[Federal Register: September 27, 1999 (Volume 64, Number 186)]

[Notices]               

[Page 52107-52109]



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LIBRARY OF CONGRESS



Copyright Office

[Docket No. 99-6 CARP DTRA]



 

Digital Performance Right in Sound Recordings and Ephemeral 

Recordings



AGENCY: Copyright Office, Library of Congress.



ACTION: Notice with a request for comments.



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SUMMARY: The Copyright Office is announcing the schedule for the 

Copyright Arbitration Royalty Panel which shall set rates and terms for 

two compulsory licenses. One license allows certain eligible 

nonsubscription services to perform sound recordings publicly by means 

of digital audio transmissions and the other allows a transmitting 

organization to make an ephemeral recording of a sound recording for 

the purpose of making a permitted public performance. The Office is 

also announcing the date by which a party who wishes to participate in 

the rate adjustment proceeding must file its Notice of Intention to 

Participate.



DATES: Comments and Notices of Intention to Participate are due no 

later than November 1, 1999.



ADDRESSES: An original and five copies of a Notice of Intention to 

Participate and an original and five copies of any comment shall be 

delivered to: Office of the General Counsel, Copyright Office, James 

Madison Building, Room LM-403, First and Independence Avenue, S.E. 

Washington, D.C. 20559-6000; or mailed to: Copyright Arbitration 

Royalty Panel (CARP), P.O. Box 70977, Southwest Station, Washington, 

D.C. 20024.



FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 

Tanya M. Sandros, Attorney Advisor, Copyright Arbitration Royalty 

Panel, P.O. Box 70977, Southwest Station, Washington, D.C. 20024. 

Telephone: (202) 707-8380. Telefax: (202) 252-3423.



SUPPLEMENTARY INFORMATION:



Background



    In 1995, Congress passed the Digital Performance Right in Sound 

Recordings Act (``DPRA''), Public Law 104-39, 109 Stat. 336 (1995), 

which created for copyright owners of sound recordings an exclusive 

right, subject to certain limitations, to perform publicly the 

copyrighted work by means of a digital audio transmission. 17 U.S.C. 

106(6). Among the limitations placed on the performance of the sound 

recording was the creation of a new compulsory license for nonexempt, 

noninteractive, digital subscription services. 17 U.S.C. 114. The scope 

of this license was expanded in 1998 with the passage of the Digital 

Millennium Copyright Act (``DMCA'') to cover the public performance of 

sound recordings by means of eligible nonsubscription transmissions and 

transmissions by any preexisting satellite digital audio radio service 

which performs a sound recording by means of a digital audio 

transmission.

    An ``eligible nonsubscription transmission'' is a noninteractive 

digital audio transmission which, as the name implies, does not require 

a subscription for receiving the transmission. The transmission must 

also be made as part of a service that provides audio programming 

consisting in whole or in part of performances of sound recordings the 

purpose of which is to provide audio or entertainment programming, but 

not to sell, advertise, or promote particular goods or services. A 

``preexisting satellite digital audio radio service'' is a subscription 

digital audio radio service that received a satellite digital audio 

radio service license issued by the Federal Communications Commission 

on or before July 31, 1998. See 17 U.S.C. 114(j)(6) and (10). Only two 

known entities, CD Radio and XM Satellite Radio (formerly known as 

American Mobile Radio Corporation), qualify under the statutory 

definition as preexisting satellite digital audio radio services.

    In addition to expanding the current section 114 license, the DMCA 

creates a new statutory license for the making of an ``ephemeral 

recording'' of a sound recording by certain transmitting organizations. 

The new statutory license allows entities that transmit performances of 

sound recordings to business establishments, pursuant to the 

limitations set forth in section 114(d)(1)(C)(iv), to make an ephemeral 

recording of a sound recording for purposes of a later transmission. 

The new license also provides a means by which a transmitting entity 

with a statutory license under section 114(f) can make more than the 

one phonorecord specified in section 112(a). 17 U.S.C. 112(e).



Determination of Reasonable Terms and Rates



    The statutory scheme for establishing reasonable terms and rates is 

the same for both licenses. The terms and rates for the two new 

statutory licenses may be determined through a voluntary negotiation 

process, or if necessary, through compulsory arbitration conducted 

pursuant to Chapter 8 of the Copyright Act. Because the DMCA does not 

establish reasonable rates and terms for either the new section 112 or 

the expanded section 114 license, the statute requires the Librarian of 

Congress to initiate a voluntary negotiation period, the first phase in 

the rate setting process, within 30 days of enactment for the purpose 

of determining reasonable terms and rates for each license. See 17 

U.S.C. 112(e)(4) and 114(f)(2)(A).

    Accordingly, the Office announced the dates for the six-month 

negotiation period in the Federal Register on November 27, 1998. 63 FR 

65555



[[Page 52108]]



(November 27, 1998).\1\ The designated six-month negotiation period 

began on November 27, 1998, and concluded on May 27, 1999.

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    \1\ The docket number for this proceeding has been changed from 

RM 98-4 CARP, as indicated in the November 27 notice, to 99-6 CARP 

DTRA. All future filings shall reference this proceeding 

accordingly.

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    At this time, the parties continue to negotiate. If the affected 

parties are able to negotiate an industry-wide agreement, then it will 

not be necessary for the parties to participate in an arbitration 

proceeding. In such a case, the Librarian of Congress will follow 

current rate regulation procedures and notify the public of the 

proposed agreement in a notice and comment proceeding. If no party with 

a substantial interest and an intent to participate in an arbitration 

proceeding files a comment opposing the negotiated rates and terms, the 

Librarian will adopt the proposed terms and rates without convening a 

copyright arbitration royalty panel. 37 CFR 251.63(b). If, however, no 

industry-wide agreement is reached or only certain parties negotiate 

license agreements, then those copyright owners and users relying upon 

one or both of the statutory licenses shall be bound by the terms and 

rates established through the arbitration process.

    Arbitration proceedings are initiated upon the filing of a petition 

for ratemaking with the Librarian of Congress during the 60 days 

immediately following the six-month negotiation period. Arbitration 

cannot take place, however, unless a party files a petition. 17 U.S.C. 

112(e)(5) and 114(f)(2)(B).

    On July 23, 1999, the Recording Industry of America, Inc. 

(``RIAA'') filed a petition in accordance with 17 U.S.C. 112(e)(5) and 

114(f)(2)(B) requesting that the Office convene a Copyright Arbitration 

Royalty Panel for the purpose of setting rates and terms for the 

expanded section 114 license and the newly created section 112 license. 

In addition, RIAA asks that the Office not require the filing of a 

Notice of Intention to Participate before October 1, 1999, nor set the 

commencement of the 45-day precontroversy period to begin before 

January 15, 2000. RIAA makes these requests based upon its belief 

``that more time for voluntary negotiation is likely to result in 

additional agreements that may avoid a CARP proceeding altogether.'' 

RIAA petition at 2.



Comments and Notices of Intention to Participate



    The regulations governing rate adjustment proceedings require that, 

upon the filing of a petition for rate adjustment, the Office establish 

a date certain by which parties wishing to participate in the 

proceeding must file with the Librarian a Notice of Intention to 

Participate. 37 CFR 251.45(a). In consideration of the ongoing 

negotiations, the Office is setting November 1, 1999, as the date by 

which an interested party must file its Notice of Intention to 

Participate. Failure to submit a timely notice will preclude the 

interested party from participating in the CARP proceeding whose 

purpose will be to set rates and terms for: (1) certain digital audio 

transmissions by a service eligible to make use of the expanded section 

114 license, and (2) for ephemeral recordings made in accordance with 

the section 112 license.

    In addition, any party who wishes to comment on the RIAA petition 

may file a comment with the Copyright Office no later than close of 

business on November 1, 1999. The Librarian will consider these 

comments when evaluating the sufficiency of the petition. See 37 CFR 

251.64.



Precontroversy Discovery Schedule



    The Copyright Office is announcing the schedule for the 45-day 

precontroversy discovery period. Any party that files a Notice of 

Intention to Participate in this proceeding may participate in the 

precontroversy discovery period, provided that the party has submitted 

a written direct case with the Copyright Office and with all other 

parties who have filed a Notice of Intention to Participate. Each party 

may request of an opposing party nonprivileged documents underlying 

facts asserted in another party's written direct case. The 

precontroversy discovery period is limited to discovery of documents 

related to a party's written direct case and any amendment made to it 

during the 45-day period.

    The precontroversy discovery schedule will be as follows:



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                Action                              Deadline

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Filing of written direct cases.......  January 18, 2000.

Requests for underlying documents      January 26, 2000.

 related to written direct cases.

Responses to request for underlying    February 1, 2000.

 documents.

Completion of document production....  February 7, 2000.

Follow-up requests for underlying      February 11, 2000.

 documents.

Responses to follow-up requests......  February 16, 2000.

Motions related to document            February 22, 2000.

 production.

Production of documents in response    February 28, 2000.

 to follow-up requests.

All other motions, petitions, and      March 2, 2000.

 objections.

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    The precontroversy discovery period, as specified by Sec. 251.45(b) 

of the rules, will begin on January 18, 2000, with the filing of 

written direct cases by each party. Each party in this proceeding who 

has filed a Notice of Intention to Participate must file a written 

direct case on the date prescribed above. Failure to submit a timely 

filed written direct case will result in dismissal of that party's 

claim. Parties must comply with the form and content of written direct 

cases as prescribed in 37 CFR 251.43. Each party to the proceeding must 

deliver a complete copy of its written direct case to each of the other 

parties to the proceeding, as well as file a complete copy with the 

Copyright Office by close of business on January 18, 2000, the first 

day of the 45-day period.

    After the filing of the written direct cases, document production 

will proceed according to the above-described schedule. Each party may 

request underlying documents related to each of the other parties' 

written direct cases by January 26, 2000, and responses to those 

requests by February 1, 2000. Documents which are produced as a result 

of the requests must be exchanged by February 7, 2000. It is important 

to note that all initial document requests must be made by the January 

26, 2000, deadline. Thus, for example, if one party asserts facts that 

expressly rely on the results of a particular study that was not 

included in the written direct case, another party desiring production 

of that study must make its request by January 26, 2000; otherwise, the 

requesting party is not entitled to production of the study.

    The precontroversy discovery schedule also establishes deadlines 

for follow-up discovery requests. Follow-up requests are due by 

February 11, 2000, and responses to those requests are due by February 

16, 2000. Any documentation produced as a result of a follow-up request 

must be exchanged by February 28, 2000. An example of a follow-up 

request would be as follows. In the above example, one party expressly 

relies on the results of a particular study which is not included in 

its written direct case. As noted above, a party desiring production of 

that study or survey must make its



[[Page 52109]]



request by January 26, 2000. If, after receiving a copy of the study, 

the reviewing party determines that the study heavily relies on the 

results of a statistical survey, it would be appropriate for that party 

to make a follow-up request for production of the statistical survey by 

the February 11, 2000, deadline. Again, failure to make a timely 

follow-up request would waive the requesting party's right to request 

production of the survey.

    In addition to the deadlines for document requests and production, 

there are two deadlines for the filing of precontroversy motions. 

Motions related to document production must be filed by February 22, 

2000. Typically, these motions are motions to compel production of 

requested documents for failure to produce them, but they may also be 

motions for protective orders. Finally, all other motions, petitions 

and objections must be filed by March 2, 2000, the final day of the 45-

day precontroversy discovery period. These motions, petitions, and 

objections include, for example, petitions to dispense with formal 

hearings under Sec. 251.41(b).

    Due to the time limitations between the procedural steps of the 

precontroversy discovery schedule, we are requiring that all discovery 

requests and responses to such requests be served by hand or fax on the 

party to whom such response or request is directed. Filing of requests 

and responses with the Copyright Office is neither encouraged nor 

required.

    Filing and service of all precontroversy motions, petitions, 

objections, oppositions, and replies shall be as follows. In order to 

be considered properly filed with the Librarian and/or Copyright 

Office, all pleadings must be delivered to the Copyright Office no 

later than 5 p.m. of the filing deadline date. Parties may deliver the 

pleadings to: Office of the Register of Copyrights, Room LM-403, James 

Madison Memorial Building, 101 Independence Avenue, S.E., Washington, 

D.C. 20540; or alternatively, parties may send their pleadings by 

Federal Express to: Copyright Arbitration Royalty Panel (CARP), Attn: 

Gina Giuffreda (Tel. 202-707-8380), Federal Express, 208 Second Street, 

S.E., Washington, D.C. 20003, provided that the filing reaches the 

Copyright Office by the deadline. The Office cautions parties to use 

only the Federal Express address listed in this Notice, to include the 

telephone number of the Office, and to direct the package to the 

attention of the CARP Specialist, Ms. Gina Giuffreda. The Federal 

Express office will notify the Copyright Office upon receipt of a 

properly addressed package, and the Copyright Office will make 

arrangements to pick up the package the same day. Under no 

circumstances will the Office make arrangements to retrieve a package 

from any other Federal Express location or track a misdirected package. 

Each party bears the responsibility for insuring that the filings are 

in the Copyright Office by the deadline.

    The form and content of all motions, petitions, objections, 

oppositions, and replies filed with the Office must be in compliance 

with Secs. 251.44(b)-(e). As provided in Sec. 251.45(b), oppositions to 

any motions or petitions must be filed with the Office no later than 

seven business days from the date of filing of such motion or petition. 

Replies are due five business days from the date of filing of such 

oppositions. Service of all motions, petitions, objections, 

oppositions, and replies must be made on counsel or the parties by 

means no slower than overnight express mail on the same day the 

pleading is filed.



Initiation of Arbitration



    The 180-day arbitration period will be initiated on May 1, 2000. 

The schedule of the arbitration proceeding will be established by the 

CARP after the three arbitrators have been selected.



Future Proceedings



    Sections 114(f)(2)(C) and 112(e)(7) of the Copyright Act, title 17, 

require the publication of a notice of the initiation of voluntary 

negotiation proceedings during the first week of January 2000. The 

purpose of these negotiations would be to set rates and terms for the 

public performance of sound recordings by means of eligible 

nonsubscription transmission services and for the making of ephemeral 

recordings for the period January 1, 2001, to December 31, 2003. 

Parties to a voluntary agreement, however, may designate an alternative 

schedule for setting rates and terms for the section 114 license as a 

provision of the settlement agreement. 17 U.S.C. 114(f)(2)(A) and 

(2)(C)(i)(II); 17 U.S.C. 112(e) (4) and (7).

    In the event the parties to the current proceeding do not reach a 

settlement agreement prior to the first week of January, 2000, which 

includes an alternative schedule for setting rates and terms to cover 

the period January 1, 2001, to December 31, 2003, the Office will 

adhere to the statutory time frame and announce the initiation of the 

voluntary negotiation period for this next two-year cycle.



    Dated: September 21, 1999.

David O. Carson,

General Counsel.

[FR Doc. 99-25040 Filed 9-24-99; 8:45 am]

BILLING CODE 1410-33-P