What’s Shakin’ on the Hill:
The House Has Spoken
Prior to the 2006 midterm elections, there was a great deal of movement on the bills described in the August What’s Shakin’ from the Hill column. Many revisions to the Section 115 Reform Act ("SIRA") and the Orphans Work Act of 2006 were made. In fact, SIRA and the Orphan Works, along with some technical amendments, were combined into the Copyright Modernization Act of 2006.
However, the most significant news on the Copyright Modernization Act of 2006 (the "Act") to report from Capitol Hill was its withdrawal from consideration.
Citing the controversial nature of the Act, and the lack of consensus among the interested parties, Congressman Lamar Smith, Chairman of the Subcommittee on Courts, the Internet and Intellectual Property of the Judiciary Committee, withdrew the legislation from consideration on September 27, 2006. He and Congressman Howard Berman, his Democratic counterpart, have vowed to revisit the topics addressed in the Act in the next Congressional session.
Since these issues will greatly impact your future and finances, here’s what you need to know before these bills are re-addressed in 2007:
Section 115 Reform Act
The Issue:
SIRA would have significantly revised the mechanical license structure for musical compositions to address the licenses required to create the copies for the digital transmission of music.
The Treatment:
The National Music Publishers Association (NMPA) worked closely with the Digital Media Association (DiMA) to draft legislation to create a compulsory license for the copies of musical compositions required for the transmission of music over the Internet, through satellites or other digital means.
Significantly, the Act created a gratis license for the server and ephemeral copies certain digital music providers use for their streaming and hybrid music services as long as an application has been filed and administrative fee paid either to a general designated agent or to a designated agent for specific works.
What It Would Have Meant to You:
The compulsory license created in the Act would have attached to the musical composition not the sound recording. However, under the Act music labels would have had the right to direct that royalties accruing to songwriters be used to offset un-recouped funds related to the sound recording. An artist disputing a "letter of direction" would have to contest the letter in the court of jurisdiction provided for in the original recording contract.
That is, had the Act been adopted, a label would be able to direct that a songwriter’s share of the compulsory license be directed to the label, and the only recourse a songwriter would have would be to sue in the court referenced in the label contract.
Orphan Works
The Issue:
The Act also incorporated the Orphan Works Act that would have limited the liability for infringement if a user of the work was unable to identify the owner of the copyright after a reasonably diligent search made in good faith.
The Treatment:
The Act provided some guidance as to what would qualify as a reasonably diligent search, including whether or not the work has a current registration at the Copyright Office of the U.S. Library of Congress.
Once a user has deemed a work to be an orphan, the work may be used in any manner, including synchronizing a song to a video work. The Act also would have required a user of an orphan work to attribute the work in some manner to alert the rightful owner that the work has been used as an orphan.
What This Would Have Meant to You:
Under the Act, in the event that a copyright owner materializes after the work has been used as an orphan, the owner would be entitled to "reasonable compensation" for the use work but not to statutory or actual damages. No compensation would be due if the user of the work discontinues use upon receipt of the notice from the owner of the copyright.
Quite significantly, if the protected work has been incorporated into a "new work," the owner of the original work is not entitled to injunctive relief. Therefore, the owner of a work that has been deemed an orphan would be unable to stop the use of the work even if the rightful owner does not approve of the new use.
Conclusion:
It was good news for artists that the Copyright Modernization Act of 2006 did NOT become law. The issues the legislation attempted to address were very big, but not all voices were heard in the debate. The unintended negative consequences for musicians to control and profit from the works they create were potentially huge.
It is of the utmost importance that artists pay attention to legislative matters and get involved in the process to ensure that their voices are heard and their creative rights are protected on the Hill.
Stay tuned to the Musicians’ Atlas and Atlas Plugged to find out more about the issues addressed in this article and how you can get involved as the new Congress begins its work in January.
Nancy Prager is a corporate and intellectual property attorney with Lampert & O'Connor, P.C. in Washington, D.C. Her music industry clients include, or have included, managers, independent music labels, as well as music destination and delivery services. Nancy can be reached at nprager@pragerlaw.us or 202-887-6230 and at http://www.myspace.com/nancyprager