Home » Article » New Developments in Copyright Law: Pending Legislation

1. The Performance Rights Act

Each time a radio station DJ plays a song, two distinct copyrights are implicated: one in the underlying musical composition and the other in the sound recording itself. All radio stations must pay royalties to the copyright owner in the musical composition. But not all radio stations must pay royalties to the owner of the copyright in the sound recording. Under current law, radio stations that do not employ satellite technologies to distribute their signals are permitted to broadcast sound recordings without compensating the copyright owner. Satellite radio stations, on the other hand, are required to pay royalties to the owner of the copyright in the sound recordings.

To remedy this inequity, members of Congress recently introduced a “bill to provide fair compensation to artists for use of their sound recordings.” The Performance Rights Act would amend the Copyright Act so as to require terrestrial radio stations to pay royalties to the owners of the copyrights in sound recordings played on their radio stations. In other words, the Performance Rights Act would do away with the Copyright Act’s earlier carve-out rule allowing terrestrial radio stations to publicly perform sound recordings without compensating the owner of the copyright in the sound recording.

Proponents of the Performance Rights Act include MusicFIRST Coalition (which represents recording artists), Marybeth Peters (the Register of Copyrights), and the Recording Industry Association of America (RIAA). They argue that it is only fair that terrestrial radio stations, like their satellite counterparts, be required to pay royalties for publicly performing the sound recordings. Indeed, the intellectual property laws of most Western nations require such compensation.

Opponents include the National Association of Broadcasters (NAB). They argue that terrestrial radio has been, and should continue to be, exempt from paying performance rights royalties because the owners of the performance rights gain the benefit of promotion from their songs being broadcast on terrestrial radio. In effect, they argue that the performance rights owners are compensated by increased sales stemming from the terrestrial radio promotion.

Proponents of the Performing Rights Act counter this argument by pointing to the changing distribution model of music. While record sales have been plummeting, subscription sales are increasing. Today, consumers of music tend not to purchase physical albums, but rather pay to listen to a song. Thus, the argument goes, terrestrial radio gives to consumers what they want – the right to listen – for free, and the vast majority of those listeners never purchase the sound recording. This leaves the performance right owner uncompensated for the public performance of his or her sound recording.

As of the date of this writing, the Performance Rights Act has been referred to committee. Watch this Newsletter for further developments.

2. Orphan Works Legislation

An orphan work is a copyrighted work where it is difficult or impossible to contact the copyright holder. Anonymous works fall into this category. A major problem created by orphan works is that potential users fail to use such works out of concern that they may be found liable for infringing the copyright.

If the potential users could contact the copyright holder, then they might be able to negotiate a license or assignment so that they could use the work legally.

Over the past few years, various bills have been introduced to adress this problem. For example, one proposal was to release certain orphan works into the public domain if the copyright renewal registrations were not made as required. Sen. Patrick Leahy most recently introduced the Shawn Bentley Orphan Works Act of 2008. The legislation would enable users to exploit orphan works if, after a thorough, documented search, the copyright owners are unable to be located.

Many groups oppose the legislation, including the Artists Rights Society, American Association of Independent Music, the Illustrators Partnership, the National Association of Music Publishers, the National Association of Record Industry Professionals, the Association of Independent Music Publishers and the American Federation of Radio and Television Artists (AFL-CIO). They argue that the legislation would negatively affect artists who make a living from being compensated for use of their copyrighted works.

Proponents of the bill argue that it would enable the use of orphan works without the fear of potential liability for copyright infringement.

As of the date of this writing, further proceedings on the Orphan Works Act have been tabled by Congress’ summer recess. Watch this Newsletterfor further developments, or contact DGW for updates.