 1 cluding by clarifying issues and cor- 2 recting factual errors. 3 ‘‘(VI) The auditing copyright 4 owner or owners shall bear the cost of 5 the audit. In case of an underpayment 6 to any copyright owner, the mechan- 7 ical licensing collective shall pay the 8 amounts of any such underpayment to 9 such auditing copyright owner, as ap- 10 propriate. In case of an overpayment 11 by the mechanical licensing collective, 12 the mechanical licensing collective 13 may debit the account of the auditing 14 copyright owner or owners for such 15 overpaid amounts, or such owner or 16 owners shall refund overpaid amounts 17 to the mechanical licensing collective, 18 as appropriate. 19 ‘‘(ii) ALTERNATIVE VERIFICATION 20 PROCEDURES.—Nothing 21 graph shall preclude a copyright owner and 22 the mechanical licensing collective from 23 agreeing to audit procedures different from 24 those described in this subparagraph, ex- 25 cept that a notice of the audit shall be pro- in this subpara- EHF18470 S.L.C. 68 1 vided to and published by the Copyright 2 Office as described in clause (i)(IV). 3 ‘‘(M) RECORDS 4 5 OF MECHANICAL LICENS- ING COLLECTIVE.— ‘‘(i) RECORDS MAINTENANCE.—The 6 mechanical licensing collective shall ensure 7 that all material records of the operations 8 of the mechanical licensing collective, in- 9 cluding those relating to notices of license, 10 the administration of the claims process of 11 the mechanical licensing collective, reports 12 of usage, royalty payments, receipt and 13 maintenance of accrued royalties, royalty 14 distribution processes, and legal matters, 15 are preserved and maintained in a secure 16 and reliable manner, with appropriate com- 17 mercially reasonable safeguards against 18 unauthorized access, copying, and disclo- 19 sure, and subject to the confidentiality re- 20 quirements prescribed by the Register of 21 Copyrights under paragraph (12)(C) for a 22 period of not less than 7 years after the 23 date of creation or receipt, whichever oc- 24 curs later. EHF18470 S.L.C. 69 1 ‘‘(ii) RECORDS ACCESS.—The mechan- 2 ical 3 prompt access to electronic and other 4 records pertaining to the administration of 5 a copyright owner’s musical works upon 6 reasonable written request of the owner or 7 the authorized representative of the owner. 8 9 10 11 12 13 licensing ‘‘(4) TERMS CENSE.—A collective shall provide AND CONDITIONS OF BLANKET LI- blanket license is subject to, and condi- tioned upon, the following requirements: ‘‘(A) ROYALTY REPORTING AND PAY- MENTS.— ‘‘(i) MONTHLY REPORTS AND PAY- 14 MENT.—A 15 port and pay royalties to the mechanical li- 16 censing collective under the blanket license 17 on a monthly basis in accordance with 18 clause (ii) and subsection (c)(2)(I), except 19 that the monthly reporting shall be due on 20 the date that is 45 calendar days, rather 21 than 20 calendar days, after the end of the 22 monthly reporting period. 23 digital music provider shall re- ‘‘(ii) DATA TO BE REPORTED.—In re- 24 porting usage of musical works to the me- 25 chanical licensing collective, a digital music EHF18470 S.L.C. 70 1 provider shall provide usage data for musi- 2 cal works used under the blanket license 3 and usage data for musical works used in 4 covered activities under voluntary licenses 5 and individual download licenses. In the re- 6 port of usage, the digital music provider 7 shall— 8 9 10 ‘‘(I) with respect to each sound recording embodying a musical work— 11 ‘‘(aa) provide identifying in- 12 formation for the sound record- 13 ing, including sound recording 14 name, featured artist, and, to the 15 extent acquired by the digital 16 music provider in connection with 17 its use of sound recordings of 18 musical works to engage in cov- 19 ered activities, including pursu- 20 ant to subparagraph (B), sound 21 recording copyright owner, pro- 22 ducer, international standard re- 23 cording code, and other informa- 24 tion commonly used in the indus- 25 try to identify sound recordings EHF18470 S.L.C. 71 1 and match them to the musical 2 works the sound recordings em- 3 body; 4 ‘‘(bb) to the extent acquired 5 by the digital music provider in 6 the metadata provided by sound 7 recording copyright owners or 8 other licensors of sound record- 9 ings in connection with the use of 10 sound 11 works to engage in covered activi- 12 ties, including pursuant to sub- 13 paragraph (B), provide informa- 14 tion concerning authorship and 15 ownership of the applicable rights 16 in the musical work embodied in 17 the sound recording (including 18 each songwriter, publisher name, 19 and respective ownership share) 20 and the international standard 21 musical work code; and recordings of musical 22 ‘‘(cc) provide the number of 23 digital phonorecord deliveries of 24 the sound recording, including EHF18470 S.L.C. 72 1 limited downloads and interactive 2 streams; 3 ‘‘(II) identify and provide contact 4 information for all musical work copy- 5 right owners for works embodied in 6 sound recordings as to which a vol- 7 untary license, rather than the blan- 8 ket license, is in effect with respect to 9 the uses being reported; and 10 ‘‘(III) provide such other infor- 11 mation as the Register of Copyrights 12 shall require by regulation. 13 ‘‘(iii) FORMAT AND MAINTENANCE OF 14 REPORTS.—Reports 15 digital music providers to the mechanical 16 licensing collective shall be in a machine- 17 readable format that is compatible with the 18 information technology systems of the me- 19 chanical licensing collective and meets the 20 requirements of regulations adopted by the 21 Register of Copyrights. The Register shall 22 also adopt regulations setting forth re- 23 quirements under which records of use 24 shall be maintained and made available to 25 the mechanical licensing collective by dig- of usage provided by EHF18470 S.L.C. 73 1 ital music providers engaged in covered ac- 2 tivities under a blanket license. 3 ‘‘(iv) ADOPTION OF REGULATIONS.— 4 The Register of Copyrights shall adopt 5 regulations— 6 ‘‘(I) setting forth requirements 7 under which records of use shall be 8 maintained and made available to the 9 mechanical licensing collective by dig- 10 ital music providers engaged in cov- 11 ered activities under a blanket license; 12 and 13 ‘‘(II) regarding adjustments to 14 reports of usage by digital music pro- 15 viders, including mechanisms to ac- 16 count for overpayment and under- 17 payment of royalties in prior periods. 18 ‘‘(B) COLLECTION OF SOUND RECORDING 19 INFORMATION.—A 20 engage in good-faith, commercially reasonable 21 efforts to obtain from sound recording copy- 22 right owners and other licensors of sound re- 23 cordings made available through the service of 24 such digital music provider information con- 25 cerning— digital music provider shall EHF18470 S.L.C. 74 1 ‘‘(i) sound recording copyright owners, 2 producers, international standard recording 3 codes, and other information commonly 4 used in the industry to identify sound re- 5 cordings and match them to the musical 6 works the sound recordings embody; and 7 ‘‘(ii) the authorship and ownership of 8 musical works, including songwriters, pub- 9 lisher names, ownership shares, and inter- 10 national standard musical work codes. 11 ‘‘(C) PAYMENT OF ADMINISTRATIVE AS- 12 SESSMENT.—A 13 significant nonblanket licensee shall pay the ad- 14 ministrative assessment established under para- 15 graph (7)(D) in accordance with this subsection 16 and applicable regulations. 17 18 19 digital music provider and any ‘‘(D) VERIFICATION OF PAYMENTS BY DIG- ITAL MUSIC PROVIDERS.— ‘‘(i) VERIFICATION PROCESS.—The 20 mechanical licensing collective may conduct 21 an audit of a digital music provider oper- 22 ating under the blanket license to verify 23 the accuracy of royalty payments by the 24 digital music provider to the mechanical li- 25 censing collective as follows: EHF18470 S.L.C. 75 1 ‘‘(I) The mechanical licensing 2 collective may commence an audit of a 3 digital music provider not more fre- 4 quently than once in any 3-calendar- 5 year period to cover a verification pe- 6 riod of not more than the 3 full cal- 7 endar years preceding the date of 8 commencement of the audit, and such 9 audit may not audit records for any 10 such 3-year verification period more 11 than once. 12 ‘‘(II) The audit shall be con- 13 ducted by a qualified auditor, who 14 shall perform the audit during the or- 15 dinary course of business by exam- 16 ining the books, records, and data of 17 the digital music provider, according 18 to generally accepted auditing stand- 19 ards and subject to applicable con- 20 fidentiality requirements prescribed by 21 the Register of Copyrights under 22 paragraph (12)(C). 23 ‘‘(III) The digital music provider 24 shall make such books, records, and 25 data available to the qualified auditor EHF18470 S.L.C. 76 1 and respond to reasonable requests 2 for relevant information, and shall use 3 commercially reasonable efforts to 4 provide access to relevant information 5 maintained with respect to a digital 6 music provider by third parties. 7 ‘‘(IV) To commence the audit, 8 the mechanical licensing collective 9 shall file with the Copyright Office a 10 notice of intent to conduct an audit of 11 the digital music provider, identifying 12 the period of time to be audited, and 13 shall simultaneously deliver a copy of 14 such notice to the digital music pro- 15 vider. The Register of Copyrights 16 shall cause the notice of audit to be 17 published in the Federal Register not 18 later than 45 calendar days after the 19 date on which notice is received. 20 ‘‘(V) The qualified auditor shall 21 determine the accuracy of royalty pay- 22 ments, including whether an under- 23 payment or overpayment of royalties 24 was made by the digital music pro- 25 vider to the mechanical licensing col- EHF18470 S.L.C. 77 1 lective, except that, before providing a 2 final audit report to the mechanical li- 3 censing collective, the qualified audi- 4 tor shall provide a tentative draft of 5 the report to the digital music pro- 6 vider and allow the digital music pro- 7 vider a reasonable opportunity to re- 8 spond to the findings, including by 9 clarifying issues and correcting factual 10 errors. 11 ‘‘(VI) The mechanical licensing 12 collective shall pay the cost of the 13 audit, unless the qualified auditor de- 14 termines that there was an under- 15 payment by the digital music provider 16 of not less than 10 percent, in which 17 case the digital music provider shall 18 bear the reasonable costs of the audit, 19 in addition to paying the amount of 20 any underpayment to the mechanical 21 licensing collective. In case of an over- 22 payment by the digital music provider, 23 the mechanical licensing collective 24 shall provide a credit to the account 25 of the digital music provider. EHF18470 S.L.C. 78 1 ‘‘(VII) A digital music provider 2 may not assert section 507 or any 3 other Federal or State statute of limi- 4 tations, doctrine of laches or estoppel, 5 or similar provision as a defense to a 6 legal action arising from an audit 7 under this subparagraph if such legal 8 action is commenced not more than 6 9 years after the commencement of the 10 audit that is the basis for such action. 11 ‘‘(ii) ALTERNATIVE VERIFICATION 12 PROCEDURES.—Nothing 13 graph shall preclude the mechanical licens- 14 ing collective and a digital music provider 15 from agreeing to audit procedures different 16 from those described in this subparagraph, 17 except that a notice of the audit shall be 18 provided to and published by the Copyright 19 Office as described in clause (i)(IV). 20 ‘‘(E) 21 CENSE.— 22 DEFAULT in this subpara- UNDER ‘‘(i) CONDITIONS OF BLANKET LI- DEFAULT.—A 23 digital music provider shall be in default 24 under a blanket license if the digital music 25 provider— EHF18470 S.L.C. 79 1 ‘‘(I) fails to provide 1 or more 2 monthly reports of usage to the me- 3 chanical licensing collective when due; 4 ‘‘(II) fails to make a monthly 5 royalty or late fee payment to the me- 6 chanical licensing collective when due, 7 in all or material part; 8 ‘‘(III) provides 1 or more month- 9 ly reports of usage to the mechanical 10 licensing collective that, on the whole, 11 is or are materially deficient as a re- 12 sult 13 unreadable data, where the correct 14 data was available to the digital music 15 provider and required to be reported 16 under this section and applicable reg- 17 ulations; of inaccurate, missing, or 18 ‘‘(IV) fails to pay the administra- 19 tive assessment as required under this 20 subsection and applicable regulations; 21 or 22 ‘‘(V) after being provided written 23 notice by the mechanical licensing col- 24 lective, refuses to comply with any 25 other material term or condition of EHF18470 S.L.C. 80 1 the blanket license under this section 2 for a period of not less than 60 cal- 3 endar days. 4 ‘‘(ii) NOTICE OF DEFAULT AND TER- 5 MINATION.—In 6 ital music provider, the mechanical licens- 7 ing collective may proceed to terminate the 8 blanket license of the digital music pro- 9 vider as follows: case of a default by a dig- 10 ‘‘(I) The mechanical licensing 11 collective shall provide written notice 12 to the digital music provider describ- 13 ing with reasonable particularity the 14 default and advising that unless such 15 default is cured not later than 60 cal- 16 endar days after the date of the no- 17 tice, the blanket license will automati- 18 cally terminate at the end of that pe- 19 riod. 20 ‘‘(II) If the digital music provider 21 fails to remedy the default before the 22 end of the 60-day period described in 23 subclause (I), the license shall termi- 24 nate without any further action on the 25 part of the mechanical licensing col- EHF18470 S.L.C. 81 1 lective. Such termination renders the 2 making of all digital phonorecord de- 3 liveries of all musical works (and 4 shares thereof) covered by the blanket 5 license for which the royalty or ad- 6 ministrative assessment has not been 7 paid actionable as acts of infringe- 8 ment under section 501 and subject to 9 the remedies provided by sections 502 10 through 506. 11 ‘‘(iii) NOTICE TO COPYRIGHT OWN- 12 ERS.—The 13 shall provide written notice of any termi- 14 nation under this subparagraph to copy- 15 right owners of affected works. 16 mechanical licensing collective ‘‘(iv) REVIEW BY FEDERAL DISTRICT 17 COURT.—A 18 lieves a blanket license was improperly ter- 19 minated by the mechanical licensing collec- 20 tive may seek review of such termination in 21 an appropriate district court of the United 22 States. The district court shall determine 23 the matter de novo based on the record be- 24 fore the mechanical licensing collective and digital music provider that be- EHF18470 S.L.C. 82 1 any additional supporting evidence pre- 2 sented by the parties. 3 ‘‘(5) DIGITAL 4 ‘‘(A) IN 5 LICENSEE COORDINATOR.— GENERAL.—The digital licensee coordinator shall be a single entity that— 6 ‘‘(i) is a nonprofit, not owned by any 7 other entity, that is created to carry out 8 responsibilities under this subsection; 9 ‘‘(ii) is endorsed by and enjoys sub- 10 stantial support from digital music pro- 11 viders and significant nonblanket licensees 12 that together represent the greatest per- 13 centage of the licensee market for uses of 14 musical works in covered activities, as 15 measured over the preceding 3 calendar 16 years; 17 ‘‘(iii) is able to demonstrate that it 18 has, or will have prior to the license avail- 19 ability date, the administrative capabilities 20 to perform the required functions of the 21 digital licensee coordinator under this sub- 22 section; and 23 ‘‘(iv) has been designated by the Reg- 24 ister of Copyrights, with the approval of 25 the Librarian of Congress pursuant to sec- EHF18470 S.L.C. 83 1 tion 702, in accordance with subparagraph 2 (B). 3 ‘‘(B) DESIGNATION 4 5 OF DIGITAL LICENSEE COORDINATOR.— ‘‘(i) INITIAL DESIGNATION.—The 6 Register of Copyrights shall initially des- 7 ignate the digital licensee coordinator not 8 later than 270 days after the enactment 9 date, in accordance with the same proce- 10 dure described for designation of the me- 11 chanical licensing collective in paragraph 12 (3)(B)(i). 13 ‘‘(ii) PERIODIC REVIEW OF DESIGNA- 14 TION.—Following 15 the digital licensee coordinator, the Reg- 16 ister of Copyrights shall, every 5 years, be- 17 ginning with the fifth full calendar year to 18 commence after the initial designation, de- 19 termine whether the existing designation 20 should be continued, or a different entity 21 meeting the criteria described in clauses (i) 22 through (iii) of subparagraph (A) should 23 be designated, in accordance with the same 24 procedure described for the mechanical li- 25 censing collective in paragraph (3)(B)(ii). the initial designation of EHF18470 S.L.C. 84 1 ‘‘(iii) INABILITY TO DESIGNATE.—If 2 the Register of Copyrights is unable to 3 identify an entity that fulfills each of the 4 qualifications 5 through (iii) of subparagraph (A) to serve 6 as the digital licensee coordinator, the Reg- 7 ister may decline to designate a digital li- 8 censee coordinator. The determination of 9 the Register not to designate a digital li- 10 censee coordinator shall not negate or oth- 11 erwise affect any provision of this sub- 12 section except to the limited extent that a 13 provision references the digital licensee co- 14 ordinator. In such case, the reference to 15 the digital licensee coordinator shall be 16 without effect unless and until a new dig- 17 ital licensee coordinator is designated. 18 ‘‘(C) AUTHORITIES 19 ‘‘(i) IN described in clauses (i) AND FUNCTIONS.— GENERAL.—The digital li- 20 censee coordinator is authorized to perform 21 the following functions, subject to more 22 particular requirements as described in 23 this subsection: 24 25 ‘‘(I) Establish a governance structure, criteria for membership, EHF18470 S.L.C. 85 1 and any dues to be paid by its mem- 2 bers. 3 ‘‘(II) Engage in efforts to enforce 4 notice and payment obligations with 5 respect to the administrative assess- 6 ment, including by receiving informa- 7 tion from and coordinating with the 8 mechanical licensing collective. 9 ‘‘(III) Initiate and participate in 10 proceedings before the Copyright Roy- 11 alty Judges to establish the adminis- 12 trative assessment under this sub- 13 section. 14 ‘‘(IV) Initiate and participate in 15 proceedings before the Copyright Of- 16 fice with respect to activities under 17 this subsection. 18 ‘‘(V) Gather and provide docu- 19 mentation for use in proceedings be- 20 fore the Copyright Royalty Judges to 21 set rates and terms under this section. 22 ‘‘(VI) Maintain records of its ac- 23 tivities. 24 ‘‘(VII) Assist in publicizing the 25 existence of the mechanical licensing EHF18470 S.L.C. 86 1 collective and the ability of copyright 2 owners to claim royalties for un- 3 matched musical works (and shares of 4 works) through the collective. 5 ‘‘(VIII) Engage in such other ac- 6 tivities as may be necessary or appro- 7 priate to fulfill its responsibilities 8 under this subsection. 9 ‘‘(ii) RESTRICTION ON LOBBYING.— 10 The digital licensee coordinator may not 11 engage in government lobbying activities, 12 but may engage in the activities described 13 in subclauses (III), (IV), and (V) of clause 14 (i). 15 ‘‘(iii) ASSISTANCE WITH PUBLICITY 16 FOR UNCLAIMED ROYALTIES.—The 17 licensee coordinator shall make reasonable, 18 good-faith efforts to assist the mechanical 19 licensing collective in the efforts of the col- 20 lective to locate and identify copyright 21 owners of unmatched musical works (and 22 shares of such works) by encouraging dig- 23 ital music providers to publicize the exist- 24 ence of the collective and the ability of digital EHF18470 S.L.C. 87 1 copyright owners to claim unclaimed ac- 2 crued royalties, including by— 3 ‘‘(I) posting contact information 4 for the collective at reasonably promi- 5 nent locations on digital music pro- 6 vider websites and applications; and 7 8 9 10 11 12 ‘‘(II) conducting in-person outreach activities with songwriters. ‘‘(6) REQUIREMENTS FOR SIGNIFICANT NON- BLANKET LICENSEES.— ‘‘(A) IN GENERAL.— ‘‘(i) NOTICE OF ACTIVITY.—Not later 13 than 45 calendar days after the license 14 availability date, or 45 calendar days after 15 the end of the first full calendar month in 16 which an entity initially qualifies as a sig- 17 nificant nonblanket licensee, whichever oc- 18 curs later, a significant nonblanket licensee 19 shall submit a notice of nonblanket activity 20 to the mechanical licensing collective. The 21 notice of nonblanket activity shall comply 22 in form and substance with requirements 23 that the Register of Copyrights shall estab- 24 lish by regulation, and a copy shall be EHF18470 S.L.C. 88 1 made available to the digital licensee coor- 2 dinator. 3 ‘‘(ii) REPORTING AND PAYMENT OBLI- 4 GATIONS.—The 5 ity submitted to the mechanical licensing 6 collective shall be accompanied by a report 7 of usage that contains the information de- 8 scribed in paragraph (4)(A)(ii), as well as 9 any payment of the administrative assess- 10 ment required under this subsection and 11 applicable regulations. Thereafter, subject 12 to clause (iii), a significant nonblanket li- 13 censee shall continue to provide monthly 14 reports of usage, accompanied by any re- 15 quired payment of the administrative as- 16 sessment, to the mechanical licensing col- 17 lective. Such reports and payments shall be 18 submitted not later than 45 calendar days 19 after the end of the calendar month being 20 reported. 21 notice of nonblanket activ- ‘‘(iii) DISCONTINUATION OF OBLIGA- 22 TIONS.—An 23 notice of nonblanket activity to the me- 24 chanical licensing collective that has ceased 25 to qualify as a significant nonblanket li- entity that has submitted a EHF18470 S.L.C. 89 1 censee may so notify the collective in writ- 2 ing. In such case, as of the calendar month 3 in which such notice is provided, such enti- 4 ty shall no longer be required to provide 5 reports of usage or pay the administrative 6 assessment, but if such entity later quali- 7 fies as a significant nonblanket licensee, 8 such entity shall again be required to com- 9 ply with clauses (i) and (ii). 10 ‘‘(B) REPORTING BY MECHANICAL LICENS- 11 ING COLLECTIVE TO DIGITAL LICENSEE COOR- 12 DINATOR.— 13 ‘‘(i) MONTHLY REPORTS OF NON- 14 COMPLIANT LICENSEES.—The 15 licensing collective shall provide monthly 16 reports to the digital licensee coordinator 17 setting forth any significant nonblanket li- 18 censees of which the collective is aware 19 that have failed to comply with subpara- 20 graph (A). 21 ‘‘(ii) TREATMENT mechanical OF CONFIDENTIAL 22 INFORMATION.—The 23 collective and digital licensee coordinator 24 shall take appropriate steps to safeguard 25 the confidentiality and security of financial mechanical licensing EHF18470 S.L.C. 90 1 and other sensitive data shared under this 2 subparagraph, in accordance with the con- 3 fidentiality requirements prescribed by the 4 Register of Copyrights under paragraph 5 (12)(C). 6 ‘‘(C) LEGAL 7 ‘‘(i) ENFORCEMENT EFFORTS.— FEDERAL COURT ACTION.— 8 Should the mechanical licensing collective 9 or digital licensee coordinator become 10 aware that a significant nonblanket li- 11 censee has failed to comply with subpara- 12 graph (A), either may commence an action 13 in an appropriate district court of the 14 United States for damages and injunctive 15 relief. If the significant nonblanket licensee 16 is found liable, the court shall, absent a 17 finding of excusable neglect, award dam- 18 ages in an amount equal to three times the 19 total amount of the unpaid administrative 20 assessment and, notwithstanding anything 21 to the contrary in section 505, reasonable 22 attorney’s fees and costs, as well as such 23 other relief as the court determines appro- 24 priate. In all other cases, the court shall 25 award relief as appropriate. Any recovery EHF18470 S.L.C. 91 1 of damages shall be payable to the me- 2 chanical licensing collective as an offset to 3 the collective total costs. 4 ‘‘(ii) STATUTE OF LIMITATIONS FOR 5 ENFORCEMENT ACTION.—Any 6 scribed in this subparagraph shall be com- 7 menced within the time period described in 8 section 507(b). 9 ‘‘(iii) OTHER action de- RIGHTS AND REMEDIES 10 PRESERVED.—The 11 ical licensing collective or digital licensee 12 coordinator to bring an action under this 13 subparagraph shall in no way alter, limit 14 or negate any other right or remedy that 15 may be available to any party at law or in 16 equity. 17 ‘‘(7) FUNDING 18 19 20 OF ability of the mechan- MECHANICAL LICENSING COLLECTIVE.— ‘‘(A) IN GENERAL.—The collective total costs shall be funded by— 21 ‘‘(i) an administrative assessment, as 22 such assessment is established by the 23 Copyright Royalty Judges pursuant to sub- 24 paragraph (D) from time to time, to be 25 paid by— EHF18470 S.L.C. 92 1 ‘‘(I) digital music providers that 2 are engaged, in all or in part, in cov- 3 ered activities pursuant to a blanket 4 license; and 5 ‘‘(II) significant nonblanket li- 6 censees; and 7 ‘‘(ii) voluntary contributions from dig- 8 ital music providers and significant non- 9 blanket licensees as may be agreed with 10 copyright owners. 11 ‘‘(B) VOLUNTARY 12 CONTRIBUTIONS.— ‘‘(i) AGREEMENTS CONCERNING CON- 13 TRIBUTIONS.—Except 14 clause (ii), voluntary contributions by dig- 15 ital music providers and significant non- 16 blanket licensees shall be determined by 17 private negotiation and agreement, and the 18 following conditions apply: as provided in 19 ‘‘(I) The date and amount of 20 each voluntary contribution to the me- 21 chanical licensing collective shall be 22 documented in a writing signed by an 23 authorized agent of the mechanical li- 24 censing collective and the contributing 25 party. EHF18470 S.L.C. 93 1 ‘‘(II) Such agreement shall be 2 made available as required in pro- 3 ceedings before the Copyright Royalty 4 Judges to establish or adjust the ad- 5 ministrative assessment in accordance 6 with applicable statutory and regu- 7 latory provisions and rulings of the 8 Copyright Royalty Judges. 9 ‘‘(ii) TREATMENT OF CONTRIBU- 10 TIONS.—Each 11 scribed in clause (i) shall be treated for 12 purposes of an administrative assessment 13 proceeding as an offset to the collective 14 total costs that would otherwise be recov- 15 ered through the administrative assess- 16 ment. Any allocation or reallocation of vol- 17 untary contributions between or among in- 18 dividual digital music providers or signifi- 19 cant nonblanket licensees shall be a matter 20 of 21 among such parties and outside the scope 22 of the administrative assessment pro- 23 ceeding. 24 ‘‘(C) INTERIM 25 private ROYALTIES.—In voluntary contribution de- negotiation and agreement APPLICATION OF ACCRUED the event that the administra- EHF18470 S.L.C. 94 1 tive assessment, together with any funding from 2 voluntary contributions as provided in subpara- 3 graphs (A) and (B), is inadequate to cover cur- 4 rent collective total costs, the collective, with 5 approval of its board of directors, may apply 6 unclaimed accrued royalties on an interim basis 7 to defray such costs, subject to future reim- 8 bursement of such royalties from future collec- 9 tions of the assessment. 10 11 12 ‘‘(D) DETERMINATION OF ADMINISTRA- TIVE ASSESSMENT.— ‘‘(i) ADMINISTRATIVE ASSESSMENT TO 13 COVER COLLECTIVE TOTAL COSTS.—The 14 administrative assessment shall be used 15 solely and exclusively to fund the collective 16 total costs. 17 ‘‘(ii) SEPARATE PROCEEDING BEFORE 18 COPYRIGHT 19 amount and terms of the administrative 20 assessment shall be determined and estab- 21 lished in a separate and independent pro- 22 ceeding before the Copyright Royalty 23 Judges, according to the procedures de- 24 scribed in clauses (iii) and (iv). The admin- ROYALTY JUDGES.—The EHF18470 S.L.C. 95 1 istrative assessment determined in such 2 proceeding shall— 3 ‘‘(I) be wholly independent of 4 royalty rates and terms applicable to 5 digital music providers, which shall 6 not be taken into consideration in any 7 manner in establishing the adminis- 8 trative assessment; 9 ‘‘(II) be established by the Copy- 10 right Royalty Judges in an amount 11 that is calculated to defray the rea- 12 sonable collective total costs; 13 ‘‘(III) be assessed based on usage 14 of musical works by digital music pro- 15 viders and significant nonblanket li- 16 censees in covered activities under 17 both compulsory and nonblanket li- 18 censes; 19 ‘‘(IV) may be in the form of a 20 percentage of royalties payable under 21 this section for usage of musical 22 works in covered activities (regardless 23 of whether a different rate applies 24 under a voluntary license), or any 25 other usage-based metric reasonably EHF18470 S.L.C. 96 1 calculated to equitably allocate the 2 collective total costs across digital 3 music providers and significant non- 4 blanket licensees engaged in covered 5 activities, and shall include as a com- 6 ponent a minimum fee for all digital 7 music providers and significant non- 8 blanket licensees; and 9 ‘‘(V) take into consideration an- 10 ticipated future collective total costs 11 and collections of the administrative 12 assessment, including, as applicable— 13 ‘‘(aa) any portion of past ac- 14 tual collective total costs of the 15 mechanical 16 not funded by previous collections 17 of the administrative assessment 18 or voluntary contributions be- 19 cause such collections or con- 20 tributions together were insuffi- 21 cient to fund such costs; 22 licensing collective ‘‘(bb) any past collections of 23 the 24 and voluntary contributions that 25 exceeded past actual collective administrative assessment EHF18470 S.L.C. 97 1 total costs, resulting in a surplus; 2 and 3 ‘‘(cc) the amount of any vol- 4 untary contributions by digital 5 music providers or significant 6 nonblanket licensees in relevant 7 periods, described in subpara- 8 graphs (A) and (B) of paragraph 9 (7). 10 ‘‘(iii) INITIAL ADMINISTRATIVE AS- 11 SESSMENT.—The 12 lishing the initial administrative assess- 13 ment shall be as follows: procedure for estab- 14 ‘‘(I) Not later than 270 days 15 after the enactment date, the Copy- 16 right Royalty Judges shall commence 17 a proceeding to establish the initial 18 administrative assessment by pub- 19 lishing a notice in the Federal Reg- 20 ister seeking petitions to participate. 21 ‘‘(II) The mechanical licensing 22 collective and digital licensee coordi- 23 nator shall participate in the pro- 24 ceeding described in subclause (I), 25 along with any interested copyright EHF18470 S.L.C. 98 1 owners, digital music providers or sig- 2 nificant 3 have notified the Copyright Royalty 4 Judges of their desire to participate. nonblanket licensees that 5 ‘‘(III) The Copyright Royalty 6 Judges shall establish a schedule for 7 submission by the parties of informa- 8 tion that may be relevant to estab- 9 lishing the administrative assessment, 10 including actual and anticipated col- 11 lective total costs of the mechanical li- 12 censing collective, actual and antici- 13 pated collections from digital music 14 providers and significant nonblanket 15 licensees, and documentation of vol- 16 untary contributions, as well as a 17 schedule 18 which shall include a hearing, as the 19 Copyright Royalty Judges determine 20 appropriate. for further proceedings, 21 ‘‘(IV) The initial administrative 22 assessment shall be determined, and 23 such determination shall be published 24 in the Federal Register by the Copy- 25 right Royalty Judges, not later than 1 EHF18470 S.L.C. 99 1 year after commencement of the pro- 2 ceeding described in this clause. The 3 determination shall be supported by a 4 written record. The initial administra- 5 tive assessment shall be effective as of 6 the license availability date, and shall 7 continue in effect unless and until an 8 adjusted administrative assessment is 9 established pursuant to an adjustment 10 proceeding under clause (iv). 11 ‘‘(iv) ADJUSTMENT OF ADMINISTRA- 12 TIVE 13 assessment may be adjusted by the Copy- 14 right Royalty Judges periodically, in ac- 15 cordance with the following procedures: ASSESSMENT.—The administrative 16 ‘‘(I) Not earlier than 1 year after 17 the most recent publication of a deter- 18 mination of the administrative assess- 19 ment 20 Judges, the mechanical licensing col- 21 lective, the digital licensee coordi- 22 nator, or one or more interested copy- 23 right owners, digital music providers, 24 or significant nonblanket licensees, 25 may file a petition with the Copyright by the Copyright Royalty EHF18470 S.L.C. 100 1 Royalty Judges in the month of May 2 to commence a proceeding to adjust 3 the administrative assessment. 4 ‘‘(II) Notice of the commence- 5 ment of such proceeding shall be pub- 6 lished in the Federal Register in the 7 month of June following the filing of 8 any petition, with a schedule of re- 9 quested information and additional 10 proceedings, as described in clause 11 (iii)(III). The mechanical licensing 12 collective and digital licensee coordi- 13 nator shall participate in such pro- 14 ceeding, along with any interested 15 copyright owners, digital music pro- 16 viders, or significant nonblanket li- 17 censees that have notified the Copy- 18 right Royalty Judges of their desire to 19 participate. 20 ‘‘(III) The determination of the 21 adjusted administrative assessment, 22 which shall be supported by a written 23 record, shall be published in the Fed- 24 eral Register during June of the cal- 25 endar year following the commence- EHF18470 S.L.C. 101 1 ment of the proceeding. The adjusted 2 administrative assessment shall take 3 effect January 1 of the year following 4 such publication. 5 ‘‘(v) ADOPTION OF VOLUNTARY 6 AGREEMENTS.—In 7 own determination based on evaluation of 8 relevant 9 Judges shall approve and adopt a nego- 10 tiated agreement to establish the amount 11 and terms of the administrative assessment 12 that has been agreed to by the mechanical 13 licensing collective and the digital licensee 14 coordinator (or if none has been des- 15 ignated, interested digital music providers 16 and significant nonblanket licensees rep- 17 resenting more than half of the market for 18 uses of musical works in covered activi- 19 ties), except that the Copyright Royalty 20 Judges shall have the discretion to reject 21 any such agreement for good cause shown. 22 An 23 under this clause shall apply to all digital 24 music providers and significant nonblanket 25 licensees engaged in covered activities dur- data, lieu of reaching their the administrative Copyright assessment Royalty adopted EHF18470 S.L.C. 102 1 ing the period the administrative assess- 2 ment is in effect. 3 ‘‘(vi) CONTINUING AUTHORITY TO 4 AMEND.—The 5 shall retain continuing authority to amend 6 a determination of an administrative as- 7 sessment to correct technical or clerical er- 8 rors, or modify the terms of implementa- 9 tion, for good cause, with any such amend- 10 ment to be published in the Federal Reg- 11 ister. Copyright Royalty Judges 12 ‘‘(vii) APPEAL 13 ASSESSMENT.—The 14 administrative assessment by the Copy- 15 right Royalty Judges shall be appealable, 16 not later than 30 calendar days after pub- 17 lication in the Federal Register, to the 18 Court of Appeals for the District of Co- 19 lumbia Circuit by any party that fully par- 20 ticipated in the proceeding. The adminis- 21 trative assessment as established by the 22 Copyright Royalty Judges shall remain in 23 effect pending the final outcome of any 24 such appeal, and the mechanical licensing 25 collective, digital licensee coordinator, dig- OF ADMINISTRATIVE determination of an EHF18470 S.L.C. 103 1 ital music providers, and significant non- 2 blanket licensees shall implement appro- 3 priate financial or other measures not later 4 than 90 days after any modification of the 5 assessment to reflect and account for such 6 outcome. 7 ‘‘(viii) REGULATIONS.—The Copyright 8 Royalty Judges may adopt regulations to 9 govern the conduct of proceedings under 10 11 12 13 this paragraph. ‘‘(8) ESTABLISHMENT OF RATES AND TERMS UNDER BLANKET LICENSE.— ‘‘(A) RESTRICTIONS ON RATESETTING 14 PARTICIPATION.—Neither 15 censing collective nor the digital licensee coordi- 16 nator shall be a party to a proceeding described 17 in subsection (c)(1)(E), except that the mechan- 18 ical licensing collective or the digital licensee co- 19 ordinator may gather and provide financial and 20 other information for the use of a party to such 21 a proceeding and comply with requests for in- 22 formation as required under applicable statu- 23 tory and regulatory provisions and rulings of 24 the Copyright Royalty Judges. the mechanical li- EHF18470 S.L.C. 104 1 ‘‘(B) APPLICATION OF LATE FEES.—In 2 any proceeding described in subparagraph (A) 3 in which the Copyright Royalty Judges estab- 4 lish a late fee for late payment of royalties for 5 uses of musical works under this section, such 6 fee shall apply to covered activities under blan- 7 ket licenses, as follows: 8 ‘‘(i) Late fees for past due royalty 9 payments shall accrue from the due date 10 for payment until payment is received by 11 the mechanical licensing collective. 12 ‘‘(ii) The availability of late fees shall 13 in no way prevent a copyright owner or the 14 mechanical licensing collective from assert- 15 ing any other rights or remedies to which 16 such copyright owner or the mechanical li- 17 censing collective may be entitled under 18 this title. 19 ‘‘(C) INTERIM RATE AGREEMENTS IN GEN- 20 ERAL.—For 21 rate or terms have been established by the 22 Copyright Royalty Judges, the mechanical li- 23 censing collective and any digital music provider 24 may agree to an interim rate and terms for any covered activity for which no EHF18470 S.L.C. 105 1 such activity under the blanket license, and any 2 such rate and terms— 3 ‘‘(i) shall be treated as nonpreceden- 4 tial and not cited or relied upon in any 5 ratesetting proceeding before the Copyright 6 Royalty Judges or any other tribunal; and 7 ‘‘(ii) shall automatically expire upon 8 the establishment of a rate and terms for 9 such covered activity by the Copyright 10 Royalty 11 (c)(1)(E). 12 ‘‘(D) Judges, ADJUSTMENTS under FOR subsection INTERIM 13 RATES.—The 14 Copyright Royalty Judges for a covered activity 15 to which an interim rate and terms have been 16 agreed under subparagraph (C) shall supersede 17 the interim rate and terms and apply retro- 18 actively to the inception of the activity under 19 the blanket license. In such case, not later than 20 90 days after the effective date of the rate and 21 terms established by the Copyright Royalty 22 Judges— rate and terms established by the 23 ‘‘(i) if the rate established by the 24 Copyright Royalty Judges exceeds the in- 25 terim rate, the digital music provider shall EHF18470 S.L.C. 106 1 pay to the mechanical licensing collective 2 the amount of any underpayment of royal- 3 ties due; or 4 ‘‘(ii) if the interim rate exceeds the 5 rate established by the Copyright Royalty 6 Judges, the mechanical licensing collective 7 shall credit the account of the digital music 8 provider for the amount of any overpay- 9 ment of royalties due. 10 11 ‘‘(9) TRANSITION TO BLANKET LICENSES.— ‘‘(A) SUBSTITUTION OF BLANKET LI- 12 CENSE.—On 13 blanket license shall, without any interruption 14 in license authority enjoyed by such digital 15 music provider, be automatically substituted for 16 and supersede any existing compulsory license 17 previously obtained under this section by the 18 digital music provider from a copyright owner 19 to engage in 1 or more covered activities with 20 respect to a musical work, except that such sub- 21 stitution shall not apply to any authority ob- 22 tained from a record company pursuant to a 23 compulsory license to make and distribute per- 24 manent downloads unless and until such record 25 company terminates such authority in writing the license availability date, a EHF18470 S.L.C. 107 1 to take effect at the end of a monthly reporting 2 period, with a copy to the mechanical licensing 3 collective. 4 ‘‘(B) EXPIRATION OF EXISTING LI- 5 CENSES.—Except 6 paragraph (A), on and after the license avail- 7 ability date, licenses other than individual 8 download licenses obtained under this section 9 for covered activities prior to the license avail- 10 11 to the extent provided in sub- ability date shall no longer continue in effect. ‘‘(C) TREATMENT OF VOLUNTARY LI- 12 CENSES.—A 13 tivity in effect on the license availability date 14 will remain in effect unless and until the vol- 15 untary license expires according to the terms of 16 the voluntary license, or the parties agree to 17 amend or terminate the voluntary license. In a 18 case where a voluntary license for a covered ac- 19 tivity entered into before the license availability 20 date incorporates the terms of this section by 21 reference, the terms so incorporated (but not 22 the rates) shall be those in effect immediately 23 prior to the license availability date, and those 24 terms shall continue to apply unless and until 25 such voluntary license is terminated or amend- voluntary license for a covered ac- EHF18470 S.L.C. 108 1 ed, or the parties enter into a new voluntary li- 2 cense. 3 ‘‘(D) FURTHER ACCEPTANCE OF NOTICES 4 FOR COVERED ACTIVITIES BY COPYRIGHT OF- 5 FICE.—On and after the enactment date— 6 ‘‘(i) the Copyright Office shall no 7 longer accept notices of intention with re- 8 spect to covered activities; and 9 ‘‘(ii) notices of intention filed before 10 the enactment date will no longer be effec- 11 tive or provide license authority with re- 12 spect to covered activities, except that, be- 13 fore the license availability date, there shall 14 be no liability under section 501 for the re- 15 production or distribution of a musical 16 work (or share thereof) in covered activi- 17 ties if a valid notice of intention was filed 18 for such work (or share) before the enact- 19 ment date. 20 21 ‘‘(10) PRIOR UNLICENSED USES.— ‘‘(A) LIMITATION ON LIABILITY IN GEN- 22 ERAL.—A 23 action under section 501 on or after January 1, 24 2018, against a digital music provider for the 25 infringement of the exclusive rights provided by copyright owner that commences an EHF18470 S.L.C. 109 1 paragraph (1) or (3) of section 106 arising 2 from the unauthorized reproduction or distribu- 3 tion of a musical work by such digital music 4 provider in the course of engaging in covered 5 activities prior to the license availability date, 6 shall, as the copyright owner’s sole and exclu- 7 sive remedy against the digital music provider, 8 be eligible to recover the royalty prescribed 9 under subsection (c)(1)(C) and chapter 8, from 10 the digital music provider, provided that such 11 digital music provider can demonstrate compli- 12 ance with the requirements of subparagraph 13 (B), as applicable. In all other cases the limita- 14 tion on liability under this subparagraph shall 15 not apply. 16 ‘‘(B) REQUIREMENTS FOR LIMITATION ON 17 LIABILITY.—The 18 apply on the enactment date and through the 19 end of the period that expires 90 days after the 20 license availability date to digital music pro- 21 viders seeking to avail themselves of the limita- 22 tion on liability described in subparagraph (A): 23 ‘‘(i) Not later than 30 calendar days 24 after first making a particular sound re- 25 cording of following requirements shall a musical work available EHF18470 S.L.C. 110 1 through its service via one or more covered 2 activities, or 30 calendar days after the en- 3 actment date, whichever occurs later, a 4 digital music provider shall engage in 5 good-faith, commercially reasonable efforts 6 to identify and locate each copyright owner 7 of such musical work (or share thereof). 8 Such required matching efforts shall in- 9 clude the following: 10 ‘‘(I) Good-faith, commercially 11 reasonable efforts to obtain from the 12 owner of the corresponding sound re- 13 cording made available through the 14 digital music provider’s service the fol- 15 lowing information: 16 ‘‘(aa) Sound recording 17 name, featured artist, sound re- 18 cording copyright owner, pro- 19 ducer, international standard re- 20 cording code, and other informa- 21 tion commonly used in the indus- 22 try to identify sound recordings 23 and match them to the musical 24 works they embody. EHF18470 S.L.C. 111 1 ‘‘(bb) Any available musical 2 work ownership information, in- 3 cluding each songwriter and pub- 4 lisher name, percentage owner- 5 ship 6 standard musical work code. 7 ‘‘(II) Employment of 1 or more 8 bulk electronic matching processes 9 that are available to the digital music 10 provider through a third-party vendor 11 on commercially reasonable terms, ex- 12 cept that a digital music provider may 13 rely on its own bulk electronic match- 14 ing process if that process has capa- 15 bilities comparable to or better than 16 those available from a third-party ven- 17 dor on commercially reasonable terms. 18 ‘‘(ii) The required matching efforts 19 shall be repeated by the digital music pro- 20 vider not less than once per month for so 21 long as the copyright owner remains un- 22 identified or has not been located. share, and international 23 ‘‘(iii) If the required matching efforts 24 are successful in identifying and locating a 25 copyright owner of a musical work (or EHF18470 S.L.C. 112 1 share thereof) by the end of the calendar 2 month in which the digital music provider 3 first makes use of the work, the digital 4 music provider shall provide statements of 5 account and pay royalties to such copy- 6 right owner in accordance with this section 7 and applicable regulations. 8 ‘‘(iv) If the copyright owner is not 9 identified or located by the end of the cal- 10 endar month in which the digital music 11 provider first makes use of the work, the 12 digital music provider shall accrue and 13 hold royalties calculated under the applica- 14 ble statutory rate in accordance with usage 15 of the work, from initial use of the work 16 until the accrued royalties can be paid to 17 the copyright owner or are required to be 18 transferred to the mechanical licensing col- 19 lective, as follows: 20 ‘‘(I) Accrued royalties shall be 21 maintained by the digital music pro- 22 vider in accordance with generally ac- 23 cepted accounting principles. 24 ‘‘(II) If a copyright owner of an 25 unmatched musical work (or share EHF18470 S.L.C. 113 1 thereof) is identified and located by or 2 to the digital music provider before 3 the license availability date, the digital 4 music provider shall— 5 ‘‘(aa) not later than 45 cal- 6 endar days after the end of the 7 calendar month during which the 8 copyright owner was identified 9 and located, pay the copyright 10 owner all accrued royalties, such 11 payment to be accompanied by a 12 cumulative statement of account 13 that includes all of the informa- 14 tion that would have been pro- 15 vided to the copyright owner had 16 the digital music provider been 17 providing monthly statements of 18 account to the copyright owner 19 from initial use of the work in 20 accordance with this section and 21 applicable regulations, including 22 the requisite certification under 23 subsection (c)(2)(I); 24 ‘‘(bb) beginning with the ac- 25 counting period following the cal- EHF18470 S.L.C. 114 1 endar month in which the copy- 2 right owner was identified and lo- 3 cated, and for all other account- 4 ing periods prior to the license 5 availability date, provide monthly 6 statements of account and pay 7 royalties to the copyright owner 8 as required under this section 9 and applicable regulations; and 10 ‘‘(cc) beginning with the 11 monthly royalty reporting period 12 commencing on the license avail- 13 ability date, report usage and pay 14 royalties for such musical work 15 (or share thereof) for such re- 16 porting period and reporting pe- 17 riods thereafter to the mechanical 18 licensing collective, as required 19 under this subsection and appli- 20 cable regulations. 21 ‘‘(III) If a copyright owner of an 22 unmatched musical work (or share 23 thereof) is not identified and located 24 by the license availability date, the 25 digital music provider shall— EHF18470 S.L.C. 115 1 ‘‘(aa) not later than 45 cal- 2 endar days after the license avail- 3 ability date, transfer all accrued 4 royalties to the mechanical licens- 5 ing collective, such payment to be 6 accompanied by a cumulative 7 statement of account that in- 8 cludes all of the information that 9 would have been provided to the 10 copyright owner had the digital 11 music 12 monthly statements of account on 13 the copyright owner from initial 14 use of the work in accordance 15 with this section and applicable 16 regulations, including the req- 17 uisite certification under sub- 18 section 19 panied by an additional certifi- 20 cation by a duly authorized offi- 21 cer of the digital music provider 22 that the digital music provider 23 has fulfilled the requirements of 24 clauses (i) and (ii) of subpara- 25 graph (B) but has not been suc- provider (c)(2)(I), been and serving accom- EHF18470 S.L.C. 116 1 cessful in locating or identifying 2 the copyright owner; and 3 ‘‘(bb) beginning with the 4 monthly royalty reporting period 5 commencing on the license avail- 6 ability date, report usage and pay 7 royalties for such musical work 8 (or share thereof) for such period 9 and reporting periods thereafter 10 to the mechanical licensing collec- 11 tive, as required under this sub- 12 section and applicable regula- 13 tions. 14 ‘‘(v) A digital music provider that 15 complies with the requirements of this sub- 16 paragraph with respect to unmatched mu- 17 sical works (or shares of works) shall not 18 be liable for or accrue late fees for late 19 payments of royalties for such works until 20 such time as the digital music provider is 21 required to begin paying monthly royalties 22 to the copyright owner or the mechanical 23 licensing collective, as applicable. 24 ‘‘(C) ADJUSTED 25 STATUTE TIONS.—Notwithstanding OF LIMITA- anything to the con- EHF18470 S.L.C. 117 1 trary in section 507(b), with respect to any 2 claim of infringement of the exclusive rights 3 provided by paragraphs (1) and (3) of section 4 106 against a digital music provider arising 5 from the unauthorized reproduction or distribu- 6 tion of a musical work by such digital music 7 provider in the course of engaging in covered 8 activities that accrued not more than 3 years 9 prior to the license availability date, such action 10 may be commenced not later than the later of— 11 ‘‘(i) 3 years after the date on which 12 the claim accrued; or 13 ‘‘(ii) 2 years after the license avail- 14 ability date. 15 ‘‘(D) OTHER RIGHTS AND REMEDIES PRE- 16 SERVED.—Except as expressly provided in this 17 paragraph, nothing in this paragraph shall be 18 construed to alter, limit, or negate any right or 19 remedy of a copyright owner with respect to un- 20 authorized use of a musical work. 21 ‘‘(11) LEGAL 22 23 PROTECTIONS FOR LICENSING AC- TIVITIES.— ‘‘(A) EXEMPTION FOR COMPULSORY LI- 24 CENSE ACTIVITIES.—The 25 described in subsection (c)(1)(D) shall apply to antitrust exemption EHF18470 S.L.C. 118 1 negotiations 2 among copyright owners and persons entitled to 3 obtain a compulsory license for covered activi- 4 ties, and common agents acting on behalf of 5 such copyright owners or persons, including 6 with respect to the administrative assessment 7 established under this subsection. 8 9 and agreements ‘‘(B) LIMITATION between and ON COMMON AGENT EX- EMPTION.—Notwithstanding the antitrust ex- 10 emption provided in subsection (c)(1)(D) and 11 subparagraph (A) of this paragraph (except for 12 the administrative assessment referenced in 13 such subparagraph (A) and except as provided 14 in paragraph (8)(C)), neither the mechanical li- 15 censing collective nor the digital licensee coordi- 16 nator shall serve as a common agent with re- 17 spect to the establishment of royalty rates or 18 terms under this section. 19 ‘‘(C) ANTITRUST EXEMPTION FOR ADMIN- 20 ISTRATIVE 21 provision of the antitrust laws, copyright own- 22 ers and persons entitled to obtain a compulsory 23 license under this section may designate the 24 mechanical licensing collective to administer vol- 25 untary licenses for the reproduction or distribu- ACTIVITIES.—Notwithstanding any EHF18470 S.L.C. 119 1 tion of musical works in covered activities on 2 behalf of such copyright owners and persons, 3 subject to the following conditions: 4 ‘‘(i) Each copyright owner shall estab- 5 lish the royalty rates and material terms of 6 any such voluntary license individually and 7 not in agreement, combination, or concert 8 with any other copyright owner. 9 ‘‘(ii) Each person entitled to obtain a 10 compulsory license under this section shall 11 establish the royalty rates and material 12 terms of any such voluntary license indi- 13 vidually and not in agreement, combina- 14 tion, or concert with any other digital 15 music provider. 16 ‘‘(iii) The mechanical licensing collec- 17 tive shall maintain the confidentiality of 18 the voluntary licenses in accordance with 19 the confidentiality provisions prescribed by 20 the Register of Copyrights under para- 21 graph (12)(C). 22 ‘‘(D) LIABILITY FOR GOOD-FAITH ACTIVI- 23 TIES.—The 24 not be liable to any person or entity based on 25 a claim arising from its good-faith administra- mechanical licensing collective shall EHF18470 S.L.C. 120 1 tion of policies and procedures adopted and im- 2 plemented to carry out the responsibilities de- 3 scribed in subparagraphs (J) and (K) of para- 4 graph (3), except to the extent of correcting an 5 underpayment or overpayment of royalties as 6 provided in paragraph (3)(L)(i)(VI), but the 7 collective may participate in a legal proceeding 8 as a stakeholder party if the collective is hold- 9 ing funds that are the subject of a dispute be- 10 tween copyright owners. For purposes of this 11 subparagraph, the term ‘good-faith administra- 12 tion’ means administration in a manner that is 13 not grossly negligent. 14 ‘‘(E) PREEMPTION OF STATE PROPERTY 15 LAWS.—The 16 by the mechanical licensing collective in accord- 17 ance with this subsection shall supersede and 18 preempt any State law (including common law) 19 concerning escheatment or abandoned property, 20 or any analogous provision, that might other- 21 wise apply. 22 holding and distribution of funds ‘‘(F) RULE OF CONSTRUCTION.—Except as 23 expressly provided in this subsection, nothing in 24 this subsection shall negate or limit the ability 25 of any person to pursue an action in Federal EHF18470 S.L.C. 121 1 court against the mechanical licensing collective 2 or any other person based upon a claim arising 3 under this title or other applicable law. 4 ‘‘(12) REGULATIONS.— 5 ‘‘(A) ADOPTION BY REGISTER OF COPY- 6 RIGHTS AND COPYRIGHT ROYALTY JUDGES.— 7 The Register of Copyrights may conduct such 8 proceedings and adopt such regulations as may 9 be necessary or appropriate to effectuate the 10 provisions of this subsection, except for regula- 11 tions concerning proceedings before the Copy- 12 right Royalty Judges to establish the adminis- 13 trative assessment, which shall be adopted by 14 the Copyright Royalty Judges. 15 ‘‘(B) JUDICIAL REVIEW OF REGULA- 16 TIONS.—Except 17 (7)(D)(vii), regulations adopted under this sub- 18 section shall be subject to judicial review pursu- 19 ant to chapter 7 of title 5. 20 as provided ‘‘(C) PROTECTION in paragraph OF CONFIDENTIAL IN- 21 FORMATION.—The 22 adopt regulations to provide for the appropriate 23 procedures to ensure that confidential, private, 24 proprietary, or privileged information contained 25 in the records of the mechanical licensing collec- Register of Copyrights shall EHF18470 S.L.C. 122 1 tive and digital licensee coordinator is not im- 2 properly disclosed or used, including through 3 any disclosure or use by the board of directors 4 or personnel of either entity, and specifically in- 5 cluding the unclaimed royalties oversight com- 6 mittee and the dispute resolution committee of 7 the mechanical licensing collective. 8 ‘‘(13) SAVINGS 9 CLAUSES.— ‘‘(A) LIMITATION ON ACTIVITIES AND 10 RIGHTS 11 solely to uses of musical works subject to licens- 12 ing under this section. The blanket license shall 13 not be construed to extend or apply to activities 14 other than covered activities or to rights other 15 than the exclusive rights of reproduction and 16 distribution licensed under this section, or serve 17 or act as the basis to extend or expand the 18 compulsory license under this section to activi- 19 ties and rights not covered by this section on 20 the day before the enactment date. COVERED.—This subsection applies 21 ‘‘(B) RIGHTS 22 NOT AFFECTED.—The 23 immunities granted under this subsection, the 24 data concerning musical works collected and 25 made available under this subsection, and the OF PUBLIC PERFORMANCE rights, protections, and EHF18470 S.L.C. 123 1 definitions under subsection (e) shall not extend 2 to, limit, or otherwise affect any right of public 3 performance in a musical work.’’; and 4 (5) by adding at the end the following: 5 ‘‘(e) DEFINITIONS.—As used in this section: 6 ‘‘(1) ACCRUED INTEREST.—The term ‘accrued 7 interest’ means interest accrued on accrued royal- 8 ties, as described in subsection (d)(3)(H)(ii). 9 ‘‘(2) ACCRUED ROYALTIES.—The term ‘accrued 10 royalties’ means royalties accrued for the reproduc- 11 tion or distribution of a musical work (or share 12 thereof) in a covered activity, calculated in accord- 13 ance with the applicable royalty rate under this sec- 14 tion. 15 ‘‘(3) ADMINISTRATIVE ASSESSMENT.—The term 16 ‘administrative assessment’ means the fee estab- 17 lished pursuant to subsection (d)(7)(D). 18 ‘‘(4) AUDIT.—The term ‘audit’ means a royalty 19 compliance examination to verify the accuracy of 20 royalty payments, or the conduct of such an exam- 21 ination, as applicable. 22 ‘‘(5) BLANKET LICENSE.—The term ‘blanket li- 23 cense’ means a compulsory license described in sub- 24 section (d)(1)(A) to engage in covered activities. EHF18470 S.L.C. 124 1 ‘‘(6) COLLECTIVE 2 ‘collective total costs’— TOTAL COSTS.—The term 3 ‘‘(A) means the total costs of establishing, 4 maintaining, and operating the mechanical li- 5 censing collective to fulfill its statutory func- 6 tions, including— 7 ‘‘(i) startup costs; 8 ‘‘(ii) financing, legal, audit, and insur- 9 ance costs; 10 ‘‘(iii) investments in information tech- 11 nology, infrastructure, and other long-term 12 resources; 13 ‘‘(iv) outside vendor costs; 14 ‘‘(v) costs of licensing, royalty admin- 15 istration, and enforcement of rights; 16 ‘‘(vi) costs of bad debt; and 17 ‘‘(vii) costs of automated and manual 18 efforts to identify and locate copyright 19 owners of musical works (and shares of 20 such musical works) and match sound re- 21 cordings to the musical works the sound 22 recordings embody; and 23 ‘‘(B) does not include any added costs in- 24 curred by the mechanical licensing collective to 25 provide services under voluntary licenses. EHF18470 S.L.C. 125 1 ‘‘(7) COVERED ACTIVITY.—The term ‘covered 2 activity’ means the activity of making a digital pho- 3 norecord delivery of a musical work, including in the 4 form of a permanent download, limited download, or 5 interactive stream, where such activity qualifies for 6 a compulsory license under this section. 7 ‘‘(8) DIGITAL MUSIC PROVIDER.—The term 8 ‘digital music provider’ means a person (or persons 9 operating under the authority of that person) that, 10 with respect to a service engaged in covered activi- 11 ties— 12 ‘‘(A) has a direct contractual, subscription, 13 or other economic relationship with end users of 14 the service, or, if no such relationship with end 15 users exists, exercises direct control over the 16 provision of the service to end users; 17 ‘‘(B) is able to fully report on any revenues 18 and consideration generated by the service; and 19 ‘‘(C) is able to fully report on usage of 20 sound recordings of musical works by the serv- 21 ice (or procure such reporting). 22 ‘‘(9) DIGITAL LICENSEE COORDINATOR.—The 23 term ‘digital licensee coordinator’ means the entity 24 most recently designated pursuant to subsection 25 (d)(5). EHF18470 S.L.C. 126 1 ‘‘(10) DIGITAL PHONORECORD DELIVERY.—The 2 term ‘digital phonorecord delivery’ means each indi- 3 vidual delivery of a phonorecord by digital trans- 4 mission of a sound recording that results in a spe- 5 cifically identifiable reproduction by or for any 6 transmission recipient of a phonorecord of that 7 sound recording, regardless of whether the digital 8 transmission is also a public performance of the 9 sound recording or any musical work embodied 10 therein, and includes a permanent download, a lim- 11 ited download, or an interactive stream. A digital 12 phonorecord delivery does not result from a real- 13 time, noninteractive subscription transmission of a 14 sound recording where no reproduction of the sound 15 recording or the musical work embodied therein is 16 made from the inception of the transmission through 17 to its receipt by the transmission recipient in order 18 to make the sound recording audible. A digital pho- 19 norecord delivery does not include the digital trans- 20 mission of sounds accompanying a motion picture or 21 other audiovisual work as defined in section 101. 22 ‘‘(11) ENACTMENT DATE.—The term ‘enact- 23 ment date’ means the date of the enactment of the 24 Musical Works Modernization Act. EHF18470 S.L.C. 127 1 ‘‘(12) INDIVIDUAL DOWNLOAD LICENSE.—The 2 term ‘individual download license’ means a compul- 3 sory license obtained by a record company to make 4 and distribute, or authorize the making and distribu- 5 tion of, permanent downloads embodying a specific 6 individual musical work. 7 ‘‘(13) INTERACTIVE STREAM.—The term ‘inter- 8 active stream’ means a digital transmission of a 9 sound recording of a musical work in the form of a 10 stream, where the performance of the sound record- 11 ing by means of such transmission is not exempt 12 under section 114(d)(1) and does not in itself, or as 13 a result of a program in which it is included, qualify 14 for statutory licensing under section 114(d)(2). An 15 interactive stream is a digital phonorecord delivery. 16 ‘‘(14) INTERESTED.—The term ‘interested’, as 17 applied to a party seeking to participate in a pro- 18 ceeding under subsection (d)(7)(D), is a party as to 19 which the Copyright Royalty Judges have not deter- 20 mined that the party lacks a significant interest in 21 such proceeding. 22 ‘‘(15) LICENSE AVAILABILITY DATE.—The term 23 ‘license availability date’ means January 1 following 24 the expiration of the 2-year period beginning on the 25 enactment date. EHF18470 S.L.C. 128 1 ‘‘(16) LIMITED DOWNLOAD.—The term ‘limited 2 download’ means a digital transmission of a sound 3 recording of a musical work in the form of a 4 download, where such sound recording is accessible 5 for listening only for a limited amount of time or 6 specified number of times. 7 ‘‘(17) MATCHED.—The term ‘matched’, as ap- 8 plied to a musical work (or share thereof), means 9 that the copyright owner of such work (or share 10 11 thereof) has been identified and located. ‘‘(18) MECHANICAL LICENSING COLLECTIVE.— 12 The term ‘mechanical licensing collective’ means the 13 entity most recently designated as such by the Reg- 14 ister of Copyrights under subsection (d)(3). 15 ‘‘(19) MECHANICAL LICENSING COLLECTIVE 16 BUDGET.—The 17 budget’ means a statement of the financial position 18 of the mechanical licensing collective for a fiscal year 19 or quarter thereof based on estimates of expendi- 20 tures during the period and proposals for financing 21 those expenditures, including a calculation of the 22 collective total costs. 23 ‘‘(20) MUSICAL term ‘mechanical licensing collective WORKS DATABASE.—The term 24 ‘musical works database’ means the database de- 25 scribed in subsection (d)(3)(E). EHF18470 S.L.C. 129 1 2 3 ‘‘(21) NONPROFIT.—The term ‘nonprofit’ means a nonprofit created or organized in a State. ‘‘(22) NOTICE OF LICENSE.—The term ‘notice 4 of license’ means a notice from a digital music pro- 5 vider provided under subsection (d)(2)(A) for pur- 6 poses of obtaining a blanket license. 7 ‘‘(23) NOTICE OF NONBLANKET ACTIVITY.— 8 The term ‘notice of nonblanket activity’ means a no- 9 tice from a significant nonblanket licensee provided 10 under subsection (d)(6)(A) for purposes of notifying 11 the mechanical licensing collective that the licensee 12 has been engaging in covered activities. 13 ‘‘(24) PERMANENT DOWNLOAD.—The term 14 ‘permanent download’ means a digital transmission 15 of a sound recording of a musical work in the form 16 of a download, where such sound recording is acces- 17 sible for listening without restriction as to the 18 amount of time or number of times it may be 19 accessed. 20 ‘‘(25) QUALIFIED AUDITOR.—The term ‘quali- 21 fied auditor’ means an independent, certified public 22 accountant with experience performing music royalty 23 audits. 24 25 ‘‘(26) RECORD COMPANY.—The term ‘record company’ means an entity that invests in, produces, EHF18470 S.L.C. 130 1 and markets sound recordings of musical works, and 2 distributes such sound recordings for remuneration 3 through multiple sales channels, including a cor- 4 porate affiliate of such an entity engaged in distribu- 5 tion of sound recordings. 6 ‘‘(27) REPORT OF USAGE.—The term ‘report of 7 usage’ means a report reflecting an entity’s usage of 8 musical works in covered activities described in sub- 9 section (d)(4)(A). 10 ‘‘(28) REQUIRED MATCHING EFFORTS.—The 11 term ‘required matching efforts’ means efforts to 12 identify and locate copyright owners of musical 13 works as described in subsection (d)(10)(B)(i). 14 ‘‘(29) SERVICE.—The term ‘service’, as used in 15 relation to covered activities, means any site, facility, 16 or offering by or through which sound recordings of 17 musical works are digitally transmitted to members 18 of the public. 19 ‘‘(30) SHARE.—The term ‘share’, as applied to 20 a musical work, means a fractional ownership inter- 21 est in such work. 22 23 ‘‘(31) SIGNIFICANT NONBLANKET LICENSEE.— The term ‘significant nonblanket licensee’— 24 ‘‘(A) means an entity, including a group of 25 entities under common ownership or control EHF18470 S.L.C. 131 1 that, acting under the authority of one or more 2 voluntary licenses or individual download li- 3 censes, offers a service engaged in covered ac- 4 tivities, and such entity or group of entities— 5 ‘‘(i) is not currently operating under a 6 blanket license and is not obligated to pro- 7 vide reports of usage reflecting covered ac- 8 tivities under subsection (d)(4)(A); 9 ‘‘(ii) has a direct contractual, sub- 10 scription, or other economic relationship 11 with end users of the service or, if no such 12 relationship with end users exists, exercises 13 direct control over the provision of the 14 service to end users; and 15 ‘‘(iii) either— 16 ‘‘(I) on any day in a calendar 17 month, makes more than 5,000 dif- 18 ferent sound recordings of musical 19 works available through such service; 20 or 21 ‘‘(II) derives revenue or other 22 consideration in connection with such 23 covered 24 $50,000 in a calendar month, or total 25 revenue or other consideration greater activities greater than EHF18470 S.L.C. 132 1 than $500,000 during the preceding 2 12 calendar months; and 3 ‘‘(B) does not include— 4 ‘‘(i) an entity whose covered activity 5 consists solely of free-to-the-user streams 6 of segments of sound recordings of musical 7 works that do not exceed 90 seconds in 8 length, are offered only to facilitate a li- 9 censed use of musical works that is not a 10 covered activity, and have no revenue di- 11 rectly attributable to such streams consti- 12 tuting the covered activity; or 13 ‘‘(ii) a ‘public broadcasting entity’ as 14 defined in section 118(f). 15 ‘‘(32) SONGWRITER.—The term ‘songwriter’ 16 means the author of all or part of a musical work, 17 including a composer or lyricist. 18 ‘‘(33) STATE.—The term ‘State’ means each 19 State of the United States, the District of Columbia, 20 and each territory or possession of the United 21 States. 22 ‘‘(34) UNCLAIMED ACCRUED ROYALTIES.—The 23 term ‘unclaimed accrued royalties’ means accrued 24 royalties eligible for distribution under subsection 25 (d)(3)(J). EHF18470 S.L.C. 133 1 ‘‘(35) UNMATCHED.—The term ‘unmatched’, as 2 applied to a musical work (or share thereof), means 3 that the copyright owner of such work (or share 4 thereof) has not been identified or located. 5 ‘‘(36) VOLUNTARY LICENSE.—The term ‘vol- 6 untary license’ means a license for use of a musical 7 work (or share thereof) other than a compulsory li- 8 cense obtained under this section.’’. 9 (b) TECHNICAL AND CONFORMING AMENDMENTS TO 10 SECTION 801.—Section 801(b) of title 17, United States 11 Code, is amended— 12 13 14 15 (1) by redesignating paragraph (8) as paragraph (9); and (2) by inserting after paragraph (7) the following: 16 ‘‘(8) To determine the administrative assess- 17 ment to be paid by digital music providers under 18 section 115(d). The provisions of section 115(d) 19 shall apply to the conduct of proceedings by the 20 Copyright Royalty Judges under section 115(d) and 21 not the procedures described in this section, or sec- 22 tion 803, 804, or 805.’’. 23 (c) EFFECTIVE DATE OF AMENDED RATE SETTING 24 STANDARD.—The amendments made by subsection (a)(3) 25 and section 103(g)(2) shall apply to any proceeding before EHF18470 S.L.C. 134 1 the Copyright Royalty Judges that is commenced on or 2 after the date of the enactment of this Act. 3 (d) TECHNICAL AND 4 TITLE 37, PART 385 5 LATIONS.—Not CONFORMING AMENDMENTS OF THE CODE OF TO FEDERAL REGU- later than 270 days after the date of en- 6 actment of this Act, the Copyright Royalty Judges shall 7 amend the regulations for section 115 of title 17, United 8 States Code, in part 385 of title 37, Code of Federal Reg9 ulations, to conform the definitions used in such part to 10 the definitions of the same terms described in section 11 115(e) of title 17, United States Code, as added by sub12 section (a). In so doing, the Copyright Royalty Judges 13 shall make adjustments to the language of the regulations 14 as necessary to achieve the same purpose and effect as 15 the original regulations with respect to the rates and 16 terms previously adopted by the Copyright Royalty 17 Judges. 18 (e) COPYRIGHT OFFICE ACTIVITIES.—The Register 19 of Copyrights shall engage in public outreach and edu20 cational activities— 21 (1) regarding the amendments made by sub- 22 section (a) to section 115 of title 17, United States 23 Code, including the responsibilities of the mechanical 24 licensing collective designated under those amend- 25 ments; EHF18470 S.L.C. 135 1 (2) which shall include educating songwriters 2 and other interested parties with respect to the proc- 3 ess established under section 115(d)(3)(C)(i)(V) of 4 title 17, United States Code, as added by subsection 5 (a), by which— 6 (A) a copyright owner may claim owner- 7 ship of musical works (and shares of such 8 works); and 9 (B) royalties for works for which the owner 10 is not identified or located shall be equitably 11 distributed to known copyright owners; and 12 (3) which the Register shall make available on- 13 line. 14 (f) UNCLAIMED ROYALTIES STUDY 15 16 AND REC- OMMENDATIONS.— (1) IN GENERAL.—Not later than 2 years after 17 the date on which the Register of Copyrights ini- 18 tially designates the mechanical licensing collective 19 under section 115(d)(3)(B)(i) of title 17, United 20 States Code, as added by subsection (a)(4), the Reg- 21 ister, in consultation with the Comptroller General 22 of the United States, and after soliciting and review- 23 ing comments and relevant information from music 24 industry participants and other interested parties, 25 shall submit to the Committee on the Judiciary of EHF18470 S.L.C. 136 1 the Senate and the Committee on the Judiciary of 2 the House of Representatives a report that rec- 3 ommends best practices that the collective may im- 4 plement in order to— 5 (A) identify and locate musical work copy- 6 right owners with unclaimed accrued royalties 7 held by the collective; 8 (B) encourage musical work copyright 9 owners to claim the royalties of those owners; 10 11 and (C) reduce the incidence of unclaimed roy- 12 alties. 13 (2) CONSIDERATION OF RECOMMENDATIONS.— 14 The mechanical licensing collective shall carefully 15 consider, and give substantial weight to, the rec- 16 ommendations submitted by the Register of Copy- 17 rights under paragraph (1) when establishing the 18 procedures of the collective with respect to the— 19 20 21 22 23 (A) identification and location of musical work copyright owners; and (B) distribution of unclaimed royalties. SEC. 103. AMENDMENTS TO SECTION 114. (a) UNIFORM RATE STANDARD.—Section 114(f) of 24 title 17, United States Code, is amended— EHF18470 S.L.C. 137 1 2 (1) by striking paragraphs (1) and (2) and inserting the following: 3 ‘‘(1)(A) Proceedings under chapter 8 shall de- 4 termine reasonable rates and terms of royalty pay- 5 ments for transmissions subject to statutory licens- 6 ing under subsection (d)(2) during the 5-year period 7 beginning on January 1 of the second year following 8 the year in which the proceedings are to be com- 9 menced pursuant to subparagraph (A) or (B) of sec- 10 tion 804(b)(3), as the case may be, or such other pe- 11 riod as the parties may agree. The parties to each 12 proceeding shall bear their own costs. 13 ‘‘(B) The schedule of reasonable rates and 14 terms determined by the Copyright Royalty Judges 15 shall, subject to paragraph (2), be binding on all 16 copyright owners of sound recordings and entities 17 performing sound recordings affected by this para- 18 graph during the 5-year period specified in subpara- 19 graph (A), or such other period as the parties may 20 agree. Such rates and terms shall distinguish among 21 the different types of services then in operation and 22 shall include a minimum fee for each such type of 23 service, such differences to be based on criteria in- 24 cluding the quantity and nature of the use of sound 25 recordings and the degree to which use of the service EHF18470 S.L.C. 138 1 may substitute for or may promote the purchase of 2 phonorecords by consumers. The Copyright Royalty 3 Judges shall establish rates and terms that most 4 clearly represent the rates and terms that would 5 have been negotiated in the marketplace between a 6 willing buyer and a willing seller. In determining 7 such rates and terms, the Copyright Royalty 8 Judges— 9 ‘‘(i) shall base their decision on economic, 10 competitive, and programming information pre- 11 sented by the parties, including— 12 ‘‘(I) whether use of the service may 13 substitute for or may promote the sales of 14 phonorecords or otherwise may interfere 15 with or may enhance the sound recording 16 copyright owner’s other streams of revenue 17 from the copyright owner’s sound record- 18 ings; and 19 ‘‘(II) the relative roles of the copy- 20 right owner and the transmitting entity in 21 the copyrighted work and the service made 22 available to the public with respect to rel- 23 ative creative contribution, technological 24 contribution, capital investment, cost, and 25 risk; and EHF18470 S.L.C. 139 1 ‘‘(ii) may consider the rates and terms for 2 comparable types of audio transmission services 3 and comparable circumstances under voluntary 4 license agreements. 5 ‘‘(C) The procedures under subparagraphs (A) 6 and (B) shall also be initiated pursuant to a petition 7 filed by any sound recording copyright owner or any 8 transmitting entity indicating that a new type of 9 service on which sound recordings are performed is 10 or is about to become operational, for the purpose 11 of determining reasonable terms and rates of royalty 12 payments with respect to such new type of service 13 for the period beginning with the inception of such 14 new type of service and ending on the date on which 15 the royalty rates and terms for eligible nonsubscrip- 16 tion services and new subscription services, or pre- 17 existing subscription services and preexisting sat- 18 ellite digital audio radio services, as the case may be, 19 most recently determined under subparagraph (A) or 20 (B) and chapter 8 expire, or such other period as 21 the parties may agree.’’; and 22 (2) by redesignating paragraphs (3), (4), and 23 (5) as paragraphs (2), (3), and (4), respectively. 24 (b) REPEAL.—Subsection (i) of section 114 of title 25 17, United States Code, is repealed. EHF18470 S.L.C. 140 1 2 (c) USE IN MUSICAL WORK PROCEEDINGS.— (1) IN GENERAL.—License fees payable for the 3 public performance of sound recordings under sec- 4 tion 106(6) of title 17, United States Code, shall not 5 be taken into account in any administrative, judicial, 6 or other governmental proceeding to set or adjust 7 the royalties payable to musical work copyright own- 8 ers for the public performance of their works except 9 in such a proceeding to set or adjust royalties for 10 the public performance of musical works by means 11 of a digital audio transmission other than a trans- 12 mission by a broadcaster, and may be taken into ac- 13 count only with respect to such digital audio trans- 14 mission. 15 16 (2) DEFINITIONS.—In this subsection: (A) TRANSMISSION BY A BROADCASTER.— 17 The term ‘‘transmission by a broadcaster’’ 18 means a nonsubscription digital transmission 19 made by a terrestrial broadcast station on its 20 own behalf, or on the behalf of a terrestrial 21 broadcast station under common ownership or 22 control, that is not part of an interactive service 23 or a music-intensive service comprising the 24 transmission of sound recordings customized for 25 or customizable by recipients or service users. EHF18470 S.L.C. 141 1 (B) TERRESTRIAL BROADCAST STATION.— 2 The term ‘‘terrestrial broadcast station’’ means 3 a terrestrial, over-the-air radio or television 4 broadcast station, including an FM translator 5 (as defined in section 74.1201 of title 47, Code 6 of Federal Regulations, and licensed as such by 7 the 8 whose primary business activities are comprised 9 of, and whose revenues are generated through, 10 terrestrial, over-the-air broadcast transmissions, 11 or the simultaneous or substantially-simulta- 12 neous digital retransmission by the terrestrial, 13 over-the-air broadcast station of its over-the-air 14 broadcast transmissions. 15 Federal (d) RULE OF Communications Commission) CONSTRUCTION.—Subsection (c)(2) 16 shall not be given effect in interpreting provisions of title 17 17, United States Code. 18 (e) USE IN SOUND RECORDING PROCEEDINGS.—The 19 repeal of section 114(i) of title 17, United States Code, 20 by subsection (b) shall not be taken into account in any 21 proceeding to set or adjust the rates and fees payable for 22 the use of sound recordings under section 112(e) or 114(f) 23 of such title that is pending on, or commenced on or after, 24 the date of enactment of this Act. EHF18470 S.L.C. 142 1 (f) DECISIONS AND PRECEDENTS NOT AFFECTED.— 2 The repeal of section 114(i) of title 17, United States 3 Code, by subsection (b) shall not have any effect upon the 4 decisions, or the precedents established or relied upon, in 5 any proceeding to set or adjust the rates and fees payable 6 for the use of sound recordings under section 112(e) or 7 114(f) of such title before the date of enactment of this 8 Act. 9 10 (g) TECHNICAL AND (1) SECTION CONFORMING AMENDMENTS.— 114.—Section 114(f) of title 17, 11 United States Code, as amended by subsection (a), 12 is further amended in paragraph (4)(C), as so redes- 13 ignated, in the first sentence, by striking ‘‘under 14 paragraph (4)’’ and inserting ‘‘under paragraph 15 (3)’’. 16 17 (2) SECTION 801.—Section 801(b) of title 17, United States Code, is amended— 18 (A) in paragraph (1), by striking ‘‘The 19 rates applicable’’ and all that follows though 20 ‘‘prevailing industry practices.’’; and 21 (B) in paragraph (7)(B), by striking 22 ‘‘114(f)(3)’’ and inserting ‘‘114(f)(2)’’. 23 (3) SECTION 24 25 803.—Section 803(c)(2)(E)(i)(II) of title 17, United States Code, is amended— (A) by striking ‘‘or 114(f)(2)(C)’’; and EHF18470 S.L.C. 143 1 (B) by striking ‘‘114(f)(4)(B)’’ and insert- 2 ing ‘‘114(f)(3)(B)’’. 3 (4) SECTION 4 5 804.—Section 17, United States Code, is amended— (A) in clause (i), by striking ‘‘and 6 114(f)(2)(C)’’; 7 (B) in clause 8 ‘‘114(f)(4)(B)(ii)’’ 9 ‘‘114(f)(3)(B)(ii)’’; and 10 11 12 804(b)(3)(C) of title (C) in clause (iii)(II), and (iv), by by striking inserting striking ‘‘or 114(f)(2)(C), as the case may be’’. (h) EFFECTIVE DATE OF AMENDED RATE SETTING 13 STANDARD.—The amendments made by subsection (a)(1) 14 shall apply to any proceeding before the Copyright Royalty 15 Judges that is commenced on or after the date of the en16 actment of this Act. 17 (i) TIMING OF RATE DETERMINATIONS.—Section 18 804(b)(3)(B) of title 17, United States Code, is amended, 19 in the third sentence, by inserting ‘‘, except that, with re20 spect to preexisting subscription services, the terms and 21 rates finally determined for the rate period ending on De22 cember 31, 2022, shall remain in effect through December 23 31, 2027, and there shall be no proceeding to determine 24 terms and rates for preexisting subscription services for EHF18470 S.L.C. 144 1 the period beginning on January 1, 2023, and ending on 2 December 31, 2027’’ after ‘‘fifth calendar year’’. 3 SEC. 104. RANDOM ASSIGNMENT OF RATE COURT PRO- 4 5 CEEDINGS. Section 137 of title 28, United States Code, is 6 amended— 7 8 9 10 11 12 (1) by striking ‘‘The business’’ and inserting ‘‘(a) IN GENERAL.—The business’’; and (2) by adding at the end the following: ‘‘(b) RANDOM ASSIGNMENT OF RATE COURT PRO- CEEDINGS.— ‘‘(1) IN GENERAL.— 13 ‘‘(A) DEFINITION.—In this paragraph, the 14 term ‘performing rights society’ has the mean- 15 ing given the term in section 101 of title 17. 16 ‘‘(B) DETERMINATION OF LICENSE FEE.— 17 Except as provided in subparagraph (C), in the 18 case of any performing rights society subject to 19 a consent decree, any application for the deter- 20 mination of a license fee for the public perform- 21 ance of music in accordance with the applicable 22 consent decree shall be made in the district 23 court with jurisdiction over that consent decree 24 and randomly assigned to a judge of that dis- 25 trict court according to the rules of that court EHF18470 S.L.C. 145 1 for the division of business among district 2 judges, provided that any such application shall 3 not be assigned to— 4 ‘‘(i) a judge to whom continuing juris- 5 diction over any performing rights society 6 for any performing rights society consent 7 decree is assigned or has previously been 8 assigned; or 9 ‘‘(ii) a judge to whom another pro- 10 ceeding concerning an application for the 11 determination of a reasonable license fee is 12 assigned at the time of the filing of the ap- 13 plication. 14 ‘‘(C) EXCEPTION.—Subparagraph (B) does 15 not apply to an application to determine reason- 16 able license fees made by individual proprietors 17 under section 513 of title 17. 18 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 19 paragraph (1) shall modify the rights of any party 20 to a consent decree or to a proceeding to determine 21 reasonable license fees, to make an application for 22 the construction of any provision of the applicable 23 consent decree. Such application shall be referred to 24 the judge to whom continuing jurisdiction over the 25 applicable consent decree is currently assigned. If EHF18470 S.L.C. 146 1 any such application is made in connection with a 2 rate proceeding, such rate proceeding shall be stayed 3 until the final determination of the construction ap- 4 plication. Disputes in connection with a rate pro- 5 ceeding about whether a licensee is similarly situated 6 to another licensee shall not be subject to referral to 7 the judge with continuing jurisdiction over the appli- 8 cable consent decree.’’. 9 SEC. 105. PERFORMING RIGHTS SOCIETY CONSENT DE- 10 11 CREES. (a) DEFINITION.—In this section, the term ‘‘per- 12 forming rights society’’ has the meaning given the term 13 in section 101 of title 17, United States Code. 14 15 (b) NOTIFICATION OF REVIEW.— (1) IN GENERAL.—The Department of Justice 16 shall provide timely briefings upon request of any 17 Member of the Committee on the Judiciary of the 18 Senate and the Committee on the Judiciary of the 19 House of Representatives regarding the status of a 20 review in progress of a consent decree between the 21 United States and a performing rights society. 22 (2) CONFIDENTIALITY AND DELIBERATIVE 23 PROCESS.—In 24 ing to confidentiality and agency deliberative proc- 25 ess, the Department of Justice shall share with such accordance with applicable rules relat- EHF18470 S.L.C. 147 1 Members of Congress detailed and timely informa- 2 tion and pertinent documents related to the consent 3 decree review. 4 (c) ACTION BEFORE MOTION TO TERMINATE.— 5 (1) IN GENERAL.—Before filing with the appro- 6 priate district court of the United States a motion 7 to terminate a consent decree between the United 8 States and a performing rights society, including a 9 motion to terminate a consent decree after the pas- 10 sage of a specified period of time, the Department 11 of Justice shall— 12 (A) notify Members of Congress and com- 13 mittees of Congress described in subsection (b); 14 and 15 (B) provide to such Members of Congress 16 and committees information regarding the im- 17 pact of the proposed termination on the market 18 for licensing the public performance of musical 19 works should the motion be granted. 20 (2) NOTIFICATION.— 21 (A) IN GENERAL.—During the notification 22 described in paragraph (1), and not later than 23 a reasonable time before the date on which the 24 Department of Justice files with the appro- 25 priate district court of the United States a mo- EHF18470 S.L.C. 148 1 tion to terminate a consent decree between the 2 United States and a performing rights society, 3 the Department of Justice should submit to the 4 chairmen and ranking members of the Com- 5 mittee on the Judiciary of the Senate and the 6 Committee on the Judiciary of the House of 7 Representatives a written notification of the in- 8 tent of the Department of Justice to file the 9 motion. 10 (B) CONTENTS.—The notification provided 11 in subparagraph (A) shall include a written re- 12 port to the chairmen and ranking members of 13 the Committee on the Judiciary of Senate and 14 the Committee on the Judiciary of the House of 15 Representatives setting forth— 16 (i) an explanation of the process used 17 by the Department of Justice to review the 18 consent decree; 19 (ii) a summary of the public com- 20 ments received by the Department of Jus- 21 tice during the review by the Department; 22 and 23 24 (iii) other information provided to Congress under paragraph (1)(B). EHF18470 S.L.C. 149 1 (d) SCOPE.—This section applies only to a consent 2 decree between the United States and a performing rights 3 society. 4 5 SEC. 106. EFFECTIVE DATE. This title, and the amendments made by this title, 6 shall take effect on the date of enactment of this Act. 7 8 9 10 TITLE II—CLASSICS PROTECTION AND ACCESS SEC. 201. SHORT TITLE. This title may be cited as the ‘‘Classics Protection 11 and Access Act’’. 12 SEC. 202. UNAUTHORIZED USE OF PRE-1972 SOUND RE- 13 14 15 CORDINGS. (a) PREEMPTION TION FOR OF STATE LAW RIGHTS; PROTEC- UNAUTHORIZED USE.—Title 17, United States 16 Code, is amended— 17 (1) in section 301, by striking subsection (c) 18 and inserting the following: 19 ‘‘(c) Notwithstanding the provisions of section 303, 20 and in accordance with chapter 14, no sound recording 21 fixed before February 15, 1972, shall be subject to copy22 right under this title. With respect to sound recordings 23 fixed before February 15, 1972, the preemptive provisions 24 of subsection (a) shall apply to activities that are com25 menced on and after the date of enactment of the Classics EHF18470 S.L.C. 150 1 Protection and Access Act. Nothing in this subsection may 2 be construed to affirm or negate the preemption of rights 3 and remedies pertaining to any cause of action arising 4 from the nonsubscription broadcast transmission of sound 5 recordings under the common law or statutes of any State 6 for activities that do not qualify as covered activities under 7 chapter 14 undertaken during the period between the date 8 of enactment of the Classics Protection and Access Act 9 and the date on which the term of prohibition on unau10 thorized acts under section 1401(a)(2) expires for such 11 sound recordings. Any potential preemption of rights and 12 remedies related to such activities undertaken during that 13 period shall apply in all respects as it did the day before 14 the date of enactment of the Classics Protection and Ac15 cess Act.’’; and 16 (2) by adding at the end the following: 17 ‘‘CHAPTER 14—UNAUTHORIZED USE OF 18 PRE-1972 SOUND RECORDINGS ‘‘Sec. ‘‘1401. Unauthorized use of pre-1972 sound recordings. 19 ‘‘§ 1401. Unauthorized use of pre-1972 sound record20 ings 21 ‘‘(a) IN GENERAL.— 22 ‘‘(1) UNAUTHORIZED ACTS.—Anyone who, on 23 or before the last day of the applicable transition pe- 24 riod under paragraph (2), and without the consent EHF18470 S.L.C. 151 1 of the rights owner, engages in covered activity with 2 respect to a sound recording fixed before February 3 15, 1972, shall be subject to the remedies provided 4 in sections 502 through 505 and 1203 to the same 5 extent as an infringer of copyright or a person that 6 engages in unauthorized activity under chapter 12. 7 ‘‘(2) TERM OF PROHIBITION.— 8 ‘‘(A) IN 9 paragraph (1)— GENERAL.—The prohibition under 10 ‘‘(i) subject to clause (ii), shall apply 11 to a sound recording described in that 12 paragraph— 13 ‘‘(I) through December 31 of the 14 year that is 95 years after the year of 15 first publication; and 16 ‘‘(II) for a further transition pe- 17 riod as prescribed under subpara- 18 graph (B) of this paragraph; and 19 ‘‘(ii) shall not apply to any sound re- 20 cording after February 15, 2067. 21 ‘‘(B) TRANSITION 22 PERIODS.— ‘‘(i) PRE-1923 RECORDINGS.—In the 23 case of a sound recording first published 24 before January 1, 1923, the transition pe- 25 riod described in subparagraph (A)(i)(II) EHF18470 S.L.C. 152 1 shall end on December 31 of the year that 2 is 3 years after the date of enactment of 3 this section. 4 ‘‘(ii) 1923–1946 RECORDINGS.—In 5 the case of a sound recording first pub- 6 lished during the period beginning on Jan- 7 uary 1, 1923, and ending on December 31, 8 1946, the transition period described in 9 subparagraph (A)(i)(II) shall end on the 10 date that is 5 years after the last day of 11 the period described in subparagraph 12 (A)(i)(I). 13 ‘‘(iii) 1947–1956 RECORDINGS.—In 14 the case of a sound recording first pub- 15 lished during the period beginning on Jan- 16 uary 1, 1947, and ending on December 31, 17 1956, the transition period described in 18 subparagraph (A)(i)(II) shall end on the 19 date that is 15 years after the last day of 20 the period described in subparagraph 21 (A)(i)(I). 22 ‘‘(iv) POST-1956 RECORDINGS.—In the 23 case of a sound recording fixed before Feb- 24 ruary 15, 1972, that is not described in 25 clause (i), (ii), or (iii), the transition period EHF18470 S.L.C. 153 1 described in subparagraph (A)(i)(II) shall 2 end on February 15, 2067. 3 ‘‘(3) RULE OF CONSTRUCTION.—For the pur- 4 poses of this subsection, the term ‘anyone’ includes 5 any State, any instrumentality of a State, and any 6 officer or employee of a State or instrumentality of 7 a State acting in the official capacity of the officer 8 or employee, as applicable. 9 ‘‘(b) CERTAIN AUTHORIZED TRANSMISSIONS AND 10 REPRODUCTIONS.—A public performance by means of a 11 digital audio transmission of a sound recording fixed be12 fore February 15, 1972, or a reproduction in an ephem13 eral phonorecord or copy of a sound recording fixed before 14 February 15, 1972, shall, for purposes of subsection (a), 15 be considered to be authorized and made with the consent 16 of the rights owner if— 17 ‘‘(1) the transmission or reproduction would 18 satisfy the requirements for statutory licensing 19 under section 112(e)(1) or section 114(d)(2), or 20 would be exempt under section 114(d)(1), as the 21 case may be, if the sound recording were fixed on or 22 after February 15, 1972; and 23 ‘‘(2) the transmitting entity pays the statutory 24 royalty for the transmission or reproduction pursu- 25 ant to the rates and terms adopted under sections EHF18470 S.L.C. 154 1 112(e) and 114(f), and complies with other obliga- 2 tions, in the same manner as required by regulations 3 adopted by the Copyright Royalty Judges under sec- 4 tions 112(e) and 114(f) for sound recordings that 5 are fixed on or after February 15, 1972, except in 6 the case of a transmission that would be exempt 7 under section 114(d)(1). 8 ‘‘(c) CERTAIN NONCOMMERCIAL USES OF SOUND 9 RECORDINGS THAT ARE NOT BEING COMMERCIALLY EX10 11 PLOITED.— ‘‘(1) IN GENERAL.—Noncommercial use of a 12 sound recording fixed before February 15, 1972, 13 that is not being commercially exploited by or under 14 the authority of the rights owner shall not violate 15 subsection (a) if— 16 ‘‘(A) the person engaging in the non- 17 commercial use, in order to determine whether 18 the sound recording is being commercially ex- 19 ploited by or under the authority of the rights 20 owner, makes a good faith, reasonable search 21 for, but does not find, the sound recording— 22 ‘‘(i) in the records of schedules filed 23 in the Copyright Office as described in 24 subsection (f)(5)(A); and EHF18470 S.L.C. 155 1 ‘‘(ii) on services offering a comprehen- 2 sive set of sound recordings for sale or 3 streaming; 4 ‘‘(B) the person engaging in the non- 5 commercial use files a notice identifying the 6 sound recording and the nature of the use in 7 the Copyright Office in accordance with the 8 regulations issued under paragraph (3)(B); and 9 ‘‘(C) during the 90-day period beginning 10 on the date on which the notice described in 11 subparagraph (B) is indexed into the public 12 records of the Copyright Office, the rights 13 owner of the sound recording does not, in its 14 discretion, opt out of the noncommercial use by 15 filing notice thereof in the Copyright Office in 16 accordance with the regulations issued under 17 paragraph (5). 18 ‘‘(2) RULES 19 OF CONSTRUCTION.—For purposes of this subsection— 20 ‘‘(A) merely recovering costs of production 21 and distribution of a sound recording resulting 22 from a use otherwise permitted under this sub- 23 section does not itself necessarily constitute a 24 commercial use of the sound recording; EHF18470 S.L.C. 156 1 ‘‘(B) the fact that a person engaging in 2 the use of a sound recording also engages in 3 commercial activities does not itself necessarily 4 render the use commercial; and 5 ‘‘(C) the fact that a person files notice of 6 a noncommercial use of a sound recording in 7 accordance with the regulations issued under 8 paragraph (3)(B) does not itself affect any limi- 9 tation on the exclusive rights of a copyright 10 owner described in section 107, 108, 109, 110, 11 or 112(f) as applied to a claim under subsection 12 (a) of this section pursuant to subsection 13 (f)(1)(A) of this section. 14 ‘‘(3) NOTICE OF COVERED ACTIVITY.—Not 15 later than 180 days after the date of enactment of 16 this section, the Register of Copyrights shall issue 17 regulations that— 18 ‘‘(A) provide specific, reasonable steps 19 that, if taken by a filer, are sufficient to con- 20 stitute a good faith, reasonable search under 21 paragraph (1)(A) to determine whether a re- 22 cording is being commercially exploited, includ- 23 ing the services that satisfy the good faith, rea- 24 sonable search requirement under paragraph EHF18470 S.L.C. 157 1 (1)(A) for purposes of the safe harbor described 2 in paragraph (4)(A); and 3 ‘‘(B) establish the form, content, and pro- 4 cedures for the filing of notices under para- 5 graph (1)(B). 6 ‘‘(4) SAFE 7 HARBOR.— ‘‘(A) IN GENERAL.—A person engaging in 8 a noncommercial use of a sound recording oth- 9 erwise permitted under this subsection who es- 10 tablishes that the person made a good faith, 11 reasonable search under paragraph (1)(A) with- 12 out finding commercial exploitation of the 13 sound recording by or under the authority of 14 the rights owner shall not be found to be in vio- 15 lation of subsection (a). 16 ‘‘(B) STEPS SUFFICIENT BUT NOT NEC- 17 ESSARY.—Taking the specific, reasonable steps 18 identified by the Register of Copyrights in the 19 regulations issued under paragraph (3)(A) shall 20 be sufficient, but not necessary, for a filer to 21 satisfy the requirement to conduct a good faith, 22 reasonable search under paragraph (1)(A) for 23 purposes of subparagraph (A) of this para- 24 graph. 25 ‘‘(5) OPTING OUT OF COVERED ACTIVITY.— EHF18470 S.L.C. 158 1 ‘‘(A) IN GENERAL.—Not later than 180 2 days after the date of enactment of this section, 3 the Register of Copyrights shall issue regula- 4 tions establishing the form, content, and proce- 5 dures for the rights owner of a sound recording 6 that is the subject of a notice under paragraph 7 (1)(B) to, in its discretion, file notice opting out 8 of the covered activity described in the notice 9 under paragraph (1)(B) during the 90-day pe- 10 riod beginning on the date on which the notice 11 under paragraph (1)(B) is indexed into the 12 public records of the Copyright Office. 13 ‘‘(B) RULE OF CONSTRUCTION.—The fact 14 that a rights holder opts out of a noncommer- 15 cial use of a sound recording by filing notice 16 thereof in the Copyright Office in accordance 17 with the regulations issued under subparagraph 18 (A) does not itself enlarge or diminish any limi- 19 tation on the exclusive rights of a copyright 20 owner described in section 107, 108, 109, 110, 21 or 112(f) as applied to a claim under subsection 22 (a) of this section pursuant to subsection 23 (f)(1)(A) of this section. 24 ‘‘(6) CIVIL PENALTIES FOR CERTAIN ACTS.— EHF18470 S.L.C. 159 1 ‘‘(A) FILING OF NOTICES OF NONCOMMER- 2 CIAL USE.—Any 3 a pattern or practice of filing a notice of non- 4 commercial use of a sound recording as de- 5 scribed in paragraph (1)(B) fraudulently de- 6 scribing the use proposed, or knowing that the 7 use proposed is not permitted under this sub- 8 section, shall be assessed a civil penalty in an 9 amount that is not less than $250, and not 10 more than $1000, for each such notice, in addi- 11 tion to any other remedies that may be avail- 12 able under this title based on the actual use 13 made. person who willfully engages in 14 ‘‘(B) FILING 15 ‘‘(i) IN OF OPT-OUT NOTICES.— GENERAL.—Any person who 16 files an opt-out notice as described in para- 17 graph (1)(C), knowing that the person is 18 not the rights owner or authorized to act 19 on behalf of the rights owner of the sound 20 recording to which the notice pertains, 21 shall be assessed a civil penalty in an 22 amount not less than $250, and not more 23 than $1,000, for each such notice. 24 25 ‘‘(ii) PATTERN OR PRACTICE.—Any person who engages in a pattern or prac- EHF18470 S.L.C. 160 1 tice of making filings as described in 2 clause (i) shall be assessed a civil penalty 3 in an amount not less than $10,000 for 4 each such filing. 5 ‘‘(C) DEFINITION.—For purposes of this 6 paragraph, the term ‘knowing’— 7 ‘‘(i) does not require specific intent to 8 defraud; and 9 ‘‘(ii) with respect to information about 10 ownership of the sound recording in ques- 11 tion, means that the person— 12 ‘‘(I) has actual knowledge of the 13 information; 14 ‘‘(II) acts in deliberate ignorance 15 of the truth or falsity of the informa- 16 tion; or 17 ‘‘(III) acts in grossly negligent 18 disregard of the truth or falsity of the 19 information. 20 ‘‘(d) PAYMENT OF PERFORMANCES BY 21 OF 22 TORY 23 ROYALTIES FOR TRANSMISSIONS DIRECT LICENSING OF STATU- SERVICES.— ‘‘(1) IN GENERAL.—A public performance by 24 means of a digital audio transmission of a sound re- 25 cording fixed before February 15, 1972, shall, for EHF18470 S.L.C. 161 1 purposes of subsection (a), be considered to be au- 2 thorized and made with the consent of the rights 3 owner if the transmission is made pursuant to a li- 4 cense agreement voluntarily negotiated at any time 5 between the rights owner and the entity performing 6 the sound recording. 7 ‘‘(2) PAYMENT 8 COLLECTIVE 9 MENTS.— 10 OF ROYALTIES TO NONPROFIT UNDER CERTAIN ‘‘(A) LICENSES LICENSE ENTERED INTO AGREE- ON OR 11 AFTER DATE OF ENACTMENT.—To 12 that a license agreement described in paragraph 13 (1) entered into on or after the date of enact- 14 ment of this section extends to a public per- 15 formance by means of a digital audio trans- 16 mission of a sound recording fixed before Feb- 17 ruary 15, 1972, that meets the conditions of 18 subsection (b)— the extent 19 ‘‘(i) the licensee shall, with respect to 20 such transmission, pay to the collective 21 designated to distribute receipts from the 22 licensing of transmissions in accordance 23 with section 114(f), 50 percent of the per- 24 formance royalties for that transmission 25 due under the license; and EHF18470 S.L.C. 162 1 ‘‘(ii) the royalties paid under clause 2 (i) shall be fully credited as payments due 3 under the license. 4 ‘‘(B) CERTAIN AGREEMENTS ENTERED 5 INTO BEFORE ENACTMENT.—To 6 a license agreement described in paragraph (1), 7 entered into during the period beginning on 8 January 1 of the year in which this section is 9 enacted and ending on the day before the date 10 of enactment of this section, or a settlement 11 agreement with a preexisting satellite digital 12 audio radio service (as defined in section 13 114(j)) entered into during the period begin- 14 ning on January 1, 2015, and ending on the 15 day before the date of enactment of this sec- 16 tion, extends to a public performance by means 17 of a digital audio transmission of a sound re- 18 cording fixed before February 15, 1972, that 19 meets the conditions of subsection (b)— the extent that 20 ‘‘(i) the rights owner shall, with re- 21 spect to such transmission, pay to the col- 22 lective designated to distribute receipts 23 from the licensing of transmissions in ac- 24 cordance with section 114(f) an amount 25 that is equal to the difference between— EHF18470 S.L.C. 163 1 2 3 ‘‘(I) 50 percent of the difference between— ‘‘(aa) the rights owner’s 4 total gross performance royalty 5 fee receipts or settlement monies 6 received 7 missions covered under the li- 8 cense or settlement agreement, as 9 applicable; and 10 ‘‘(bb) for the all such rights trans- owner’s 11 total payments for outside legal 12 expenses, including any payments 13 of third-party claims, that are di- 14 rectly attributable to the license 15 or settlement agreement, as ap- 16 plicable; and 17 ‘‘(II) the amount of any royalty 18 receipts or settlement monies under 19 the agreement that are distributed by 20 the rights owner to featured and non- 21 featured artists before the date of en- 22 actment of this section; and 23 ‘‘(ii) the royalties paid under clause 24 (i) shall be fully credited as payments due EHF18470 S.L.C. 164 1 under the license or settlement agreement, 2 as applicable. 3 ‘‘(3) DISTRIBUTION OF ROYALTIES AND SET- 4 TLEMENT MONIES BY COLLECTIVE.—The 5 described in paragraph (2) shall, in accordance with 6 subparagraphs 7 114(g)(2), and paragraphs (5) and (6) of section 8 114(g), distribute the royalties or settlement monies 9 received under paragraph (2) under a license or set- 10 tlement described in paragraph (2), which shall be 11 the only payments to which featured and nonfea- 12 tured artists are entitled by virtue of the trans- 13 missions described in paragraph (2), except for set- 14 tlement monies described in paragraph (2) that are 15 distributed by the rights owner to featured and non- 16 featured artists before the date of enactment of this 17 section. 18 (B) ‘‘(4) PAYMENT through (D) of collective section OF ROYALTIES UNDER LICENSE 19 AGREEMENTS ENTERED BEFORE ENACTMENT OR 20 NOT OTHERWISE DESCRIBED IN PARAGRAPH (2).— 21 ‘‘(A) IN GENERAL.—To the extent that a 22 license agreement described in paragraph (1) 23 entered into before the date of enactment of 24 this section, or any other license agreement not 25 as described in paragraph (2), extends to a EHF18470 S.L.C. 165 1 public performance by means of a digital audio 2 transmission of a sound recording fixed before 3 February 15, 1972, that meets the conditions 4 of subsection (b), the payments made by the li- 5 censee pursuant to the license shall be made in 6 accordance with the agreement. 7 ‘‘(B) ADDITIONAL PAYMENTS NOT RE- 8 QUIRED.—To 9 made, or will make in the future, payments pur- 10 suant to a license as described in subparagraph 11 (A), the provisions of paragraphs (2) and (3) 12 shall not require any additional payments from, 13 or additional financial obligations on the part 14 of, the licensee. 15 the extent that a licensee has ‘‘(C) RULE OF CONSTRUCTION.—Nothing 16 in this subsection may be construed to prohibit 17 the collective designated to distribute receipts 18 from the licensing of transmissions in accord- 19 ance with section 114(f) from administering 20 royalty payments under any license not de- 21 scribed in paragraph (2). 22 ‘‘(e) PREEMPTION WITH RESPECT TO CERTAIN PAST 23 ACTS.— 24 25 ‘‘(1) IN GENERAL.—This section preempts any claim of common law copyright or equivalent right EHF18470 S.L.C. 166 1 under the laws of any State arising from a digital 2 audio transmission or reproduction that is made be- 3 fore the date of enactment of this section of a sound 4 recording fixed before February 15, 1972, if— 5 ‘‘(A) the digital audio transmission would 6 have satisfied the requirements for statutory li- 7 censing under section 114(d)(2) or been exempt 8 under section 114(d)(1), or the reproduction 9 would have satisfied the requirements of section 10 112(e)(1), as the case may be, if the sound re- 11 cording were fixed on or after February 15, 12 1972; and 13 ‘‘(B) either— 14 ‘‘(i) except in the case of a trans- 15 mission that would have been exempt 16 under section 114(d)(1), not later than 17 270 days after the date of enactment of 18 this section, the transmitting entity pays 19 statutory royalties and provides notice of 20 the use of the relevant sound recordings in 21 the same manner as required by regula- 22 tions adopted by the Copyright Royalty 23 Judges for sound recordings that are fixed 24 on or after February 15, 1972, for all the 25 digital audio transmissions and reproduc- EHF18470 S.L.C. 167 1 tions satisfying the requirements for statu- 2 tory licensing under sections 112(e)(1) and 3 114(d)(2) during the 3 years before that 4 date of enactment; or 5 ‘‘(ii) an agreement voluntarily nego- 6 tiated between the rights owner and the 7 entity performing the sound recording (in- 8 cluding a litigation settlement agreement 9 entered into before the date of enactment 10 of this section) authorizes or waives liabil- 11 ity for any such transmission or reproduc- 12 tion and the transmitting entity has paid 13 for and reported such digital audio trans- 14 mission under that agreement. 15 ‘‘(2) RULE OF CONSTRUCTION FOR COMMON 16 LAW COPYRIGHT.—For 17 claim of common law copyright or equivalent right 18 under the laws of any State includes a claim that 19 characterizes conduct subject to that paragraph as 20 an unlawful distribution, act of record piracy, or 21 similar violation. 22 ‘‘(3) RULE OF purposes of paragraph (1), a CONSTRUCTION FOR PUBLIC 23 PERFORMANCE 24 may be construed to recognize or negate the exist- RIGHTS.—Nothing in this section EHF18470 S.L.C. 168 1 ence of public performance rights in sound record- 2 ings under the laws of any State. 3 ‘‘(f) LIMITATIONS ON REMEDIES.— 4 5 6 ‘‘(1) FAIR USE; USES BY LIBRARIES, ARCHIVES, AND EDUCATIONAL INSTITUTIONS.— ‘‘(A) IN GENERAL.—The limitations on the 7 exclusive rights of a copyright owner described 8 in sections 107, 108, 109, 110, and 112(f) shall 9 apply to a claim under subsection (a) with re- 10 spect to a sound recording fixed before Feb- 11 ruary 15, 1972. 12 ‘‘(B) RULE OF CONSTRUCTION FOR SEC- 13 TION 108(H).—With 14 section 108(h) to a claim under subsection (a) 15 with respect to a sound recording fixed before 16 February 15, 1972, the phrase ‘during the last 17 20 years of any term of copyright of a pub- 18 lished work’ in such section 108(h) shall be con- 19 strued to mean at any time after the date of en- 20 actment of this section. 21 ‘‘(2) ACTIONS.—The limitations on actions de- 22 scribed in section 507 shall apply to a claim under 23 subsection (a) with respect to a sound recording 24 fixed before February 15, 1972. respect to the application of EHF18470 S.L.C. 169 1 ‘‘(3) MATERIAL ONLINE.—Section 512 shall 2 apply to a claim under subsection (a) with respect 3 to a sound recording fixed before February 15, 4 1972. 5 ‘‘(4) PRINCIPLES OF EQUITY.—Principles of eq- 6 uity apply to remedies for a violation of this section 7 to the same extent as such principles apply to rem- 8 edies for infringement of copyright. 9 10 11 12 13 ‘‘(5) FILING REQUIREMENT FOR STATUTORY DAMAGES AND ATTORNEYS’ FEES.— ‘‘(A) FILING OF INFORMATION ON SOUND RECORDINGS.— ‘‘(i) FILING REQUIREMENT.—Except 14 in the case of a transmitting entity that 15 has filed contact information for that 16 transmitting entity under subparagraph 17 (B), in any action under this section, an 18 award of statutory damages or of attor- 19 neys’ fees under section 504 or 505 may 20 be made with respect to an unauthorized 21 use of a sound recording under subsection 22 (a) only if— 23 ‘‘(I) the rights owner has filed 24 with the Copyright Office a schedule 25 that specifies the title, artist, and EHF18470 S.L.C. 170 1 rights owner of the sound recording 2 and contains such other information, 3 as practicable, as the Register of 4 Copyrights prescribes by regulation; 5 and 6 ‘‘(II) the use occurs after the end 7 of the 90-day period beginning on the 8 date on which the information de- 9 scribed in subclause (I) is indexed into 10 the public records of the Copyright 11 Office. 12 ‘‘(ii) REGULATIONS.—Not later than 13 180 days after the date of enactment of 14 this section, the Register of Copyrights 15 shall issue regulations that— 16 ‘‘(I) establish the form, content, 17 and procedures for the filing of sched- 18 ules under clause (i); 19 ‘‘(II) provide that a person may 20 request that the person receive timely 21 notification of a filing described in 22 subclause (I); and 23 ‘‘(III) set forth the manner in 24 which a person may make a request 25 under subclause (II). EHF18470 S.L.C. 171 1 2 3 ‘‘(B) FILING OF CONTACT INFORMATION FOR TRANSMITTING ENTITIES.— ‘‘(i) FILING REQUIREMENT.—Not 4 later than 30 days after the date of enact- 5 ment of this section, the Register of Copy- 6 rights shall issue regulations establishing 7 the form, content, and procedures for the 8 filing of contact information by any entity 9 that, as of the date of enactment of this 10 section, performs a sound recording fixed 11 before February 15, 1972, by means of a 12 digital audio transmission. 13 ‘‘(ii) TIME LIMIT ON FILINGS.—The 14 Register of Copyrights may accept filings 15 under clause (i) only until the 180th day 16 after the date of enactment of this section. 17 18 ‘‘(iii) LIMITATION ON STATUTORY DAMAGES AND ATTORNEYS’ FEES.— 19 ‘‘(I) LIMITATION.—An award of 20 statutory damages or of attorneys’ 21 fees under section 504 or 505 may 22 not be made against an entity that 23 has filed contact information for that 24 entity under clause (i) with respect to 25 an unauthorized use by that entity of EHF18470 S.L.C. 172 1 a sound recording under subsection 2 (a) if the use occurs before the end of 3 the 90-day period beginning on the 4 date on which the entity receives a no- 5 tice that— 6 ‘‘(aa) is sent by or on behalf 7 of the rights owner of the sound 8 recording; 9 ‘‘(bb) states that the entity 10 is not legally authorized to use 11 that sound recording under sub- 12 section (a); and 13 ‘‘(cc) identifies the sound re- 14 cording in a schedule conforming 15 to the requirements prescribed by 16 the regulations issued under sub- 17 paragraph (A)(ii). 18 ‘‘(II) UNDELIVERABLE NO- 19 TICES.—In 20 under subclause (I) is sent to an enti- 21 ty by mail or courier service and the 22 notice is returned to the sender be- 23 cause the entity either is no longer lo- 24 cated at the address provided in the 25 contact information filed under clause any case in which a notice EHF18470 S.L.C. 173 1 (i) or has refused to accept delivery, 2 or the notice is sent by electronic mail 3 and is undeliverable, the 90-day pe- 4 riod under subclause (I) shall begin 5 on the date of the attempted delivery. 6 ‘‘(C) SECTION 412.—Section 412 shall not 7 limit an award of statutory damages under sec- 8 tion 504(c) or attorneys’ fees under section 505 9 with respect to a covered activity in violation of 10 subsection (a). 11 ‘‘(6) APPLICABILITY 12 ‘‘(A) IN OF OTHER PROVISIONS.— GENERAL.—Subject to subpara- 13 graph (B), no provision of this title shall apply 14 to or limit the remedies available under this 15 section except as otherwise provided in this sec- 16 tion. 17 ‘‘(B) APPLICABILITY OF DEFINITIONS.— 18 Any term used in this section that is defined in 19 section 101 shall have the meaning given that 20 term in section 101. 21 22 ‘‘(g) APPLICATION BOR.—For OF SECTION 230 SAFE HAR- purposes of section 230 of the Communica- 23 tions Act of 1934 (47 U.S.C. 230), subsection (a) shall 24 be considered to be a ‘law pertaining to intellectual prop25 erty’ under subsection (e)(2) of such section 230. EHF18470 S.L.C. 174 1 2 3 ‘‘(h) APPLICATION TO RIGHTS OWNERS.— ‘‘(1) TRANSFERS.—With respect to a rights owner described in subsection (l)(2)(B)— 4 ‘‘(A) subsections (d) and (e) of section 201 5 and section 204 shall apply to a transfer de- 6 scribed in subsection (l)(2)(B) to the same ex- 7 tent as with respect to a transfer of copyright 8 ownership; and 9 ‘‘(B) notwithstanding section 411, that 10 rights owner may institute an action with re- 11 spect to a violation of this section to the same 12 extent as the owner of an exclusive right under 13 a copyright may institute an action under sec- 14 tion 501(b). 15 ‘‘(2) APPLICATION OF OTHER PROVISIONS.— 16 The following provisions shall apply to a rights 17 owner under this section to the same extent as any 18 copyright owner: 19 ‘‘(A) Section 112(e)(2). 20 ‘‘(B) Section 112(e)(7). 21 ‘‘(C) Section 114(e). 22 ‘‘(D) Section 114(h). 23 ‘‘(i) EPHEMERAL RECORDINGS.—An authorized re- 24 production made under this section shall be subject to sec- EHF18470 S.L.C. 175 1 tion 112(g) to the same extent as a reproduction of a 2 sound recording fixed on or after February 15, 1972. 3 ‘‘(j) RULE OF CONSTRUCTION.—A rights owner of, 4 or featured recording artist who performs on, a sound re5 cording under this chapter shall be deemed to be an inter6 ested copyright party, as defined in section 1001, to the 7 same extent as a copyright owner or featured recording 8 artist under chapter 10. 9 10 ‘‘(k) TREATMENT MENTALITIES, OF OFFICERS, STATES AND AND STATE INSTRU- EMPLOYEES.—Any State, 11 and any instrumentality, officer, or employee described in 12 subsection (a)(3), shall be subject to the provisions of this 13 section in the same manner and to the same extent as 14 any nongovernmental entity. 15 16 ‘‘(l) DEFINITIONS.—In this section: ‘‘(1) COVERED ACTIVITY.—The term ‘covered 17 activity’ means any activity that the copyright owner 18 of a sound recording would have the exclusive right 19 to do or authorize under section 106 or 602, or that 20 would violate section 1201 or 1202, if the sound re- 21 cording were fixed on or after February 15, 1972. 22 23 ‘‘(2) RIGHTS OWNER.—The term ‘rights owner’ means— 24 ‘‘(A) the person that has the exclusive 25 right to reproduce a sound recording under the EHF18470 S.L.C. 176 1 laws of any State, as of the day before the date 2 of enactment of this section; or 3 ‘‘(B) any person to which a right to en- 4 force a violation of this section may be trans- 5 ferred, in whole or in part, after the date of en- 6 actment of this section, under— 7 ‘‘(i) subsections (d) and (e) of section 8 201; and 9 10 ‘‘(ii) section 204.’’. (b) CONFORMING AMENDMENT.—The table of chap- 11 ters for title 17, United States Code, is amended by add12 ing at the end the following: ‘‘14. Unauthorized use of pre-1972 sound recordings ............................ 1401’’. 13 14 15 16 TITLE III—ALLOCATION FOR MUSIC PRODUCERS SEC. 301. SHORT TITLE. This title may be cited as the ‘‘Allocation for Music 17 Producers Act’’ or the ‘‘AMP Act’’. 18 19 20 SEC. 302. PAYMENT OF STATUTORY PERFORMANCE ROYALTIES. (a) LETTER OF DIRECTION.—Section 114(g) of title 21 17, United States Code, is amended by adding at the end 22 the following: 23 ‘‘(5) LETTER 24 ‘‘(A) IN 25 OF DIRECTION.— GENERAL.—A nonprofit collective designated by the Copyright Royalty Judges to EHF18470 S.L.C. 177 1 distribute receipts from the licensing of trans- 2 missions in accordance with subsection (f) shall 3 adopt and reasonably implement a policy that 4 provides, in circumstances determined by the 5 collective to be appropriate, for acceptance of 6 instructions from a payee identified under sub- 7 paragraph (A) or (D) of paragraph (2) to dis- 8 tribute, to a producer, mixer, or sound engineer 9 who was part of the creative process that cre- 10 ated a sound recording, a portion of the pay- 11 ments to which the payee would otherwise be 12 entitled from the licensing of transmissions of 13 the sound recording. In this section, such in- 14 structions shall be referred to as a ‘letter of di- 15 rection’. 16 ‘‘(B) ACCEPTANCE OF LETTER.—To the 17 extent that a collective described in subpara- 18 graph (A) accepts a letter of direction under 19 that subparagraph, the person entitled to pay- 20 ment pursuant to the letter of direction shall, 21 during the period in which the letter of direc- 22 tion is in effect and carried out by the collec- 23 tive, be treated for all purposes as the owner of 24 the right to receive such payment, and the 25 payee providing the letter of direction to the EHF18470 S.L.C. 178 1 collective shall be treated as having no interest 2 in such payment. 3 ‘‘(C) AUTHORITY OF COLLECTIVE.—This 4 paragraph shall not be construed in such a 5 manner so that the collective is not authorized 6 to accept or act upon payment instructions in 7 circumstances other than those to which this 8 paragraph applies.’’. 9 (b) ADDITIONAL PROVISIONS FOR RECORDINGS 10 FIXED BEFORE NOVEMBER 1, 1995.—Section 114(g) of 11 title 17, United States Code, as amended by subsection 12 (a), is further amended by adding at the end the following: 13 14 15 ‘‘(6) SOUND RECORDINGS FIXED BEFORE NO- VEMBER 1, 1995.— ‘‘(A) PAYMENT ABSENT LETTER OF DI- 16 RECTION.—A 17 the Copyright Royalty Judges to distribute re- 18 ceipts from the licensing of transmissions in ac- 19 cordance with subsection (f) (in this paragraph 20 referred to as the ‘collective’) shall adopt and 21 reasonably implement a policy that provides, in 22 circumstances determined by the collective to be 23 appropriate, for the deduction of 2 percent of 24 all the receipts that are collected from the li- 25 censing of transmissions of a sound recording nonprofit collective designated by EHF18470 S.L.C. 179 1 fixed before November 1, 1995, but which is 2 withdrawn from the amount otherwise payable 3 under paragraph (2)(D) to the recording artist 4 or artists featured on the sound recording (or 5 the persons conveying rights in the artists’ per- 6 formance in the sound recording), and the dis- 7 tribution of such amount to 1 or more persons 8 described in subparagraph (B) of this para- 9 graph, after deduction of costs described in 10 paragraph (3) or (4), as applicable, if each of 11 the following requirements is met: 12 ‘‘(i) CERTIFICATION OF ATTEMPT TO 13 OBTAIN A LETTER OF DIRECTION.—The 14 person described in subparagraph (B) who 15 is to receive the distribution has certified 16 to the collective, under penalty of perjury, 17 that— 18 ‘‘(I) for a period of not less than 19 120 days, that person made reason- 20 able efforts to contact the artist payee 21 for such sound recording to request 22 and obtain a letter of direction in- 23 structing the collective to pay to that 24 person a portion of the royalties pay- EHF18470 S.L.C. 180 1 able to the featured recording artist 2 or artists; and 3 ‘‘(II) during the period beginning 4 on the date on which that person 5 began the reasonable efforts described 6 in subclause (I) and ending on the 7 date of that person’s certification to 8 the collective, the artist payee did not 9 affirm or deny in writing the request 10 for a letter of direction. 11 ‘‘(ii) COLLECTIVE ATTEMPT TO CON- 12 TACT ARTIST.—After 13 cation described in clause (i) and for a pe- 14 riod of not less than 120 days before the 15 first distribution by the collective to the 16 person described in subparagraph (B), the 17 collective attempts, in a reasonable manner 18 as determined by the collective, to notify 19 the artist payee of the certification made 20 by the person described in subparagraph 21 (B). 22 ‘‘(iii) NO receipt of the certifi- OBJECTION RECEIVED.—The 23 artist payee does not, as of the date that 24 was 10 business days before the date on 25 which the first distribution is made, submit EHF18470 S.L.C. 181 1 to the collective in writing an objection to 2 the distribution. 3 ‘‘(B) ELIGIBILITY FOR PAYMENT.—A per- 4 son shall be eligible for payment under subpara- 5 graph (A) if the person— 6 7 ‘‘(i) is a producer, mixer, or sound engineer of the sound recording; 8 ‘‘(ii) has entered into a written con- 9 tract with a record company involved in 10 the creation or lawful exploitation of the 11 sound recording, or with the recording art- 12 ist or artists featured on the sound record- 13 ing (or the persons conveying rights in the 14 artists’ performance in the sound record- 15 ing), under which the person seeking pay- 16 ment is entitled to participate in royalty 17 payments that are based on the exploi- 18 tation of the sound recording and are pay- 19 able from royalties otherwise payable to 20 the recording artist or artists featured on 21 the sound recording (or the persons con- 22 veying rights in the artists’ performance in 23 the sound recording); 24 25 ‘‘(iii) made a creative contribution to the creation of the sound recording; and EHF18470 S.L.C. 182 1 ‘‘(iv) submits to the collective— 2 ‘‘(I) a written certification stat- 3 ing, under penalty of perjury, that the 4 person meets the requirements in 5 clauses (i) through (iii); and 6 ‘‘(II) a true copy of the contract 7 8 described in clause (ii). ‘‘(C) MULTIPLE CERTIFICATIONS.—Sub- 9 ject to subparagraph (D), in a case in which 10 more than 1 person described in subparagraph 11 (B) has met the requirements for a distribution 12 under subparagraph (A) with respect to a 13 sound recording as of the date that is 10 busi- 14 ness days before the date on which the distribu- 15 tion is made, the collective shall divide the 2 16 percent distribution equally among all such per- 17 sons. 18 ‘‘(D) OBJECTION TO PAYMENT.—Not later 19 than 10 business days after the date on which 20 the collective receives from the artist payee a 21 written objection to a distribution made pursu- 22 ant to subparagraph (A), the collective shall 23 cease making any further payment relating to 24 such distribution. In any case in which the col- 25 lective has made 1 or more distributions pursu- EHF18470 S.L.C. 183 1 ant to subparagraph (A) to a person described 2 in subparagraph (B) before the date that is 10 3 business days after the date on which the col- 4 lective receives from the artist payee an objec- 5 tion to such distribution, the objection shall not 6 affect that person’s entitlement to any distribu- 7 tion made before the collective ceases such dis- 8 tribution under this subparagraph. 9 ‘‘(E) OWNERSHIP OF THE RIGHT TO RE- 10 CEIVE PAYMENTS.—To the extent that the col- 11 lective determines that a distribution will be 12 made under subparagraph (A) to a person de- 13 scribed in subparagraph (B), such person shall, 14 during the period covered by such distribution, 15 be treated for all purposes as the owner of the 16 right to receive such payments, and the artist 17 payee to whom such payments would otherwise 18 be payable shall be treated as having no inter- 19 est in such payments. 20 ‘‘(F) ARTIST PAYEE DEFINED.—In this 21 paragraph, the term ‘artist payee’ means a per- 22 son, other than a person described in subpara- 23 graph (B), who owns the right to receive all or 24 part of the receipts payable under paragraph 25 (2)(D) with respect to a sound recording. In a EHF18470 S.L.C. 184 1 case in which there are multiple artist payees 2 with respect to a sound recording, an objection 3 by 1 such payee shall apply only to that payee’s 4 share of the receipts payable under paragraph 5 (2)(D), and shall not preclude payment under 6 subparagraph (A) from the share of an artist 7 payee that does not so object.’’. 8 (c) TECHNICAL AND CONFORMING AMENDMENTS.— 9 Section 114(g) of title 17, United States Code, as amend10 ed by subsections (a) and (b), is further amended— 11 (1) in paragraph (2), by striking ‘‘An agent 12 designated’’ and inserting ‘‘Except as provided for in 13 paragraph (6), a nonprofit collective designated by 14 the Copyright Royalty Judges’’; 15 (2) in paragraph (3)— 16 (A) by striking ‘‘nonprofit agent des- 17 ignated’’ and inserting ‘‘nonprofit collective des- 18 ignated by the Copyright Royalty Judges’’; 19 (B) by striking ‘‘another designated agent’’ 20 and inserting ‘‘another designated nonprofit col- 21 lective’’; and 22 (C) by striking ‘‘agent’’ and inserting ‘‘col- 23 lective’’ each subsequent place it appears; 24 (3) in paragraph (4)— EHF18470 S.L.C. 185 1 (A) by striking ‘‘designated agent’’ and in- 2 serting ‘‘nonprofit collective’’; and 3 (B) by striking ‘‘agent’’ and inserting ‘‘col- 4 lective’’ each subsequent place it appears; and 5 (4) by adding at the end the following: 6 ‘‘(7) PREEMPTION OF STATE PROPERTY 7 LAWS.—The 8 under section 112 and this section by a nonprofit 9 collective designated by the Copyright Royalty 10 Judges in accordance with this subsection and regu- 11 lations adopted by the Copyright Royalty Judges, or 12 by an independent administrator pursuant to sub- 13 paragraphs (B) and (C) of section 114(g)(2), shall 14 supersede and preempt any State law (including 15 common law) concerning escheatment or abandoned 16 property, or any analogous provision, that might 17 otherwise apply.’’. 18 19 holding and distribution of receipts SEC. 303. EFFECTIVE DATE. (a) IN GENERAL.—Except as provided in subsection 20 (b), this title and the amendments made by this title shall 21 take effect on the date of enactment of this Act. 22 (b) DELAYED EFFECTIVE DATE.—Paragraphs 23 (5)(B) and (6)(E) of section 114(g) of title 17, United 24 States Code, as added by section 302, shall take effect 25 on January 1, 2020. EHF18470 S.L.C. 186 1 2 3 TITLE IV—SEVERABILITY SEC. 401. SEVERABILITY. If any provision of this Act or any amendment made 4 by this Act, or any application of such provision or amend5 ment to any person or circumstance, is held to be uncon6 stitutional, the remainder of the provisions of this Act and 7 the amendments made by this Act, and the application of 8 the provision or amendment to any other person or cir9 cumstance, shall not be affected.