Monday, May 15, 2006

Section 115 Amendment

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.

9 comments:

Marcus said...

Could this revision serve as a blanket license for podcasters who want to use copyrighted music in their recordings?

William Patry said...

My understanding is that podcasts take many different forms, so one couldn't generalize about them and the bill. A first step would be to determine if there is a digital phonorecord delivery; that term is untouched in the bill and retains its meaning from the 1995 Act. Next, one would have to decide if it was a full or a limited download, and finally, one would have to qualify under the bill as a "digital music provider," which is defined in the bill.

Marcus said...

If I understand the analysis properly, it seems that this is legislation that will create another SoundExchange sort of entity to serve as a clearing house for compulsory licenses.

But it looks as though the bill will grant only 7 companies status as digital music providers.

As you probably know, many people are anticipating a blanket license that would allow amateurs to use copyrighted music in podcasts. I'm looking forward to hearing your further thoughts on this bill. Please keep us informed of what's at stake.

John T. Mitchell said...

Several years ago, the Copyright Office briefly considered how to treat the so-called “limited download.” See http://www.copyright.gov/fedreg/2001/66fr64783.html. Music and video retailers, through their respective trade associations, noted that such a concept, if controlled by the copyright owner, would vastly enlarge the cope of the copyright, which has never included the right to perform the work publicly and, thanks to the first sale doctrine, has never included the right to control re-distribution of the copies and phonorecords (the physical media, that is), made through reproduction. After their comments were filed, the record companies and music publishers cut a deal to privately divvy up the rights, and the Copyright Office asked for comment how the deal would affect the rulemaking. The retailers responded, http://www.copyright.gov/carp/dpd/dpd005.pdf, and the issue died away.

It seems strange that Congress would now consider codifying a royalty for an activity that has no basis under copyright law. Copyright owners may license the reproduction of the work and the public performance of the work, but this “limited download” is nothing more than an attempt to gain the efficiencies of a reproduction with the revenue stream of charging for public performances by, in effect, giving copyright owners power to control the length of time or number of times a work may be performed privately. Can you imagine having to pay Hollywood every time you want to re-watch one of the movies in your prized DVD collection? It makes no more sense than allowing book publishers to charge for re-reading an old book.

No country in the world grants copyright owners a right of private performance. Congress would do well to remain with the mainstream.

William Patry said...

John:

The proposed amendment assumes that there is a digital phonorecord delivery, a defined term in existence since 1995.

Keith said...
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Keith said...
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Keith said...

Hello,

"The proposed amendment assumes that there is a digital phonorecord delivery, a defined term in existence since 1995."

Defined, sure, but do you think it's well-defined? As far as I can tell, the current definition of DPD is a mess. Does an on-demand RealAudio stream result in a DPD? How about a non-on-demand RealAudio Stream? Section 115(d) suggests that Congress intended a distinction between the on-demand and non-on-demand cases, since "A digital phonorecord delivery
does not result from a real-time, non-interactive 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."

But literally read, that exception is almost a nullity, since one sentence earlier we learn that a DPD only results when there is "a specifically identifiable reproduction" in the first place! It's very difficult to imagine an activity that could produce a "specifically identifiable reproduction" and yet qualify for an exemption that requires that "no reproduction of the sound recording or the musical work embodied therein is made...."

So while, on its face, the subsection appears to suggest that Congress wanted the on-demand RealAudio stream to result in a DPD and the non-on-demand RealAudio
stream not to, what we are really left to argue about is whether the RealAudio streaming activity implicated the reproduction right ("Was there a 'specifically identifiable reproduction'?") in the first place -- the DPD definition is of no help.

Nimmer seems to agree with this analysis:

More confusing than clarifying, by contrast, is the statutory reference (quoted above) to a ''real-time, non-interactive subscription transmission.'' The qualified nature of that reference leads naturally to the question: How should one treat either an interactive or a non-subscription transmission in real time, even in a context in which no reproduction is made? The negative pregnant from the statute is that either usage would constitute a digital phonorecord delivery, and hence be subject to regulation by the Act, notwithstanding no reproduction having been made. But that inference contradicts the general statutory definition of a digital phonorecord delivery to be that which ''results in a specifically identifiable reproduction,'' as quoted above. The resulting juxtaposition seems to bear out Murphy's law that, by striving too hard to make everything perfectly clear, one inevitably injects ambiguity into the mix.

Nimmer on Copyright sec. 8.23[A][2] (rev. 66?) (footnote omitted).

Moving Blankets said...

Thanks for the info on the player pianos- I'd never actually heard about that before.