Music Modernization Act of 2017
This bill amends the copyright law to create a statutory blanket license for making and distributing nondramatic musical sound recordings, including through digital delivery. The blanket license allows digital music services to distribute sound recordings covered by the license without negotiating for the rights for each individual recording, as long as the music service complies with the license's requirements, such as paying the required royalties.
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4706 Introduced in House (IH)]
<DOC>
115th CONGRESS
1st Session
H. R. 4706
To amend title 17, United States Code, to provide clarity and modernize
the licensing system for musical works under section 115 and to ensure
fairness in the establishment of certain rates and fees under sections
114 and 115 of such title, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 21, 2017
Mr. Collins of Georgia (for himself, Mr. Jeffries, Mr. Crowley, Mrs.
Black, Mr. Cohen, Mrs. Blackburn, Mr. Ted Lieu of California, Mr.
Sessions, Mr. Fleischmann, Mr. Cramer, Mr. Cooper, and Ms. Bass)
introduced the following bill; which was referred to the Committee on
the Judiciary
_______________________________________________________________________
A BILL
To amend title 17, United States Code, to provide clarity and modernize
the licensing system for musical works under section 115 and to ensure
fairness in the establishment of certain rates and fees under sections
114 and 115 of such title, 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.
This Act may be cited as the ``Music Modernization Act of 2017''.
SEC. 2. 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''; and
(B) by striking paragraph (1) and inserting the
following:
``(1)(A) 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; 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--
``(I) the copyright owner of the sound
recording first fixed such sound recording
under the authority of the copyright owner of
the musical work and is further authorized by
the copyright owner of the musical work to make
and distribute phonorecords embodying such work
to the public in the United States; and
``(II) the copyright owner of the sound
recording 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) 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.'';
(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 this section to make and distribute phonorecords of a
musical work other than by means of digital phonorecord
delivery shall, before or within 30 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 in 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 this section to make and
distribute phonorecords of a musical work by means of digital
phonorecord delivery--
``(A) prior to the license availability date set
forth in subsection (e), shall, before or within 30
days after first making any such digital phonorecord
delivery, serve a notice of intention to do so on the
copyright owner. The notice, which may not be filed
with the Copyright Office, shall comply, in form,
content, and manner of service, with requirements that
the Register of Copyrights shall prescribe by
regulation; and
``(B) on or after the license availability date,
shall, before making any such digital phonorecord
delivery, follow the procedure set forth in subsection
(d)(2), except as provided in paragraph (3).
``(3) Record company download licenses.--Notwithstanding
anything to the contrary in this section, a record company may,
on or after the license availability date, obtain a license to
make and distribute, or authorize the making and distribution
of, digital phonorecord deliveries of musical works in the form
of permanent downloads in the manner described in paragraph
(2)(A). A record company that obtains a compulsory license for
permanent downloads as permitted under this paragraph shall
provide statements of account and pay royalties as provided in
subsection (c)(5).
``(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 case of phonorecords made and distributed
by means of digital phonorecord delivery prior to the
license availability date, the failure to serve the
notice of intention required by paragraph (2)(A)
forecloses the possibility of a compulsory license
under paragraph (2)(A). In either case, in the absence
of a voluntary license, the failure to obtain a
compulsory license renders the making and distribution
of phonorecords, including 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.
``(B) Digital phonorecord deliveries.--In the case
of phonorecords made and distributed by means of
digital phonorecord delivery on or after the license
availability date, the failure to comply with paragraph
(2)(B), or, if applicable, paragraph (3), forecloses
the possibility of a compulsory license under this
section. 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) in subsection (c)--
(A) by striking paragraphs (1) and (2) and
inserting the following:
``(1) 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.
``(2) Except as provided by paragraph (1), for every
phonorecord made and distributed under a compulsory license
under this section 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 (B) through (E) of paragraph (3) and chapter 8 of
this title. For purposes of this paragraph, a phonorecord is
considered `distributed' if the person exercising the
compulsory license has voluntarily and permanently parted with
its possession.'';
(B) by striking paragraph (3)(A) and inserting the
following:
``(3)(A) 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 (B) through (E) and chapter 8 of this
title.'';
(C) in paragraph (3)(C)--
(i) by striking the second sentence; and
(ii) by adding at the end the following new
sentence: ``The administrative assessment to be
paid by digital music providers and significant
nonblanket licensees under subsection (d) shall
be established in separate proceedings before
the Copyright Royalty Judges as provided in
subsection (d)(7).'';
(D) by striking paragraph (3)(D) and inserting the
following:
``(D) The schedule of reasonable rates and terms determined
by the Copyright Royalty Judges shall, subject to subparagraph
(E), be binding on all copyright owners of nondramatic musical
works and persons entitled to obtain a compulsory license under
subsection (a)(1) during the period specified in subparagraph
(C), such other period as may be determined pursuant to
subparagraphs (B) and (C), 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.'';
(E) in paragraph (3)(E)(i), by striking ``Librarian
of Congress and'';
(F) in paragraph (3)(G)(i)(II)--
(i) by striking ``owner of the copyright in
the sound recording or the''; and
(ii) by striking ``to distribute or
authorize the distribution, by means of a
digital phonorecord delivery'' and inserting
``, or by a record company pursuant to an
individual download license, to make and
distribute phonorecords by means of digital
phonorecord delivery'';
(G) in paragraph (4), by striking the first
sentence and inserting ``A compulsory license obtained
in accordance with 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).'';
(H) in paragraph (5), by striking ``Royalty
payments shall'' and inserting ``Except as provided in
paragraphs (4)(A)(i) and (10)(B) of subsection (d),
royalty payments shall''; and
(I) in paragraph (6)--
(i) by striking ``If the copyright owner''
and inserting ``In the case of a license
obtained under subsection (b)(1), (b)(2)(A), or
(b)(3), if the copyright owner''; and
(ii) by adding at the end the following
sentence: ``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 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 designated
under paragraph (3)(B) to make and distribute digital
phonorecord deliveries of musical works through one or more
covered activities.
``(A) Included activities.--A blanket license
obtained under this subsection--
``(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 (B);
``(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 set forth in
subsection (d)(1)(A)(i) and (ii).
``(B) Other licenses.--A voluntary license for
covered activities entered into between 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 the copyright owner of a
sound recording 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;
provided, however, that--
``(i) where a voluntary 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 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); and
``(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)(3)(E) and paragraph (9)(C) as
applicable.
``(C) 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).
``(D) 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 under this
subsection to engage in one or more covered activities
by submitting a notice of license to the mechanical
licensing collective described in paragraph (3) 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 days
after receipt, the blanket license shall be
effective as of the date the notice of license
was provided by the digital music provider.
``(iii) A notice of license shall not be
rejected by the mechanical licensing collective
unless--
``(I) the digital music provider or
notice of license does not meet all
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 license under this subsection
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), the digital music provider
shall have 30 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.
``(B) Blanket license effective date.--Blanket
licenses under this subsection shall be made available
by the mechanical licensing collective as of the
license availability date specified in subsection
(e)(15). 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 not-for-profit entity, 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 copyright owners of
musical works that together represent the
greatest share 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
of the enactment date as follows:
``(I) Within 90 days of 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.
``(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 set forth
in subparagraph (A) should 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
from 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, and
administrative responsibilities from
the existing mechanical licensing
collective to the new entity.
``(C) Authorities and functions.--
``(i) In general.--The mechanical licensing
collective is authorized to perform the
following functions, subject to more particular
requirements as set forth in this subsection:
``(I) Offer and administer blanket
licenses for covered activities,
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 a publicly
accessible database of musical works
(and shares of such works) and
copyright owners, 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 efforts to
enforce rights and obligations under
this subsection, including 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 as contemplated 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
subsection (e)(31), the mechanical licensing
collective may also administer, or assist in
administering, voluntary or individual download
licenses issued by copyright owners for uses of
musical works, for which the mechanical
licensing collective shall charge reasonable
fees for such services.
``(iii) Restriction on lobbying.--The
mechanical licensing collective shall not
engage in government lobbying activities;
provided, however, that it may engage in the
activities set forth in clause (i)(IX), (X) and
(XI).
``(D) Governance.--
``(i) Board of directors.--The mechanical
licensing collective shall have a board of
directors consisting of 10 voting members and 3
nonvoting members, as follows:
``(I) Eight voting members shall be
music publishers to which songwriters
have assigned exclusive rights of
reproduction and distribution of
musical works with respect to covered
activities; provided, however, that no
such music publisher member may be
owned by, or under common control with,
any other board member.
``(II) Two 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 share 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 subsection
(d)(5)(B). Otherwise, the nonvoting
member shall be the nonprofit trade
association of digital licensees that
represents the greatest share 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 American songwriters.
``(ii) Board meetings.--The board of
directors shall meet no less than 2 times per
year and discuss matters pertinent to the
operations, including the budget, of the board
of directors.
``(iii) Operations advisory committee.--The
board of directors of the mechanical licensing
collective shall establish an operations
advisory committee consisting of no fewer than
6 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--
``(I) copyright owners of musical
works 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, 6 of which
shall be copyright owners of musical works and
4 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 6 members, which committee shall
include an equal number of representatives of
copyright owners of musical works and
professional songwriters.
``(E) Musical works database.--
``(i) Establishment and maintenance of
database.--The mechanical licensing collective
shall establish and maintain a database of
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 they 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 available--
``(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, 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 works (and shares of works) in the
database, the musical works database shall
include--
``(I) to the extent available--
``(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, 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
copyright owner of musical works shall engage
in commercially reasonable efforts to deliver
to the mechanical licensing collective 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 work database shall be accessible to
the public in a searchable, online format free
of charge. The mechanical licensing collective
shall also make such database available free of
charge in a bulk, machine-readable format, via
a widely available software application, to--
``(I) digital music providers
operating under valid notices of
license;
``(II) significant nonblanket
licensees; and
``(III) authorized vendors of the
entities described in subclauses (I)
and (II).
``(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) In general.--The mechanical licensing
collective shall receive, review, and confirm
or reject notices of license from digital music
providers, as provided in subsection (d)(2)(A).
The collective shall maintain a current,
publicly accessible list of blanket licenses
obtained by digital music providers under this
subsection that includes contact information
for the licensees and the effective dates of
such licenses.
``(ii) Public list of notices.--The
mechanical licensing collective shall receive
notices of nonblanket activity from significant
nonblanket licensees, as provided in subsection
(d)(6)(A). The collective shall maintain a
current, publicly accessible list of notices of
nonblanket activity submitted by significant
nonblanket licensees that includes contact
information for such 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 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 its records; and
``(III) deposit royalties that
cannot be distributed due to an
inability to identify or locate a
copyright owner of a musical work (or
share thereof), or due to a pending
dispute before the dispute resolution
committee of the mechanical licensing
collective, in an interest-bearing
account as provided in subparagraph
(H)(ii).
``(ii) Regulations required.--The Register
of Copyrights shall adopt regulations regarding
adjustments to reports of usage by digital
music providers, including establishing
mechanisms to account for overpayments and
underpayments made in prior periods.
``(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 from
the date on which the funds were received by
the mechanical licensing collective, or at
least 3 years from 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 share 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 subparagraph
(H)(i), the mechanical licensing collective
shall distribute such accrued royalties, along
with a proportionate share of accrued interest,
to copyright owners identified in its records,
subject to the following requirements, and in
accordance with the policies and procedures
established under clause (ii):
``(I) The first such distribution
shall occur in the first full calendar
year to commence after the license
availability date, with at least one
such distribution to take place in 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 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
paragraph--
``(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 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
subsection (d)(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 in accordance with this
subparagraph, 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 at least 90 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 they license or administer musical works
for covered activities, in accordance with
applicable contractual terms; provided,
however, that 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 set forth in subparagraph (H)(ii)
pending resolution of the dispute by the
committee, written agreement of the affected
parties, or pursuant to a binding judicial
determination or arbitration; 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 and distributions
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 systems of the
mechanical licensing collective, as
well as underlying data, according to
generally accepted auditing standards
and subject to applicable
confidentiality requirements prescribed
by the Register of Copyrights under
subsection (d)(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, the
copyright owner(s) shall file with the
Copyright Office a notice of intent to
conduct an audit of the mechanical
licensing collective, 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 30 days of 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 the auditing
copyright owner(s); provided, however,
that before providing a final audit
report to such copyright owner(s), 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(s) shall bear the cost of the
audit. In case of an underpayment to
the copyright owner(s), the mechanical
licensing collective shall pay the
amounts of any such underpayment to the
auditing copyright owner(s), as
appropriate. In case of an overpayment
by the mechanical licensing collective,
the mechanical licensing collective may
debit the accounts of the auditing
copyright owner(s) 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 set forth
herein; provided, however, that notice of the
audit shall still be provided to and published
by the Copyright Office as set forth 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 subsection
(d)(12)(C) for a period of no less than 7 years
from 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 obtained under this subsection 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)(5); provided, however, that
monthly reporting shall be due 45 days, rather
than 20 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 under this subsection
as well as usage data for musical works used in
covered activities under voluntary and
individual download licenses. In its report of
usage, the digital music provider shall--
``(I) with respect to each musical
work--
``(aa) provide identifying
information for the sound
recording embodying such work,
including sound recording name,
featured artist, producer and,
to the extent available,
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) to the extent
available, provide information
concerning authorship and
ownership of the applicable
rights in the musical work,
including songwriter(s),
publisher name(s) and
respective ownership share(s),
and the international standard
musical work code; and
``(cc) provide the number
of digital phonorecord
deliveries of such work,
including limited downloads and
interactive streams;
``(II) identify and provide contact
information for all copyright owners of
musical works 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.
``(B) Procurement of sound recording information.--
In addition to obtaining sound recording names and
featured artists, 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) producers, international standard
recording codes, and other information commonly
used in the industry to identify sound
recordings and match them to the musical works
they 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-year period to cover a
verification period of no more than the
3 preceding full calendar years, 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 systems of the
digital music provider, as well as
underlying data, according to generally
accepted auditing standards and subject
to applicable confidentiality
requirements prescribed by the Register
of Copyrights under subsection
(d)(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, 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 30 days of
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; provided, however, that
before providing a final audit report
to the copyright owner(s), 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 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
provided that 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 set forth
herein; provided, however, that notice of the
audit shall still be provided to and published
by the Copyright Office as set forth in clause
(i)(IV).
``(E) Default under blanket license.--
``(i) Condition of default.--A digital
music provider shall be considered generally in
default under a blanket license obtained under
this subsection 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 days or longer.
``(ii) Notice of default and termination.--
In case of a general 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 days from 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.
``(5) Digital licensee coordinator.--
``(A) In general.--The digital licensee coordinator
shall be a single entity that--
``(i) is a not-for-profit entity, not owned
by any other entity, that is designated by the
Register of Copyrights 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 share of
the licensee market for uses of musical works
in covered activities, as measured over the
preceding 3 full 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 of
the enactment date, in accordance with the same
procedure as set forth 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 set forth
in subparagraph (A) should be designated, in
accordance with the same procedure as set forth
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 the qualifications set forth in
paragraph (A) that is willing to serve as
digital licensee coordinator, the Register
shall decline to designate a digital licensee
coordinator. The Register's inability 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 set forth 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 shall not engage
in government lobbying activities; provided,
however, that it may engage in the activities
set forth in clause (i)(III), (IV), and (V).
``(6) Requirements for significant nonblanket licensees.--
``(A) In general.--
``(i) Notice of activity.--Not later than
45 days after the license availability date, or
45 days after the end of the first full
calendar month in which an entity initially
qualifies as a significant nonblanket licensee
as defined in subsection (e)(29), 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 payment of the
administrative assessment as 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 payment of the administrative
assessment, to the mechanical licensing
collective, such reports and payments to be
submitted not later than 45 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; provided, however,
that should such entity once again qualify as a
significant nonblanket licensee, it 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 subsection
(d)(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
total costs.
``(ii) Statute of limitations for
enforcement action.--Any action described in
this subparagraph shall be commenced within the
time period set forth 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 total costs of the
mechanical licensing collective 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 under this subsection;
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), any voluntary contributions by digital
music providers and significant nonblanket
licensees shall be determined by private
negotiation and agreement; provided, however,
that--
``(I) the date and amount of any
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; and
``(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.--Any
such voluntary contribution shall be treated
for purposes of an administrative assessment
proceeding as a general offset to total costs
of the mechanical licensing collective 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 total costs of the mechanical licensing
collective, 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
total costs.--The administrative assessment
shall be used solely and exclusively to fund
the total costs of the mechanical licensing
collective.
``(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 total costs of the
mechanical licensing collective, as
such total costs are defined in
subsection (e)(31);
``(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
costs of the mechanical licensing
collective 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 not
only anticipated future total costs and
collections of the administrative
assessment, but also, as applicable--
``(aa) any portion of past
actual 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 total costs of the
mechanical licensing
collective, resulting in a
surplus; and
``(cc) the amount of any
voluntary contributions by
digital music providers or
significant nonblanket
licensees in relevant periods,
as 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 one year of 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 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 9
months of commencement of the
proceeding contemplated by 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 in
a proceeding to occur no more than once every 2
years, in accordance with the following
procedure:
``(I) The mechanical licensing
collective, 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 January to commence a proceeding to
adjust the administrative assessment,
if at least 2 years have expired since
the date of the most recent
determination of the administrative
assessment by the Copyright Royalty
Judges.
``(II) Notice of the commencement
of such proceeding shall be published
in the Federal Register in the month of
February, along 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 adjusted administrative
assessment, which shall be supported by
a written record, shall be published in
the Federal Register no later than 9
months after the publication of the
notice of commencement of the
adjustment proceeding. The adjusted
administrative assessment shall take
effect as of January 1 of the following
year.
``(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, on the one hand, 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),
on the other; provided, however, that 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
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;
provided, however, that the mechanical
licensing collective, digital licensee
coordinator, digital music providers, and
significant nonblanket licensees shall
implement appropriate financial or other
measures within 3 months of 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 to determine rates and terms for activities
under this section as described in subsection
(c)(3)(C); provided, however, that 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 under this subsection, 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 it may be
entitled under this title.
``(C) Interim rate agreements.--For any covered
activity for which no rate or terms have been
established by the Copyright Royalty Judges, the
mechanical licensing collective and a digital music
provider may agree to an interim rate and terms for
such activity; provided, however, that any such interim
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, except as may otherwise be agreed by
the parties.
``(9) Transition to blanket licenses.--
``(A) Substitution of blanket license.--As of the
license availability date, a blanket license obtained
by a digital music provider under this subsection
shall, without any interruption in license authority
enjoyed by such digital music provider, be
automatically substituted for and supersede any
existing license previously obtained by the digital
music provider from a copyright owner under this
section to engage in one or more covered activities
with respect to a musical work; provided, however, that
the foregoing shall not apply to authority obtained
from a record company to make and distribute permanent
downloads unless and until such record company
terminates such authority in writing as of 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), as of the
license availability date, 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 as of the
license availability date will remain in effect unless
and until it expires according to its terms, or the
parties agree to amend or terminate the 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 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.--As of 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; provided, however, that
there shall be no liability pursuant to section
501 for the reproduction or distribution of a
musical work (or share thereof) under a validly
filed notice of intention through the license
availability date.
``(10) Prior unlicensed uses.--
``(A) Limitation on liability in general.--A
copyright owner that commences an action pursuant to
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)(3)(A) 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 as of the
enactment date through 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 days after first
making a particular sound recording of a
musical work available through its service via
one or more covered activities, or 30 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:
``(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,
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
songwriter and publisher
name(s), percentage ownership
share(s), 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 third-party vendors on
commercially reasonable terms;
provided, however, that a digital music
provider may rely on its own bulk
electronic matching process if it has
capabilities comparable to or better
than such third-party offerings.
``(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 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 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)(5);
``(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) as of the monthly
royalty reporting period
commencing on the license
availability date, begin
reporting usage and paying
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 work (or share thereof) is
not identified and located by the
license availability date, the digital
music provider shall--
``(aa) within 45 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)(5), 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) as of the monthly
royalty reporting period
commencing on the license
availability date, begin
reporting usage and paying
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 set forth in
subsection (c)(3)(B) shall apply to negotiations and
agreements between and among copyright owners and
persons entitled to obtain a compulsory license for
covered activities under this subsection, and common
agents acting on their behalf, 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)(3)(B) and subparagraph (A), except for
the administrative assessment, 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
their behalf; provided, however, that--
``(i) each copyright owner shall establish
the royalty rates and material license 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
license terms of any such voluntary license
individually and not in agreement, combination,
or concert with any other digital music
provider; and
``(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 subsection
(d)(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 set forth 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); provided, however, that it may
be named as a stakeholder in an action between
copyright owners if it is holding disputed funds that
are the subject of such action. 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.
``(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 license 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 compulsory license established hereunder
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 as of 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 set forth 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)(I)(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 rate under this
section.
``(3) Administrative assessment.--The term `administrative
assessment' means the fee to be paid by digital music providers
and significant nonblanket licensees that is established
pursuant to subsection (d)(7)(D).
``(4) Blanket license.--The term `blanket license' means a
compulsory license to engage in covered activities as described
in subsection (d)(1).
``(5) Budget.--The term `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 total costs.
``(6) Copyright owner.--The term `copyright owner'--
``(A) means the owner of the exclusive right of
reproduction or distribution in a musical work, in all
or in part, as provided in section 201 of this title;
and
``(B) does not refer to ownership of any other
right.
``(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 is
subject to compulsory licensing 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 licensed under this subsection--
``(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 described in 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 enactment of the Music Modernization Act of 2017.
``(12) Individual download license.--The term `individual
download license' means a license obtained by a record company
under subsection (b)(3) to make and distribute, or authorize
the making and distribution of, permanent downloads embodying a
specific musical work (or share of a 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 January 1 following the second
anniversary of the enactment of the Music Modernization Act of
2017.
``(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 described in
subsection (d)(3)(A).
``(19) Musical works database.--The term `musical works
database' means the database described in subsection (d)(3)(E).
``(20) 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 to engage in covered activities under subsection (d).
``(21) 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
it has been engaging in covered activities.
``(22) 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.
``(23) Qualified auditor.--The term `qualified auditor'
means an independent, certified public accountant with
experience performing music royalty audits.
``(24) 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.
``(25) Report of usage.--The term `report of usage' means a
report reflecting an entity's usage of musical works in covered
activities as described in subsection (d)(4)(A).
``(26) 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).
``(27) Service.--The term `service', as used in relation to
covered activities, means any site or other facility through
which sound recordings of musical works are made available by
digital transmission to members of the public.
``(28) Share.--The term `share', as applied to a musical
work, means a fractional ownership interest in such work.
``(29) Significant nonblanket licensee.--The term
`significant nonblanket licensee' means an entity, including a
group of entities under common ownership or control that,
acting under the authority of one or more voluntary or
individual download licenses, offers a service engaged in
covered activities, where such entity or group of entities--
``(A) is not currently operating under a blanket
license obtained under this subsection and therefore is
not obligated to provide reports of usage reflecting
covered activities under subsection (d)(4)(A);
``(B) 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
``(C) either--
``(i) at any time in a calendar month,
makes more than 5,000 different sound
recordings of musical works available through
its service; or
``(ii) derives revenue or other
consideration in connection with such covered
activities greater than 50,000 dollars in a
calendar month, or total revenue or other
consideration greater than 500,000 dollars
during the preceding 12 calendar months.
``(30) Songwriter.--The term `songwriter' means the author
of all or part of a musical work, including a composer or
lyricist.
``(31) Total costs.--The term `total costs' means the total
costs of establishing, maintaining, and operating the
mechanical licensing collective to fulfill its statutory
functions, including startup costs; financing, legal, and
insurance costs; investments in information technology,
infrastructure, and other long-term resources; outside vendor
costs; costs of licensing, royalty administration, and
enforcement of rights; costs of bad debt; and costs of
automated and manual efforts to identify and locate copyright
owners of musical works (and shares thereof) and match sound
recordings to the musical works they embody; provided, however,
that total costs shall not include any added costs incurred by
the mechanical licensing collective to provide services under
voluntary licenses.
``(32) Unclaimed accrued royalties.--The term `unclaimed
accrued royalties' means accrued royalties eligible for
distribution under subsection (d)(3)(J).
``(33) 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.
``(34) 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) in paragraph (1), by striking ``The rates applicable
under sections 114(f)(1)(B), 115, and 116 shall be calculated
to achieve the following objectives'' and inserting ``The rates
applicable under sections 114(f)(1)(B) and 116 shall be
calculated to achieve the following objectives'';
(2) by redesignating paragraph (8) as paragraph (9); and
(3) 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 set forth 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
existing regulations for section 115 in part 385 of title 17, Code of
Federal Regulations, to conform definitions used in such part to the
definitions of the same terms set forth 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.
(e) Best Practices Working Group.--Not later than 1 year after the
date of the enactment of this Act, the Register of Copyrights shall
establish a working group consisting of representatives of the
mechanical licensing collective, the digital licensee coordinator,
copyright owners, digital music providers, sound recording owners, and
performing rights societies to consider and advise on best practices to
minimize the incidence of unidentified and unmatched musical works and
facilitate and encourage the exchange of ownership information and
prompt access to such information by and among such parties.
SEC. 3. AMENDMENT TO SECTION 114.
(a) Repeal.--Subsection (i) of section 114 of title 17, United
States Code, is repealed.
(b) Proceedings Not Affected.--The repeal of section 114(i) of
title 17, United States Code, by subsection (a) 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.
(c) Decisions and Precedents Not Affected.--The repeal of section
114(i) of title 17, United States Code, by subsection (a) 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.
SEC. 4. RANDOM ASSIGNMENT OF RATE COURT PROCEEDINGS.
Section 137 of title 28, United States Code, is amended--
(1) by striking ``The business'' and inserting ``(a) The
business''; and
(2) by adding at the end the following new subsection:
``(b)(1) 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 assigned by lot 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--
``(A) 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
``(B) 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.
This provision does not apply to applications to determine reasonable
license fees made by individual proprietors under section 513 of title
17.
``(2) Nothing in paragraph (1) shall abrogate the right of any
party to the applicable consent decree to make an application for a
construction of any provision of the applicable consent decree to the
judge to whom continuing jurisdiction over the applicable consent
decree is currently assigned. If a party to a consent decree makes such
an application in connection with any rate proceeding, such proceeding
shall be stayed until the final determination of the construction
application.''.
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Introduced in House
Introduced in House
Referred to the House Committee on the Judiciary.
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