[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5447 Received in Senate (RDS)]
<DOC>
115th CONGRESS
2d Session
H. R. 5447
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 26, 2018
Received
_______________________________________________________________________
AN ACT
To modernize copyright law, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Music
Modernization Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Rescission Of Unobligated Balances In The Department Of Justice
Assets Forfeiture Fund.
TITLE I--MUSIC LICENSING MODERNIZATION
Sec. 101. Short title.
Sec. 102. Blanket license for digital uses and mechanical licensing
collective.
Sec. 103. Amendments to section 114.
Sec. 104. Random assignment of rate court proceedings.
TITLE II--COMPENSATING LEGACY ARTISTS FOR THEIR SONGS, SERVICE, AND
IMPORTANT CONTRIBUTIONS TO SOCIETY
Sec. 201. Short title.
Sec. 202. Unauthorized digital performance of pre-1972 sound
recordings.
Sec. 203. Effective date.
TITLE III--ALLOCATION FOR MUSIC PRODUCERS
Sec. 301. Short title.
Sec. 302. Payment of statutory performance royalties.
Sec. 303. Effective date.
SEC. 2. RESCISSION OF UNOBLIGATED BALANCES IN THE DEPARTMENT OF JUSTICE
ASSETS FORFEITURE FUND.
Of the unobligated balances available under the Department of
Justice Assets Forfeiture Fund, $47,000,000 is hereby permanently
rescinded.
TITLE I--MUSIC LICENSING MODERNIZATION
SEC. 101. SHORT TITLE.
This title may be cited as the ``Musical Works Modernization Act''.
SEC. 102. BLANKET LICENSE FOR DIGITAL USES AND MECHANICAL LICENSING
COLLECTIVE.
(a) Amendment.--Section 115 of title 17, United States Code, is
amended--
(1) in subsection (a)--
(A) by inserting ``in General'' after
``Availability and Scope of Compulsory License'';
(B) by striking paragraph (1) and inserting the
following new paragraph:
``(1) Eligibility for compulsory license.--
``(A) Conditions for compulsory license.--A person
may by complying with the provisions of this section
obtain a compulsory license to make and distribute
phonorecords of a nondramatic musical work, including
by means of digital phonorecord delivery. A person may
obtain a compulsory license only if the primary purpose
in making phonorecords of the musical work is to
distribute them to the public for private use,
including by means of digital phonorecord delivery,
and--
``(i) phonorecords of such musical work
have previously been distributed to the public
in the United States under the authority of the
copyright owner of the work, including by means
of digital phonorecord delivery; or
``(ii) in the case of a digital music
provider seeking to make and distribute digital
phonorecord deliveries of a sound recording
embodying a musical work under a compulsory
license for which clause (i) does not apply--
``(I) the first fixation of such
sound recording was made under the
authority of the musical work copyright
owner, and sound recording copyright
owner has the authority of the musical
work copyright owner to make and
distribute digital phonorecord
deliveries embodying such work to the
public in the United States; and
``(II) the sound recording
copyright owner or its authorized
distributor has authorized the digital
music provider to make and distribute
digital phonorecord deliveries of the
sound recording to the public in the
United States.
``(B) Duplication of sound recording.--A person may
not obtain a compulsory license for the use of the work
in the making of phonorecords duplicating a sound
recording fixed by another, including by means of
digital phonorecord delivery, unless--
``(i) such sound recording was fixed
lawfully; and
``(ii) the making of the phonorecords was
authorized by the owner of the copyright in the
sound recording or, if the sound recording was
fixed before February 15, 1972, by any person
who fixed the sound recording pursuant to an
express license from the owner of the copyright
in the musical work or pursuant to a valid
compulsory license for use of such work in a
sound recording.''; and
(C) in paragraph (2), by striking ``A compulsory
license'' and inserting ``Musical arrangement.--A
compulsory license'';
(2) by striking subsection (b) and inserting the following:
``(b) Procedures To Obtain a Compulsory License.--
``(1) Phonorecords other than digital phonorecord
deliveries.--A person who seeks to obtain a compulsory license
under subsection (a) to make and distribute phonorecords of a
musical work other than by means of digital phonorecord
delivery shall, before or within 30 calendar days after making,
and before distributing, any phonorecord of the work, serve
notice of intention to do so on the copyright owner. If the
registration or other public records of the Copyright Office do
not identify the copyright owner and include an address at
which notice can be served, it shall be sufficient to file the
notice of intention with the Copyright Office. The notice shall
comply, in form, content, and manner of service, with
requirements that the Register of Copyrights shall prescribe by
regulation.
``(2) Digital phonorecord deliveries.--A person who seeks
to obtain a compulsory license under subsection (a) to make and
distribute phonorecords of a musical work by means of digital
phonorecord delivery--
``(A) prior to the license availability date,
shall, before or within 30 calendar days after first
making any such digital phonorecord delivery, serve a
notice of intention to do so on the copyright owner
(but may not file the notice with the Copyright Office,
even if the public records of the Office do not
identify the owner or the owner's address), and such
notice shall comply, in form, content, and manner of
service, with requirements that the Register of
Copyrights shall prescribe by regulation; or
``(B) on or after the license availability date,
shall, before making any such digital phonorecord
delivery, follow the procedure described in subsection
(d)(2), except as provided in paragraph (3).
``(3) Record company individual download licenses.--
Notwithstanding paragraph (2)(B), a record company may, on or
after the license availability date, obtain an individual
download license in accordance with the notice requirements
described in paragraph (2)(A) (except for the requirement that
notice occur prior to the license availability date). A record
company that obtains an individual download license as
permitted under this paragraph shall provide statements of
account and pay royalties as provided in subsection (c)(2)(I).
``(4) Failure to obtain license.--
``(A) Phonorecords other than digital phonorecord
deliveries.--In the case of phonorecords made and
distributed other than by means of digital phonorecord
delivery, the failure to serve or file the notice of
intention required by paragraph (1) forecloses the
possibility of a compulsory license under paragraph
(1). In the absence of a voluntary license, the failure
to obtain a compulsory license renders the making and
distribution of phonorecords actionable as acts of
infringement under section 501 and subject to the
remedies provided by sections 502 through 506.
``(B) Digital phonorecord deliveries.--
``(i) In the case of phonorecords made and
distributed by means of digital phonorecord
delivery:
``(I) The failure to serve the
notice of intention required by
paragraph (2)(A) or paragraph (3), as
applicable, forecloses the possibility
of a compulsory license under such
paragraph.
``(II) The failure to comply with
paragraph (2)(B) forecloses the
possibility of a blanket license for a
period of 3 years after the last
calendar day on which the notice of
license was required to be submitted to
the mechanical licensing collective
under such paragraph.
``(ii) In either case described in clause
(i), in the absence of a voluntary license, the
failure to obtain a compulsory license renders
the making and distribution of phonorecords by
means of digital phonorecord delivery
actionable as acts of infringement under
section 501 and subject to the remedies
provided by sections 502 through 506.'';
(3) by amending subsection (c) to read as follows:
``(c) General Conditions Applicable to Compulsory License.--
``(1) Royalty payable under compulsory license.--
``(A) Identification requirement.--To be entitled
to receive royalties under a compulsory license
obtained under subsection (b)(1) the copyright owner
must be identified in the registration or other public
records of the Copyright Office. The owner is entitled
to royalties for phonorecords made and distributed
after being so identified, but is not entitled to
recover for any phonorecords previously made and
distributed.
``(B) Royalty for phonorecords other than digital
phonorecord deliveries.--Except as provided by
subparagraph (A), for every phonorecord made and
distributed under a compulsory license under subsection
(a) other than by means of digital phonorecord
delivery, with respect to each work embodied in the
phonorecord, the royalty shall be the royalty
prescribed under subparagraphs (D) through (F) and
paragraph (2)(A) and chapter 8 of this title. For
purposes of this subparagraph, a phonorecord is
considered `distributed' if the person exercising the
compulsory license has voluntarily and permanently
parted with its possession.
``(C) Royalty for digital phonorecord deliveries.--
For every digital phonorecord delivery of a musical
work made under a compulsory license under this
section, the royalty payable shall be the royalty
prescribed under subparagraphs (D) through (F) and
paragraph (2)(A) and chapter 8 of this title.
``(D) Authority to negotiate.--Notwithstanding any
provision of the antitrust laws, any copyright owners
of nondramatic musical works and any persons entitled
to obtain a compulsory license under subsection (a) may
negotiate and agree upon the terms and rates of royalty
payments under this section and the proportionate
division of fees paid among copyright owners, and may
designate common agents on a nonexclusive basis to
negotiate, agree to, pay or receive such royalty
payments. Such authority to negotiate the terms and
rates of royalty payments includes, but is not limited
to, the authority to negotiate the year during which
the royalty rates prescribed under this subparagraph
and subparagraphs (E) and (F) and paragraph (2)(A) and
chapter 8 of this title shall next be determined.
``(E) Determination of reasonable rates and
terms.--Proceedings under chapter 8 shall determine
reasonable rates and terms of royalty payments for the
activities specified by this section during the period
beginning with the effective date of such rates and
terms, but not earlier than January 1 of the second
year following the year in which the petition
requesting the proceeding is filed, and ending on the
effective date of successor rates and terms, or such
other period as the parties may agree. Any copyright
owners of nondramatic musical works and any persons
entitled to obtain a compulsory license under
subsection (a) may submit to the Copyright Royalty
Judges licenses covering such activities. The parties
to each proceeding shall bear their own costs.
``(F) Schedule of reasonable rates.--The schedule
of reasonable rates and terms determined by the
Copyright Royalty Judges shall, subject to paragraph
(2)(A), be binding on all copyright owners of
nondramatic musical works and persons entitled to
obtain a compulsory license under subsection (a) during
the period specified in subparagraph (E), such other
period as may be determined pursuant to subparagraphs
(D) and (E), or such other period as the parties may
agree. The Copyright Royalty Judges shall establish
rates and terms that most clearly represent the rates
and terms that would have been negotiated in the
marketplace between a willing buyer and a willing
seller. In determining such rates and terms for digital
phonorecord deliveries, the Copyright Royalty Judges
shall base their decision on economic, competitive, and
programming information presented by the parties,
including--
``(i) whether use of the compulsory
licensee's service may substitute for or may
promote the sales of phonorecords or otherwise
may interfere with or may enhance the musical
work copyright owner's other streams of revenue
from its musical works; and
``(ii) the relative roles of the copyright
owner and the compulsory licensee in the
copyrighted work and the service made available
to the public with respect to the relative
creative contribution, technological
contribution, capital investment, cost, and
risk.
``(2) Additional terms and conditions.--
``(A) Voluntary licenses and contractual royalty
rates.--
``(i) License agreements voluntarily
negotiated at any time between one or more
copyright owners of nondramatic musical works
and one or more persons entitled to obtain a
compulsory license under subsection (a) shall
be given effect in lieu of any determination by
the Copyright Royalty Judges. Subject to clause
(ii), the royalty rates determined pursuant to
subparagraphs (E) and (F) of paragraph (1)
shall be given effect as to digital phonorecord
deliveries in lieu of any contrary royalty
rates specified in a contract pursuant to which
a recording artist who is the author of a
nondramatic musical work grants a license under
that person's exclusive rights in the musical
work under paragraphs (1) and (3) of section
106 or commits another person to grant a
license in that musical work under paragraphs
(1) and (3) of section 106, to a person
desiring to fix in a tangible medium of
expression a sound recording embodying the
musical work.
``(ii) The second sentence of clause (i)
shall not apply to--
``(I) a contract entered into on or
before June 22, 1995, and not modified
thereafter for the purpose of reducing
the royalty rates determined pursuant
to subparagraphs (E) and (F) of
paragraph (1) or of increasing the
number of musical works within the
scope of the contract covered by the
reduced rates, except if a contract
entered into on or before June 22,
1995, is modified thereafter for the
purpose of increasing the number of
musical works within the scope of the
contract, any contrary royalty rates
specified in the contract shall be
given effect in lieu of royalty rates
determined pursuant to subparagraphs
(E) and (F) of paragraph (1) for the
number of musical works within the
scope of the contract as of June 22,
1995; and
``(II) a contract entered into
after the date that the sound recording
is fixed in a tangible medium of
expression substantially in a form
intended for commercial release, if at
the time the contract is entered into,
the recording artist retains the right
to grant licenses as to the musical
work under paragraphs (1) and (3) of
section 106.
``(B) Sound recording information.--Except as
provided in section 1002(e) of this title, a digital
phonorecord delivery licensed under this paragraph
shall be accompanied by the information encoded in the
sound recording, if any, by or under the authority of
the copyright owner of that sound recording, that
identifies the title of the sound recording, the
featured recording artist who performs on the sound
recording, and related information, including
information concerning the underlying musical work and
its writer.
``(C) Infringement remedies.--
``(i) A digital phonorecord delivery of a
sound recording is actionable as an act of
infringement under section 501, and is fully
subject to the remedies provided by sections
502 through 506, unless--
``(I) the digital phonorecord
delivery has been authorized by the
sound recording copyright owner; and
``(II) the entity making the
digital phonorecord delivery has
obtained a compulsory license under
subsection (a) or has otherwise been
authorized by the musical work
copyright owner, or by a record company
pursuant to an individual download
license, to make and distribute
phonorecords of each musical work
embodied in the sound recording by
means of digital phonorecord delivery.
``(ii) Any cause of action under this
subparagraph shall be in addition to those
available to the owner of the copyright in the
nondramatic musical work under subparagraph (J)
and section 106(4) and the owner of the
copyright in the sound recording under section
106(6).
``(D) Liability of sound recording owners.--The
liability of the copyright owner of a sound recording
for infringement of the copyright in a nondramatic
musical work embodied in the sound recording shall be
determined in accordance with applicable law, except
that the owner of a copyright in a sound recording
shall not be liable for a digital phonorecord delivery
by a third party if the owner of the copyright in the
sound recording does not license the distribution of a
phonorecord of the nondramatic musical work.
``(E) Recording devices and media.--Nothing in
section 1008 shall be construed to prevent the exercise
of the rights and remedies allowed by this paragraph,
subparagraph (J), and chapter 5 in the event of a
digital phonorecord delivery, except that no action
alleging infringement of copyright may be brought under
this title against a manufacturer, importer or
distributor of a digital audio recording device, a
digital audio recording medium, an analog recording
device, or an analog recording medium, or against a
consumer, based on the actions described in such
section.
``(F) Preservation of rights.--Nothing in this
section annuls or limits (i) the exclusive right to
publicly perform a sound recording or the musical work
embodied therein, including by means of a digital
transmission, under sections 106(4) and 106(6), (ii)
except for compulsory licensing under the conditions
specified by this section, the exclusive rights to
reproduce and distribute the sound recording and the
musical work embodied therein under sections 106(1) and
106(3), including by means of a digital phonorecord
delivery, or (iii) any other rights under any other
provision of section 106, or remedies available under
this title, as such rights or remedies exist either
before or after the date of enactment of the Digital
Performance Right in Sound Recordings Act of 1995.
``(G) Exempt transmissions and retransmissions.--
The provisions of this section concerning digital
phonorecord deliveries shall not apply to any exempt
transmissions or retransmissions under section
114(d)(1). The exemptions created in section 114(d)(1)
do not expand or reduce the rights of copyright owners
under section 106(1) through (5) with respect to such
transmissions and retransmissions.
``(H) Distribution by rental, lease, or lending.--A
compulsory license obtained under subsection (b)(1) to
make and distribute phonorecords includes the right of
the maker of such a phonorecord to distribute or
authorize distribution of such phonorecord, other than
by means of a digital phonorecord delivery, by rental,
lease, or lending (or by acts or practices in the
nature of rental, lease, or lending). With respect to
each nondramatic musical work embodied in the
phonorecord, the royalty shall be a proportion of the
revenue received by the compulsory licensee from every
such act of distribution of the phonorecord under this
clause equal to the proportion of the revenue received
by the compulsory licensee from distribution of the
phonorecord under subsection (a)(1)(A)(ii)(II) that is
payable by a compulsory licensee under that clause and
under chapter 8. The Register of Copyrights shall issue
regulations to carry out the purpose of this clause.
``(I) Payment of royalties and statements of
account.--Except as provided in paragraphs (4)(A)(i)
and (10)(B) of subsection (d), royalty payments shall
be made on or before the twentieth day of each month
and shall include all royalties for the month next
preceding. Each monthly payment shall be made under
oath and shall comply with requirements that the
Register of Copyrights shall prescribe by regulation.
The Register shall also prescribe regulations under
which detailed cumulative annual statements of account,
certified by a certified public accountant, shall be
filed for every compulsory license under subsection
(a). The regulations covering both the monthly and the
annual statements of account shall prescribe the form,
content, and manner of certification with respect to
the number of records made and the number of records
distributed.
``(J) Notice of default and termination of
compulsory license.--In the case of a license obtained
under subsection (b)(1), (b)(2)(A), or (b)(3), if the
copyright owner does not receive the monthly payment
and the monthly and annual statements of account when
due, the owner may give written notice to the licensee
that, unless the default is remedied within 30 days
from the date of the notice, the compulsory license
will be automatically terminated. Such termination
renders either the making or the distribution, or both,
of all phonorecords for which the royalty has not been
paid, actionable as acts of infringement under section
501 and fully subject to the remedies provided by
sections 502 through 506. In the case of a license
obtained under subsection (b)(2)(B), license authority
under the compulsory license may be terminated as
provided in subsection (d)(4)(E).'';
(4) by amending subsection (d) to read as follows:
``(d) Blanket License for Digital Uses, Mechanical Licensing
Collective, and Digital Licensee Coordinator.--
``(1) Blanket license for digital uses.--
``(A) In general.--A digital music provider that
qualifies for a compulsory license under subsection (a)
may, by complying with the terms and conditions of this
subsection, obtain a blanket license from copyright
owners through the mechanical licensing collective to
make and distribute digital phonorecord deliveries of
musical works through one or more covered activities.
``(B) Included activities.--A blanket license--
``(i) covers all musical works (or shares
of such works) available for compulsory
licensing under this section for purposes of
engaging in covered activities, except as
provided in subparagraph (C);
``(ii) includes the making and distribution
of server, intermediate, archival, and
incidental reproductions of musical works that
are reasonable and necessary for the digital
music provider to engage in covered activities
licensed under this subsection, solely for the
purpose of engaging in such covered activities;
and
``(iii) does not cover or include any
rights or uses other than those described in
clauses (i) and (ii).
``(C) Other licenses.--A voluntary license for
covered activities entered into by or under the
authority of one or more copyright owners and one or
more digital music providers, or authority to make and
distribute permanent downloads of a musical work
obtained by a digital music provider from a sound
recording copyright owner pursuant to an individual
download license, shall be given effect in lieu of a
blanket license under this subsection with respect to
the musical works (or shares thereof) covered by such
voluntary license or individual download authority and
the following conditions apply:
``(i) Where a voluntary license or
individual download license applies, the
license authority provided under the blanket
license shall exclude any musical works (or
shares thereof) subject to the voluntary
license or individual download license.
``(ii) An entity engaged in covered
activities under a voluntary license or
authority obtained pursuant to an individual
download license that is a significant
nonblanket licensee shall comply with paragraph
(6)(A).
``(iii) The rates and terms of any
voluntary license shall be subject to the
second sentence of clause (i) and clause (ii)
of subsection (c)(2)(A) and paragraph (9)(C),
as applicable.
``(D) Protection against infringement actions.--A
digital music provider that obtains and complies with
the terms of a valid blanket license under this
subsection shall not be subject to an action for
infringement of the exclusive rights provided by
paragraphs (1) and (3) of section 106 under this title
arising from use of a musical work (or share thereof)
to engage in covered activities authorized by such
license, subject to paragraph (4)(E).
``(E) Other requirements and conditions apply.--
Except as expressly provided in this subsection, each
requirement, limitation, condition, privilege, right,
and remedy otherwise applicable to compulsory licenses
under this section shall apply to compulsory blanket
licenses under this subsection.
``(2) Availability of blanket license.--
``(A) Procedure for obtaining license.--A digital
music provider may obtain a blanket license by
submitting a notice of license to the mechanical
licensing collective that specifies the particular
covered activities in which the digital music provider
seeks to engage, as follows:
``(i) The notice of license shall comply in
form and substance with requirements that the
Register of Copyrights shall establish by
regulation.
``(ii) Unless rejected in writing by the
mechanical licensing collective within 30
calendar days after receipt, the blanket
license shall be effective as of the date the
notice of license was sent by the digital music
provider as shown by a physical or electronic
record.
``(iii) A notice of license may only be
rejected by the mechanical licensing collective
if--
``(I) the digital music provider or
notice of license does not meet the
requirements of this section or
applicable regulations, in which case
the requirements at issue shall be
specified with reasonable particularity
in the notice of rejection; or
``(II) the digital music provider
has had a blanket license terminated by
the mechanical licensing collective
within the past 3 years pursuant to
paragraph (4)(E).
``(iv) If a notice of license is rejected
under clause (iii)(I), the digital music
provider shall have 30 calendar days after
receipt of the notice of rejection to cure any
deficiency and submit an amended notice of
license to the mechanical licensing collective.
If the deficiency has been cured, the
mechanical licensing collective shall so
confirm in writing, and the license shall be
effective as of the date that the original
notice of license was provided by the digital
music provider.
``(v) A digital music provider that
believes a notice of license was improperly
rejected by the mechanical licensing collective
may seek review of such rejection in Federal
district court. The district court shall
determine the matter de novo based on the
record before the mechanical licensing
collective and any additional evidence
presented by the parties.
``(B) Blanket license effective date.--Blanket
licenses shall be made available by the mechanical
licensing collective on and after the license
availability date. No such license shall be effective
prior to the license availability date.
``(3) Mechanical licensing collective.--
``(A) In general.--The mechanical licensing
collective shall be a single entity that--
``(i) is a nonprofit, not owned by any
other entity, that is created by copyright
owners to carry out responsibilities under this
subsection;
``(ii) is endorsed by and enjoys
substantial support from musical work copyright
owners that together represent the greatest
percentage of the licensor market for uses of
such works in covered activities, as measured
over the preceding 3 full calendar years;
``(iii) is able to demonstrate to the
Register of Copyrights that it has, or will
have prior to the license availability date,
the administrative and technological
capabilities to perform the required functions
of the mechanical licensing collective under
this subsection; and
``(iv) has been designated by the Register
of Copyrights in accordance with subparagraph
(B).
``(B) Designation of mechanical licensing
collective.--
``(i) Initial designation.--The Register of
Copyrights shall initially designate the
mechanical licensing collective within 9 months
after the enactment date as follows:
``(I) Within 90 calendar days after
the enactment date, the Register shall
publish notice in the Federal Register
soliciting information to assist in
identifying the appropriate entity to
serve as the mechanical licensing
collective, including the name and
affiliation of each member of the board
of directors described under
subparagraph (D)(i) and each committee
established pursuant to clauses (iii),
(iv), and (v) of subparagraph (D).
``(II) After reviewing the
information requested under subclause
(I) and making a designation, the
Register shall publish notice in the
Federal Register setting forth the
identity of and contact information for
the mechanical licensing collective.
``(ii) Periodic review of designation.--
Following the initial designation of the
mechanical licensing collective, the Register
shall, every 5 years, beginning with the fifth
full calendar year to commence after the
initial designation, publish notice in the
Federal Register in the month of January
soliciting information concerning whether the
existing designation should be continued, or a
different entity meeting the criteria described
in clauses (i) through (iii) of subparagraph
(A) shall be designated. Following publication
of such notice:
``(I) The Register shall, after
reviewing the information submitted and
conducting additional proceedings as
appropriate, publish notice in the
Federal Register of a continuing
designation or new designation of the
mechanical licensing collective, as the
case may be, with any new designation
to be effective as of the first day of
a month that is no less than 6 months
and no longer than 9 months after the
date of publication of such notice, as
specified by the Register.
``(II) If a new entity is
designated as a mechanical licensing
collective, the Register shall adopt
regulations to govern the transfer of
licenses, funds, records, data, and
administrative responsibilities from
the existing mechanical licensing
collective to the new entity.
``(iii) Closest alternative designation.--
If the Register is unable to identify an entity
that fulfills each of the qualifications set
forth in clauses (i) through (iii) of
subparagraph (A), the Register shall designate
the entity that most nearly fulfills such
qualifications for purposes of carrying out the
responsibilities of the mechanical licensing
collective.
``(C) Authorities and functions.--
``(i) In general.--The mechanical licensing
collective is authorized to perform the
following functions, subject to more particular
requirements as described in this subsection:
``(I) Offer and administer blanket
licenses, including receipt of notices
of license and reports of usage from
digital music providers.
``(II) Collect and distribute
royalties from digital music providers
for covered activities.
``(III) Engage in efforts to
identify musical works (and shares of
such works) embodied in particular
sound recordings, and to identify and
locate the copyright owners of such
musical works (and shares of such
works).
``(IV) Maintain the musical works
database and other information relevant
to the administration of licensing
activities under this section.
``(V) Administer a process by which
copyright owners can claim ownership of
musical works (and shares of such
works), and a process by which
royalties for works for which the owner
is not identified or located are
equitably distributed to known
copyright owners.
``(VI) Administer collections of
the administrative assessment from
digital music providers and significant
nonblanket licensees, including receipt
of notices of nonblanket activity.
``(VII) Invest in relevant
resources, and arrange for services of
outside vendors and others, to support
its activities.
``(VIII) Engage in legal and other
efforts to enforce rights and
obligations under this subsection,
including by filing bankruptcy proofs
of claims for amounts owed under
licenses, and acting in coordination
with the digital licensee coordinator.
``(IX) Initiate and participate in
proceedings before the Copyright
Royalty Judges to establish the
administrative assessment under this
subsection.
``(X) Initiate and participate in
proceedings before the Copyright Office
with respect to activities under this
subsection.
``(XI) Gather and provide
documentation for use in proceedings
before the Copyright Royalty Judges to
set rates and terms under this section.
``(XII) Maintain records of its
activities and engage in and respond to
audits described under this subsection.
``(XIII) Engage in such other
activities as may be necessary or
appropriate to fulfill its
responsibilities under this subsection.
``(ii) Additional administrative
activities.--Subject to paragraph (11)(C) and
clause (iii), the mechanical licensing
collective may also administer, or assist in
administering, voluntary licenses issued by or
individual download licenses obtained from
copyright owners for uses of musical works, for
which the mechanical licensing collective shall
charge reasonable fees for such services.
``(iii) Restriction concerning public
performance rights.--The mechanical licensing
collective may, pursuant to clause (ii),
provide administration services with respect to
voluntary licenses that include the right of
public performance in musical works, but may
not itself negotiate or grant licenses for the
right of public performance in musical works,
and may not be the exclusive or nonexclusive
assignee or grantee of the right of public
performance in musical works.
``(iv) Restriction on lobbying.--The
mechanical licensing collective may not engage
in government lobbying activities, but may
engage in the activities described in
subclauses (IX), (X), and (XI) of clause (i).
``(D) Governance.--
``(i) Board of directors.--The mechanical
licensing collective shall have a board of
directors consisting of 14 voting members and 3
nonvoting members, as follows:
``(I) Ten voting members shall be
representatives of music publishers to
which songwriters have assigned
exclusive rights of reproduction and
distribution of musical works with
respect to covered activities and no
such music publisher member may be
owned by, or under common control with,
any other board member.
``(II) Four voting members shall be
professional songwriters who have
retained and exercise exclusive rights
of reproduction and distribution with
respect to covered activities with
respect to musical works they have
authored.
``(III) One nonvoting member shall
be a representative of the nonprofit
trade association of music publishers
that represents the greatest percentage
of the licensor market for uses of
musical works in covered activities, as
measured over the preceding 3 full
calendar years.
``(IV) One nonvoting member shall
be a representative of the digital
licensee coordinator, provided that a
digital licensee coordinator has been
designated pursuant to paragraph
(5)(B). Otherwise, the nonvoting member
shall be the nonprofit trade
association of digital licensees that
represents the greatest percentage of
the licensee market for uses of musical
works in covered activities, as
measured over the preceding 3 full
calendar years.
``(V) One nonvoting member shall be
a representative of a nationally
recognized nonprofit trade association
whose primary mission is advocacy on
behalf of songwriters in the United
States.
``(ii) Board meetings.--The board of
directors shall meet no less than two times per
year and discuss matters pertinent to the
operations, including the mechanical licensing
collective budget.
``(iii) Operations advisory committee.--The
board of directors of the mechanical licensing
collective shall establish an operations
advisory committee consisting of no fewer than
six members to make recommendations to the
board of directors concerning the operations of
the mechanical licensing collective, including
the efficient investment in and deployment of
information technology and data resources. Such
committee shall have an equal number of members
of the committee who are--
``(I) musical work copyright owners
who are appointed by the board of
directors of the mechanical licensing
collective; and
``(II) representatives of digital
music providers who are appointed by
the digital licensee coordinator.
``(iv) Unclaimed royalties oversight
committee.--The board of directors of the
mechanical licensing collective shall establish
and appoint an unclaimed royalties oversight
committee consisting of 10 members, 5 of which
shall be musical work copyright owners and 5 of
which shall be professional songwriters whose
works are used in covered activities.
``(v) Dispute resolution committee.--The
board of directors of the mechanical licensing
collective shall establish and appoint a
dispute resolution committee consisting of no
fewer than six members, which committee shall
include an equal number of representatives of
musical work copyright owners and professional
songwriters.
``(vi) Mechanical licensing collective
annual report.--Not later than June 30 of each
year commencing after the license availability
date, the mechanical licensing collective shall
post, and make available online for a period of
at least 3 years, an annual report that sets
forth how the collective operates, how
royalties are collected and distributed, and
the collective total costs for the preceding
calendar year. At the time of posting, a copy
of the report shall be provided to the Register
of Copyrights.
``(E) Musical works database.--
``(i) Establishment and maintenance of
database.--The mechanical licensing collective
shall establish and maintain a database
containing information relating to musical
works (and shares of such works) and, to the
extent known, the identity and location of the
copyright owners of such works (and shares
thereof) and the sound recordings in which the
musical works are embodied. In furtherance of
maintaining such database, the mechanical
licensing collective shall engage in efforts to
identify the musical works embodied in
particular sound recordings, as well as to
identify and locate the copyright owners of
such works (and shares thereof), and update
such data as appropriate.
``(ii) Matched works.--With respect to
musical works (and shares thereof) that have
been matched to copyright owners, the musical
works database shall include--
``(I) the title of the musical
work;
``(II) the copyright owner of the
work (or share thereof), and such
owner's ownership percentage;
``(III) contact information for
such copyright owner;
``(IV) to the extent reasonably
available to the mechanical licensing
collective--
``(aa) the international
standard musical work code for
the work; and
``(bb) identifying
information for sound
recordings in which the musical
work is embodied, including the
name of the sound recording,
featured artist, sound
recording copyright owner,
producer, international
standard recording code, and
other information commonly used
to assist in associating sound
recordings with musical works;
and
``(V) such other information as the
Register of Copyrights may prescribe by
regulation.
``(iii) Unmatched works.--With respect to
unmatched musical works (and shares of works)
in the database, the musical works database
shall include--
``(I) to the extent reasonably
available to the mechanical licensing
collective--
``(aa) the title of the
musical work;
``(bb) the ownership
percentage for which an owner
has not been identified;
``(cc) if a copyright owner
has been identified but not
located, the identity of such
owner and such owner's
ownership percentage;
``(dd) identifying
information for sound
recordings in which the work is
embodied, including sound
recording name, featured
artist, sound recording
copyright owner, producer,
international standard
recording code, and other
information commonly used to
assist in associating sound
recordings with musical works;
and
``(ee) any additional
information reported to the
mechanical licensing collective
that may assist in identifying
the work; and
``(II) such other information
relating to the identity and ownership
of musical works (and shares of such
works) as the Register of Copyrights
may prescribe by regulation.
``(iv) Sound recording information.--Each
musical work copyright owner with any musical
work listed in the musical works database shall
engage in commercially reasonable efforts to
deliver to the mechanical licensing collective,
including for use in the musical works
database, to the extent such information is not
then available in the database, information
regarding the names of the sound recordings in
which that copyright owner's musical works (or
shares thereof) are embodied, to the extent
practicable.
``(v) Accessibility of database.--The
musical works database shall be made available
to members of the public in a searchable,
online format, free of charge. The mechanical
licensing collective shall make such database
available in a bulk, machine-readable format,
through a widely available software
application, to the following entities:
``(I) Digital music providers
operating under the authority of valid
notices of license, free of charge.
``(II) Significant nonblanket
licensees in compliance with their
obligations under paragraph (6), free
of charge.
``(III) Authorized vendors of the
entities described in subclauses (I)
and (II), free of charge.
``(IV) The Register of Copyrights,
free of charge (but the Register shall
not treat such database or any
information therein as a Government
record).
``(V) Any member of the public, for
a fee not to exceed the marginal cost
to the mechanical licensing collective
of providing the database to such
person.
``(vi) Additional requirements.--The
Register of Copyrights shall establish
requirements by regulations to ensure the
usability, interoperability, and usage
restrictions of the musical works database.
``(F) Notices of license and nonblanket activity.--
``(i) Notices of licenses.--The mechanical
licensing collective shall receive, review, and
confirm or reject notices of license from
digital music providers, as provided in
paragraph (2)(A). The collective shall maintain
a current, publicly accessible list of blanket
licenses that includes contact information for
the licensees and the effective dates of such
licenses.
``(ii) Notices of nonblanket activity.--The
mechanical licensing collective shall receive
notices of nonblanket activity from significant
nonblanket licensees, as provided in paragraph
(6)(A). The collective shall maintain a
current, publicly accessible list of notices of
nonblanket activity that includes contact
information for significant nonblanket
licensees and the dates of receipt of such
notices.
``(G) Collection and distribution of royalties.--
``(i) In general.--Upon receiving reports
of usage and payments of royalties from digital
music providers for covered activities, the
mechanical licensing collective shall--
``(I) engage in efforts to--
``(aa) identify the musical
works embodied in sound
recordings reflected in such
reports, and the copyright
owners of such musical works
(and shares thereof);
``(bb) confirm uses of
musical works subject to
voluntary licenses and
individual download licenses,
and the corresponding pro rata
amounts to be deducted from
royalties that would otherwise
be due under the blanket
license; and
``(cc) confirm proper
payment of royalties due;
``(II) distribute royalties to
copyright owners in accordance with the
usage and other information contained
in such reports, as well as the
ownership and other information
contained in the records of the
collective; and
``(III) deposit into an interest-
bearing account, as provided in
subparagraph (H)(ii), royalties that
cannot be distributed due to--
``(aa) an inability to
identify or locate a copyright
owner of a musical work (or
share thereof); or
``(bb) a pending dispute
before the dispute resolution
committee of the mechanical
licensing collective.
``(ii) Other collection efforts.--Any
royalties recovered by the mechanical licensing
collective as a result of efforts to enforce
rights or obligations under a blanket license,
including through a bankruptcy proceeding or
other legal action, shall be distributed to
copyright owners based on available usage
information and in accordance with the
procedures described in subclauses (I) and (II)
of clause (i), on a pro rata basis in
proportion to the overall percentage recovery
of the total royalties owed, with any pro rata
share of royalties that cannot be distributed
deposited in an interest-bearing account as
provided in subparagraph (H)(ii).
``(H) Holding of accrued royalties.--
``(i) Holding period.--The mechanical
licensing collective shall hold accrued
royalties associated with particular musical
works (and shares of works) that remain
unmatched for a period of at least 3 years
after the date on which the funds were received
by the mechanical licensing collective, or at
least 3 years after the date on which they were
accrued by a digital music provider that
subsequently transferred such funds to the
mechanical licensing collective pursuant to
paragraph (10)(B), whichever period expires
sooner.
``(ii) Interest-bearing account.--Accrued
royalties for unmatched works (and shares
thereof) shall be maintained by the mechanical
licensing collective in an interest-bearing
account that earns monthly interest at the
Federal, short-term rate, such interest to
accrue for the benefit of copyright owners
entitled to payment of such accrued royalties.
``(I) Musical works claiming process.--The
mechanical licensing collective shall publicize the
existence of accrued royalties for unmatched musical
works (and shares of such works) within 6 months of
receiving a transfer of accrued royalties for such
works by publicly listing the works and the procedures
by which copyright owners may identify themselves and
provide ownership, contact, and other relevant
information to the mechanical licensing collective in
order to receive payment of accrued royalties. When a
copyright owner of an unmatched work (or share of a
work) has been identified and located in accordance
with the procedures of the mechanical licensing
collective, the collective shall--
``(i) update the musical works database and
its other records accordingly; and
``(ii) provided that accrued royalties for
the musical work (or share thereof) have not
yet been included in a distribution pursuant to
subparagraph (J)(i), pay such accrued royalties
and a proportionate amount of accrued interest
associated with that work (or share thereof) to
the copyright owner, accompanied by a
cumulative statement of account reflecting
usage of such work and accrued royalties based
on information provided by digital music
providers to the mechanical licensing
collective.
``(J) Distribution of unclaimed accrued
royalties.--
``(i) Distribution procedures.--After the
expiration of the prescribed holding period for
accrued royalties provided in paragraph (H)(i),
the mechanical licensing collective shall
distribute such accrued royalties, along with a
proportionate share of accrued interest, to
copyright owners identified in the records of
the collective, subject to the following
requirements, and in accordance with the
policies and procedures established under
clause (ii):
``(I) The first such distribution
shall occur on or after July 1 of the
first full calendar year to commence
after the license availability date,
with at least one such distribution to
take place during each calendar year
thereafter.
``(II) Copyright owners' payment
shares for unclaimed accrued royalties
for particular reporting periods shall
be determined in a transparent and
equitable manner based on data
indicating the relative market shares
of such copyright owners as reflected
by royalty payments made by digital
music providers for covered activities
for the periods in question, including,
in addition to royalty payments made to
the mechanical licensing collective,
royalty payments made to copyright
owners under voluntary licenses and
individual download licenses for
covered activities, to the extent such
information is available to the
mechanical licensing collective. In
furtherance of the determination of
equitable market shares under this
subparagraph--
``(aa) the mechanical
licensing collective may
require copyright owners
seeking distributions of
unclaimed accrued royalties to
provide, or direct the
provision of, information
concerning royalties received
under voluntary licenses and
individual download licenses
for covered activities; and
``(bb) the mechanical
licensing collective shall take
appropriate steps to safeguard
the confidentiality and
security of financial and other
sensitive data used to compute
market shares in accordance
with the confidentiality
provisions prescribed by the
Register of Copyrights under
paragraph (12)(C).
``(ii) Establishment of distribution
policies.--The unclaimed royalties oversight
committee established under paragraph
(3)(D)(iv) shall establish policies and
procedures for the distribution of unclaimed
accrued royalties and accrued interest in
accordance with this subparagraph, including
the provision of usage data to copyright owners
to allocate payments and credits to songwriters
pursuant to clause (iv), subject to the
approval of the board of directors of the
mechanical licensing collective.
``(iii) Advance notice of distributions.--
The mechanical licensing collective shall
publicize a pending distribution of unclaimed
accrued royalties and accrued interest at least
90 calendar days in advance of such
distribution.
``(iv) Songwriter payments.--Copyright
owners that receive a distribution of unclaimed
accrued royalties and accrued interest shall
pay or credit a portion to songwriters (or the
authorized agents of songwriters) on whose
behalf the copyright owners license or
administer musical works for covered
activities, in accordance with applicable
contractual terms, but notwithstanding any
agreement to the contrary--
``(I) such payments and credits to
songwriters shall be allocated in
proportion to reported usage of
individual musical works by digital
music providers during the reporting
periods covered by the distribution
from the mechanical licensing
collective; and
``(II) in no case shall the payment
or credit to an individual songwriter
be less than 50 percent of the payment
received by the copyright owner
attributable to usage of musical works
(or shares of works) of that
songwriter.
``(K) Dispute resolution.--The dispute resolution
committee established under paragraph (3)(D)(v) shall
address and resolve in a timely and equitable manner
disputes among copyright owners relating to ownership
interests in musical works licensed under this section
and allocation and distribution of royalties by the
mechanical licensing collective, according to a process
approved by the board of directors of the mechanical
licensing collective. Such process--
``(i) shall include a mechanism to hold
disputed funds in accordance with the
requirements described in subparagraph (H)(ii)
pending resolution of the dispute; and
``(ii) except as provided in paragraph
(11)(D), shall not affect any legal or
equitable rights or remedies available to any
copyright owner or songwriter concerning
ownership of, and entitlement to royalties for,
a musical work.
``(L) Verification of payments by mechanical
licensing collective.--
``(i) Verification process.--A copyright
owner entitled to receive payments of royalties
for covered activities from the mechanical
licensing collective may, individually or with
other copyright owners, conduct an audit of the
mechanical licensing collective to verify the
accuracy of royalty payments by the mechanical
licensing collective to such copyright owner,
as follows:
``(I) A copyright owner may audit
the mechanical licensing collective
only once in a year for any or all of
the prior 3 calendar years, and may not
audit records for any calendar year
more than once.
``(II) The audit shall be conducted
by a qualified auditor, who shall
perform the audit during the ordinary
course of business by examining the
books, records, and data of the
mechanical licensing collective,
according to generally accepted
auditing standards and subject to
applicable confidentiality requirements
prescribed by the Register of
Copyrights under paragraph (12)(C).
``(III) The mechanical licensing
collective shall make such books,
records, and data available to the
qualified auditor and respond to
reasonable requests for relevant
information, and shall use commercially
reasonable efforts to facilitate access
to relevant information maintained by
third parties.
``(IV) To commence the audit, any
copyright owner shall file with the
Copyright Office a notice of intent to
conduct an audit of the mechanical
licensing collective, identifying the
period of time to be audited, and shall
simultaneously deliver a copy of such
notice to the mechanical licensing
collective. The Register of Copyrights
shall cause the notice of audit to be
published in the Federal Register
within 45 calendar days after receipt.
``(V) The qualified auditor shall
determine the accuracy of royalty
payments, including whether an
underpayment or overpayment of
royalties was made by the mechanical
licensing collective to each auditing
copyright owner, but before providing a
final audit report to any such
copyright owner, the qualified auditor
shall provide a tentative draft of the
report to the mechanical licensing
collective and allow the mechanical
licensing collective a reasonable
opportunity to respond to the findings,
including by clarifying issues and
correcting factual errors.
``(VI) The auditing copyright owner
or owners shall bear the cost of the
audit. In case of an underpayment to
any copyright owner, the mechanical
licensing collective shall pay the
amounts of any such underpayment to
such auditing copyright owner, as
appropriate. In case of an overpayment
by the mechanical licensing collective,
the mechanical licensing collective may
debit the account of the auditing
copyright owner or owners for such
overpaid amounts, or such owner(s)
shall refund overpaid amounts to the
mechanical licensing collective, as
appropriate.
``(ii) Alternative verification
procedures.--Nothing in this subparagraph shall
preclude a copyright owner and the mechanical
licensing collective from agreeing to audit
procedures different from those described
herein, but a notice of the audit shall be
provided to and published by the Copyright
Office as described in clause (i)(IV).
``(M) Records of mechanical licensing collective.--
``(i) Records maintenance.--The mechanical
licensing collective shall ensure that all
material records of its operations, including
those relating to notices of license, the
administration of its claims process, reports
of usage, royalty payments, receipt and
maintenance of accrued royalties, royalty
distribution processes, and legal matters, are
preserved and maintained in a secure and
reliable manner, with appropriate commercially
reasonable safeguards against unauthorized
access, copying, and disclosure, and subject to
the confidentiality requirements prescribed by
the Register of Copyrights under paragraph
(12)(C) for a period of no less than 7 years
after the date of creation or receipt,
whichever occurs later.
``(ii) Records access.--The mechanical
licensing collective shall provide prompt
access to electronic and other records
pertaining to the administration of a copyright
owner's musical works upon reasonable written
request of such owner or the owner's authorized
representative.
``(4) Terms and conditions of blanket license.--A blanket
license is subject to, and conditioned upon, the following
requirements:
``(A) Royalty reporting and payments.--
``(i) Monthly reports and payment.--A
digital music provider shall report and pay
royalties to the mechanical licensing
collective under the blanket license on a
monthly basis in accordance with clause (ii)
and subsection (c)(2)(I), but the monthly
reporting shall be due 45 calendar days, rather
than 20 calendar days, after the end of the
monthly reporting period.
``(ii) Data to be reported.--In reporting
usage of musical works to the mechanical
licensing collective, a digital music provider
shall provide usage data for musical works used
under the blanket license and usage data for
musical works used in covered activities under
voluntary licenses and individual download
licenses. In the report of usage, the digital
music provider shall--
``(I) with respect to each sound
recording embodying a musical work--
``(aa) provide identifying
information for the sound
recording, including sound
recording name, featured artist
and, to the extent acquired by
the digital music provider in
connection with its use of
sound recordings of musical
works to engage in covered
activities, including pursuant
to subparagraph (B), producer,
international standard
recording code, and other
information commonly used in
the industry to identify sound
recordings and match them to
the musical works the sound
recordings embody;
``(bb) to the extent
acquired by the digital music
provider in the metadata in
connection with its use of
sound recordings of musical
works to engage in covered
activities, including pursuant
to subparagraph (B), provide
information concerning
authorship and ownership of the
applicable rights in the
musical work embodied in the
sound recording (including each
songwriter, publisher name, and
respective ownership share) and
the international standard
musical work code; and
``(cc) provide the number
of digital phonorecord
deliveries of the sound
recording, including limited
downloads and interactive
streams;
``(II) identify and provide contact
information for all musical work
copyright owners for works embodied in
sound recordings as to which a
voluntary license, rather than the
blanket license, is in effect with
respect to the uses being reported; and
``(III) provide such other
information as the Register of
Copyrights shall require by regulation.
``(iii) Format and maintenance of
reports.--Reports of usage provided by digital
music providers to the mechanical licensing
collective shall be in a machine-readable
format that is compatible with the information
technology systems of the mechanical licensing
collective and meets the requirements of
regulations adopted by the Register of
Copyrights. The Register shall also adopt
regulations setting forth requirements under
which records of use shall be maintained and
made available to the mechanical licensing
collective by digital music providers engaged
in covered activities under a blanket license.
``(iv) Adoption of regulations.--The
Register shall adopt regulations--
``(I) setting forth requirements
under which records of use shall be
maintained and made available to the
mechanical licensing collective by
digital music providers engaged in
covered activities under a blanket
license; and
``(II) regarding adjustments to
reports of usage by digital music
providers, including mechanisms to
account for overpayment and
underpayment of royalties in prior
periods.
``(B) Collection of sound recording information.--A
digital music provider shall engage in good-faith,
commercially reasonable efforts to obtain from
copyright owners of sound recordings made available
through the service of such digital music provider--
``(i) sound recording copyright owners,
producers, international standard recording
codes, and other information commonly used in
the industry to identify sound recordings and
match them to the musical works the sound
recordings embody; and
``(ii) information concerning the
authorship and ownership of musical works,
including songwriters, publisher names,
ownership shares, and international standard
musical work codes.
``(C) Payment of administrative assessment.--A
digital music provider and any significant nonblanket
licensee shall pay the administrative assessment
established under paragraph (7)(D) in accordance with
this subsection and applicable regulations.
``(D) Verification of payments by digital music
providers.--
``(i) Verification process.--The mechanical
licensing collective may conduct an audit of a
digital music provider operating under the
blanket license to verify the accuracy of
royalty payments by the digital music provider
to the mechanical licensing collective as
follows:
``(I) The mechanical licensing
collective may commence an audit of a
digital music provider no more than
once in any 3-calendar-year period to
cover a verification period of no more
than the 3 full calendar years
preceding the date of commencement of
the audit, and such audit may not audit
records for any such 3-year
verification period more than once.
``(II) The audit shall be conducted
by a qualified auditor, who shall
perform the audit during the ordinary
course of business by examining the
books, records, and data of the digital
music provider, according to generally
accepted auditing standards and subject
to applicable confidentiality
requirements prescribed by the Register
of Copyrights under paragraph (12)(C).
``(III) The digital music provider
shall make such books, records, and
data available to the qualified auditor
and respond to reasonable requests for
relevant information, and shall use
commercially reasonable efforts to
provide access to relevant information
maintained with respect to a digital
music provider by third parties.
``(IV) To commence the audit, the
mechanical licensing collective shall
file with the Copyright Office a notice
of intent to conduct an audit of the
digital music provider, identifying the
period of time to be audited, and shall
simultaneously deliver a copy of such
notice to the digital music provider.
The Register of Copyrights shall cause
the notice of audit to be published in
the Federal Register within 45 calendar
days after receipt.
``(V) The qualified auditor shall
determine the accuracy of royalty
payments, including whether an
underpayment or overpayment of
royalties was made by the digital music
provider to the mechanical licensing
collective, but before providing a
final audit report to the mechanical
licensing collective, the qualified
auditor shall provide a tentative draft
of the report to the digital music
provider and allow the digital music
provider a reasonable opportunity to
respond to the findings, including by
clarifying issues and correcting
factual errors.
``(VI) The mechanical licensing
collective shall pay the cost of the
audit, unless the qualified auditor
determines that there was an
underpayment by the digital music
provider of 10 percent or more, in
which case the digital music provider
shall bear the reasonable costs of the
audit, in addition to paying the amount
of any underpayment to the mechanical
licensing collective. In case of an
overpayment by the digital music
provider, the mechanical licensing
collective shall provide a credit to
the account of the digital music
provider.
``(VII) A digital music provider
may not assert section 507 or any other
Federal or State statute of
limitations, doctrine of laches or
estoppel, or similar provision as a
defense to a legal action arising from
an audit under this subparagraph if
such legal action is commenced no more
than 6 years after the commencement of
the audit that is the basis for such
action.
``(ii) Alternative verification
procedures.--Nothing in this subparagraph shall
preclude the mechanical licensing collective
and a digital music provider from agreeing to
audit procedures different from those described
herein, but a notice of the audit shall be
provided to and published by the Copyright
Office as described in clause (i)(IV).
``(E) Default under blanket license.--
``(i) Conditions of default.--A digital
music provider shall be in default under a
blanket license if the digital music provider--
``(I) fails to provide one or more
monthly reports of usage to the
mechanical licensing collective when
due;
``(II) fails to make a monthly
royalty or late fee payment to the
mechanical licensing collective when
due, in all or material part;
``(III) provides one or more
monthly reports of usage to the
mechanical licensing collective that,
on the whole, is or are materially
deficient as a result of inaccurate,
missing, or unreadable data, where the
correct data was available to the
digital music provider and required to
be reported under this section and
applicable regulations;
``(IV) fails to pay the
administrative assessment as required
under this subsection and applicable
regulations; or
``(V) after being provided written
notice by the mechanical licensing
collective, refuses to comply with any
other material term or condition of the
blanket license under this section for
a period of 60 calendar days or longer.
``(ii) Notice of default and termination.--
In case of a default by a digital music
provider, the mechanical licensing collective
may proceed to terminate the blanket license of
the digital music provider as follows:
``(I) The mechanical licensing
collective shall provide written notice
to the digital music provider
describing with reasonable
particularity the default and advising
that unless such default is cured
within 60 calendar days after the date
of the notice, the blanket license will
automatically terminate at the end of
that period.
``(II) If the digital music
provider fails to remedy the default
within the 60-day period referenced in
subclause (I), the license shall
terminate without any further action on
the part of the mechanical licensing
collective. Such termination renders
the making of all digital phonorecord
deliveries of all musical works (and
shares thereof) covered by the blanket
license for which the royalty or
administrative assessment has not been
paid actionable as acts of infringement
under section 501 and subject to the
remedies provided by sections 502
through 506.
``(iii) Notice to copyright owners.--The
mechanical licensing collective shall provide
written notice of any termination under this
subparagraph to copyright owners of affected
works.
``(iv) Review by federal district court.--A
digital music provider that believes a blanket
license was improperly terminated by the
mechanical licensing collective may seek review
of such termination in Federal district court.
The district court shall determine the matter
de novo based on the record before the
mechanical licensing collective and any
additional supporting evidence presented by the
parties.
``(5) Digital licensee coordinator.--
``(A) In general.--The digital licensee coordinator
shall be a single entity that--
``(i) is a nonprofit, not owned by any
other entity, that is created to carry out
responsibilities under this subsection;
``(ii) is endorsed by and enjoys
substantial support from digital music
providers and significant nonblanket licensees
that together represent the greatest percentage
of the licensee market for uses of musical
works in covered activities, as measured over
the preceding 3 calendar years;
``(iii) is able to demonstrate that it has,
or will have prior to the license availability
date, the administrative capabilities to
perform the required functions of the digital
licensee coordinator under this subsection; and
``(iv) has been designated by the Register
of Copyrights in accordance with subparagraph
(B).
``(B) Designation of digital licensee
coordinator.--
``(i) Initial designation.--The Register of
Copyrights shall initially designate the
digital licensee coordinator within 9 months
after the enactment date, in accordance with
the same procedure described for designation of
the mechanical licensing collective in
paragraph (3)(B)(i).
``(ii) Periodic review of designation.--
Following the initial designation of the
digital licensee coordinator, the Register
shall, every 5 years, beginning with the fifth
full calendar year to commence after the
initial designation, determine whether the
existing designation should be continued, or a
different entity meeting the criteria described
in clauses (i) through (iii) of subparagraph
(A) should be designated, in accordance with
the same procedure described for the mechanical
licensing collective in paragraph (3)(B)(ii).
``(iii) Inability to designate.--If the
Register is unable to identify an entity that
fulfills each of the qualifications described
in clauses (i) through (iii) of subparagraph
(A) to serve as the digital licensee
coordinator, the Register may decline to
designate a digital licensee coordinator. The
Register's determination not to designate a
digital licensee coordinator shall not negate
or otherwise affect any provision of this
subsection except to the limited extent that a
provision references the digital licensee
coordinator. In such case, the reference to the
digital licensee coordinator shall be without
effect unless and until a new digital licensee
coordinator is designated.
``(C) Authorities and functions.--
``(i) In general.--The digital licensee
coordinator is authorized to perform the
following functions, subject to more particular
requirements as described in this subsection:
``(I) Establish a governance
structure, criteria for membership, and
any dues to be paid by its members.
``(II) Engage in efforts to enforce
notice and payment obligations with
respect to the administrative
assessment, including by receiving
information from and coordinating with
the mechanical licensing collective.
``(III) Initiate and participate in
proceedings before the Copyright
Royalty Judges to establish the
administrative assessment under this
subsection.
``(IV) Initiate and participate in
proceedings before the Copyright Office
with respect to activities under this
subsection.
``(V) Gather and provide
documentation for use in proceedings
before the Copyright Royalty Judges to
set rates and terms under this section.
``(VI) Maintain records of its
activities.
``(VII) Engage in such other
activities as may be necessary or
appropriate to fulfill its
responsibilities under this subsection.
``(ii) Restriction on lobbying.--The
digital licensee coordinator may not engage in
government lobbying activities, but may engage
in the activities described in subclauses
(III), (IV), and (V) of clause (i).
``(6) Requirements for significant nonblanket licensees.--
``(A) In general.--
``(i) Notice of activity.--Not later than
45 calendar days after the license availability
date, or 45 calendar days after the end of the
first full calendar month in which an entity
initially qualifies as a significant nonblanket
licensee, whichever occurs later, a significant
nonblanket licensee shall submit a notice of
nonblanket activity to the mechanical licensing
collective. The notice of nonblanket activity
shall comply in form and substance with
requirements that the Register of Copyrights
shall establish by regulation, and a copy shall
be made available to the digital licensee
coordinator.
``(ii) Reporting and payment obligations.--
The notice of nonblanket activity submitted to
the mechanical licensing collective shall be
accompanied by a report of usage that contains
the information described in paragraph
(4)(A)(ii), as well as any payment of the
administrative assessment required under this
subsection and applicable regulations.
Thereafter, subject to clause (iii), a
significant nonblanket licensee shall continue
to provide monthly reports of usage,
accompanied by any required payment of the
administrative assessment, to the mechanical
licensing collective. Such reports and payments
shall be submitted not later than 45 calendar
days after the end of the calendar month being
reported.
``(iii) Discontinuation of obligations.--An
entity that has submitted a notice of
nonblanket activity to the mechanical licensing
collective that has ceased to qualify as a
significant nonblanket licensee may so notify
the collective in writing. In such case, as of
the calendar month in which such notice is
provided, such entity shall no longer be
required to provide reports of usage or pay the
administrative assessment, but if such entity
later qualifies as a significant nonblanket
licensee, such entity shall again be required
to comply with clauses (i) and (ii).
``(B) Reporting by mechanical licensing collective
to digital licensee coordinator.--
``(i) Monthly reports of noncompliant
licensees.--The mechanical licensing collective
shall provide monthly reports to the digital
licensee coordinator setting forth any
significant nonblanket licensees of which the
collective is aware that have failed to comply
with subparagraph (A).
``(ii) Treatment of confidential
information.--The mechanical licensing
collective and digital licensee coordinator
shall take appropriate steps to safeguard the
confidentiality and security of financial and
other sensitive data shared under this
subparagraph, in accordance with the
confidentiality requirements prescribed by the
Register of Copyrights under paragraph (12)(C).
``(C) Legal enforcement efforts.--
``(i) Federal court action.--Should the
mechanical licensing collective or digital
licensee coordinator become aware that a
significant nonblanket licensee has failed to
comply with subparagraph (A), either may
commence an action in Federal district court
for damages and injunctive relief. If the
significant nonblanket licensee is found
liable, the court shall, absent a finding of
excusable neglect, award damages in an amount
equal to three times the total amount of the
unpaid administrative assessment and,
notwithstanding anything to the contrary in
section 505, reasonable attorney's fees and
costs, as well as such other relief as the
court deems appropriate. In all other cases,
the court shall award relief as appropriate.
Any recovery of damages shall be payable to the
mechanical licensing collective as an offset to
the collective total costs.
``(ii) Statute of limitations for
enforcement action.--Any action described in
this subparagraph shall be commenced within the
time period described in section 507(b).
``(iii) Other rights and remedies
preserved.--The ability of the mechanical
licensing collective or digital licensee
coordinator to bring an action under this
subparagraph shall in no way alter, limit or
negate any other right or remedy that may be
available to any party at law or in equity.
``(7) Funding of mechanical licensing collective.--
``(A) In general.--The collective total costs shall
be funded by--
``(i) an administrative assessment, as such
assessment is established by the Copyright
Royalty Judges pursuant to subparagraph (D)
from time to time, to be paid by--
``(I) digital music providers that
are engaged, in all or in part, in
covered activities pursuant to a
blanket license; and
``(II) significant nonblanket
licensees; and
``(ii) voluntary contributions from digital
music providers and significant nonblanket
licensees as may be agreed with copyright
owners.
``(B) Voluntary contributions.--
``(i) Agreements concerning
contributions.--Except as provided in clause
(ii), voluntary contributions by digital music
providers and significant nonblanket licensees
shall be determined by private negotiation and
agreement, and the following conditions apply:
``(I) The date and amount of each
voluntary contribution to the
mechanical licensing collective shall
be documented in a writing signed by an
authorized agent of the mechanical
licensing collective and the
contributing party.
``(II) Such agreement shall be made
available as required in proceedings
before the Copyright Royalty Judges to
establish or adjust the administrative
assessment in accordance with
applicable statutory and regulatory
provisions and rulings of the Copyright
Royalty Judges.
``(ii) Treatment of contributions.--Each
such voluntary contribution shall be treated
for purposes of an administrative assessment
proceeding as an offset to the collective total
costs that would otherwise be recovered through
the administrative assessment. Any allocation
or reallocation of voluntary contributions
between or among individual digital music
providers or significant nonblanket licensees
shall be a matter of private negotiation and
agreement among such parties and outside the
scope of the administrative assessment
proceeding.
``(C) Interim application of accrued royalties.--In
the event that the administrative assessment, together
with any funding from voluntary contributions as
provided in subparagraphs (A) and (B), is inadequate to
cover current collective total costs, the collective,
with approval of its board of directors, may apply
unclaimed accrued royalties on an interim basis to
defray such costs, subject to future reimbursement of
such royalties from future collections of the
assessment.
``(D) Determination of administrative assessment.--
``(i) Administrative assessment to cover
collective total costs.--The administrative
assessment shall be used solely and exclusively
to fund the collective total costs.
``(ii) Separate proceeding before copyright
royalty judges.--The amount and terms of the
administrative assessment shall be determined
and established in a separate and independent
proceeding before the Copyright Royalty Judges,
according to the procedures described in
clauses (iii) and (iv). The administrative
assessment determined in such proceeding
shall--
``(I) be wholly independent of
royalty rates and terms applicable to
digital music providers, which shall
not be taken into consideration in any
manner in establishing the
administrative assessment;
``(II) be established by the
Copyright Royalty Judges in an amount
that is calculated to defray the
reasonable collective total costs;
``(III) be assessed based on usage
of musical works by digital music
providers and significant nonblanket
licensees in covered activities under
both compulsory and nonblanket
licenses;
``(IV) may be in the form of a
percentage of royalties payable under
this section for usage of musical works
in covered activities (regardless of
whether a different rate applies under
a voluntary license), or any other
usage-based metric reasonably
calculated to equitably allocate the
collective total costs across digital
music providers and significant
nonblanket licensees engaged in covered
activities, but shall include as a
component a minimum fee for all digital
music providers and significant
nonblanket licensees; and
``(V) take into consideration
anticipated future collective total
costs and collections of the
administrative assessment, but also, as
applicable--
``(aa) any portion of past
actual collective total costs
of the mechanical licensing
collective not funded by
previous collections of the
administrative assessment or
voluntary contributions because
such collections or
contributions together were
insufficient to fund such
costs;
``(bb) any past collections
of the administrative
assessment and voluntary
contributions that exceeded
past actual collective total
costs, resulting in a surplus;
and
``(cc) the amount of any
voluntary contributions by
digital music providers or
significant nonblanket
licensees in relevant periods,
described in subparagraphs (A)
and (B) of paragraph (7).
``(iii) Initial administrative
assessment.--The procedure for establishing the
initial administrative assessment shall be as
follows:
``(I) The Copyright Royalty Judges
shall commence a proceeding to
establish the initial administrative
assessment within 9 months after the
enactment date by publishing a notice
in the Federal Register seeking
petitions to participate.
``(II) The mechanical licensing
collective and digital licensee
coordinator shall participate in such
proceeding, along with any interested
copyright owners, digital music
providers or significant nonblanket
licensees that have notified the
Copyright Royalty Judges of their
desire to participate.
``(III) The Copyright Royalty
Judges shall establish a schedule for
submission by the parties of
information that may be relevant to
establishing the administrative
assessment, including actual and
anticipated collective total costs of
the mechanical licensing collective,
actual and anticipated collections from
digital music providers and significant
nonblanket licensees, and documentation
of voluntary contributions, as well as
a schedule for further proceedings,
which shall include a hearing, as they
deem appropriate.
``(IV) The initial administrative
assessment shall be determined, and
such determination shall be published
in the Federal Register by the
Copyright Royalty Judges, within 1 year
after commencement of the proceeding
described in this clause. The
determination shall be supported by a
written record. The initial
administrative assessment shall be
effective as of the license
availability date, and shall continue
in effect unless and until an adjusted
administrative assessment is
established pursuant to an adjustment
proceeding under clause (iii).
``(iv) Adjustment of administrative
assessment.--The administrative assessment may
be adjusted by the Copyright Royalty Judges
periodically, in accordance with the following
procedures:
``(I) No earlier than 1 year after
the most recent publication of a
determination of the administrative
assessment by the Copyright Royalty
Judges, the mechanical licensing
collective, the digital licensee
coordinator, or one or more interested
copyright owners, digital music
providers, or significant nonblanket
licensees, may file a petition with the
Copyright Royalty Judges in the month
of October to commence a proceeding to
adjust the administrative assessment.
``(II) Notice of the commencement
of such proceeding shall be published
in the Federal Register in the month of
November following the filing of any
petition, with a schedule of requested
information and additional proceedings,
as described in clause (iii)(III). The
mechanical licensing collective and
digital licensee coordinator shall
participate in such proceeding, along
with any interested copyright owners,
digital music providers, or significant
nonblanket licensees that have notified
the Copyright Royalty Judges of their
desire to participate.
``(III) The determination of the
adjusted administrative assessment,
which shall be supported by a written
record, shall be published in the
Federal Register during November of the
calendar year following the
commencement of the proceeding. The
adjusted administrative assessment
shall take effect January 1 of the year
following such publication.
``(v) Adoption of voluntary agreements.--In
lieu of reaching their own determination based
on evaluation of relevant data, the Copyright
Royalty Judges shall approve and adopt a
negotiated agreement to establish the amount
and terms of the administrative assessment that
has been agreed to by the mechanical licensing
collective and the digital licensee coordinator
(or if none has been designated, interested
digital music providers and significant
nonblanket licensees representing more than
half of the market for uses of musical works in
covered activities), but the Copyright Royalty
Judges shall have the discretion to reject any
such agreement for good cause shown. An
administrative assessment adopted under this
clause shall apply to all digital music
providers and significant nonblanket licensees
engaged in covered activities during the period
it is in effect.
``(vi) Continuing authority to amend.--The
Copyright Royalty Judges shall retain
continuing authority to amend a determination
of an administrative assessment to correct
technical or clerical errors, or modify the
terms of implementation, for good cause, with
any such amendment to be published in the
Federal Register.
``(vii) Appeal of administrative
assessment.--The determination of an
administrative assessment by the Copyright
Royalty Judges shall be appealable, within 30
calendar days after publication in the Federal
Register, to the Court of Appeals for the
District of Columbia Circuit by any party that
fully participated in the proceeding. The
administrative assessment as established by the
Copyright Royalty Judges shall remain in effect
pending the final outcome of any such appeal,
and the mechanical licensing collective,
digital licensee coordinator, digital music
providers, and significant nonblanket licensees
shall implement appropriate financial or other
measures within 3 months after any modification
of the assessment to reflect and account for
such outcome.
``(viii) Regulations.--The Copyright
Royalty Judges may adopt regulations to govern
the conduct of proceedings under this
paragraph.
``(8) Establishment of rates and terms under blanket
license.--
``(A) Restrictions on ratesetting participation.--
Neither the mechanical licensing collective nor the
digital licensee coordinator shall be a party to a
proceeding described in subsection (c)(1)(E), but
either may gather and provide financial and other
information for the use of a party to such a proceeding
and comply with requests for information as required
under applicable statutory and regulatory provisions
and rulings of the Copyright Royalty Judges.
``(B) Application of late fees.--In any proceeding
described in subparagraph (A) in which the Copyright
Royalty Judges establish a late fee for late payment of
royalties for uses of musical works under this section,
such fee shall apply to covered activities under
blanket licenses, as follows:
``(i) Late fees for past due royalty
payments shall accrue from the due date for
payment until payment is received by the
mechanical licensing collective.
``(ii) The availability of late fees shall
in no way prevent a copyright owner or the
mechanical licensing collective from asserting
any other rights or remedies to which such
copyright owner or the mechanical licensing
collective may be entitled under this title.
``(C) Interim rate agreements in general.--For any
covered activity for which no rate or terms have been
established by the Copyright Royalty Judges, the
mechanical licensing collective and any digital music
provider may agree to an interim rate and terms for
such activity under the blanket license, and any such
rate and terms--
``(i) shall be treated as nonprecedential
and not cited or relied upon in any ratesetting
proceeding before the Copyright Royalty Judges
or any other tribunal; and
``(ii) shall automatically expire upon the
establishment of a rate and terms for such
covered activity by the Copyright Royalty
Judges, under subsection (c)(1)(E).
``(D) Adjustments for interim rates.--The rate and
terms established by the Copyright Royalty Judges for a
covered activity to which an interim rate and terms
have been agreed under subparagraph (C) shall supersede
the interim rate and terms and apply retroactively to
the inception of the activity under the blanket
license. In such case, within 3 months after the rate
and terms established by the Copyright Royalty Judges
become effective--
``(i) if the rate established by the
Copyright Royalty Judges exceeds the interim
rate, the digital music provider shall pay to
the mechanical licensing collective the amount
of any underpayment of royalties due; or
``(ii) if the interim rate exceeds the rate
established by the Copyright Royalty Judges,
the mechanical licensing collective shall
credit the account of the digital music
provider for the amount of any overpayment of
royalties due.
``(9) Transition to blanket licenses.--
``(A) Substitution of blanket license.--On the
license availability date, a blanket license shall,
without any interruption in license authority enjoyed
by such digital music provider, be automatically
substituted for and supersede any existing compulsory
license previously obtained under this section by the
digital music provider from a copyright owner to engage
in one or more covered activities with respect to a
musical work, but the foregoing shall not apply to any
authority obtained from a record company pursuant to a
compulsory license to make and distribute permanent
downloads unless and until such record company
terminates such authority in writing to take effect at
the end of a monthly reporting period, with a copy to
the mechanical licensing collective.
``(B) Expiration of existing licenses.--Except to
the extent provided in subparagraph (A), on and after
the license availability date, licenses other than
individual download licenses obtained under this
section for covered activities prior to the license
availability date shall no longer continue in effect.
``(C) Treatment of voluntary licenses.--A voluntary
license for a covered activity in effect on the license
availability date will remain in effect unless and
until the voluntary license expires according to the
terms of the voluntary license, or the parties agree to
amend or terminate the voluntary license. In a case
where a voluntary license for a covered activity
entered into before the license availability date
incorporates the terms of this section by reference,
the terms so incorporated (but not the rates) shall be
those in effect immediately prior to the license
availability date, and those terms shall continue to
apply unless and until such voluntary license is
terminated or amended, or the parties enter into a new
voluntary license.
``(D) Further acceptance of notices for covered
activities by copyright office.--On and after the
enactment date--
``(i) the Copyright Office shall no longer
accept notices of intention with respect to
covered activities; and
``(ii) previously filed notices of
intention will no longer be effective or
provide license authority with respect to
covered activities, but before the license
availability date there shall be no liability
under section 501 for the reproduction or
distribution of a musical work (or share
thereof) in covered activities if a valid
notice of intention was filed for such work (or
share) before the enactment date.
``(10) Prior unlicensed uses.--
``(A) Limitation on liability in general.--A
copyright owner that commences an action under section
501 on or after January 1, 2018, against a digital
music provider for the infringement of the exclusive
rights provided by paragraph (1) or (3) of section 106
arising from the unauthorized reproduction or
distribution of a musical work by such digital music
provider in the course of engaging in covered
activities prior to the license availability date,
shall, as the copyright owner's sole and exclusive
remedy against the digital music provider, be eligible
to recover the royalty prescribed under subsection
(c)(1)(C) and chapter 8 of this title, from the digital
music provider, provided that such digital music
provider can demonstrate compliance with the
requirements of subparagraph (B), as applicable. In all
other cases the limitation on liability under this
subparagraph shall not apply.
``(B) Requirements for limitation on liability.--
The following requirements shall apply on the enactment
date and through the end of the period that expires 90
days after the license availability date to digital
music providers seeking to avail themselves of the
limitation on liability described in subparagraph (A):
``(i) No later than 30 calendar days after
first making a particular sound recording of a
musical work available through its service via
one or more covered activities, or 30 calendar
days after the enactment date, whichever occurs
later, a digital music provider shall engage in
good-faith, commercially reasonable efforts to
identify and locate each copyright owner of
such musical work (or share thereof). Such
required matching efforts shall include the
following:
``(I) Good-faith, commercially
reasonable efforts to obtain from the
owner of the corresponding sound
recording made available through the
digital music provider's service the
following information:
``(aa) Sound recording
name, featured artist, sound
recording copyright owner,
producer, international
standard recording code, and
other information commonly used
in the industry to identify
sound recordings and match them
to the musical works they
embody.
``(bb) Any available
musical work ownership
information, including each
songwriter and publisher name,
percentage ownership share, and
international standard musical
work code.
``(II) Employment of one or more
bulk electronic matching processes that
are available to the digital music
provider through a third-party vendor
on commercially reasonable terms, but a
digital music provider may rely on its
own bulk electronic matching process if
it has capabilities comparable to or
better than those available from a
third-party vendor on commercially
reasonable terms.
``(ii) The required matching efforts shall
be repeated by the digital music provider no
less than once per month for so long as the
copyright owner remains unidentified or has not
been located.
``(iii) If the required matching efforts
are successful in identifying and locating a
copyright owner of a musical work (or share
thereof) by the end of the calendar month in
which the digital music provider first makes
use of the work, the digital music provider
shall provide statements of account and pay
royalties to such copyright owner in accordance
with this section and applicable regulations.
``(iv) If the copyright owner is not
identified or located by the end of the
calendar month in which the digital music
provider first makes use of the work, the
digital music provider shall accrue and hold
royalties calculated under the applicable
statutory rate in accordance with usage of the
work, from initial use of the work until the
accrued royalties can be paid to the copyright
owner or are required to be transferred to the
mechanical licensing collective, as follows:
``(I) Accrued royalties shall be
maintained by the digital music
provider in accordance with generally
accepted accounting principles.
``(II) If a copyright owner of an
unmatched musical work (or share
thereof) is identified and located by
or to the digital music provider before
the license availability date, the
digital music provider shall--
``(aa) within 45 calendar
days after the end of the
calendar month during which the
copyright owner was identified
and located, pay the copyright
owner all accrued royalties,
such payment to be accompanied
by a cumulative statement of
account that includes all of
the information that would have
been provided to the copyright
owner had the digital music
provider been providing monthly
statements of account to the
copyright owner from initial
use of the work in accordance
with this section and
applicable regulations,
including the requisite
certification under subsection
(c)(2)(I);
``(bb) beginning with the
accounting period following the
calendar month in which the
copyright owner was identified
and located, and for all other
accounting periods prior to the
license availability date,
provide monthly statements of
account and pay royalties to
the copyright owner as required
under this section and
applicable regulations; and
``(cc) beginning with the
monthly royalty reporting
period commencing on the
license availability date,
report usage and pay royalties
for such musical work (or share
thereof) for such reporting
period and reporting periods
thereafter to the mechanical
licensing collective, as
required under this subsection
and applicable regulations.
``(III) If a copyright owner of an
unmatched musical work (or share
thereof) is not identified and located
by the license availability date, the
digital music provider shall--
``(aa) within 45 calendar
days after the license
availability date, transfer all
accrued royalties to the
mechanical licensing
collective, such payment to be
accompanied by a cumulative
statement of account that
includes all of the information
that would have been provided
to the copyright owner had the
digital music provider been
serving monthly statements of
account on the copyright owner
from initial use of the work in
accordance with this section
and applicable regulations,
including the requisite
certification under subsection
(c)(2)(I), and accompanied by
an additional certification by
a duly authorized officer of
the digital music provider that
the digital music provider has
fulfilled the requirements of
clauses (i) and (ii) of
subparagraph (B) but has not
been successful in locating or
identifying the copyright
owner; and
``(bb) beginning with the
monthly royalty reporting
period commencing on the
license availability date,
report usage and pay royalties
for such musical work (or share
thereof) for such period and
reporting periods thereafter to
the mechanical licensing
collective, as required under
this subsection and applicable
regulations.
``(v) Suspension of late fees.--A digital
music provider that complies with the
requirements of this paragraph with respect to
unmatched musical works (or shares of works)
shall not be liable for or accrue late fees for
late payments of royalties for such works until
such time as the digital music provider is
required to begin paying monthly royalties to
the copyright owner or the mechanical licensing
collective, as applicable.
``(C) Adjusted statute of limitations.--
Notwithstanding anything to the contrary in section
507(b), with respect to any claim of infringement of
the exclusive rights provided by paragraphs (1) and (3)
of section 106 against a digital music provider arising
from the unauthorized reproduction or distribution of a
musical work by such digital music provider to engage
in covered activities that accrued no more than 3 years
prior to the license availability date, such action may
be commenced within 3 years of the date the claim
accrued, or up to 2 years after the license
availability date, whichever is later.
``(D) Other rights and remedies preserved.--Except
as expressly provided in this paragraph, nothing in
this paragraph shall be construed to alter, limit, or
negate any right or remedy of a copyright owner with
respect to unauthorized use of a musical work.
``(11) Legal protections for licensing activities.--
``(A) Exemption for compulsory license
activities.--The antitrust exemption described in
subsection (c)(1)(D) shall apply to negotiations and
agreements between and among copyright owners and
persons entitled to obtain a compulsory license for
covered activities, and common agents acting on behalf
of such copyright owners or persons, including with
respect to the administrative assessment established
under this subsection.
``(B) Limitation on common agent exemption.--
Notwithstanding the antitrust exemption provided in
subsection (c)(1)(D) and subparagraph (A) (except for
the administrative assessment referenced therein and
except as provided in paragraph (8)(C)), neither the
mechanical licensing collective nor the digital
licensee coordinator shall serve as a common agent with
respect to the establishment of royalty rates or terms
under this section.
``(C) Antitrust exemption for administrative
activities.--Notwithstanding any provision of the
antitrust laws, copyright owners and persons entitled
to obtain a compulsory license under this section may
designate the mechanical licensing collective to
administer voluntary licenses for the reproduction or
distribution of musical works in covered activities on
behalf of such copyright owners and persons, but the
following conditions apply:
``(i) Each copyright owner shall establish
the royalty rates and material terms of any
such voluntary license individually and not in
agreement, combination, or concert with any
other copyright owner.
``(ii) Each person entitled to obtain a
compulsory license under this section shall
establish the royalty rates and material terms
of any such voluntary license individually and
not in agreement, combination, or concert with
any other digital music provider.
``(iii) The mechanical licensing collective
shall maintain the confidentiality of the
voluntary licenses in accordance with the
confidentiality provisions prescribed by the
Register of Copyrights under paragraph (12)(C).
``(D) Liability for good-faith activities.--The
mechanical licensing collective shall not be liable to
any person or entity based on a claim arising from its
good-faith administration of policies and procedures
adopted and implemented to carry out the
responsibilities described in subparagraphs (J) and (K)
of paragraph (3), except to the extent of correcting an
underpayment or overpayment of royalties as provided in
paragraph (3)(L)(i)(VI), but the collective may
participate in a legal proceeding as a stakeholder
party if the collective is holding funds that are the
subject of a dispute between copyright owners. For
purposes of this subparagraph, `good-faith
administration' means administration in a manner that
is not grossly negligent.
``(E) Preemption of state property laws.--The
holding and distribution of funds by the mechanical
licensing collective in accordance with this subsection
shall supersede and preempt any State law (including
common law) concerning escheatment or abandoned
property, or any analogous provision, that might
otherwise apply.
``(F) Rule of construction.--Except as expressly
provided in this subsection, nothing in this subsection
shall negate or limit the ability of any person to
pursue an action in Federal court against the
mechanical licensing collective or any other person
based upon a claim arising under this title or other
applicable law.
``(12) Regulations.--
``(A) Adoption by register of copyrights and
copyright royalty judges.--The Register of Copyrights
may conduct such proceedings and adopt such regulations
as may be necessary or appropriate to effectuate the
provisions of this subsection, except for regulations
concerning proceedings before the Copyright Royalty
Judges to establish the administrative assessment,
which shall be adopted by the Copyright Royalty Judges.
``(B) Judicial review of regulations.--Except as
provided in paragraph (7)(D)(vii), regulations adopted
under this subsection shall be subject to judicial
review pursuant to chapter 7 of title 5.
``(C) Protection of confidential information.--The
Register of Copyrights shall adopt regulations to
provide for the appropriate procedures to ensure that
confidential, private, proprietary, or privileged
information contained in the records of the mechanical
licensing collective and digital licensee coordinator
is not improperly disclosed or used, including through
any disclosure or use by the board of directors or
personnel of either entity, and specifically including
the unclaimed royalties oversight committee and the
dispute resolution committee of the mechanical
licensing collective.
``(13) Savings clauses.--
``(A) Limitation on activities and rights
covered.--This subsection applies solely to uses of
musical works subject to licensing under this section.
The blanket license shall not be construed to extend or
apply to activities other than covered activities or to
rights other than the exclusive rights of reproduction
and distribution licensed under this section, or serve
or act as the basis to extend or expand the compulsory
license under this section to activities and rights not
covered by this section on the enactment date.
``(B) Rights of public performance not affected.--
The rights, protections, and immunities granted under
this subsection, the data concerning musical works
collected and made available under this subsection, and
the definitions described in subsection (e) shall not
extend to, limit, or otherwise affect any right of
public performance in a musical work.''; and
(5) by adding at the end the following new subsection:
``(e) Definitions.--As used in this section:
``(1) Accrued interest.--The term `accrued interest' means
interest accrued on accrued royalties, as described in
subsection (d)(3)(H)(ii).
``(2) Accrued royalties.--The term `accrued royalties'
means royalties accrued for the reproduction or distribution of
a musical work (or share thereof) in a covered activity,
calculated in accordance with the applicable royalty rate under
this section.
``(3) Administrative assessment.--The term `administrative
assessment' means the fee established pursuant to subsection
(d)(7)(D).
``(4) Audit.--The term `audit' means a royalty compliance
examination to verify the accuracy of royalty payments, or the
conduct of such an examination, as applicable.
``(5) Blanket license.--The term `blanket license' means a
compulsory license described in subsection (d)(1)(A) to engage
in covered activities.
``(6) Collective total costs.--The term `collective total
costs'--
``(A) means the total costs of establishing,
maintaining, and operating the mechanical licensing
collective to fulfill its statutory functions,
including--
``(i) startup costs;
``(ii) financing, legal, and insurance
costs;
``(iii) investments in information
technology, infrastructure, and other long-term
resources;
``(iv) outside vendor costs;
``(v) costs of licensing, royalty
administration, and enforcement of rights;
``(vi) costs of bad debt; and
``(vii) costs of automated and manual
efforts to identify and locate copyright owners
of musical works (and shares of such musical
works) and match sound recordings to the
musical works the sound recordings embody; and
``(B) does not include any added costs incurred by
the mechanical licensing collective to provide services
under voluntary licenses.
``(7) Covered activity.--The term `covered activity' means
the activity of making a digital phonorecord delivery of a
musical work, including in the form of a permanent download,
limited download, or interactive stream, where such activity
qualified for a compulsory license under this section.
``(8) Digital music provider.--The term `digital music
provider' means a person (or persons operating under the
authority of that person) that, with respect to a service
engaged in covered activities--
``(A) has a direct contractual, subscription, or
other economic relationship with end users of the
service, or, if no such relationship with end users
exists, exercises direct control over the provision of
the service to end users;
``(B) is able to fully report on any revenues and
consideration generated by the service; and
``(C) is able to fully report on usage of sound
recordings of musical works by the service (or procure
such reporting).
``(9) Digital licensee coordinator.--The term `digital
licensee coordinator' means the entity most recently designated
pursuant to subsection (d)(5).
``(10) Digital phonorecord delivery.--The term `digital
phonorecord delivery' means each individual delivery of a
phonorecord by digital transmission of a sound recording that
results in a specifically identifiable reproduction by or for
any transmission recipient of a phonorecord of that sound
recording, regardless of whether the digital transmission is
also a public performance of the sound recording or any musical
work embodied therein, and includes a permanent download, a
limited download, or an interactive stream. A digital
phonorecord delivery does not result from a real-time,
noninteractive subscription transmission of a sound recording
where no reproduction of the sound recording or the musical
work embodied therein is made from the inception of the
transmission through to its receipt by the transmission
recipient in order to make the sound recording audible. A
digital phonorecord delivery does not include the digital
transmission of sounds accompanying a motion picture or other
audiovisual work as defined in section 101 of this title.
``(11) Enactment date.--The term `enactment date' means the
date of the enactment of the Musical Works Modernization Act.
``(12) Individual download license.--The term `individual
download license' means a compulsory license obtained by a
record company to make and distribute, or authorize the making
and distribution of, permanent downloads embodying a specific
individual musical work.
``(13) Interactive stream.--The term `interactive stream'
means a digital transmission of a sound recording of a musical
work in the form of a stream, where the performance of the
sound recording by means of such transmission is not exempt
under section 114(d)(1) and does not in itself, or as a result
of a program in which it is included, qualify for statutory
licensing under section 114(d)(2). An interactive stream is a
digital phonorecord delivery.
``(14) Interested.--The term `interested', as applied to a
party seeking to participate in a proceeding under subsection
(d)(7)(D), is a party as to which the Copyright Royalty Judges
have not determined that the party lacks a significant interest
in such proceeding.
``(15) License availability date.--The term `license
availability date' means the next January 1 following the
expiration of the 2-year period beginning on the enactment
date.
``(16) Limited download.--The term `limited download' means
a digital transmission of a sound recording of a musical work
in the form of a download, where such sound recording is
accessible for listening only for a limited amount of time or
specified number of times.
``(17) Matched.--The term `matched', as applied to a
musical work (or share thereof), means that the copyright owner
of such work (or share thereof) has been identified and
located.
``(18) Mechanical licensing collective.--The term
`mechanical licensing collective' means the entity most
recently designated as such by the Register of Copyrights under
subsection (d)(3).
``(19) Mechanical licensing collective budget.--The term
`mechanical licensing collective budget' means a statement of
the financial position of the mechanical licensing collective
for a fiscal year or quarter thereof based on estimates of
expenditures during the period and proposals for financing
them, including a calculation of the collective total costs.
``(20) Musical works database.--The term `musical works
database' means the database described in subsection (d)(3)(E).
``(21) Nonprofit.--The term `nonprofit' means a nonprofit
created or organized in a State.
``(22) Notice of license.--The term `notice of license'
means a notice from a digital music provider provided under
subsection (d)(2)(A) for purposes of obtaining a blanket
license.
``(23) Notice of nonblanket activity.--The term `notice of
nonblanket activity' means a notice from a significant
nonblanket licensee provided under subsection (d)(6)(A) for
purposes of notifying the mechanical licensing collective that
the licensee has been engaging in covered activities.
``(24) Permanent download.--The term `permanent download'
means a digital transmission of a sound recording of a musical
work in the form of a download, where such sound recording is
accessible for listening without restriction as to the amount
of time or number of times it may be accessed.
``(25) Qualified auditor.--The term `qualified auditor'
means an independent, certified public accountant with
experience performing music royalty audits.
``(26) Record company.--The term `record company' means an
entity that invests in, produces, and markets sound recordings
of musical works, and distributes such sound recordings for
remuneration through multiple sales channels, including a
corporate affiliate of such an entity engaged in distribution
of sound recordings.
``(27) Report of usage.--The term `report of usage' means a
report reflecting an entity's usage of musical works in covered
activities described in subsection (d)(4)(A).
``(28) Required matching efforts.--The term `required
matching efforts' means efforts to identify and locate
copyright owners of musical works as described in subsection
(d)(10)(B)(i).
``(29) Service.--The term `service', as used in relation to
covered activities, means any site, facility, or offering by or
through which sound recordings of musical works are digitally
transmitted to members of the public.
``(30) Share.--The term `share', as applied to a musical
work, means a fractional ownership interest in such work.
``(31) Significant nonblanket licensee.--The term
`significant nonblanket licensee'--
``(A) means an entity, including a group of
entities under common ownership or control that, acting
under the authority of one or more voluntary licenses
or individual download licenses, offers a service
engaged in covered activities, and such entity or group
of entities--
``(i) is not currently operating under a
blanket license and is not obligated to provide
reports of usage reflecting covered activities
under subsection (d)(4)(A);
``(ii) has a direct contractual,
subscription, or other economic relationship
with end users of the service or, if no such
relationship with end users exists, exercises
direct control over the provision of the
service to end users; and
``(iii) either--
``(I) on any day in a calendar
month, makes more than 5,000 different
sound recordings of musical works
available through such service; or
``(II) derives revenue or other
consideration in connection with such
covered activities greater than $50,000
in a calendar month, or total revenue
or other consideration greater than
$500,000 during the preceding 12
calendar months; and
``(B) does not include--
``(i) an entity whose covered activity
consists solely of free-to-the-user streams of
segments of sound recordings of musical works
that do not exceed 90 seconds in length, are
offered only to facilitate a licensed use of
musical works that is not a covered activity,
and have no revenue directly attributable to
such streams constituting the covered activity;
or
``(ii) a `public broadcasting entity' as
defined in section 118(f).
``(32) Songwriter.--The term `songwriter' means the author
of all or part of a musical work, including a composer or
lyricist.
``(33) State.--The term `State' means each State of the
United States, the District of Columbia, and each territory or
possession of the United States.
``(34) Unclaimed accrued royalties.--The term `unclaimed
accrued royalties' means accrued royalties eligible for
distribution under subsection (d)(3)(J).
``(35) Unmatched.--The term `unmatched', as applied to a
musical work (or share thereof), means that the copyright owner
of such work (or share thereof) has not been identified or
located.
``(36) Voluntary license.--The term `voluntary license'
means a license for use of a musical work (or share thereof)
other than a compulsory license obtained under this section.''.
(b) Technical and Conforming Amendments to Section 801.--Section
801(b) of title 17, United States Code, is amended--
(1) by redesignating paragraph (8) as paragraph (9); and
(2) by inserting after paragraph (7) the following new
paragraph:
``(8) To determine the administrative assessment to be paid
by digital music providers under section 115(d). The provisions
of section 115(d) shall apply to the conduct of proceedings by
the Copyright Royalty Judges under section 115(d) and not the
procedures described in this section, or section 803, 804, or
805.''.
(c) Effective Date of Amended Rate Setting Standard.--The
amendments made by subsections (a)(3)(D) and (b)(1) shall apply to any
proceeding before the Copyright Royalty Judges that is pending on, or
commenced on or after, the date of the enactment of this Act.
(d) Technical and Conforming Amendments to Title 37, Part 385 of
the Code of Federal Regulations.--Within 9 months after the date of the
enactment of this Act, the Copyright Royalty Judges shall amend the
regulations for section 115 in part 385 of title 37, Code of Federal
Regulations to conform the definitions used in such part to the
definitions of the same terms described in section 115(e) of title 17,
United States Code, as amended by subsection (a). In so doing, the
Copyright Royalty Judges shall make adjustments to the language of the
regulations as necessary to achieve the same purpose and effect as the
original regulations with respect to the rates and terms previously
adopted by the Copyright Royalty Judges.
SEC. 103. AMENDMENTS TO SECTION 114.
(a) Uniform Rate Standard.--Section 114(f) of title 17, United
States Code, is amended--
(1) by striking paragraphs (1) and (2) and inserting the
following:
``(1)(A) Proceedings under chapter 8 shall determine
reasonable rates and terms of royalty payments for
transmissions subject to statutory licensing under subsection
(d)(2) during the 5-year period beginning on January 1 of the
second year following the year in which the proceedings are to
be commenced pursuant to subparagraph (A) or (B) of section
804(b)(3), as the case may be, or such other period as the
parties may agree. The parties to each proceeding shall bear
their own costs.
``(B) The schedule of reasonable rates and terms determined
by the Copyright Royalty Judges shall, subject to paragraph
(2), be binding on all copyright owners of sound recordings and
entities performing sound recordings affected by this paragraph
during the 5-year period specified in subparagraph (A), or such
other period as the parties may agree. Such rates and terms
shall distinguish among the different types of services then in
operation and shall include a minimum fee for each such type of
service, such differences to be based on criteria including the
quantity and nature of the use of sound recordings and the
degree to which use of the service may substitute for or may
promote the purchase of phonorecords by consumers. The
Copyright Royalty Judges shall establish rates and terms that
most clearly represent the rates and terms that would have been
negotiated in the marketplace between a willing buyer and a
willing seller. In determining such rates and terms, the
Copyright Royalty Judges--
``(i) shall base their decision on economic,
competitive, and programming information presented by
the parties, including--
``(I) whether use of the service may
substitute for or may promote the sales of
phonorecords or otherwise may interfere with or
may enhance the sound recording copyright
owner's other streams of revenue from the
copyright owner's sound recordings; and
``(II) the relative roles of the copyright
owner and the transmitting entity in the
copyrighted work and the service made available
to the public with respect to relative creative
contribution, technological contribution,
capital investment, cost, and risk; and
``(ii) may consider the rates and terms for
comparable types of audio transmission services and
comparable circumstances under voluntary license
agreements.
``(C) The procedures under subparagraphs (A) and (B) shall
also be initiated pursuant to a petition filed by any sound
recording copyright owner or any transmitting entity indicating
that a new type of service on which sound recordings are
performed is or is about to become operational, for the purpose
of determining reasonable terms and rates of royalty payments
with respect to such new type of service for the period
beginning with the inception of such new type of service and
ending on the date on which the royalty rates and terms for
eligible nonsubscription services and new subscription
services, or preexisting services, as the case may be, most
recently determined under subparagraph (A) or (B) and chapter 8
expire, or such other period as the parties may agree.''; and
(2) by redesignating paragraphs (3), (4), and (5) as
paragraphs (2), (3), and (4), respectively.
(b) Repeal.--Subsection (i) of section 114 of title 17, United
States Code, is repealed.
(c) Use in Musical Work Proceedings.--
(1) In general.--License fees payable for the public
performance of sound recordings under section 106(6) of title
17, United States Code, shall not be taken into account in any
administrative, judicial, or other governmental proceeding to
set or adjust the royalties payable to musical work copyright
owners for the public performance of their works except in such
a proceeding to set or adjust royalties for the public
performance of musical works by means of a digital audio
transmission other than a transmission by a broadcaster, and
may be taken into account only with respect to such digital
audio transmission.
(2) Definitions.--In this subsection:
(A) Transmission by a broadcaster.--A
``transmission by a broadcaster'' means a
nonsubscription digital transmission made by a
terrestrial broadcast station on its own behalf, or on
the behalf of a terrestrial broadcast station under
common ownership or control, that is not part of an
interactive service or a music-intensive service
comprising the transmission of sound recordings
customized for or customizable by recipients or service
users.
(B) Terrestrial broadcast station.--A ``terrestrial
broadcast station'' means a terrestrial, over-the-air
radio or television broadcast station, licensed as such
by the Federal Communications Commission, including an
FM Translator as defined in section 74.1231 of title
47, Code of Federal Regulations, and whose primary
business activities are comprised of, and revenues are
generated through, terrestrial, over-the-air broadcast
transmissions, or the simultaneous or substantially-
simultaneous digital retransmission by the terrestrial,
over-the-air broadcast station of its over-the-air
broadcast transmissions.
(d) Rule of Construction.--Subsection (c)(2) shall not be given
effect in interpreting provisions of title 17, United States Code.
(e) Use in Sound Recording Proceedings.--The repeal of section
114(i) of title 17, United States Code, by subsection (b) shall not be
taken into account in any proceeding to set or adjust the rates and
fees payable for the use of sound recordings under section 112(e) or
section 114(f) of such title that is pending on, or commenced on or
after, the date of the enactment of this Act.
(f) Decisions and Precedents Not Affected.--The repeal of section
114(i) of title 17, United States Code, by subsection (b) shall not
have any effect upon the decisions, or the precedents established or
relied upon, in any proceeding to set or adjust the rates and fees
payable for the use of sound recordings under section 112(e) or section
114(f) of such title before the date of the enactment of this Act.
(g) Technical and Conforming Amendments.--
(1) Section 114.--Section 114(f) of title 17, United States
Code, as amended by subsection (a), is further amended in
paragraph (4)(C), as so redesignated, by striking ``under
paragraph (4)'' and inserting ``under paragraph (3)''.
(2) Section 801.--Section 801(b)(1) of title 17, United
States Code, is amended by striking ``The rates applicable''
and all that follows though ``prevailing industry practices.''.
(3) Section 804.--Section 804(b)(3)(C) of title 17, United
States Code, is amended--
(A) in clause (i), by striking ``and
114(f)(2)(C)'';
(B) in clause (iii)(II), by striking
``114(f)(4)(B)(ii)'' and inserting
``114(f)(3)(B)(ii)''; and
(C) in clause (iv), by striking ``or 114(f)(2)(C),
as the case may be''.
SEC. 104. RANDOM ASSIGNMENT OF RATE COURT PROCEEDINGS.
Section 137 of title 28, United States Code, is amended--
(1) by striking ``The business'' and inserting ``(a) In
General.--The business''; and
(2) by adding at the end the following new subsection:
``(b) Random Assignment of Rate Court Proceedings.--
``(1) In general.--
``(A) Determination of license fee.--Except as
provided in subparagraph (B), in the case of any
performing rights society subject to a consent decree,
any application for the determination of a license fee
for the public performance of music in accordance with
the applicable consent decree shall be made in the
district court with jurisdiction over that consent
decree and randomly assigned to a judge of that
district court according to that court's rules for the
division of business among district judges currently in
effect or as may be amended from time to time, provided
that any such application shall not be assigned to--
``(i) a judge to whom continuing
jurisdiction over any performing rights society
for any performing rights society consent
decree is assigned or has previously been
assigned; or
``(ii) a judge to whom another proceeding
concerning an application for the determination
of a reasonable license fee is assigned at the
time of the filing of the application.
``(B) Exception.--Subparagraph (A) does not apply
to an application to determine reasonable license fees
made by individual proprietors under section 513 of
title 17.
``(2) Rule of construction.--Nothing in paragraph (1) shall
modify the rights of any party to a consent decree or to a
proceeding to determine reasonable license fees, to make an
application for the construction of any provision of the
applicable consent decree. Such application shall be referred
to the judge to whom continuing jurisdiction over the
applicable consent decree is currently assigned. If any such
application is made in connection with a rate proceeding, such
rate proceeding shall be stayed until the final determination
of the construction application. Disputes in connection with a
rate proceeding about whether a licensee is similarly situated
to another licensee shall not be subject to referral to the
judge with continuing jurisdiction over the applicable consent
decree.''.
TITLE II--COMPENSATING LEGACY ARTISTS FOR THEIR SONGS, SERVICE, AND
IMPORTANT CONTRIBUTIONS TO SOCIETY
SEC. 201. SHORT TITLE.
This title may be cited as the ``Compensating Legacy Artists for
their Songs, Service, and Important Contributions to Society Act'' or
the ``CLASSICS Act''.
SEC. 202. UNAUTHORIZED DIGITAL PERFORMANCE OF PRE-1972 SOUND
RECORDINGS.
(a) Protection for Unauthorized Digital Performances.--Title 17,
United States Code, is amended by adding at the end the following new
chapter:
``CHAPTER 14--UNAUTHORIZED DIGITAL PERFORMANCE OF PRE-1972 SOUND
RECORDINGS
``Sec.
``1401. Unauthorized digital performance of pre-1972 sound recordings.
``Sec. 1401. Unauthorized digital performance of pre-1972 sound
recordings
``(a) Unauthorized Acts.--Anyone who, before February 15, 2067, and
without the consent of the rights owner, performs publicly, by means of
a digital audio transmission, a sound recording fixed on or after
January 1, 1923, and before February 15, 1972, shall be subject to the
remedies provided in sections 502 through 505 to the same extent as an
infringer of copyright.
``(b) Certain Authorized Transmissions.--A digital audio
transmission of a sound recording fixed on or after January 1, 1923,
and before February 15, 1972, shall, for purposes of subsection (a), be
considered to be authorized and made with the consent of the rights
owner if--
``(1) the transmission is made by a transmitting entity
that is publicly performing sound recordings fixed on or after
February 15, 1972, by means of digital audio transmissions
subject to section 114;
``(2) the transmission would satisfy the requirements for
statutory licensing under section 114(d)(2), or would be exempt
under section 114(d)(1), if the sound recording were fixed on
or after February 15, 1972;
``(3) in the case of a transmission that would not be
exempt under section 114(d)(1) as described in paragraph (2),
the transmitting entity pays statutory royalties and provides
notice of its use of the relevant sound recordings in the same
manner as is required by regulations adopted by the Copyright
Royalty Judges for sound recordings fixed on or after February
15, 1972; and
``(4) in the case of a transmission that would not be
exempt under section 114(d)(1) as described in paragraph (2),
the transmitting entity otherwise satisfies the requirements
for statutory licensing under section 114(f)(4)(B).
``(c) Transmissions by Direct Licensing of Statutory Services.--
``(1) In general.--A transmission of a sound recording
fixed on or after January 1, 1923, and before February 15,
1972, shall, for purposes of subsection (a), be considered to
be authorized and made with the consent of the rights owner if
such transmission is included in a license agreement
voluntarily negotiated at any time between the rights owner and
the entity performing the sound recording.
``(2) Payment of royalties to nonprofit collective.--To the
extent that such a license agreement entered into on or after
the date of the enactment of this section extends to digital
audio transmissions of a sound recording fixed on or after
January 1, 1923, and before February 15, 1972, that meet the
conditions of subsection (b), the licensee shall pay, to the
collective designated to distribute receipts from the licensing
of transmissions in accordance with section 114(f), 50 percent
of the performance royalties for the transmissions due under
the license, with such royalties fully credited as payments due
under the license.
``(3) Distribution of royalties by collective.--The
collective described in paragraph (2) shall, in accordance with
subparagraphs (B) through (D) of section 114(g)(2), and
paragraphs (5) and (6) of section 114(g)), distribute the
royalties received under paragraph (2) under the license
described in paragraph (2). Such payments shall be the only
payments to which featured and nonfeatured artists are entitled
by virtue of the transmissions described in paragraph (2) under
the license.
``(4) Rule of construction.--This section does not prohibit
any other license from directing the licensee to pay other
royalties due to featured and nonfeatured artists for such
transmissions to the collective designated to distribute
receipts from the licensing of transmissions in accordance with
section 114(f).
``(d) Relationship to State Law.--
``(1) In general.--Nothing in this section shall be
construed to annul or limit any rights or remedies under the
common law or statutes of any State for sound recordings fixed
before February 15, 1972, except, notwithstanding section
301(c), for the following:
``(A) This section preempts any claim of common law
copyright or equivalent right under the laws of any
State arising from any digital audio transmission that
is made, on and after the date of the enactment of this
section, of a sound recording fixed on or after January
1, 1923, and before February 15, 1972.
``(B) This section preempts any claim of common law
copyright or equivalent right under the laws of any
State arising from any reproduction that is made, on
and after the date of the enactment of this section, of
a sound recording fixed on or after January 1, 1923,
and before February 15, 1972, and that would satisfy
the requirements for statutory licensing under
paragraphs (1) and (6) of section 112(e), if the sound
recording were fixed on or after February 15, 1972.
``(C) This section preempts any claim of common law
copyright or equivalent right under the laws of any
State arising from any digital audio transmission or
reproduction that is made, before the date of the
enactment of this section, of a sound recording fixed
on or after January 1, 1923, and before February 15,
1972, if--
``(i) the digital audio transmission would
have satisfied the requirements for statutory
licensing under section 114(d)(2) or been
exempt under section 114(d)(1), or the
reproduction would have satisfied the
requirements of section 112(e)(1), as the case
may be, if the sound recording were fixed on or
after February 15, 1972; and
``(ii) except in the case of transmissions
that would have been exempt under section
114(d)(1), the transmitting entity, before the
end of the 270-day period beginning on the date
of the enactment of this section, pays
statutory royalties and provides notice of the
use of the relevant sound recordings in the
same manner as is required by regulations
adopted by the Copyright Royalty Judges for
sound recordings that are protected under this
title for all the digital audio transmissions
and reproductions satisfying the requirements
for statutory licensing under section 114(d)(2)
and section 112(e)(1) during the 3 years prior
to the date of the enactment of this section.
``(2) Rule of construction for common law copyright.--For
purposes of subparagraphs (A) through (C) of paragraph (1), a
claim of common law copyright or equivalent right under the
laws of any State includes a claim that characterizes conduct
subject to such subparagraphs as an unlawful distribution, act
of record piracy, or similar violation.
``(3) Rule of construction for public performance rights.--
Nothing in this section shall be construed to recognize or
negate the existence of public performance rights in sound
recordings under the laws of any State.
``(e) Limitations on Remedies.--
``(1) Fair use; uses by libraries, archives, and
educational institutions.--The limitations on the exclusive
rights of a copyright owner described in sections 107, 108, and
110(1) and (2) shall apply to a claim under subsection (a) for
the unauthorized performance of a sound recording fixed on or
after January 1, 1923, and before February 15, 1972.
``(2) Actions.--The limitations on actions described in
section 507 shall apply to a claim under subsection (a) for the
unauthorized performance of a sound recording fixed on or after
January 1, 1923, and before February 15, 1972.
``(3) Material online.--Section 512 shall apply to a claim
under subsection (a) for the unauthorized performance of a
sound recording fixed on or after January 1, 1923, and before
February 15, 1972.
``(4) Principles of equity.--Principles of equity apply to
remedies for a violation of this section to the same extent as
such principles apply to remedies for infringement of
copyright.
``(5) Filing requirement for statutory damages and
attorneys' fees.--
``(A) Filing of information on sound recordings.--
``(i) Filing requirement.--Except in the
case of a transmitting entity that has filed
contact information for that transmitting
entity under subparagraph (B), in any action
under this section, an award of statutory
damages or of attorneys' fees under section 504
or 505 may be made with respect to an
unauthorized transmission of a sound recording
under subsection (a) only if--
``(I) the rights owner has filed
with the Copyright Office a schedule
that specifies the title, artist, and
rights owner of the sound recording and
contains such other information, as
practicable, as the Register of
Copyrights prescribes by regulation;
and
``(II) the transmission is made
after the end of the 90-day period
beginning on the date on which the
information filed under subclause (I)
is indexed into the public records of
the Copyright Office.
``(ii) Regulations.--The Register of
Copyrights shall, before the end of the 180-day
period beginning on the date of the enactment
of this section, issue regulations establishing
the form, content, and procedures for the
filing of schedules under clause (i). Such
regulations shall provide that persons may
request that they receive timely notification
of such filings, and shall set forth the manner
in which such requests may be made.
``(B) Filing of contact information for
transmitting entities.--
``(i) Filing requirement.--The Register of
Copyrights shall, before the end of the 30-day
period beginning on the date of the enactment
of this section, issue regulations establishing
the form, content, and procedures for the
filing, by any entity that, as of the date of
the enactment of this section, performs sound
recordings fixed before February 15, 1972, by
means of digital audio transmissions, of
contact information for such entity.
``(ii) Time limit on filings.--The Register
of Copyrights may accept filings under clause
(i) only until the 180th day after the date of
the enactment of this section.
``(iii) Limitation on statutory damages and
attorneys' fees.--
``(I) Limitation.--An award of
statutory damages or of attorneys' fees
under section 504 or 505 may not be
made, against an entity that has filed
contact information for that entity
under clause (i), with respect to an
unauthorized transmission by that
entity of a sound recording under
subsection (a) if the transmission is
made before the end of the 90-day
period beginning on the date on which
the entity receives a notice that--
``(aa) is sent by or on
behalf of the rights owner of
the sound recording;
``(bb) states that the
entity is not legally
authorized to transmit that
sound recording under
subsection (a); and
``(cc) identifies the sound
recording in a schedule
conforming to the requirements
prescribed by the regulations
issued under subparagraph
(A)(ii).
``(II) Undeliverable notices.--In
any case in which a notice under
subclause (I) is sent to an entity by
mail or courier service and the notice
is returned to the sender because the
entity either is no longer located at
the address provided in the contact
information filed under clause (i) or
has refused to accept delivery, or the
notice is sent by electronic mail and
is undeliverable, the 90-day period
under subclause (I) shall begin on the
date of the attempted delivery.
``(C) Section 412.--Section 412 shall not limit an
award of statutory damages under section 504(c) or
attorneys' fees under section 505 with respect to an
unauthorized transmission of a sound recording under
subsection (a).
``(6) Applicability of other provisions.--
``(A) In general.--Subject to subparagraph (B), no
provision of this title shall apply to or limit the
remedies available under this section except as
otherwise provided in this section.
``(B) Applicability of definitions.--Any term used
in this section that is defined in section 101 shall
have the meaning given that term in section 101.
``(f) Application of Section 230 Safe Harbor.--For purposes of
section 230 of the Communications Act of 1934 (47 U.S.C. 230),
subsection (a) shall be considered to be a `law pertaining to
intellectual property' under subsection (e)(2) of such section.
``(g) Rights Owner Defined.--In this section, the term `rights
owner' means the person who has the exclusive right to reproduce a
sound recording under the laws of any State.''.
(b) Conforming Amendment.--The table of chapters for title 17,
United States Code, is amended by adding at the end the following new
chapter:
``14. Unauthorized digital performance of pre-1972 sound 1401''.
recordings.
SEC. 203. EFFECTIVE DATE.
This title and the amendments made by this title shall take effect
on the date of the enactment of this Act.
TITLE III--ALLOCATION FOR MUSIC PRODUCERS
SEC. 301. SHORT TITLE.
This title may be cited as the ``Allocation for Music Producers
Act'' or the ``AMP Act''.
SEC. 302. PAYMENT OF STATUTORY PERFORMANCE ROYALTIES.
(a) Letter of Direction.--Section 114(g) of title 17, United States
Code, is amended by adding at the end the following new paragraph:
``(5) Letter of direction.--
``(A) In general.--A nonprofit collective
designated by the Copyright Royalty Judges to
distribute receipts from the licensing of transmissions
in accordance with subsection (f) shall adopt and
reasonably implement a policy that provides, in
circumstances determined by the collective to be
appropriate, for acceptance of instructions from an
artist payee identified under subparagraph (A) or (D)
of paragraph (2) to distribute, to a producer, mixer,
or sound engineer who was part of the creative process
that created a sound recording, a portion of the
payments to which the artist payee would otherwise be
entitled from the licensing of transmissions of the
sound recording. In this section, such instructions
shall be referred to as a `letter of direction'.
``(B) Acceptance of letter.--To the extent that the
collective accepts a letter of direction under
subparagraph (A), the person entitled to payment
pursuant to the letter of direction shall, during the
period in which the letter of direction is in effect
and carried out by the collective, be treated for all
purposes as the owner of the right to receive such
payment, and the artist payee providing the letter of
direction to the collective shall be treated as having
no interest in such payment.
``(C) Authority of collective.--This paragraph
shall not be construed in such a manner so that the
collective is not authorized to accept or act upon
payment instructions in circumstances other than those
to which this paragraph applies.''.
(b) Additional Provisions for Recordings Fixed Before November 1,
1995.--Section 114(g) of title 17, United States Code, as amended by
subsection (a), is further amended by adding at the end the following
new paragraph:
``(6) Sound recordings fixed before november 1, 1995.--
``(A) Payment absent letter of direction.--A
nonprofit collective designated by the Copyright
Royalty Judges to distribute receipts from the
licensing of transmissions in accordance with
subsection (f) (in this paragraph referred to as the
`collective') shall adopt and reasonably implement a
policy that provides, in circumstances determined by
the collective to be appropriate, for the deduction of
2 percent of all the receipts that are collected from
the licensing of transmissions of a sound recording
fixed before November 1, 1995, but which is withdrawn
from the amount otherwise payable under paragraph
(2)(D) to the recording artist or artists featured on
the sound recording (or the persons conveying rights in
the artists' performance in the sound recording), and
the distribution of such amount to one or more persons
described in subparagraph (B), after deduction of costs
described in paragraph (3) or (4), as applicable, if
each of the following requirements is met:
``(i) Certification of attempt to obtain a
letter of direction.--The person described in
subparagraph (B) who is to receive the
distribution has certified to the collective,
under penalty of perjury, that--
``(I) for a period of at least 4
months, that person made reasonable
efforts to contact the artist payee for
such sound recording to request and
obtain a letter of direction
instructing the collective to pay to
that person a portion of the royalties
payable to the featured recording
artist or artists; and
``(II) during the period beginning
on the date that person began the
reasonable efforts described in
subclause (I) and ending on the date of
that person's certification to the
collective, the artist payee did not
affirm or deny in writing the request
for a letter of direction.
``(ii) Collective attempt to contact
artist.--After receipt of the certification
described in clause (i) and for a period of at
least 4 months before the collective's first
distribution to the person described in
subparagraph (B), the collective attempted, in
a reasonable manner as determined by the
collective, to notify the artist payee of the
certification made by the person described in
subparagraph (B).
``(iii) No objection received.--The artist
payee did not, as of the date that is 10
business days before the date on which the
first distribution is made, submit to the
collective in writing an objection to the
distribution.
``(B) Eligibility for payment.--A person shall be
eligible for payment under subparagraph (A) if the
person--
``(i) is a producer, mixer, or sound
engineer of the sound recording;
``(ii) has entered into a written contract
with a record company involved in the creation
or lawful exploitation of the sound recording,
or with the recording artist or artists
featured on the sound recording (or the persons
conveying rights in the artists' performance in
the sound recording), under which the person
seeking payment is entitled to participate in
royalty payments that are based on the
exploitation of the sound recording and are
payable from royalties otherwise payable to the
recording artist or artists featured on the
sound recording (or the persons conveying
rights in the artists' performance in the sound
recording);
``(iii) made a creative contribution to the
creation of the sound recording; and
``(iv) submits a written certification to
the collective stating, under penalty of
perjury, that the person meets the requirements
in clauses (i) through (iii) and includes a
true copy of the contract described in clause
(ii).
``(C) Multiple certifications.--Subject to
subparagraph (D), in a case in which more than one
person described in subparagraph (B) has met the
requirements for a distribution under subparagraph (A)
with respect to a sound recording as of the date that
is 10 business days before the date on which a
distribution is made, the collective shall divide the 2
percent distribution equally among all such persons.
``(D) Objection to payment.--Not later than 10
business days after the date on which the collective
receives from the artist payee a written objection to a
distribution made pursuant to subparagraph (A), the
collective shall cease making any further payment
relating to such distribution. In any case in which the
collective has made one or more distributions pursuant
to subparagraph (A) to a person described in
subparagraph (B) before the date that is 10 business
days after the date on which the collective receives
from the artist payee an objection to such
distribution, the objection shall not affect that
person's entitlement to any distribution made before
the collective ceases such distribution under this
subparagraph.
``(E) Ownership of the right to receive payments.--
To the extent that the collective determines that a
distribution will be made under subparagraph (A) to a
person described in subparagraph (B), such person
shall, during the period covered by such distribution,
be treated for all purposes as the owner of the right
to receive such payments, and the artist payee to whom
such payments would otherwise be payable shall be
treated as having no interest in such payments.
``(F) Artist payee defined.--In this paragraph, the
term `artist payee' means a person, other than a person
described in subparagraph (B), who owns the right to
receive all or part of the receipts payable under
paragraph (2)(D) with respect to a sound recording. In
a case in which there are multiple artist payees with
respect to a sound recording, an objection by one such
payee shall apply only to that payee's share of the
receipts payable under paragraph (2)(D), and does not
preclude payment under subparagraph (A) from the share
of an artist payee that does not so object.''.
(c) Technical and Conforming Amendments.--Section 114(g) of title
17, United States Code, as amended by subsections (a) and (b), is
further amended--
(1) in paragraph (2), by striking ``An agent designated''
and inserting ``Except as provided for in paragraph (6), a
nonprofit collective designated by the Copyright Royalty
Judges'';
(2) in paragraph (3)--
(A) by striking ``nonprofit agent designated'' and
inserting ``nonprofit collective designated by the
Copyright Royalty Judges'';
(B) by striking ``another designated agent'' and
inserting ``another designated nonprofit collective'';
and
(C) by striking ``agent'' and inserting
``collective'' each subsequent place it appears;
(3) in paragraph (4)--
(A) by striking ``designated agent'' and inserting
``nonprofit collective''; and
(B) by striking ``agent'' and inserting
``collective'' each subsequent place it appears; and
(4) by adding at the end the following new paragraph:
``(7) Preemption of state property laws.--The holding and
distribution of receipts under section 112 and this section by
a nonprofit collective designated by the Copyright Royalty
Judges in accordance with this subsection and regulations
adopted by the Copyright Royalty Judges shall supersede and
preempt any State law (including common law) concerning
escheatment or abandoned property, or any analogous provision,
that might otherwise apply.''.
SEC. 303. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this title
and the amendments made by this title shall take effect on the date of
the enactment of this Act.
(b) Delayed Effective Date.--The effective date for paragraphs
(5)(B) and (6)(E) of section 114(g) of title 17, United States Code, as
added by section 302, shall be January 1, 2020.
Passed the House of Representatives April 25, 2018.
Attest:
KAREN L. HAAS,
Clerk.