In another victory for the record companies, the United States District Court in Philadelphia has affirmed the Copyright Office's December 2000 ruling holding that AM/FM broadcasters simultaneously streaming their signals on the Internet are responsible for royalty payments to ACSAP, BMI, and SESAC, and to record companies.
Last December, the Copyright Office issued a final rule stating that AM/FM broadcast signals transmitted simultaneously over the Internet are not exempt from paying royalties to record companies for their limited public performance rights in sound recordings. In response to this final rule, the National Association of Broadcasters and several large broadcast groups filed suit against the Registrar of Copyrights to overturn the Copyright Office's final rule.
In March 2000 the Copyright Office initiated a rulemaking and sought comments on whether a broadcaster's transmission of its AM or FM radio station over the Internet is exempt from copyright liability under the Copyright Act, and whether such transmissions should either qualify for the compulsory license or be authorized by the individual copyright owners. The record companies and the broadcasters looked to the Digital Performance Right in Sound Recording Act of 1995 (DPRA) and the Digital Millennium Copyright Act of 1998 (DMCA) for guidance.
The DPRA created an exclusive, but limited, right for copyright owners of sound recordings to perform their works publicly by means of digital audio transmissions. Among the limitations on such performances was the creation of a compulsory license for nonexempt, noninteractive, digital subscription transmissions and an exemption for certain nonsubscription transmissions, the scope of which has been the subject of dispute between broadcasters and copyright owners since the DPRA's inception.
With the passage of the DMCA, Congress amended the Copyright Act to clarify that the digital sound recording performance right applies to certain nonsubscription digital audio transmissions over the Internet, such as Internet-only webcasting. Specifically, the DMCA created a statutory license for nonexempt eligible nonsubscription transmissions (e.g., webcasting) and nonexempt transmissions by preexisting satellite digital audio radio services to perform the sound recordings publicly in accordance with the terms and conditions set forth in the new statutory license. The parties disagreed, however, over whether a broadcast transmission, which is defined as a transmission made by a terrestrial broadcast station licensed by the FCC, is a non-subscription transmission within the scope of exemptions provided in the Copyright Act.
The District Court in Philadelphia sided with the Copyright Office in its interpretations of the Copyright Act. Thus, any entity that transmits an AM/FM radio signal via the Internet is subject to the terms of the statutory license in the Copyright Act is law, and AM/FM broadcasters must comply with it or face sanctions.
The Copyright Arbitration Royalty Panel (CARP) is in the process of establishing rates and terms for statutory licenses to webcast public performances of sound recordings. The CARP rates are not expected to be established until the end of the year at the earliest and will be retroactive.