2018 Entertainment Law Year in Review Presented By: ELIP Section Thursday, January 31, 2019 Program - 12:30 p.m. - 1:30 p.m. Lawry’s Restaurant 1.0 CLE Hours Provider #36 The Los Angeles County Bar Association is a State Bar of California approved MCLE provider. The Los Angles County Bar Association certifies that this activity has been approved for MCLE credit by the State Bar of California. Music Modernization | U.S. Copyright Office https://www.copyright.gov/music-modernization/ Search Home (index.html) / Music Modernization Act Copyright Office Implementation and Outreach (/music-modernization /implementation.html) Changes in Law Regarding On October 11, 2018, the Orrin G. Hatch–Bob Goodlatte Music the Section 115 Mechanical License (/music- Modernization Act was signed into law. This bipartisan and unanimously modernization/115/) enacted legislation represents the realization of years of effort by a wide Changes in Law Regarding array of policymakers and stakeholders, as well as the U.S. Copyright Pre-1972 Sound Recordings (https://www.copyright.gov Office itself, to update the music licensing landscape to better facilitate legal /music-modernization licensing of music by digital services. The Copyright Office is heartened by /pre1972-soundrecordings /index.html) the passage of landmark legislation expected to benefit the many Amendments to the Copyright stakeholders across all aspects of the music marketplace, including Act as a result of the Orrin G. songwriters, publishers, artists, record labels, digital services, libraries, and Hatch–Bob Goodlatte Music Modernization Act the public at large. (https://www.copyright.gov /legislation /2018_mma_amendments.pdf) In advance of introducing this legislation, Congress held a series of FAQs Regarding the Orrin G. hearings on music issues, as part of its comprehensive review of the Hatch–Bob Goodlatte Music Modernization Act nation’s copyright laws. To assist and inform that effort, the Copyright Office (https://www.copyright.gov conducted a comprehensive study of the music licensing framework as well /music-modernization /faq.html) as the ever-evolving needs of those who create and invest in music in the Legislative History twenty-first century, which resulted in a report entitled “Copyright and the (/legislation/) Music Marketplace (/policy/musiclicensingstudy/copyright-and-the-music- marketplace.pdf).” This report followed the Copyright Office’s earlier policy report “Federal Copyright Protection for Pre-1972 Sound Recordings (/docs /sound/pre-72-report.pdf),” which examined the desirability of and means for bringing sound recordings fixed before February 15, 1972, under federal jurisdiction. Many of the suggestions offered in both of those reports will be Interim Rule Regarding Pre-1972 Sound Recordings realized in enactment of this legislation. (/rulemaking/pre1972- soundrecordings-schedules/) The Orrin G. Hatch–Bob Goodlatte Music Modernization Act promises to Notice of Inquiry Regarding the Noncommercial Use serve as one of the most significant pieces of copyright legislation in Exception to Unauthorized decades. Uses of Pre-1972 Sound Recordings (/rulemaking /pre1972-soundrecordings- noncommercial/) 1 of 3 1/30/2019, 11:57 AM Music Modernization | U.S. Copyright Office https://www.copyright.gov/music-modernization/ Notice of Inquiry Regarding the Designation of The Orrin G. Hatch–Bob Goodlatte Music Modernization Act addresses Mechanical Licensing Collective (/rulemaking/mma- Congress’s determination that copyright law has not kept pace with designations/) changing consumer preferences and technological developments in the music marketplace. The law is organized into three key titles: Title I—Music Licensing Modernization; Title II—Classics Protection and Access; and Title III – Allocation for Music Producers. Title I—Music Licensing Modernization, among other things, modifies the existing section 115 “mechanical” license for reproduction and distribution of musical works in phonorecords (which was previously obtained by licensees on a per-work, song-by-song basis) to establish a new blanket license for digital music providers to engage in specific covered activities (namely, permanent downloads, limited downloads, and interactive streaming). Licensing of physical configurations (e.g., CDs, vinyl) will still operate on a per-work, individual song license, basis. Title I establishes a market-oriented “willing buyer, willing seller” rate standard that will apply to all licensees of musical works under the section 115 mechanical license. Pursuant to section 115(d)(3), as amended, the Register of Copyrights will designate an entity as the mechanical licensing collective to administer the blanket license and distribute collected royalties to songwriters and music publishers. The newly created mechanical licensing collective will be tasked with developing and maintaining a database of musical works and sound recordings, which will be publicly available and is expected to become the most comprehensive database in the music industry. There will be a transition period to move to the new blanket license, allowing digital music providers to limit copyright infringement liability so long as the provider engages in good-faith, commercially reasonable efforts to identify and locate musical work copyright owners. The legislation also modifies the process for selecting federal district court judges to adjudicate rate-setting disputes regarding performance rights organizations that are subject to consent decrees with the Department of Justice (i.e., ASCAP and BMI). Title II—Classics Protection and Access, among other things, brings pre-1972 sound recordings partially into the federal copyright system by extending remedies for copyright infringement to owners of sound recordings fixed before February 15, 1972. The federal remedies for unauthorized use of pre-1972 sound recordings shall be available for 95 years after first publication of the recording, ending on December 31 of that 2 of 3 1/30/2019, 11:57 AM Music Modernization | U.S. Copyright Office https://www.copyright.gov/music-modernization/ year, subject to certain additional periods. These periods provide varying additional protection for pre-1972 sound recordings, based on when the sound recording was first published: For recordings first published before 1923, the additional time period ends on December 31, 2021. For recordings first published between 1923-1946, the additional time period is 5 years after the general 95-year term. For recordings first published between 1947-1956, the additional time period is 15 years after the general 95-year term. For all remaining recordings first fixed prior to February 15, 1972, the additional transition period shall end on February 15, 2067. This section applies a statutory licensing regime similar to that which applies to post-1972 sound recordings, e.g., the statutory licenses for noninteractive digital streaming services — such as internet radio, satellite radio, and cable TV music services. It also establishes a process for lawfully engaging in noncommercial uses of pre-1972 sound recordings that are not being commercially exploited. The legislation also applies certain existing title 17 limitations on exclusive rights and limitations on liability to uses of pre-1972 sound recordings, e.g., sections 107 (fair use), 108 (libraries and archives), 109 (first sale), 110 (certain public performances), 112(f) (certain ephemeral copies) and 512 (safe harbor provisions for online service providers). Title III – Allocation for Music Producers, among other things, will allow music producers to receive compensation from royalties collected for uses of sound recordings under the section 114 statutory license by codifying a process wherein the collective designated to collect and distribute royalties (currently, Sound Exchange) will distribute royalty payments to a producer under a “letter of direction.” 3 of 3 1/30/2019, 11:57 AM Music Modernization: FAQ | U.S. Copyright Office https://www.copyright.gov/music-modernization/faq.html Search Home () / Music Modernization (/music-modernization/) / Musical Works Modernization Act (changes to section 115) Can I still file a NOI with the Copyright Office? The existing system for filing notices of intention to obtain a compulsory license for making and distributing phonorecords of nondramatic musical works (NOIs) with the Copyright Office on a song-by-song basis will remain place for non-digital uses (CDs, vinyl). However, the Copyright Office will no longer accept NOIs to obtain a compulsory license for making a digital phonorecord delivery of a musical work, such as in the form of a permanent download, limited download, or interactive stream. Instead, after a transition period, during which the Register will issue relevant regulations and designate key entities to carry out administration of the license, the new license becomes available on a blanket basis (covering all musical works available for compulsory licensing). Digital phonorecord deliveries are obtained under the new blanket license by submitting a notice of license to the mechanical licensing collective (MLC). In the interim before the blanket license is available from the MLC, the liability for digital music providers will be limited so long as they comply with certain requirements, including engaging in good-faith, commercially reasonab efforts to identify and locate each copyright owner of a musical work they use on their service. See the below FAQ on what happens during the transition