Tomorrow the U.S. House of Representatives IP subcommittee will hold a hearing on a draft bill to amend Section 115. Here is a short sectional analysis and here is the draft bill (a new link). Kudos to chair Lamar Smith and subcommittee counsel Joe Keeley for having such an open process. The subcommittee conducted a number of roundtable sessions, vetted issues through the Copyright Office, and has now circulated the draft in advance of the hearing, as well as having the hearing, which one can watch via a live webcast here.
The issues dealt with in Section 115 have a long history, going back to the pre-1909 Act days, when the Aeolian player piano company hit upon an idea that will have resonance today: consumers would buy more of its pianos if it sewed up exclusive deals with copyright owners of musical compositions. You want to hear "Melancholy Baby," you have to buy Aeolian. This arrangement came out during congressional hearings on the general revision, where one of the issues was whether to give musical copyright owners the exclusive right to reproduce their works. Meanwhile, a sweetheart lawsuit was moving forward to test whether the existing law gave such right. If not, Aeolian's deal with the publishers stated they didn't have to pay. In White-Smith Publishing Co. v. Apollo Co., 209 U.S. 1 (1908), the Court held that to be a copy the work had to be visually perceptible. The perforations were not deemed to be a visually perceptible representation of the musical composition, hence no infringement. But this also meant that player piano player companies did not have to pay for the use.
Congress stepped in and created the world's first compulsory license: once the copyright owner authorized a first mechanical reproduction, anyone else could make another such reproduction, upon paying a statutory 2 cent fee, which stayed in place until 1978. No other subject matter is treated this way, and the problems caused by the Aeolian company's attempt to corner the market for its pianos was better rectified by the antitrust laws. In 1993, in early negotiations on what became the Digital Performance Right in Sound Recordings Act, I and subcommittee chief counsel Hayden Gregory succeeded in persuading the record labels to agree to repeal of Section 115. To our great surprise, the music publishers, who had long complained about the provision, insisted that it remain. Their objective was expand Section 115 to include digital distribution. Professor Paul Goldstein told subcommitte chair William Hughes that this was a bad idea, that it was saddling the 21st century with a 19th century fix. Professor Goldstein was dead-on right.
The legislation did not move in 1993 or 1994 because Mr. Hughes could not agree to a number of provisions in drafts (especially regarding broadcasters), but when it did move in 1995 under the new House, with Carlos Moorhead as chair, Section 115 was greatly expanded to include "digital phonorecord deliveries," known affectionately as "dpds."
The new draft bill that will be discussed tomorrow attempts to find a more efficient solution to the expanded version of 115, by mandating in new 115(e) blanket licensing of dpds in the form of "full downloads," "limited downloads," and "interactive streams," terms defined in the draft. There is also a royalty free license for ephemeral copying made as part of non-interactive streaming covered by the Section 114 compulsory license. There are very detailed provisions on designation of agents for issuing the new blanket license and for rate setting.