82 FR 15297 - Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords III); Subpart A Configurations of the Mechanical License
LIBRARY OF CONGRESS
Copyright Royalty Board Federal Register Volume 82, Issue 58 (March 28, 2017)
Copyright Royalty Board
Federal Register Volume 82, Issue 58 (March 28, 2017)
| Page Range | 15297-15299 | |
| FR Document | 2017-06065 |
[Federal Register Volume 82, Number 58 (Tuesday, March 28, 2017)] [Rules and Regulations] [Pages 15297-15299] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-06065] ======================================================================= ----------------------------------------------------------------------- LIBRARY OF CONGRESS Copyright Royalty Board 37 CFR Part 385 [Docket No. 16-CRB-0003-PR] Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords III); Subpart A Configurations of the Mechanical License AGENCY: Copyright Royalty Board, Library of Congress. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Copyright Royalty Judges publish final regulations that set continued, unaltered rates and terms for subpart A configurations subject to the statutory license to use nondramatic musical works to make and distribute phonorecords of those works (the Mechanical License). In addition, the Judges correct an outdated cross-reference in the regulations. DATES: Effective Date: March 28, 2017. FOR FURTHER INFORMATION CONTACT: Anita Blaine, Program Specialist, by telephone at (202) 707-7658 or by email at [email protected]. SUPPLEMENTARY INFORMATION: Background The Copyright Royalty Judges (Judges) received a Motion to Adopt Settlement (Motion) from UMG Recordings, Inc. (UMG) \1\ and Warner Music, Inc. (WMG),\2\ in their respective capacities as licensees of nondramatic musical works. The Motion sought approval of a partial settlement of the license rate proceeding before the Judges titled Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords III), Docket No. 16-CRB-0003-PR. UMG and WMG reported that they reached the settlement with ``a significant portion of the sound recording and music publishing industries'' to continue unaltered the currently existing rates and terms in subpart A of 37 CFR part 385 for the ``Mechanical License'', i.e., the statutory license for the use of nondramatic musical works in the making and distributing of phonorecords. See 17 U.S.C. 115. --------------------------------------------------------------------------- \1\ UMG Recordings, Inc. includes its successors and affiliates that engage in the production and distribution of recorded music, including Capitol Christian Music group, Inc., and Capitol Records, LLC. \2\ Warner Music, Inc. includes its successors and affiliates that engage in the production and distribution of recorded music. --------------------------------------------------------------------------- Section 801(b)(7)(A) of the Copyright Act authorizes the Judges to adopt rates and terms negotiated by ``some or all of the participants in a proceeding at any time during the proceeding'' provided the settling parties submit the negotiated rates and terms to the Judges for approval. That provision directs the Judges to provide those who would be bound by the negotiated rates and terms an opportunity to comment on the agreement. The Judges published the proposed settlement in the Federal Register and requested comments from the public.\3\ 81 FR 48371 (July 25, 2016). The Judges received comments from three entities: American Association of Independent Music (A2IM), Sony Music Entertainment (SME), and George D. Johnson dba GEO Music (Mr. Johnson). A2IM urged adoption of the agreed settlement. SME did not oppose continuing the existing royalty rates, but opposed adoption of one portion of the proposed regulation, viz., the late fee provision. Mr. Johnson opposed adoption of the settlement. --------------------------------------------------------------------------- \3\ The notice of settlement included a proposed rule that purported to limit the license rates at issue to the time period 2018 to 2022. See 81 FR 48371 (Jul. 25, 2016). In fact, the license rates adopted in this Final Rule will remain in effect until superseded by a subsequent rulemaking. See 17 U.S.C. 115(c)(3)(C). --------------------------------------------------------------------------- The National Music Publishers' Association (NMPA) and the Nashville Songwriters Association International (NSAI) (together, Copyright Owners) filed a motion seeking leave to respond to the SME comment and partial objection to the settlement. The Judges granted the Copyright Owners' motion and extended the initial comment period to permit interested parties to submit responsive comments. See 81 FR 71657 (Oct. 18, 2016). The Judges thus considered Copyright Owners' responsive comments, which they had attached to their motion for leave to respond. During the extended comment period, the Judges received a comment in support of the proposed settlement from ``Anonymous.'' \4\ --------------------------------------------------------------------------- \4\ Without more information, the Judges cannot determine whether ``Anonymous'' is a participant in this proceeding. As ``Anonymous'' made no objection, however, participant status is irrelevant. --------------------------------------------------------------------------- On or about October 28, 2016, the Judges received a Motion to Adopt Settlement Industry-Wide (Second Motion). In the Second Motion, the Copyright Owners reported an agreement between Copyright Owners and SME, resolving all issues SME raised in its partial objection to the proposed settlement. According to the Second Motion, the parties agreed that: (1) SME would withdraw its objection to the proposed rule, (2) Copyright Owners would withdraw their response to SME's objection, (3) the parties to the settlement would request that the Judges adopt the settlement industry-wide, and (4) SME would withdraw from the proceeding, except to support adoption of the settlement or, if the settlement were not adopted, to litigate matters relating to the subpart A regulations. By its terms, the partial settlement applied originally only to UMG, WMG, and the unnamed ``significant portion of the . . . music publishing industries'' with whom the licensees had agreed. The Second Motion expanded the settlement to include SME as a licensee subject to the settlement rates and terms. The Judges ``may decline to adopt the agreement as a basis for statutory terms and rates for participants that are not parties to the agreement,'' only ``if any participant [in the proceeding] objects to the agreement and the [Judges] conclude, based on the record before them if one exists, that the agreement does not provide a reasonable basis for setting statutory terms or rates.'' 17 U.S.C. 801(b)(7)(A)(ii). Mr. Johnson's Objections to the Settlement George Johnson, dba GEO Music, appears in this proceeding as a pro se participant. Mr. Johnson's comment [[Page 15298]] opposing the proposed settlement rates and terms filed August 24, 2016, incorporated by reference ``two Opposition Motions'' filed concurrently with his Comments in the rulemaking. The exact identity of the two ``Opposition Motions'' Mr. Johnson cites is unclear. Mr. Johnson submitted: (1) Opposition to Parties Motion to Adopt Settlement, dated June 27, 2016 (Opposition); (2) Second Opposition Motion to NMPA, NSAI, WMG, and UMG's Reply to Adopt Settlement as Statutory Rates and Terms, dated July 7, 2016 (Second Opposition); (3) Objection to Comments and Objections of Sony Music Entertainment Concerning Proposed Settlement, dated August 29, 2016 (Objection); and (4) Objection and Response to NMPA and NSAI's Response to SME's Comments and Objections Concerning Proposed Sec. 385.3 Settlement, dated August 31, 2016 (Second Objection).\5\ --------------------------------------------------------------------------- \5\ These papers were filed with the Judges on July 7, 2016, July 11, 2016, September 28, 2016, and September 28, 2016, respectively. --------------------------------------------------------------------------- Mr. Johnson filed an opposition to the Second Motion on November 3, but amended his filing twice. He submitted his final version November 8, 2016.\6\ The objections Mr. Johnson made in response to the Second Motion were a reprise of his earlier objections. Nothing in the parties' agreement addresses Mr. Johnson's grievances. --------------------------------------------------------------------------- \6\ CRB procedural rules require responses to motions to be filed within five business days after the motion is filed. See 37 CFR 350.4(f). Five business days after October 28, 2016, was November 4, 2016. As Mr. Johnson's later filings consisted of amendments to the original, timely filing and as Mr. Johnson is appearing in this proceeding pro se, the Judges accepted his November 8, amended filing. --------------------------------------------------------------------------- In each of his filings, Mr. Johnson objects to adoption of the settlement rates and terms, whether for the settling parties alone, or as a basis for statutory licenses industry-wide. The bases for his objections are that the proposed settlement: (1) ``violates copyright owners' exclusive rights''; \7\ --------------------------------------------------------------------------- \7\ Opposition at 2; Second Opposition at 6; see Second Objection at 3. --------------------------------------------------------------------------- (2) creates a ``substantive competitive disadvantage for every American independent songwriter and music publisher, as well as, every co-writer and co-publisher within the Universal Music Publishing (UMP) . . . and Warner-Chappell Publishing (WCP) catalogs;'' \8\ --------------------------------------------------------------------------- \8\ Opposition at 2-3; Second Opposition at 6. --------------------------------------------------------------------------- (3) involves foreign companies, as UMP/UMG and WCP/WMG are headquartered in France and Russia; \9\ --------------------------------------------------------------------------- \9\ Opposition at 3; Second Opposition at 7. --------------------------------------------------------------------------- (4) permits licensees to look out for their own self-interests; \10\ --------------------------------------------------------------------------- \10\ Id. --------------------------------------------------------------------------- (5) is a product of anticompetitive ``price-fixing other people's property at the below-market 9.1 cents. . . .'' \11\ --------------------------------------------------------------------------- \11\ Id.; Objection at 2; see Second Objection at 3-4. --------------------------------------------------------------------------- (6) ``does not provide a reasonable basis for setting statutory terms or rates;'' \12\ and --------------------------------------------------------------------------- \12\ Opposition at 6. --------------------------------------------------------------------------- (7) disregards the effects of inflation on the songwriter and publisher rights at issue.\13\ --------------------------------------------------------------------------- \13\ Opposition at 7; Second Opposition at 6-7; Objection at 3- 4; Second Objection at 2. Mr. Johnson makes legal, economic, and subjective arguments against adoption of the agreed license rates and terms from his perspective as an independent songwriter and publisher. Mr. Johnson's legal argument, viz., that the proposed settlement violates copyright owners' exclusive rights, fails.\14\ The copyrights of creators of nondramatic musical works are not unlimited. They are subject to express exceptions and limitations, including section 115 of the Act. Section 115, like its predecessor, section 1(e) of the 1909 Copyright Act, creates a compulsory, statutory license available to users of musical works for ``mechanical'' manufacture and distribution of those works. Over time, the scope of the ``mechanical'' license has grown to include digital uses. These uses are expressly allowed by the Act and, so long as the user complies with the terms of the statutory license, the user is not infringing on any copyright that a songwriter or publisher might claim.\15\ --------------------------------------------------------------------------- \14\ It is unclear whether, in his Objection, Mr. Johnson intended to challenge the constitutionality of the mechanical compulsory license. The Judges find that Mr. Johnson's conclusory statement that ``[t]his is . . . unconstitutional and violates the Art I exclusive rights in copyright'' does not articulate a constitutional challenge that the Judges can consider. \15\ In some of his argument, Mr. Johnson refers to the difficulties presented not only by the section 115 license, but also by the Performing Rights Organizations' uses that are governed by separate Consent Decrees that were first entered in 1941 and have been amended periodically since. Consent Decree rates are determined in a New York federal district court, commonly known as the Rate Court. The Judges agree with Mr. Johnson that music licensing is fragmented, both by reason of the Consent Decree and the fragmentation of the statutory licensing schemes in the Act. These issues are beyond the scope of authority of the Judges; they can only be addressed by Congress. --------------------------------------------------------------------------- Similarly, Mr. Johnson's economic arguments must fail. Negotiations by and between major recording companies and major publishers might be concluded without input from independent songwriters or publishers. The negotiating representatives, however, represent individual songwriters and publishers.\16\ Presumably the representatives are acting in the interest of their constituents. If they were not doing so, the constituents could seek representation elsewhere. But, Mr. Johnson has not even hinted at evidence to support his argument that the representative negotiators are engaged in anti-competitive price-fixing at below-market rates. The very definition of a market value is one that is reached by negotiations between a willing buyer and a willing seller, with neither party being under any compulsion to bargain. Although Mr. Johnson states it as a negative, the parties' negotiations are only fair and reasonable if each party acts to protect its own self-interest. In that regard, the Judges view the settling parties' consensual decision to establish a fixed nominal rate, i.e., unadjusted for inflation, as also representative of their mutual self- interest.\17\ --------------------------------------------------------------------------- \16\ Of note, Mr. Johnson himself is a member of NSAI. See George Johnson's (GEO) Objection to NMPA, NSAI and SME's Motion to Adopt Settlement Industry Wide at 10 (Nov. 8, 2016). \17\ Mr. Johnson repeats allegations that the recording companies involved in this licensing negotiation are foreign-owned. He fails, however, to state why foreign corporate ownership might be relevant to the issues at hand. --------------------------------------------------------------------------- Judges' Conclusion Section 801(b)(7)(A) of the Act is clear that the Judges have the authority to adopt settlements between some or all of the participants to a proceeding at any time during a proceeding, so long as those that would be bound by those rates and terms are given an opportunity to comment. Id. at (b)(7)(A)(i). If a participant raises an objection to adoption of the settlement, the Judges must determine whether, despite the objection(s), the proposed settlement provides a reasonable basis for setting the rates and terms at issue. Id. If the Judges find that no participant has shown that the agreement ``does not provide a reasonable basis for setting statutory terms or rates'' then they may adopt the proposed terms and rates as statutory rates and terms for participants that are not parties to the agreement. Id. at (b)(7)(A)(ii). The Judges provided an opportunity for comment and, following the Second Motion, were left with only Mr. Johnson's objections. As discussed above, Mr. Johnson's objections did not change and he provides no persuasive legal or economic arguments that would convince the Judges to reject a proposed settlement reached voluntarily between the Settling parties. From the perspective of an independent songwriter, the proposed rates might seem inadequate. The fact remains, however, that the proposed rates and terms were negotiated on behalf of the vast majority of parties that historically have participated in Section 115 proceedings before the Judges. [[Page 15299]] Those parties clearly concluded that the rates and terms were acceptable to both sides. The evidence \18\ and arguments Mr. Johnson presented are insufficient for the Judges to determine that the agreed rates and terms are unreasonable. --------------------------------------------------------------------------- \18\ The Judges are not ruling that any of Mr. Johnson's submissions would be admissible at an evidentiary hearing. Even taking those submissions as admissible evidence in support of its positions, however, the Judges find that they would be immaterial to the Judges' rate-setting mandate. --------------------------------------------------------------------------- The only objections to the agreement by a participant were those of Mr. Johnson. Based on those objections, the Judges cannot conclude that the agreement reached voluntarily between the Settling Parties does not provide a reasonable basis for setting statutory terms and rates for licensing nondramatic musical works to manufacture and distribute phonorecords, including permanent digital downloads and ringtones (Subpart A Configurations). Therefore, the Judges must adopt the proposed regulations that codify the partial settlement. Further, because the only participant, other than Mr. Johnson, offering objection to the settlement joined in the Second Motion to apply the rates and terms industry-side, the Judges adopt the proposed rates and terms industry-wide for subpart A Configurations. In doing so, the Judges make clear that the adoption of the partial settlement should in no way suggest that they are more or less inclined to adopt the reasoning or proposals of any of the parties remaining in the proceeding in relation to subpart B or C configurations. In reviewing the regulations, the Judges discovered an outdated cross-reference and are correcting it. The regulations of 37 CFR part 385, subpart A, are adopted as detailed in this Final Rule. List of Subjects in 37 CFR Part 385 Copyright, Phonorecords, Recordings. Final Regulation For the reasons set forth herein, the Copyright Royalty Judges amend 37 CFR part 385 as follows: PART 385--RATES AND TERMS FOR USE OF MUSICAL WORKS UNDER COMPULSORY LICENSE FOR MAKING AND DISTRIBUTING OF PHYSICAL AND DIGITAL PHONORECORDS 0 1. The authority citation for part 385 continues to read: Authority: 17 U.S.C. 115, 801(b)(1), 804(b)(4). Sec. 385.4 [Amended] 0 2. Section 385.4 is amended by removing ``Sec. 201.19(e)(7)(i)'' and adding ``Sec. 210.16(g)(1)'' in its place. Dated: February 22, 2017. Suzanne M. Barnett, Chief Copyright Royalty Judge. Approved by: Carla D. Hayden, Librarian of Congress. [FR Doc. 2017-06065 Filed 3-27-17; 8:45 am] BILLING CODE 1410-72-P
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authorized to do so by the PATCOM. Background Songwriters Association International
Additionally, each person who receives The Copyright Royalty Judges (Judges) (NSAI) (together, Copyright Owners)
notice of a lawful order or direction received a Motion to Adopt Settlement filed a motion seeking leave to respond
issued by an official patrol vessel shall (Motion) from UMG Recordings, Inc. to the SME comment and partial
obey the order or direction. The (UMG) 1 and Warner Music, Inc. objection to the settlement. The Judges
PATCOM is empowered to forbid entry (WMG),2 in their respective capacities granted the Copyright Owners’ motion
into and control the regulated area. The as licensees of nondramatic musical and extended the initial comment
PATCOM shall be designated by the works. The Motion sought approval of a period to permit interested parties to
Commander, Coast Guard Sector San partial settlement of the license rate submit responsive comments. See 81 FR
Francisco. The PATCOM may, upon proceeding before the Judges titled 71657 (Oct. 18, 2016). The Judges thus
request, allow the transit of commercial Determination of Royalty Rates and considered Copyright Owners’
vessels through regulated areas when it Terms for Making and Distributing responsive comments, which they had
is safe to do so. Phonorecords (Phonorecords III), Docket attached to their motion for leave to
This notice is issued under authority No. 16–CRB–0003–PR. UMG and WMG respond. During the extended comment
of 33 CFR 165.1191 and 5 U.S.C. 552 (a). reported that they reached the period, the Judges received a comment
In addition to this notice in the Federal settlement with ‘‘a significant portion of in support of the proposed settlement
Register, the Coast Guard will provide the sound recording and music from ‘‘Anonymous.’’ 4
the maritime community with extensive publishing industries’’ to continue On or about October 28, 2016, the
advance notification of the safety zone unaltered the currently existing rates Judges received a Motion to Adopt
and its enforcement period via the Local and terms in subpart A of 37 CFR part Settlement Industry-Wide (Second
Notice to Mariners. If the Captain of the 385 for the ‘‘Mechanical License’’, i.e., Motion). In the Second Motion, the
Port determines that the regulated area the statutory license for the use of Copyright Owners reported an
need not be enforced for the full nondramatic musical works in the agreement between Copyright Owners
duration stated in this notice, a making and distributing of and SME, resolving all issues SME
Broadcast Notice to Mariners may be phonorecords. See 17 U.S.C. 115. raised in its partial objection to the
used to grant general permission to Section 801(b)(7)(A) of the Copyright proposed settlement. According to the
enter the regulated area. Act authorizes the Judges to adopt rates Second Motion, the parties agreed that:
Dated: March 9, 2017. and terms negotiated by ‘‘some or all of (1) SME would withdraw its objection to
Anthony J. Ceraolo, the participants in a proceeding at any the proposed rule, (2) Copyright Owners
Captain, U.S. Coast Guard, Captain of the time during the proceeding’’ provided would withdraw their response to
Port of San Francisco. the settling parties submit the SME’s objection, (3) the parties to the
[FR Doc. 2017–06082 Filed 3–27–17; 8:45 am]
negotiated rates and terms to the Judges settlement would request that the Judges
for approval. That provision directs the adopt the settlement industry-wide, and
BILLING CODE 9110–04–P
Judges to provide those who would be (4) SME would withdraw from the
bound by the negotiated rates and terms proceeding, except to support adoption
an opportunity to comment on the of the settlement or, if the settlement
LIBRARY OF CONGRESS were not adopted, to litigate matters
agreement.
Copyright Royalty Board The Judges published the proposed relating to the subpart A regulations.
settlement in the Federal Register and By its terms, the partial settlement
37 CFR Part 385 requested comments from the public.3 applied originally only to UMG, WMG,
81 FR 48371 (July 25, 2016). The Judges and the unnamed ‘‘significant portion of
[Docket No. 16–CRB–0003–PR] received comments from three entities: the . . . music publishing industries’’
American Association of Independent with whom the licensees had agreed.
Determination of Royalty Rates and Music (A2IM), Sony Music The Second Motion expanded the
Terms for Making and Distributing Entertainment (SME), and George D. settlement to include SME as a licensee
Phonorecords (Phonorecords III); Johnson dba GEO Music (Mr. Johnson). subject to the settlement rates and
Subpart A Configurations of the A2IM urged adoption of the agreed terms.
Mechanical License settlement. SME did not oppose The Judges ‘‘may decline to adopt the
AGENCY: Copyright Royalty Board, continuing the existing royalty rates, but agreement as a basis for statutory terms
Library of Congress. opposed adoption of one portion of the and rates for participants that are not
ACTION: Final rule. proposed regulation, viz., the late fee parties to the agreement,’’ only ‘‘if any
provision. Mr. Johnson opposed participant [in the proceeding] objects to
SUMMARY: The Copyright Royalty Judges adoption of the settlement. the agreement and the [Judges]
publish final regulations that set The National Music Publishers’ conclude, based on the record before
continued, unaltered rates and terms for Association (NMPA) and the Nashville them if one exists, that the agreement
subpart A configurations subject to the does not provide a reasonable basis for
statutory license to use nondramatic 1 UMG Recordings, Inc. includes its successors
setting statutory terms or rates.’’ 17
musical works to make and distribute and affiliates that engage in the production and
distribution of recorded music, including Capitol
U.S.C. 801(b)(7)(A)(ii).
phonorecords of those works (the Christian Music group, Inc., and Capitol Records,
Mechanical License). In addition, the Mr. Johnson’s Objections to the
LLC.
Judges correct an outdated cross- 2 Warner Music, Inc. includes its successors and Settlement
mstockstill on DSK3G9T082PROD with RULES
reference in the regulations. affiliates that engage in the production and George Johnson, dba GEO Music,
distribution of recorded music.
DATES: Effective Date: March 28, 2017. 3 The notice of settlement included a proposed
appears in this proceeding as a pro se
FOR FURTHER INFORMATION CONTACT: rule that purported to limit the license rates at issue participant. Mr. Johnson’s comment
Anita Blaine, Program Specialist, by to the time period 2018 to 2022. See 81 FR 48371
telephone at (202) 707–7658 or by email (Jul. 25, 2016). In fact, the license rates adopted in 4 Without more information, the Judges cannot
this Final Rule will remain in effect until determine whether ‘‘Anonymous’’ is a participant
at crb@loc.gov. superseded by a subsequent rulemaking. See 17 in this proceeding. As ‘‘Anonymous’’ made no
SUPPLEMENTARY INFORMATION: U.S.C. 115(c)(3)(C). objection, however, participant status is irrelevant.
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opposing the proposed settlement rates (5) is a product of anticompetitive ‘‘price- acting in the interest of their
and terms filed August 24, 2016, fixing other people’s property at the below- constituents. If they were not doing so,
incorporated by reference ‘‘two market 9.1 cents. . . .’’ 11 the constituents could seek
(6) ‘‘does not provide a reasonable basis for
Opposition Motions’’ filed concurrently representation elsewhere. But, Mr.
setting statutory terms or rates;’’ 12 and
with his Comments in the rulemaking. (7) disregards the effects of inflation on the Johnson has not even hinted at evidence
The exact identity of the two songwriter and publisher rights at issue.13 to support his argument that the
‘‘Opposition Motions’’ Mr. Johnson cites representative negotiators are engaged
is unclear. Mr. Johnson makes legal, economic, in anti-competitive price-fixing at
Mr. Johnson submitted: (1) and subjective arguments against below-market rates. The very definition
Opposition to Parties Motion to Adopt adoption of the agreed license rates and of a market value is one that is reached
Settlement, dated June 27, 2016 terms from his perspective as an by negotiations between a willing buyer
(Opposition); (2) Second Opposition independent songwriter and publisher. and a willing seller, with neither party
Motion to NMPA, NSAI, WMG, and Mr. Johnson’s legal argument, viz.,
being under any compulsion to bargain.
UMG’s Reply to Adopt Settlement as that the proposed settlement violates
Although Mr. Johnson states it as a
Statutory Rates and Terms, dated July 7, copyright owners’ exclusive rights,
negative, the parties’ negotiations are
2016 (Second Opposition); (3) Objection fails.14 The copyrights of creators of
only fair and reasonable if each party
to Comments and Objections of Sony nondramatic musical works are not
acts to protect its own self-interest. In
Music Entertainment Concerning unlimited. They are subject to express
that regard, the Judges view the settling
Proposed Settlement, dated August 29, exceptions and limitations, including
parties’ consensual decision to establish
2016 (Objection); and (4) Objection and section 115 of the Act. Section 115, like
a fixed nominal rate, i.e., unadjusted for
Response to NMPA and NSAI’s its predecessor, section 1(e) of the 1909
inflation, as also representative of their
Response to SME’s Comments and Copyright Act, creates a compulsory,
mutual self-interest.17
Objections Concerning Proposed § 385.3 statutory license available to users of
Settlement, dated August 31, 2016 musical works for ‘‘mechanical’’ Judges’ Conclusion
(Second Objection).5 manufacture and distribution of those Section 801(b)(7)(A) of the Act is clear
Mr. Johnson filed an opposition to the works. Over time, the scope of the that the Judges have the authority to
Second Motion on November 3, but ‘‘mechanical’’ license has grown to adopt settlements between some or all
amended his filing twice. He submitted include digital uses. These uses are of the participants to a proceeding at
his final version November 8, 2016.6 expressly allowed by the Act and, so any time during a proceeding, so long as
The objections Mr. Johnson made in long as the user complies with the terms those that would be bound by those
response to the Second Motion were a of the statutory license, the user is not rates and terms are given an opportunity
reprise of his earlier objections. Nothing infringing on any copyright that a to comment. Id. at (b)(7)(A)(i). If a
in the parties’ agreement addresses Mr. songwriter or publisher might claim.15 participant raises an objection to
Johnson’s grievances. Similarly, Mr. Johnson’s economic adoption of the settlement, the Judges
In each of his filings, Mr. Johnson arguments must fail. Negotiations by must determine whether, despite the
objects to adoption of the settlement and between major recording companies objection(s), the proposed settlement
rates and terms, whether for the settling and major publishers might be provides a reasonable basis for setting
parties alone, or as a basis for statutory concluded without input from the rates and terms at issue. Id. If the
licenses industry-wide. The bases for independent songwriters or publishers. Judges find that no participant has
his objections are that the proposed The negotiating representatives, shown that the agreement ‘‘does not
settlement: however, represent individual provide a reasonable basis for setting
songwriters and publishers.16 statutory terms or rates’’ then they may
(1) ‘‘violates copyright owners’ exclusive Presumably the representatives are
rights’’; 7 adopt the proposed terms and rates as
(2) creates a ‘‘substantive competitive 11 Id.;
statutory rates and terms for participants
Objection at 2; see Second Objection at 3–
disadvantage for every American that are not parties to the agreement. Id.
4.
independent songwriter and music publisher, 12 Opposition at (b)(7)(A)(ii).
at 6.
as well as, every co-writer and co-publisher 13 Opposition The Judges provided an opportunity
at 7; Second Opposition at 6–7;
within the Universal Music Publishing Objection at 3–4; Second Objection at 2. for comment and, following the Second
(UMP) . . . and Warner-Chappell Publishing
(WCP) catalogs;’’ 8
14 It is unclear whether, in his Objection, Mr.
Motion, were left with only Mr.
Johnson intended to challenge the constitutionality Johnson’s objections. As discussed
(3) involves foreign companies, as UMP/ of the mechanical compulsory license. The Judges
UMG and WCP/WMG are headquartered in find that Mr. Johnson’s conclusory statement that above, Mr. Johnson’s objections did not
France and Russia; 9 ‘‘[t]his is . . . unconstitutional and violates the Art change and he provides no persuasive
(4) permits licensees to look out for their I exclusive rights in copyright’’ does not articulate legal or economic arguments that would
own self-interests; 10 a constitutional challenge that the Judges can convince the Judges to reject a proposed
consider.
15 In some of his argument, Mr. Johnson refers to settlement reached voluntarily between
5 These papers were filed with the Judges on July
the difficulties presented not only by the section the Settling parties.
7, 2016, July 11, 2016, September 28, 2016, and From the perspective of an
115 license, but also by the Performing Rights
September 28, 2016, respectively.
6 CRB procedural rules require responses to
Organizations’ uses that are governed by separate independent songwriter, the proposed
Consent Decrees that were first entered in 1941 and rates might seem inadequate. The fact
motions to be filed within five business days after have been amended periodically since. Consent
the motion is filed. See 37 CFR 350.4(f). Five Decree rates are determined in a New York federal remains, however, that the proposed
business days after October 28, 2016, was district court, commonly known as the Rate Court. rates and terms were negotiated on
November 4, 2016. As Mr. Johnson’s later filings
consisted of amendments to the original, timely
The Judges agree with Mr. Johnson that music behalf of the vast majority of parties that
mstockstill on DSK3G9T082PROD with RULES
licensing is fragmented, both by reason of the historically have participated in Section
filing and as Mr. Johnson is appearing in this Consent Decree and the fragmentation of the
proceeding pro se, the Judges accepted his statutory licensing schemes in the Act. These issues 115 proceedings before the Judges.
November 8, amended filing. are beyond the scope of authority of the Judges;
7 Opposition at 2; Second Opposition at 6; see
they can only be addressed by Congress. 17 Mr. Johnson repeats allegations that the
Second Objection at 3. 16 Of note, Mr. Johnson himself is a member of recording companies involved in this licensing
8 Opposition at 2–3; Second Opposition at 6.
NSAI. See George Johnson’s (GEO) Objection to negotiation are foreign-owned. He fails, however, to
9 Opposition at 3; Second Opposition at 7.
NMPA, NSAI and SME’s Motion to Adopt state why foreign corporate ownership might be
10 Id. Settlement Industry Wide at 10 (Nov. 8, 2016). relevant to the issues at hand.
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Those parties clearly concluded that the § 385.4 [Amended] the Internet and will be publicly
rates and terms were acceptable to both ■ 2. Section 385.4 is amended by available only in hard copy form.
sides. The evidence 18 and arguments removing ‘‘§ 201.19(e)(7)(i)’’ and adding Publicly available docket materials are
Mr. Johnson presented are insufficient ‘‘§ 210.16(g)(1)’’ in its place. available through www.regulations.gov
for the Judges to determine that the or please contact the person identified
Dated: February 22, 2017. in the FOR FURTHER INFORMATION
agreed rates and terms are unreasonable.
Suzanne M. Barnett, CONTACT section for additional
The only objections to the agreement
by a participant were those of Mr. Chief Copyright Royalty Judge. information.
Johnson. Based on those objections, the Approved by:
FOR FURTHER INFORMATION CONTACT:
Judges cannot conclude that the Carla D. Hayden, Steven Brown, Environmental
agreement reached voluntarily between Librarian of Congress. Protection Agency, Air Planning and
the Settling Parties does not provide a [FR Doc. 2017–06065 Filed 3–27–17; 8:45 am] Development Branch, 11201 Renner
reasonable basis for setting statutory BILLING CODE 1410–72–P Boulevard, Lenexa, Kansas 66219 at
terms and rates for licensing 913–551–7718, or by email at
nondramatic musical works to brown.steven@epa.gov.
manufacture and distribute ENVIRONMENTAL PROTECTION SUPPLEMENTARY INFORMATION:
phonorecords, including permanent AGENCY Throughout this document ‘‘we,’’ ‘‘us,’’
digital downloads and ringtones and ‘‘our’’ refer to EPA. This section
(Subpart A Configurations). Therefore, 40 CFR Part 52 provides additional information by
the Judges must adopt the proposed addressing the following:
[EPA–R07–OAR–2016–0470; FRL–9958–72–
regulations that codify the partial Region 7] I. What is being addressed in this document?
settlement. II. Have the requirements for final approval
Further, because the only participant, Approval of Missouri’s Air Quality of a SIP revision been met?
other than Mr. Johnson, offering Implementation Plans; Open Burning III. What action is EPA taking?
objection to the settlement joined in the Requirements IV. Incorporation by Reference
Second Motion to apply the rates and V. Statutory and Executive Order Reviews
terms industry-side, the Judges adopt AGENCY: Environmental Protection
the proposed rates and terms industry- Agency (EPA). I. What is being addressed in this
wide for subpart A Configurations. In ACTION: Final rule. document?
doing so, the Judges make clear that the EPA is taking final action to approve
SUMMARY: The Environmental Protection
adoption of the partial settlement the SIP revision submitted by the state
Agency (EPA) is taking final action to
should in no way suggest that they are of Missouri that replaces four area
approve a revision to the State
more or less inclined to adopt the specific open burning rules with a rule
Implementation Plan (SIP) for the State
reasoning or proposals of any of the that is applicable state-wide. On
of Missouri related to open burning. On
parties remaining in the proceeding in November 24, 2009, the MDNR
November 24, 2009, the Missouri
relation to subpart B or C requested to amend the SIP to rescind
Department of Natural Resources
configurations. Missouri Open Burning Restrictions 10
(MDNR) requested to amend the SIP to
In reviewing the regulations, the CSR 10–2.100, 10 CSR 10–3.030, 10 CSR
replace four area specific open burning
Judges discovered an outdated cross- 10–4.090, and 10 CSR 10–5.070, and
rules into one rule that is area specific
reference and are correcting it. consolidated these four rules into a new
and applicable state-wide. EPA solicited
The regulations of 37 CFR part 385, rule 10 CSR 10–6.045. The new rule
comment in an earlier proposed
subpart A, are adopted as detailed in adds language that allows burning of
rulemaking that published in the
this Final Rule. ‘‘trade wastes’’ by permit in areas for
Federal Register on September 8, 2016,
situations where open burning is in the
List of Subjects in 37 CFR Part 385 and received one comment in support of
best interest of the general public or
the proposed SIP revision. These
Copyright, Phonorecords, Recordings. when it can be shown that open burning
revisions to Missouri’s SIP do not have
is the safest and most feasible method
Final Regulation an adverse effect on air quality as
of disposal. The rule reserves the right
demonstrated in the technical support
For the reasons set forth herein, the for the staff director to deny, revoke or
document (TSD) which is a part of the
Copyright Royalty Judges amend 37 CFR suspend an open burn permit. It
proposed rulemaking docket. EPA’s
part 385 as follows: changes the general provisions section
final approval of these SIP revisions is
by not limiting liability to an individual
PART 385—RATES AND TERMS FOR being done in accordance with the
who is directly responsible for a
USE OF MUSICAL WORKS UNDER requirements of the Clean Air Act
violation and extends the regulatory
COMPULSORY LICENSE FOR MAKING (CAA).
liability to any person, such as a
AND DISTRIBUTING OF PHYSICAL DATES: This final rule is effective on property owner who hires an individual
AND DIGITAL PHONORECORDS April 27, 2017. to start the fire. The rule also adds the
ADDRESSES: EPA has established a definition of ‘‘untreated wood’’ for
■ 1. The authority citation for part 385 docket for this action under Docket ID clarification to aid in compliance
continues to read: No. EPA–R07–OAR–2016–0470. All purposes. On September 8, 2016, EPA
Authority: 17 U.S.C. 115, 801(b)(1), documents in the docket are listed on proposed approval of the SIP revision in
mstockstill on DSK3G9T082PROD with RULES
804(b)(4). the http://www.regulations.gov Web the Federal Register (81 FR 62066), the
site. Although listed in the index, some comment period closed on October 11,
18 The Judges are not ruling that any of Mr. information is not publicly available, 2016. During this period, on October 11,
Johnson’s submissions would be admissible at an i.e., CBI or other information whose 2016, EPA received one comment which
evidentiary hearing. Even taking those submissions
as admissible evidence in support of its positions,
disclosure is restricted by statute. is included in the docket from an
however, the Judges find that they would be Certain other material, such as unknown commenter that supports this
immaterial to the Judges’ rate-setting mandate. copyrighted material, is not placed on final rule.
VerDate Sep<11>2014 16:44 Mar 27, 2017 Jkt 241001 PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 E:\FR\FM\28MRR1.SGM 28MRR1](https://thefederalregister.org/doc/82_FR_15355/page/3.svg)
Document Created: 2017-03-28 00:32:12
Document Modified: 2017-03-28 00:32:12
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | Effective Date: March 28, 2017. | |
| Contact | Anita Blaine, Program Specialist, by telephone at (202) 707-7658 or by email at [email protected] | |
| FR Citation | 82 FR 15297 | |
| CFR Associated | Copyright; Phonorecords and Recordings |
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