Monday, July 31, 2017

Copyright Bill Would End Unequal, Inequitable Treatment of Pre-72 Sound Recordings

Current federal copyright law fails to provide important copyright protections to music artists and other copyright holders in sound recordings made before 1972. As a result, copyright holders do not enjoy the same right under federal law to receive royalties for public performances of pre-72 sound recordings that others enjoy for later recordings. A new bill in Congress offers a workable, straightforward, and long overdue solution to this glaring problem.

On July 19, Representatives Darrell Issa and Jerrold Nadler introduced HR 3301, the “Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society Act” – or “CLASSICS Act.” If adopted, digital audio transmissions of pre-72 sound recording would no longer be excluded from federal protections for public performances of copyrighted sound recordings. HR 3301 would also provide a streamlined way for resolving pre-existing state law claims for digital audio transmissions of pre-72 sound recordings. The CLASSICS Act strongly merits consideration without delay by the 115th Congress.

As Free State Foundation President Randolph J. May and I described in our book, The Constitutional Foundations of Intellectual Property: A Property Rights Perspective (2015), copyright is a unique kind of private property right, rooted in an author’s creative labor. The U.S. Constitution’s Article I, Section 8, IP Clause authorizes Congress to protect an author’s exclusive right to the proceeds of his or her work. Federal copyright law establishes baseline protections for copyright holders – including exclusive rights to proceeds from public performances of sound recordings.

Without any apparent explanation, the Copyright Act of 1976 excluded federal protection for the owners of copyrighted sound recordings made before February 15, 1972. Digital music services such as Sirius XM and Pandora have publicly performed pre-72 sound recordings via digital audio transmissions without paying royalties to copyright holders in the manner they routinely pay for post-72 sound recordings. Although the 1976 Act largely preempted state copyright laws, Section 301(c) left intact state jurisdiction over rights in sound recordings fixed before 1972. This state of affairs has resulted in a handful of lawsuits against digital music services based on state copyright law. Courts have largely – but not entirely – recognized that owners of pre-1972 recordings have property interests under state law and that those interests may not be misappropriated without compensation.

In a 2015 report, the U.S. Copyright Office reiterated its view that “pre-1972 recordings should be brought under the protection of federal copyright law.” According to the Copyright Office, federal recognition of public performance copyright protections in pre-72 sound recordings “would serve the interests of licensing parity by eliminating… market distortion” and also “allow for a federal compensation mechanism for the artists responsible for pre-1972 works.”

The CLASSICS Act, HR 3301, is perhaps the most promising legislative proposal to date for extending federal copyright protections to public performances of pre-72 sound recordings. Passage of HR 3301 would bring needed parity to federal law. HR 3301 would end free-riding commercial usage of valuable copyrighted sound recordings. Certainly, this would be in step with Congress’s constitutional duty to secure copyright holders’ exclusive rights to the proceeds of their intellectual property. Going forward, copyright holders would receive royalties based on rates established by the Copyright Royalty Board pursuant to its “willing buyer/willing seller” standard that seeks to approximate market prices for public performances of sound recordings via digital audio transmissions.  

Further, the CLASSICS Act would clear up existing uncertainties tied to state copyright laws. If adopted, the HR 3301 would preempt state law claims based on public performances of pre-72 sound recordings that meet the requirements of federal law. The bill also provides a streamlined option for settling prior lawsuits based on state copyright lawsuits claims. Within nine months after the HR 3301’s effective date, if digital music providers pay royalties for all public performances of pre-72 sound recordings taking place during the last three years, all state law claims against such providers would be federally preempted.

Importantly, a press release by the CLASSIC Act’s sponsors states that HR 3301 has a broad base of support from a diverse array of participants in the music marketplace. Listed supporters of the bill include the Recording Industry Association of America (RIAA), Pandora, musicFIRST, the Internet Association, SoundExchange, and the American Federation of Musicians. This cross-section of support bodes well for the bill’s prospects in this Congress.

The sponsors of the CLASSIC Act should be commended for introducing the bill. HR 3301would at long last recognize the rights of copyright holders in pre-1972 sound recordings, and justly ensure they receive compensation for commercial uses of their intellectual property. Congress should give HR 3301 prompt attention.