Register of Copyrights Marybeth Peters was the lead witness in a House hearing on one of the most hotly debated copyright issues facing Congress this session: the performance and broadcast of music in restaurants and other establishments and the compensation of the copyright owners of this music. The hearing was held on July 17 before the House Judiciary Subcommittee on Courts and Intellectual Property, led by Rep. Howard Coble (R-N.C.).
The hearing focused on H.R. 789, the Fairness in Musical Licensing Act of 1997, a bill sponsored by Rep. James Sensenbrenner Jr. (R-Wis.) that would expand the permissible uses of music and television transmissions in commercial establishments where copyright owners would not have to be compensated. The legislation would also require changes in the business practices of those organizations that collect royalties on behalf of composers and music publishers. Similar bills were introduced in the last Congress.
Under current copyright law, copyright owners have the exclusive right to perform or authorize others to perform their works publicly, including by transmission such as broadcast, cable or satellite. When a restaurant or other commercial establishment turns on a radio or television for the benefit of its customers, that transmission is a public performance of a copyrighted work. Authors must be compensated for public performances except where the law specifically provides for an exemption to the compensation requirement. Section 110(5) of the current law allows for an exemption when three conditions are met: (1) when the communication is done through "a single receiving apparatus of the kind commonly used in private homes," (2) when there is no direct charge to hear or see the transmission and (3) when the work or program will not be further transmitted to the public. Reflecting Congress's intent to limit the exemption to small establishments, it is often referred to in the copyright community as the "Mom and Pop store" exemption.
H.R. 789 would remove two of these three exemptions so that copyright owners would be compensated only when there was a direct charge to see or hear their work. Many small commercial establishments believe that music is incidental to their businesses and that license fees and the manner in which they are collected are overly burdensome.
In his opening statement, Chairman Coble said: "The Music Licensing Fairness Coalition, which represents several restaurant, tavern and retail and other establishment groups, supports expanding the Section 110(5) exemption. ... The performing rights societies, ASCAP, BMI and SESAC, oppose this effort. They counter that the music aired in restaurants, bars and retail and other establishments is integral to enhance sales and draw customers and that the authors deserve to be compensated for such public performances of their works."
The chairman indicated the deep divisions on the issue when he stated that half the calls he receives about the legislation are from people urging him to make sure the bill is passed this year and the other half from people telling him to make sure the bill is killed.
Register Peters outlined the nature of the public performance right for the subcommittee and discussed Congress's intent in crafting the current exemption. "With respect to music, the public performance right is the most important of the copyright bundle of rights," Ms. Peters said. "It represents the largest source of income for its owner. The present copyright law, which was enacted in 1976, recognizes the importance of this right: section 106(4) gives copyright owners a very broad public performance right. There are, of course, exceptions to this right -- most are detailed and complex and refer to specific categories of works and narrowly delineated types of uses.
"The current exemptions, which were debated over a 20-year period, represent a careful balancing of interests between rights holders and users. With respect to commercial uses, the exemptions have been narrowly drawn to ensure that they don't substitute for meaningful commercial exploitation."
Ms. Peters said the proposed legislation would be "a major shift in the balance struck in 1976." She also talked about the international considerations of the legislation. The proposed exemption could fall outside the "small exemptions" permitted by the Berne Convention, an international copyright treaty to which the U.S. is a signatory, she said. Ms. Peters noted that the United States is under investigation by the European Community to determine if the existing Section 110 (5) exemption meets international requirements.
Ms. Peters said that the proponents of H.R. 789, such as restaurants and small businesses, need to demonstrate their alleged hardship under the current law. "To the extent that there are problems ... we believe that a reasonable exemption of narrower scope should be pursued. For example, criteria could be formulated that clarify the permissible conduct by small businesses in relation to international standards. We stand ready to assist Congress in drafting such criteria," she said.
Subcommittee members questioned Ms. Peters on the application of the current exemption and possible international interpretations of the proposed expanded exemption.
An executive branch official testifying at the hearing said that the Clinton administration opposes the bill in its present form. Other witness included songwriters Mac Davis and Wayland Holyfield and officials of the National Restaurant Association and the Wisconsin Tavern League.
During the hearing, Rep. Edward A. Pease (R-Ind.) made a statement commending Peters for the "professionally conducted" copyright law seminars the Copyright Office held this year for members and staff. He thanked her for the professionalism and expertise her staff provides to members and the committee.
"A copyright law is one of the most important pieces of legislation a government can enact. The copyright law of a country reflects that nation's principles and attitudes. In the United States, our Founding Fathers recognized the significance of copyright in the first article of our Constitution, which gives you, Congress, the power to promote knowledge as well as cultural and educational development by granting authors exclusive rights in their creative efforts for limited times.
"Copyright protection provides compensation to composers and lyricists for their time, effort and talent in creating a work. The elemental fairness of compensation is clear, but the importance of copyright goes far beyond this. The prime value of a strong copyright system is its benefit to the public, in providing incentives for the creation and dissemination of works of authorship."
