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December 18, 2007, Alert No. 1,690.
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Bills Introduced in House and Senate to End Terrestrial Broadcasters' Performance Right

12/18. Rep. Howard Berman (D-CA) and others introduced HR 4789 [PDF | LOC | WW], the "Performance Rights Act of 2007". Sen. Patrick Leahy (D-VT) and others introduced S 2500, the companion bill in the Senate. These bills would end terrestrial broadcasters' exemption from paying copyright royalties when they play copyrighted songs.

Introduction. Section 106 of the Copyright Act, which is codified at 17 U.S.C. § 106, enumerates the exclusive rights of owners of copyrights. Section 106(6) currently provides that "the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: ... (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission". 17 U.S.C. § 114 then elaborates on what is an exclusive right under Section 106(6), and what is exempt.

That is, performances by AM and FM radio broadcasters are exempted from the exclusive rights of copyright holders. These broadcasters do not need to obtain permission, or pay royalties, for playing copyrighted songs in the U.S.

Broadcasters, who are represented by the National Association of Broadcasters (NAB), are happy with this arrangement, and therefore oppose this bill. In contrast, various copyright groups support ending this broadcast performance exception.

Also, various other platforms for music delivery that compete with radio, including webcasting, satellite radio, and cable, must pay to play.

Rep. Howard BermanRep. Berman (at right), the sponsor of the bill, is the Chairman of the House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet and Intellectual Property. He wrote in his statement introducing this bill that "This legislation is a first step at ensuring that all radio platforms are treated in a similar manner and that those who perform music are paid for their work. This narrowly tailored bill amends a glaring inequity in America’s copyright law -- the provision in Section 114 that exempts over-the-air broadcasters from paying those who perform the music that we listen to on AM and FM radio."

Bill Summary. This bill amends Section 106(6) to provide an exclusive right "in the case of sound recordings, to perform the copyrighted work publicly by means of an audio transmission." It also makes several revisions to Section 114.

Also, the bill provides for special treatment for small, non-commercial, educational, and religious broadcasters.

For example, the bill provides that "each individual terrestrial broadcast station that has gross revenues in any calendar year of less than $1,250,000 may elect to pay for its over-the-air nonsubscription broadcast transmissions a royalty fee of $5,000 per year, ...", while a "public broadcasting entity ... may elect to pay for its over-the-air nonsubscription broadcast transmissions a royalty fee of $1,000 per year ..."

The bill also provides that the performance of a sound recording publicly by means of an audio transmission is not an infringement of Section 106(6) if the performance is part of an eligible nonsubscription transmission of either "services at a place of worship or other religious assembly" or "an incidental use of a musical sound recording".

That is, no royalties must be paid for the broadcast of a religious service that includes performance of a copyrighted song.

Rep. Berman stated that "incidental use" would include "brief musical transitions in and out of commercials or program segments, or brief performances during news, talk and sports programming". Although, neither this bill, Section 114, Section 106, nor Section 101 (the definitions section of the Copyright Act), define the term "incidental use".

The bill then amends Section 114 to provide that "Such rates and terms shall include a per program license option for terrestrial broadcast stations that make limited feature uses of sound recordings."

Rep. Berman explained that "This section allows terrestrial radio stations to obtain program licenses for sound recordings (at separately set rates), in lieu of blanket licenses. In some cases, a radio station may not make many featured uses of music, for example a mixed-format station. In such cases, rather than requiring a station to pay a general blanket license fee in the same amount paid by a station that primarily makes featured uses of music, this section requires the Copyright Royalty Board to establish a ``per program license´´ so that such stations can choose only to pay for the music they use, which may be less costly than the general blanket license. This parallels the licenses offered by the performance rights organizations for performing the underlying musical copyright." (Parentheses and internal quotations in original.)

The bill also provides that "Nothing in this Act shall adversely affect in any respect the public performance rights of or royalties payable to songwriters or copyright owners of musical works."

Sponsors' Statements. The original cosponsors of the bill in the House are Rep. John Conyers (D-MI), Rep. John Shadegg (R-AZ), Rep. Darrell Issa (R-CA), Rep. Marsha Blackburn (R-TN), and Rep. Jane Harman (D-CA). The Senate cosponsors Sen. Orrin Hatch (R-UT), Sen. Dianne Feinstein (D-CA), and Sen. Bob Corker (R-TN).

Sen. Leahy, the Chairman of the Senate Judiciary Committee (SJC), wrote in his introduction statement that "artists should be compensated fairly for the use of their work". See, Sen. Leahy's statement, bill summary, and release.

He elaborated that "When radio stations broadcast music, listeners are enjoying the intellectual property of two creative artists – the songwriter and the performer.  The success, and the artistic quality, of any recorded song depends on both.  Radio stations pay songwriters for a license to broadcast the music they have composed.  That is proper, and that is fair.  The songwriters’ work is promoted by the air play, but no one seriously questions that the songwriter should be paid for the use of his or her work. But the performing artist is not paid by the radio station. The time has come to end this inequity."

Rep. Conyers, the Chairman of the HJC, stated that "Today we take the first step toward finally giving artists and musicians their fair due ... They are the people who bring the music to life and should no longer be overlooked. My decision to take a leading role to remedy this inequity in no way alters my commitment to working with the songwriters to ensure that their rights and compensation are protected.”

More Reaction to Bill. Sen. Arlen Specter (R-PA), the ranking Republican on the SJC is not a cosponsor. He stated in a release that "I welcome Senator Leahy and Hatch's introduction of the Performance Rights Act, and I commend their efforts to tackle perceived inequities in the treatment of music within the Copyright Code."

He added that "I am very interested in the issues involved in the performance rights debate, and I will continue to analyze the Performance Rights Act to ensure it achieves a proper balance amongst the recording artists, songwriters and broadcasters."

He concluded that "This legislation is a positive step in the dialogue between the Congress and interested industries regarding performance rights. I agree that some changes in the existing law are necessary, but I would like to give interested parties an opportunity to give me the benefit of their thinking before I make a final decision on this important matter."

The NAB's Dennis Wharton stated in a release that "After decades of Ebenezer Scrooge-like exploitation of countless artists, RIAA and the foreign-owned record labels are singing a new holiday jingle to offset their failing business model".

He added that the "NAB will aggressively oppose this brazen attempt to force America's hometown radio stations to subsidize companies that have profited enormously through the free promotion provided by radio airplay."

Related Congressional Activity. On October 31, 2007, Rep. Gene Green (D-TX) and others introduced HConRes 244. It states that the "Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings."

As of December 18, 2007, this resolution had 122 cosponsors.

Also, the HJC's SCIIP held a hearing on July 31, 2007, titled "Ensuring Artists Fair Compensation: Updating the Performance Right and Platform Parity for the 21st Century". See, prepared testimony [1 page in PDF] of Rep. Paul Hodes (D-NH), prepared testimony [16 pages in PDF] of Marybeth Peters (Register of Copyright), prepared testimony [6 pages in PDF] of Judy Collins (recording artist), prepared testimony [20 pages in PDF] of Charles Warfield (ICBC Broadcast Holding, Inc.), and prepared testimony [6 pages in PDF] of Sam Moore (recording artist).

Peters wrote that "Congress has repeatedly recognized the emergence of technological threats to the creators of sound recordings."

"What is needed is a change to ensure that performers and record companies can continue to make a viable living from their craft." She suggested that "an expansion of the performance right for sound recordings would I believe provide fair compensation to the creators and serve as a significant stimulus to ensure that creators continue to develop new works throughout the 21st Century."

Warfield, who testified for the NAB, wrote that the radio and music industries have a relationship of "mutual collaboration" which is embodied in the broadcast performance right. He argued that radio stations advertise the music that they play. He said that ending this exemption would be a "tax".

He said that "The recording industry’s pursuit of a performance tax at this time appears directly linked to the loss of revenues from the sale of music. This should not be a basis for the imposition of such a tax and radio should not be responsible for the loss of revenue from physical sales in the recording industry. A performance tax would harm the beneficial relationship that exists between the recording industry and the radio industry."

1st Circuit Holds Copyright Act Limitation Applies to State Law Claim for Accounting for Sales of Items for which Copyright Ownership is Disputed

12/13. The U.S. Court of Appeals (1stCir) issued its divided opinion in Cambridge Literary Properties, Ltd. v. W. Goebel Porzellanfabrik, affirming the summary judgment of the District Court for the defendant in an action for an accounting regarding the sale of copyrighted works. The issue is which statute of limitations to apply.

Cambridge Literary Properties (CLP) filed a complaint in U.S. District Court (DMass), based upon diversity of citizenship, against W. Goebel Porzellanfabrik and others seeking an accounting and share of the profits, under state law, regarding the sale of figurines and images in which it claims a copyright interest. The complaint does not plead copyright infringement, or seek a declaration of ownership of copyright, although this fact is in dispute.

Basically, CLP filed its complaint beyond the limitation set by the Copyright Act for claims to establish copyright ownership, but within the state statute's limitation for claims for an accounting.

The Court of Appeals held that the Copyright Act limitation applies, and therefore affirmed the summary judgment of the District Court for the defendant.

The Court of Appeals reasoned that "The accounting and equitable trust claims created by state law are premature. Such claims may well be governed by state law, but they are not ripe and necessarily rest upon plaintiff having met the antecedent showing that it has ownership rights under the Copyright Act. Plaintiff may not assert the state-law claims for accounting or equitable trust without establishing that it is a co-owner. Whether Cambridge is a co-owner in turn depends, on the facts of this case, upon the federal Copyright Act. This in turn requires that Cambridge have asserted its ownership claims within that statute's limitations period."

Judge Cyr wrote in his dissenting opinion that this holding "threatens to draw into the federal courts many copyright-related claims over which Congress deliberately intended to give the state courts concurrent jurisdiction".

This case is Cambridge Literary Properties, No. U.S. Court of Appeals for the 1st Circuit, App. Ct. 06-2339, an appeal from the U.S. District Court for the District of Massachusetts. Judge Lynch wrote the opinion of the Court of Appeals, in which Howard joined. Judge Cyr wrote a dissenting opinion.

More IPR News

12/18. The Department of Justice (DOJ) announced in release that a federal grand jury in Puerto Rico returned indictments that charge 26 individuals with violations to 17 U.S.C. §§ 506(a)(1) & (b) and 18 U.S.C. § 2319 (b)(1) in connection with reproducing and distributing music CDs and DVDs for the purpose of commercial advantage or private financial gain. The DOJ also stated that this follows the seizure in Puerto Rico by various federal government agencies, working with the Motion Picture Association of America (MPAA) and the Recording Industry of Association of America (RIAA), of more than 53,000 counterfeit music CDs and DVDs in flea markets in Puerto Rico.

12/18. The U.S. Court of Appeals (9thCir) issued its opinion [6 pages in PDF] in K and N Engineering v. Bulat, a case regarding remedies for trademark counterfeiting. The Court of Appeals held that an election to receive statutory damages under 15 U.S.C. § 1117(c) precludes an award of attorney’s fees under 15 U.S.C. § 1117(b). Hence, it reversed the judgment of the District Court. This case is K and N Engineering, Inc. v. Sarah Bulat, et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 06-55393, an appeal from the U.S. District Court for the Central District of California, D.C. No. CV-04-09707-AHM, Judge Howard Matz presiding. Judge Sandra Ikuta wrote the opinion of the Court of Appeals, in which Judges Thomas Nelson and Randy Smith joined.

Chertoff Addresses Terrorism and Identification

12/18. Michael Chertoff, the Secretary of Homeland Security, gave a speech in Dublin, Ireland. He addressed threats posed by terrorists, including uses of new technologies, and things that governments are doing in response, including collection and sharing of identification information.

Michael ChertoffHe stated that "I would say this threat is particularly exacerbated because we live in a world in which technology has given even the individual terrorist much more leverage than was true 20, 50 or 75 years ago: the ability to use the Internet to communicate and create networks; the ability to use technology to develop biological, chemical, even radiological and nuclear weapons. What this has created is the threat that even a small group getting control of a small portion of a state could build laboratories and other facilities that would allow them to put together capabilities that would enable the waging of war on a scale that a hundred years ago required a powerful nation-state."

He also discussed the US-EU passenger name record agreement, and other intelligence and identification efforts. He said that "there is a perception that somehow America is an outlier, that America is Big Brother looking to collect information in a way that is at odds with the general trend in Europe and in other free parts of the world."

He asserted that "that perception is clearly at odds with reality, for it is precisely in those nations that share our commitment to democratic values and freedom that we see a similar movement to what I would consider to be a reasonable and balanced approach to identifying people who are threats to security."

"What we're seeing, then, in Japan, in Southeast Asia, in Europe, is that many countries around the world are beginning to take a converging approach to the management of intelligence and information to identify those who are a threat to all of our free societies", said Chertoff.

Washington Tech Calendar
New items are highlighted in red.
Wednesday, December 19

The House will meet at 10:00 AM for legislative business. The House may consider several non-technology related items under suspension of the rules. It may also approve the Senate amendment to the AMT bill, the Senate amendments to the foreign operations appropriations bill, and HJRes 72, the continuing resolution. See, Rep. Hoyer's schedule for the week and schedule for Wednesday.

The Senate will meet at 11:30 AM.

10:00 AM. The Senate Judiciary Committee (SJC) will hold a hearing on the nomination of Judge Mark Filip to be the Deputy Attorney General. See, Sen. Patrick Leahy's (D-VT) release and SJC notice. Location: Room 226, Dirksen Building.

6:00 - 9:15 PM. The DC Bar Association will host a continuing legal education (CLE) program titled "2007 Intellectual Property Law: Year in Review Series - Part I". Part I will address developments in copyright, trademark, and internet law. The speakers will be Brian Banner, Justyna Burr, and Terence Ross. The price to attend ranges from $80 to $115. For more information, call 202-626-3488. See, notice. Location: DC Bar Conference Center, B-1 Level, 1250 H St., NW.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) regarding ancillary terrestrial components (ATC), which allow mobile satellite service (MSS) operators to integrate terrestrial services into their satellite networks in order to augment coverage in areas where their satellite signals are largely unavailable due to blocking, by re-using their assigned MSS frequencies. This item is FCC 07-194 in IB Docket No. 07-253. See, notice in the Federal Register, November 19, 2007, Vol. 72, No. 222, at Pages 64979-64980.

Thursday, December 20

The House will meet at 10:00 AM for legislative business. See, Rep. Hoyer's schedule for the week.

10:00 AM - 12:00 NOON. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare advice on U.S. positions on the restructuring of the Radiocommunication Sector of the International Telecommunication Union (ITU-R). See, notice in the Federal Register, December 7, 2007, Vol. 72, No. 235, at Page 69279. Location: Boeing Company, 1200 Wilson Blvd., Arlington, VA.

1:00 PM. The National Science Foundation's (NSF) National Science Board's (NSB) Public Service Award Committee will hold a closed meeting by teleconference. See, notice in the Federal Register, November 30, 2007, Vol. 72, No. 230, at Page 67761. Location: NSF, 4201 Wilson Blvd., Arlington, VA.

6:00 - 8:15 PM. The DC Bar Association will host a continuing legal education (CLE) program titled "2007 Intellectual Property Law: Year in Review Series - Part II". Part II will address developments in patent law. The speakers will be Bradley Wright and Eric Wright. The price to attend ranges from $80 to $115. For more information, call 202-626-3488. See, notice. Location: DC Bar Conference Center, B-1 Level, 1250 H St., NW.

Friday, December 21

The House will meet at 9:00 AM for legislative business. See, Rep. Hoyer's schedule for the week.

12:00 NOON. Deadline to submit initial comments to the Office of the US Trade Representative (OUSTR) regarding compliance with telecommunications trade agreements. See, notice in the Federal Register, November 19, 2007, Vol. 72, No. 222, at Pages 65109-65111.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) regarding hearing aids and wireless handsets. This item is FCC 07-192 in WT Docket No. 07-250. See, notice in the Federal Register, November 21, 2007, Vol. 72, No. 224, at Pages 65494-65508. See also, story titled "FCC Releases 2nd Report and Order and NPRM on Hearing Aids and Wireless Handsets" in TLJ Daily E-Mail Alert No. 1,672, November 8, 2007.

Deadline to submit comments to the Office of the US Trade Representative (OUSTR) regarding the US complaint to the World Trade Organization (WTO) regarding the People's Republic of China's (PRC) trade barriers and market access restrictions affecting movies and audio recordings. See, notice in the Federal Register, November 8, 2007, Vol. 72, No. 216, at Pages 63211-63213.

Deadline to submit to the National Cable and Telecommunications Association (NCTA) proposals for 2008 NCTA Technical Papers. See, notice.

Monday, December 24

There will be no issue of the TLJ Daily E-Mail Alert.

All federal executive branch departments and agencies will be closed. See, Executive Order of December 6, 2007.

Deadline to submit comments to the U.S. Patent and Trademark Office (USPTO) regarding its proposal to amend the Rules of Practice in Trademark Cases to require a description of the mark in all applications to register a mark not in standard characters. See, notice in the Federal Register, October 25, 2007, Vol. 72, No. 206, at Pages 60609-60611.

Effective date of the Federal Communications Commission's (FCC) Second Report and Order regarding video franchising. This item is FCC 07-190 in MB Docket No. 05-311. See, notice in the Federal Register, November 23, 2007, Vol. 72, No. 225, at Pages 65670-65677. See also, story titled "FCC Adopts 2nd Report and Order on Video Franchising" in TLJ Daily E-Mail Alert No. 1,668, November 2, 2007.

Tuesday, December 25


There will be no issue of the TLJ Daily E-Mail Alert.

The Federal Communications Commission (FCC) and other federal offices will be closed. See, Office of Personnel Management's (OPM) list of federal holidays and 5 U.S.C. § 6103.

People and Appointments

12/18. President Bush announced his intent to nominate Deanna Okun to be a Deputy USTR in the Office of the U.S. Trade Representative (OUSTR). See, White House release and OUSTR release. She is currently a Commissioner of the U.S. International Trade Commission (USITC). Before that, she worked for former Sen. Frank Murkowski (R-AK).

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