Subject: 1998CRH9946 SONNY BONO COPYRIGHT TERM EXTENSION ACT, Part 2/2
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Communities to investigate the consistency of the ``home
style exception'' with the Berne Convention. We believe that
this request is groundless. We believe that the courts'
ability to apply the ``home style exception'' on a case-by-
case basis is appropriate and that legislating a specific
size exemption would be problematic. If there are to be
further limitations on the public performance right, such
limitations should be the subject of private agreements and
not set in legislation.
We share your concern that, if it is determined that there
must be specific guidance in the copyright law, an exception
tailored to the kind of equipment used might be more
appropriate, but even in this case, we are concerned that it
could lead to substantial erosion of the public performance
right, and could lead to the erosion of other rights. As we
continue to urge other countries to improve their
intellectual property protection, we should not be weakening
our own laws by the imposition of additional limitations on
the rights of copyright owners. As we noted in our earlier
testimony, we believe that private negotiations to exempt
certain performances or size of establishments are the
appropriate solution, consistent with our treaty obligations.
Bruce A. Lehmann,
Assistant Secretary of Commerce and Commissioner of Patents
The Register of Copyrights,
Washington, DC, Sept. 28, 1994.
Hon. William J. Hughes,
Chairman, House Subcommittee on Intellectual Property and
Judicial Administration, Washington, DC.
Dear Chairman Hughes: I would like to comment on H.R. 4936,
the ``Fairness in Musical Licensing Act of 1994,'' which was
introduced on August 10, 1994. I have a number of concerns
that I would like to share with you.
amendment to section 110(5)
My first concern is with the proposed amendments to 17 USC
Sec. 110(5); that section represents a narrowly crafted
exemption to the copyright owner's exclusive right of public
performance under section 106(4). I believe that H.R. 4936
would make major changes and would violate our treaty
At the time section 110(5) was enacted into law the United
States was not a member of the Berne Convention. The United
States became a signatory to the Berne Convention on March 1,
1989. In joining the Berne Convention the United States
reviewed its copyright law to make sure that it was
consistent with the requirements of Berne. For the most part
deficiencies in our law were corrected in the Berne
Convention Implementation Act of 1988; P.L. 100-568, 102
Stat. 2853 (1988). One of the sections reviewed was section
110(5). An Ad Hoc Working Group on U.S. Adherence to the
Berne Convention noted that section 110(5) was an extremely
narrow exemption to the public performance right and that the
case law interpreting that section had not broadened the
exemption beyond Congress' intent. The Working Group noted
that the exemption did not extend to the use of loudspeakers
or any sort of speaker arrangement which was the
characteristics of a commercial sound system and therefore
found section 110(5) compatible with the provisions of the
Let me quickly review part of the legislative history of
section 110(5). The 1965 Supplementary Report of the Register
on the General Revision of the Copyright Law stated:
``The intention behind this exception is to make clear that
it is not an infringement of copyright merely to turn on, in
a public place, an ordinary radio or television receiving
apparatus of a type commonly sold to members of the public
for private use. This exception would apply for the most part
to the incidental entertainment of small public audiences
(patrons in a bar, customers getting a shoeshine, patients
waiting in a doctor's office, etc.). It is not intended to
exempt larger establishments, such as supermarkets, bus
stations, factories, etc., in which broadcasts are not merely
received in the usual manner of a private reception, but are
transmitted to substantial audiences by means of a receiving
system connected with a number of loudspeakers spread over a
wide area. The exemption would also not apply in any case
where the public is charged directly to see or hear the
broadcast.'' Id. at 44.
The legislative history shows that the rationale for the
subsection was that the secondary use of the transmission by
turning on an ordinary receiver in public is so remote and
minimal that no further liability should be imposed.
During the revision process the Supreme Court decided
Twentieth Century Music Corp. v. Aiken, 422 U.S. 151 (1975)
which, though addressing the issue of what constituted a
performance under the 1909 law, raised questions about the
proper interpretation of section 110(5). The Senate, House
and Conference Committee Reports all written after Aiken
indicate how that case would be decided under the 1976
Copyright Act. The House Report states that Aiken represented
the outer limit of the exemption; (Aiken operated a small
fast-food restaurant which had a radio with four ordinary
speakers in the ceiling.) That report states that the line
should be drawn here. It goes on to say ``the clause would
exempt small commercial establishments whose proprietors
merely bring onto their premises standard radio or television
equipment and turn it on for their customers' enjoyment.'' H.
Rep. No. 1476, 94th Cong., 2d Sess. 87 (1976).
The House Report also suggests some of the factors to
consider in particular cases--the size, physical arrangement,
and noise level of areas within the establishment where the
transmissions are made audible or visible. The Conference
Committee Report states that the establishment involved is
``of sufficient size to justify, as a practical matter, a
subscription to a commercial background music service.'' H.R.
Conf. Rept. No. 1733, 94th Cong., 2d Sess. 75 (1976).''
It is true that there has been litigation on the scope of
section 110(5) exemption; some courts have relied on the
legislative history while others have refused to go beyond
the plain language of the statute.
At the time that the United States joined the Berne
Convention courts had consistently held that the Sec. 110(5)
exemption was not available to businesses financially capable
of paying reasonable licensing fees for the use of music.
However, since that time two decisions have significantly
expanded scope of the exemption. Broadcast Music, Inc. v.
Claire's Boutiques, 949 F.2d 1482 (7th Cir. 1991) and Edison
Brothers Stores, Inc. v. Broadcast Music, Inc., 954 F.2d 1419
(8th Cir. 1992). It can be argued that the holding in these
cases violate the spirit, if not the letter, of the Berne
My concern is that the proposed amendment to section 110(5)
would do further violence to our Berne Convention
Berne allows only narrow exemptions to the author's
exclusive right to authorize public performance. Thus, only
in rare instances may third parties use a broadcast without a
license and without remuneration to the author. Article 11
bis (1) (iii) establishes the exclusive right of the author
to authorize the ``public communication by loudspeaker or any
other analogous instrument transmitting by signs, sounds, or
images, the broadcast of the work.'' The World Intellectual
Property Organization Guide to the Berne Convention (Paris
Act 1971) (1978) states:
``Finally, the third case dealt with in this paragraph is
that in which the work which has been broadcast is publicly
communicated e.g., by loudspeaker, or otherwise, to the
public. The case is becoming more common. In places where
people gather (cafes, restaurants, tea-rooms, hotels, large
shops, trains, aircraft, etc.) the practice is growing of
providing broadcast programs . . . The question is whether
the license given by the author to the broadcasting station
covers, in addition, all the use made of the broadcast which
may or may not be for commercial ends.'' Id. notes 11 and 12
at 68. The Convention's answer is no. Id. note 12.
In 1988 Congress decided to adhere to the Berne Convention
to increase protection for United States' interests in the
international copyright arena. The House Report on the
implementing legislation states:
``. . . the relationship of Berne adherence to promotion of
U.S. trade is clear. American popular culture and information
products have become precious export commodities of immense
economic value. That value is badly eroded by low
international copyright standards. Berne standards are both
high, reasonable and widely accepted internationally. Lending
our prestige and power to the international credibility of
those standards will promote development of acceptable
copyright regimes in bilateral and multilateral contexts.''
H.R. Rep. No. 609, 100th Cong., 2d Sess. 19-20 (1988).
To expand the section 110(5) exemption would send the wrong
signal. Moreover, I am not aware of any new or unusual
difficulties with respect to the licensing of music in
commercial establishments. I urge you to reconsider this
With respect to the particular language in the proposed
amendment to section 110(5), let me raise some additional
questions. The proposed language contains no limitation on
the type of equipment, and it could permit businesses to use
sophisticated equipment with no limitation on the number of
speakers or the size of a television screen.
The Copyright Office also wonders about the interpretation
of ``indirect charge.'' There is no indication on how this is
to be interpreted. Entertainment and background music is
frequently part of the overhead cost of running an
establishment. Would overhead costs built into the price of
food, for example, make this exception unavailable?
choral group exemption
This proposal exemption would eliminate liability for
public performance of a ``nondramatic musical work by a
choral group of a nonprofit educational institution choral
group, unless a direct or indirect charge is made to hear the
performance.'' I understand that this change was suggested in
response to complaints that performing rights organizations
were attempting to require school groups to pay license fees
for performing seasonal musical compositions.
The Copyright Act of 1976 already covers most situations in
which a choral group connected with a non-profit institution
may be permitted to perform works freely. Section 110(4)
contains a nonprofit exemption for performance of nondramatic
literary and musical works if the performance is ``without
any purpose of direct or indirect commercial advantage and
without payment of any fee or other compensation for the
performance to any of its performers, promoters, organizers .
. .'' 17 U.S.C. Sec. 110(4). If there is a charge, the
exemption is still available if the net
proceeds are used exclusively for educational, charitable or
religious purposes. Although a copyright owner may prohibit
such a performance by serving the performing organization
with a signed written notice, this is rarely done. Thus, it
would seem that virtually all performances by such choral
groups are already covered either by existing licenses or
existing exemptions. I urge you to reconsider the
necessity for a further exemption.
ARBITRATION OF RATE DISPUTES
The proposed legislation allows a defendant in a copyright
infringement suit involving a licensed nondramatic musical
work to admit liability but contest the amount being charged
for the license. Either the defendant or the plaintiff in the
suit would be able to request arbitration of the licensing
fee under 28 U.S.C. 652(e).
This section would reconfigure the dispute resolution
process between the performing rights societies and their
licensees. Currently, ASCAP rates may be altered by the
federal district court of the Southern District of New York,
although this is far from a daily practice. Neither BMI nor
SESAC has such a mechanism; disputes about their rates must
be solved by means of negotiation. However, BMI has asked the
United States Department of Justice for permission to amend
its consent decree to provide for a rate court similar to
that now in place for ASCAP. The Justice Department has
agreed, and opened a public comment period on this matter.
BMI would like to designate the Southern District of New York
as its rate court. When the comment period closes, that court
may agree to BMI's requested changes, or may disagree and
suggest an alternative. We feel a trend may be developing
that would provide more efficient administration of rate
disputes and that amendment at this time is premature.
Furthermore, H.R. 4936 would allow any party who disagrees
with the licensing organization to demand arbitration
proceedings. This proposal may be a more cost effective
system for an individual defendant who admits liability, but
it could create a tremendous burden on the licensing
organizations to address each complaint individually. Even
arbitration proceedings are time-consuming and expensive, and
at the end of the day, may not result in an arrangement that
is any fairer to copyright owners or users than a negotiated
licensing agreement would have been. Such a result would make
it difficult for representatives of performers to set prices
for use consistently, as they are required to do now.
I am also troubled by the proposed conforming amendment to
Title 28 of the United States Code concerning civil actions
for copyright infringement. The proposed amendment says that
upon a request by either party for arbitration, as set out in
section 4 of H.R. 4936, a district court may refer the
dispute with respect to that defendant to arbitration. It
also says that ``[e]ach district court shall establish
procedures by local rule authorizing the use of arbitration
under this subsection.''
Should each district court be charged with creating a set
of rules and procedures regarding arbitration for public
performance of nondramatic musical works? Since courts have
extremely busy schedules, it does not appear to be judicially
efficient to impose new duties on all district courts.
Moreover, permitting each court to set its own rules would
likely result in an uneven, patchwork effect that is
undesirable as well as unpredictable. In addition, the
Southern District Court of New York and the legal
representatives of the private parties have developed a
certain expertise in music licensing matters that other
courts would take time to gain.
ACCESS TO REPERTOIRE
This proposed section mandates free access to critical
information about copyrighted works by those who wish to
license use of the works from performing rights
organizations. We think it is unwise to mandate provision of
this information at this time. Moreover, address and
telephone information about authors who no longer are
copyright owners seems unwarranted.
ASCAP is now providing information about its activities and
its membership via CompuServe's Entertainment Drive. In
addition, BMI recently launched its accessible database
containing information that more than satisfies the needs
evidenced by H.R. 4936's Sec. 5. The Library of Congress and
the Copyright Office are working with the Corporation for
National Research Initiative to develop an electronic
copyright management system; a key feature of this system
will make certain basic information about copyright owners
available to the public for licensing purposes.
In conclusion, I urge you to reconsider this legislation.
Many of the problems H.R. 4936 is attempting to resolve are
currently being addressed elsewhere; thus, the proposed
legislation seems premature. In at least one case, the new
exemption for choral groups, it is difficult to see where the
problem is, and finally, the proposed modification to
Sec. 110(5) seems unwise.
Register of Copyrights.
Mr. SENSENBRENNER. Madam Speaker, I have no further requests for
time, and I yield back the balance of my time.
The SPEAKER pro tempore (Mrs. Wilson). The question is on the motion
offered by the gentleman from Wisconsin (Mr. Sensenbrenner) that the
House suspend the rules and pass the Senate bill, S. 505.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the Senate bill was passed.
A motion to reconsider was laid on the table.
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