Stop the Music, I Want My Royalty — The Public Playing of Music in Restaurants and Businesses Robert B. Goss, J.D., LL.M. Candidate IPIL Fall 2007 Professor Craig Joyce (Advisor) University of Houston Law Center ABSTRACT In 1790, the founding fathers originally did not provide specific copyright protection in the United States to musical works, musical compositions, or sound recordings. However, as the technological and political developments occurred in the United States the original copyright protection provided in Article I, § 8, cl. 8 expanded to include music. The first protection for music occurred with the enactment of the 1831 Act. Over time, Congress and the Courts supplied additional factors for copyright protection of musical compositions culminating in the 1976 Copyright Act. The Fairness in Music Licensing Act made further revisions in 1998. The passage of the Fairness in Music Licensing Act drew an immediate attack from both United States musical composition and sound recording copyright owners and a unified European Community. At stake was the copyright owners’ individual exclusive right for a royalty and their ability to collect royalties. The Fairness in Music Licensing Act created a business exception that provided the exemption for any business under 2,000 square feet and any restaurant under 3,750 square feet when copyrighted works were played as a public performance over a sound system connected to a radio. This paper examines the conflict between the U.S. Copyright Act with its homestyle and business exceptions and the obligations created between the European Community and other international trading partners through the Trade-Related Aspects of Intellectual Property (TRIPS) agreement. Further, the U.S. copyright law has to catch up to the technological changes in the music industry. Inclusion of these changes may provide a solution to the U.S. liability imposed by the World Trade Organization (WTO) regarding the present U.S. Copyright Act. ii TABLE OF CONTENTS Table of Contents ABSTRACT ............................................................................................................................ii I. INTRODUCTION.................................................................................................................... 1 II. MUSIC COPYRIGHT DEVELOPMENTS: THE BEGINNINGS THROUGH 1909....... 1 A. The U.S. Constitution and Copyright Development....................................................... 1 1. Copyright law development immediately after winning Independence from England.................................................................................................................... 3 B. Legislation Prior to the 1976 Copyright Act................................................................... 4 1. 1790 Copyright Act ................................................................................................ 4 2. 1831 Copyright Act ................................................................................................ 7 3. 1909 Act ................................................................................................................11 III. MUSIC COPYRIGHT DEVELOPMENTS FROM 1976 TO 2007: AN OVERVIEW 14 A. The Digital Performance Right in Sound Recordings Act of 1995 (DPRSR) ............14 B. The Digital Millennium Copyright Act (DMCA) of 1999...........................................16 C. The Fairness in Music Licensing Act (FMLA) of 1998...............................................17 D. Summary of Other U.S. Laws Applicable to Businesses and Restaurants .................18 IV. TITLE 17 TODAY: MUSIC PROTECTIONS.................................................................19 A. Congressional Purpose of Act........................................................................................20 B. 1976 Copyright Code: 17 U.S.C....................................................................................21 1. § 102 — Subject Matter of Copyright: in General .............................................21 2. Prima Facie Copyright Elements.........................................................................21 a. Authorship and Originality ..................................................................................22 b. Fixation in a Tangible Form ................................................................................24 3. §103, Subject Matter of Copyright: Compilations & Derivative Works ..........25 4. §101, Definitions ..................................................................................................26 5. §106, Exclusive Rights in Copyrighted Works ..................................................33 iii V. TITLE 17 TODAY: MUSIC LIMITATIONS (§§ 107-122)..........................................35 A. Limitations That Do Not Affect the Playing of Music in Businesses or Restaurants 35 B. Limitations That Do Affect the Playing of Music in Businesses or Restaurants........37 1. § 107 — Fair Use..................................................................................................37 2. § 109 — Limitations on Exclusive Use: Effect of Transfer of Particular Copy or Phonorecord......................................................................................................39 3. § 110 — Limitations on Exclusive Use: Exemptions of Certain Performances and Displays..........................................................................................................43 4. § 111 — Limitations on exclusive rights: secondary transmissions .................52 5. § 112 — Limitations on exclusive rights: Ephemeral recordings .....................53 6. § 114 — Scope of exclusive rights in sound recordings....................................53 7. § 115 — the compulsory license .........................................................................54 8. § 118 — Exclusive rights: use of certain works in connection with noncommercial broadcasting ...............................................................................56 9. Summary of the provisions of the 1976 Copyright Act applicable to businesses and restaurants playing music..............................................................................57 VI. ADMINISTRATION RIGHTS AND ENFORCEMENT ..................................................58 A. §501 — Infringement of Copyright...............................................................................58 B. Performance Rights.........................................................................................................59 1. Performance vs. performing......................................................................................61 C. Record Companies and Musical Publishers..................................................................62 D. Performance Right Societies ..........................................................................................62 E. Harry Fox Agency ..........................................................................................................63 VII. INTERNATIONAL DISPUTE WITH THE U.S. AS LITIGATED IN WTO DS160. 64 A. The European Community had issues with the U.S. over the FMLA .........................64 B. TRIPS and Berne Article 9(1)........................................................................................68 C. TRIPS Article 13.............................................................................................................69 D. Berne Article 13..............................................................................................................72 E. Berne Article 11bis .........................................................................................................73 F. Berne Article 11..............................................................................................................74 iv VIII. ANALYSIS ..........................................................................................................................75 A. U.S. Case law for Homestyle Exceptions (§ 110(5)(A)) and Business Exception (§ 110(5)(B))........................................................................................................................76 1. Buck v. Jewell-LaSalle Realty Company.............................................................76 2. Twentieth Century Music Corp. v. Aiken ............................................................77 3. Sailor Music v. The Gap Stores ...........................................................................79 4. Springsteen v. Plaza Roller Dome.......................................................................80 5. Broadcast Music, Inc. v. United States Shoe Corporation ................................81 6. Broadcast Music, Inc. v. Jeep Sales & Service Co.............................................82 7. Crabshaw Music v. K-Bob’s of El Paso Inc. ......................................................84 B. Summary of U.S. Case law Applicable to Business and Restaurants .........................85 C. Discussion of 17 U.S.C. § 110(5)(A) & (B) Violations in Regards to TRIPS ...........85 IX. CONCLUSION............................................................................................................................ 86 Bibliography ..........................................................................................................................91 v STOP THE MUSIC, I WANT MY ROYALTY: THE PLAYING OF MUSIC IN PUBLIC RESTAURANTS AND BUSINESSES I. INTRODUCTION Copyright protection in the United States started almost immediately