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April 27, 2007

Legislation Watch: One Good, One Bad

It’s been an eventful 24 hours in copyright. Jack Valenti died, leading to some nice encomia — and leading one wag to comment, “I suppose now he’ll find out how the Boston Strangler felt about being compared to a VCR.”

And two copyright bills were introduced in Congress: one good, one bad.

First, the bad. Rep. William Delahunt (D-MA) has reintroduced a bill that would extend copyright to fashion designs. If you’re wondering why this is a bad idea, read Chris Sprigman and Kal Raustiala’s law review article on the subject, “The Piracy Paradox: Innovation and Intellectual Property in Fashion Design.”

Second, the good. Reps. Jay Inslee (D-WA) and Don Manzullo (R-IL) have introduced H.R. 2060, the “Internet Radio Equality Act.” The bill would have several effects on the rates paid by webcasters for their digital transmissions of sound recordings:

  • The bill would nullify the March 2, 2007 rate determination issued by the Copyright Royalty Board, which would otherwise double webcasting rates over the next five years.
  • With regard to commercial webcasters, the bill would:
    • Set an interim rate for webcasts made between 2006 and 2011. Webcasters could choose to pay $0.0033 per hour of sound recordings transmitted to a single listener or 7.5% of gross revenues “directly related to” webcasting.
    • Set a new standard that the Copyright Royalty Board will use to set rates for webcasts made after 2011. Instead of the current standard — in which the rates are those that “would have been negotiated in the marketplace between a willing buyer and a willing seller” — the bill directs the Copyright Royalty Board to set a rate based on the factors set forth in 17 U.S.C. 801(b)(1). Those factors include the furthering the public interest in access to copyrighted works, delivering a fair return to the copyright holder, recognizing owners’ and users’ respective roles in making works available to the public, and avoiding unnecessary disruption of existing industry practices.
  • With regard to non-commercial webcasters, the bill would:
    • Set an interim rate. For each year between 2005 and whenever the parties agree on a rate or the Copyright Royalty Board sets a new rate under the new standard set forth below, non-commercial webcasters must pay 150% of whatever they paid in 2004.
    • Set a new standard. The bill would add sound recordings to the kinds of works covered by the collective bargaining provision of section 118, and would add all “non-profit institution[s] or organization[s]” to the class of users who can take advantage of section 118. (My reading of this is that groups of noncommercial webcasters could bargain collectively with SoundExchange, and if they can’t come to an agreement, the Copyright Royalty Board would set a rate based on the rate negotiated by other groups of noncommercial broadcasters and webcasters.)

  • The bill orders three studies:
    • One by the National Telecommunications and Information Administration on the competitiveness of the Internet radio marketplace and the effects of webcasting royalties thereon.
    • One by the FCC on the effects of webcasting royalties on localism, diversity, and competition.
    • One by the Corporation for Public Broadcasting on the effect of webcasting royalties on public radio stations.

While it’s almost certain to be modified before passage, the bill represents a great step forward in coming up with a set of webcasting royalty rates that fairly compensate copyright holders without destroying webcasters.

Disclaimer Haiku:
West wind seems to say,
"This is not legal advice;
I'm not your lawyer."

(And if you're a client with whom I have a preexisting attorney-client relationship, this still isn't legal advice.)

In case you're wondering, this blog is also not intended as advertising, as a representation of anything but my personal opinion, or as an offer of representation.

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