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2. U.S. Copyright Law

Even though federal copyright law does not apply directly to most pre-1972 sound recordings, it is relevant to this report in several respects: (1) as indicated above, certain pre-1972 sound recordings of foreign origin are governed by federal copyright law; (2) many sound recordings embody musical or other underlying works that are protected by federal copyright law; and (3) our review of state law, discussed below, suggests that some states may evaluate state law claims relating to pre-1972 sound recordings with reference to federal copyright law.

2.1 Protected Works

"Copyright" exists in any original work of authorship that is fixed in a tangible medium, such as paper, canvas, or a computer disc. For a work to be "original," it must meet two qualifications: (1) it cannot be copied from another work; and (2) it must exhibit at least a small amount of creativity.

Copyright protects a wide range of works. The principal categories for works of authorship are as follows:

Copyright does not protect all aspects of a work. Ideas, concepts, methods, principles, procedures, and the like may not be protected, although the specific manner in which they are expressed may be.

2.2 Term of Protection

The duration of copyright protection in the United States differs depending on when the work was created and published.

2.2.1 Term for All Works Created on or after January 1, 1978

For works first created on or after January 1, 1978 (the effective date of the current Copyright Act), copyright lasts for the life of the author and 70 years thereafter.⁴ For anonymous works and works made for hire,⁵ the term is 95 years from publication or 120 years from creation, whichever expires first. So, for example, the musical composition Like a Virgin (example 6, above) will be protected for 70 years after the death of its last surviving author. The sound recording by Madonna—assuming it is a work made for hire, as sound recordings commonly purport to be—will be protected until 2079 (1984 plus 95 years).

2.2.2 Term for Works Created and Published before January 1, 1978

For works first published prior to January 1, 1978, the rules are more complicated, but can be summarized as follows.

Date first published with copyright notice6	Term of protection
Before 1923	Work is in the public domain.
1923–1963	If the copyright was renewed in the 28th year, the work is protected for a total of 95 years from publication. If the copyright was not renewed, the work is in the public domain.7
1964–1977	95 years from publication.

So, for example, if the copyright in Irving Berlin's composition White Christmas was renewed in 1970, as we assume it was (see example 1, above), the copyright in the song would expire at the end of 2037 (1942 plus 95 years).

2.2.3 Term for Works Created but not Published before January 1, 1978

If a work was created but not published before January 1, 1978, it has been given the same term as works created on or after January 1, 1978: life of the author plus 70 years, or, for anonymous works and works made for hire, 95 years from creation or 120 years from publication. However, all works unpublished as of January 1, 1978, no matter how old, were protected under the law at least until December 31, 2002. If a work that was unpublished as of January 1, 1978, was published between that date and December 31, 2002, its term of protection will not end until December 31, 2047.⁸

Intuitively, it would seem that pre-1972 commercial sound recordings would be considered "published" both as to the sound recording and the underlying work, but this is not necessarily the case. Under copyright law, a performance of a work is not deemed a publication, so playing the work live or on the radio is not "publication." If, for example, as part of a "young artists" program, a radio station records and broadcasts a classical music concert by Julliard students, the station does not "publish" that recording, regardless of how many people listen to the broadcast. The students' renditions would not be deemed "published" until phonorecords (the technical name for copies of sound recordings) are distributed to the public "by sale or other transfer of ownership, or by rental, lease or lending."⁹ Moreover, even musical compositions commercially distributed in phonorecords may not be "published" under the law. Because of a dispute over the copyright status of certain musical compositions distributed on phonorecords without copyright notice, Congress amended the Copyright Act in 1997 to provide that "[t]he distribution before January 1, 1978 of a phonorecord shall not for any purpose constitute a publication of the musical work embodied therein."¹⁰ So, if the underlying musical work was distributed in another format, such as sheet music, it was published; if not, it was unpublished at January 1, 1978, and received the term of protection described above for unpublished works. The law is ambiguous about whether the distribution of a phonorecord is a publication of the underlying work if that work is anything other than a musical composition (e.g., a spoken-word recording).¹¹

2.3 Rights under Copyright

Copyright provides a copyright owner with a bundle of rights that can be exploited or licensed separately or together. In the case of a sound recording embodying a musical composition, each copyright owner has a separate bundle of rights. Those rights include the following:

The word "publicly" as used to define certain copyright rights is a broad concept. To perform or display a work publicly means to perform or display it anywhere that is open to the public or anywhere that a "substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered."¹⁶ Transmitting the performance or display to such a place also makes it public. It does not matter whether members of the public receive the performance at the same time or at different times, at the same place or different places. Making a work available to be received or viewed by the public over an electronic network is a public performance or display of the work.¹⁷ Broadcasting it over the radio is a public performance. Playing a CD in one's home for family and friends is a private performance.

Ownership of a copy of a work (even of the original copy, if there is only one) and ownership of the copyright rights are separate and distinct. For example, libraries and archives occasionally receive donations of vinyl discs or eight-track tapes, but they generally own only the physical copies and not the copyright rights.¹⁸

As the discussion of the performance right in sound recordings suggests, not all rights attach to all works. For example, some works, such as sculpture, are not capable of being performed. Other works—notably, musical compositions and sound recordings, discussed below—are subject to "compulsory licenses" for certain uses. A compulsory license is a specific legal authorization to use a copyrighted work (in other words, the copyright owner cannot deny permission to use it) in certain ways or for certain purposes, provided that the user pays the required fee and otherwise meets the conditions in the law.

2.4 Privileges and Exceptions

The Copyright Act contains many privileges and exceptions to the rights outlined above. Below is a brief description of the privileges and exceptions most relevant to digital preservation and dissemination by libraries and archives, followed by a discussion of aspects of the law specific to musical works and sound recordings. As discussed above, federal copyright law does not apply to most pre-1972 sound recordings. It does, however, govern certain pre-1972 sound recordings of foreign origin and many of the works that underlie pre-1972 sound recordings, even though the sound recordings themselves may not be protected by copyright. Federal copyright law is also indirectly relevant to pre-1972 U.S. recordings, to the extent that state court decisions concerning such recordings are informed by the scope of federal copyright protection.

2.4.1 Fair Use: § 107

Fair use is the best-known exception to copyright. Fair use excuses a use that would otherwise be infringing. There is no simple test for determining whether a use is fair. The law sets out four factors that must be evaluated in each case to determine whether a use is fair, although other factors may be considered.

Certain uses are favored in the statute: criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, and research. Preservation and dissemination by a nonprofit digital library or archives for scholarly or research purposes would be the kind of use favored by the law. However, favored uses are not automatically deemed fair, and other uses are not automatically deemed unfair. There is no formula to determine whether a use is fair. The determination depends on the facts of a particular case. The factors discussed above must be considered in each case by the user and, if there is a dispute, by the courts.

2.4.2 Special Library Privileges: § 108

The Copyright Act contains a number of privileges specific to libraries and archives. To qualify for these privileges, the library or archives must be open to the public, or at least to researchers in a specialized field; the reproduction and distribution may not be for commercial advantage; and the library or archives must include a copyright notice on any copies provided.²¹

(a) Copying for Maintenance and Preservation
Section 108(b) allows libraries or archives to make up to three copies of an unpublished copyrighted work "solely for purposes of preservation and security or for deposit for research use in another library or archives." The work must be currently in the collections of the library or archives, and any copy made in digital format may not be made available to the public in that format outside the library premises.

Section 108(c) allows libraries and archives to make up to three copies of a published work to replace a work in their collections that is damaged, deteriorating, lost, or stolen, or whose format has become obsolete, if the library determines after reasonable effort that an unused replacement cannot be obtained at a fair price (the extent to which one library may rely on another to make copies is addressed in section 4.1.3 of this report). As with copies of unpublished works, copies in digital format may not be made available to the public outside the library premises.²²

Until the Digital Millennium Copyright Act (DMCA) was passed in 1998, the copying privileges in § 108(b) and (c) discussed above were limited to a single copy of a work "in facsimile form." The DMCA changed these provisions to permit up to three copies and to allow those copies to be made in digital form, in recognition of the changing practices of libraries and archives (particularly with respect to the use of digital technology). Many in the library community, however, would argue that Congress did not go far enough in expanding libraries' privileges to take advantage of digital technology.

(b) Copying for Library Patrons
Section 108 also allows libraries and archives, under certain conditions, to reproduce and distribute to patrons all or part of a copyrighted work. However, certain works—including musical works; pictorial, graphic, and sculptural works (other than illustrations or similar adjuncts to literary works); and audiovisual works (including motion pictures)—are not subject to these reproduction and distribution privileges.²³

Specifically, a library or an archives may reproduce and distribute, in response to a user's request, "no more than one article or other contribution to a copyrighted collection or periodical issue," or "a small part" of any other copyrighted work from its collection or that of another library or archives. It may also copy all or a substantial portion of a user-requested work if it determines, after reasonable investigation, that a copy cannot be obtained at a fair price. However, these reproduction and distribution privileges have conditions: they apply only if "the library or archives has had no notice that the copy would be used for purposes other than private study, scholarship, or research"; the copy becomes the property of the requesting user (so the exemption does not become a means of collection building); and the library or archives displays a warning of copyright where it accepts orders.²⁴

These exemptions encompass "isolated and unrelated reproduction or distribution of a single copy . . . of the same material on separate occasions."²⁵ They do not apply when a library or an archives "is aware or has substantial reason to believe that it is engaging in the related or concerted reproduction or distribution of multiple copies" of the same material, whether at one time or over a period of time. Likewise, they do not apply to a library or an archives that "engages in the systematic reproduction or distribution of a single or multiple copies" of a work. Libraries and archives may participate in interlibrary arrangements as long as the practice is not intended to—and does not—substitute for a subscription to or purchase of the work.²⁶

(c) Special-Use Provisions for the Last 20 Years of the Copyright Term
The copyright law contains a special provision for use of "orphan works" whose copyright owners cannot be located. The provision was passed as part of the 1998 Copyright Term Extension Act, which extended the copyright term by 20 years (from life of the author plus 50 years to life plus 70 years). A library or an archives may reproduce, distribute, perform, or display in facsimile or digital form a copy of a published work during the last 20 years of its term, for purposes of preservation, scholarship, or research. This privilege applies only if the work is not subject to normal exploitation and cannot be obtained at a reasonable price. To take advantage of this privilege, a qualified institution must first make a reasonable investigation to determine that the work meets these criteria and that the copyright owner has not filed a notice to the contrary in the Copyright Office.²⁷

Until recently, the terms of the statute excluded musical works; most pictorial, graphic, and sculptural works; and audiovisual works (including motion pictures) from these special-use provisions. This exclusion was eliminated early in 2005 when Congress amended the Copyright Act to make all categories of works eligible in the last 20 years of their copyright term for broader use by libraries and archives.²⁸

Even if copying a work is not expressly allowed by § 108, it may still be permitted under the fair use doctrine.²⁹ However, the privileges under § 108 do not supersede any contractual obligations a library may have with respect to a work that it wishes to copy (e.g., under a subscription or donor agreement).³⁰

2.4.3 The First Sale Doctrine: § 109

The "first sale doctrine" provides that the owner of a particular copy of a copyrighted work that was lawfully made may transfer or otherwise dispose of that copy. The doctrine prevents the copyright owner from controlling the disposition of a particular copy of a work after the initial sale or transfer of that copy.³¹ The first sale doctrine enables, for example, library lending of books, CDs, and DVDs acquired by the library as well as markets in used books and other works.

So far, neither the courts nor the Copyright Office has endorsed broadening the first sale doctrine to allow users to retransmit digital copies over the Internet (sometimes referred to as a "digital first sale doctrine").³²

2.4.4 Distance Education: § 110(2)

Section 110(2) of the Copyright Act permits certain performances and displays of copyrighted works in the course of instructional transmissions. Section 110(2) was amended by the Technology, Education, and Copyright Harmonization Act (TEACH Act) in 2002 to facilitate distance education, but the authorization it provides to transmit copyrighted materials is carefully circumscribed. For example, only "a government body or an accredited nonprofit educational institution" may invoke the exemption. The performance or display must be made "by, at the direction of, or under the actual supervision of an instructor as an integral part of a class session," offered as part of "systematic mediated instructional activities,"³³ and must be relevant and material to the content of the course. The transmission must be directed to students officially enrolled in the course for which it was made or to officers or employees of governmental bodies as part of their duties. There are additional conditions as well, including provisions related to the security of the copyrighted materials.

The distance-education provision of the Copyright Act would permit a library to transmit performances of sound recordings, but only as part of systematic, mediated instructional activities that otherwise qualify for the exemption.

2.4.5 Ephemeral Copying: § 112

Section 112 of the Copyright Act allows certain "ephemeral" or temporary copies to facilitate authorized transmissions (e.g., radio broadcasts) of copyrighted works and for archival purposes. The conditions under which these copies may be made and retained vary according to the nature of the transmitter and the transmission. Specifically, § 112(a) allows an organization licensed or otherwise entitled to transmit a public performance or display of a work (other than a motion picture or audiovisual work) to make no more than one copy of a particular transmission program embodying the performance or display, solely for its own use (e.g., in preparing the work for broadcast) or for archival preservation. No further copies may be made from the copy, and it must be destroyed within six months unless preserved exclusively for archival purposes. Thus, for example, an analog transmission of copyright-protected sound recordings is not covered by the performance right in sound recordings. So, as long as the transmitting organization gets a license to perform the underlying works (for musical recordings, that would likely mean a license from one or more of the performing rights societies³⁴—ASCAP, BMI, and/or SESAC—discussed below in section 2.5, "Musical Works"), it may make an ephemeral recording of a transmission program embodying those works under § 112(a).

Other provisions of § 112 provide ephemeral recording privileges in connection with religious broadcasts, transmissions in connection with distance education pursuant to § 110(2), discussed above, and broadcasts directed to the handicapped. Section 112(e) authorizes ephemeral recordings of, among other things, Internet webcasts of sound recordings made pursuant to the compulsory license available for certain digital audio transmissions of sound recordings, discussed in section 2.6. The rationale for the § 112(e) exception is similar to that for § 112(a): the copies are allowed to facilitate the permitted webcasting. Section 112(e) is discussed in greater detail later in this report.³⁵

2.5 Musical Works

Under the Copyright Act, the "author" is the initial owner of copyright in a work. In the case of musical compositions, the authors are usually the composer and lyricist (if any)—collectively, the "writers." Writers usually enter into contracts with music publishers, transferring their copyrights to the publisher in exchange for stated royalties. (Music publishers include, for example, major worldwide publishers such as Warner/Chappell Music and EMI Music and independents such as Peermusic Publishing. In addition, some popular performers and writers create and maintain their own music publishing companies.³⁶) The publisher then licenses rights to reproduce the work (in sound recordings or sheet music), to combine it with visual content (e.g., as part of the soundtrack of an audiovisual work), and to perform the work publicly. For historical reasons, reproduction rights and performance rights in musical compositions are commonly exercised through separate entities. The music publisher usually controls the reproduction rights (subject to a compulsory license), while nondramatic performing rights are usually exercised through a performing rights society, generally ASCAP or BMI. This is discussed in more detail below.

2.5.1 Reproduction of Musical Works

Reproduction of musical compositions in copies of sound recordings³⁷ is governed by a form of compulsory license known as a "mechanical license," which sets the terms and rate at which the copyright owner must be paid.³⁸ The mechanical license works like this: once a musical composition has been recorded and distributed in the United States with the copyright owner's permission, others may make their own recordings of the composition (by renting a studio, assembling musicians and singers, and so on), without seeking permission from the copyright owner of the musical composition, provided they pay the set rate and otherwise comply with the terms of the law.³⁹ The mechanical license is available only if the primary purpose of the subsequent user is to distribute phonorecords to the public for private use (e.g., in CDs, on audiotape, or electronically).⁴⁰ So, for example, if Josh Groban wanted to record Irving Berlin's composition White Christmas for a Christmas album, the Irving Berlin Music Company may not prevent him from doing so, provided Groban's recording company complies with the terms of the mechanical license. (White Christmas has already been recorded by Bing Crosby with the authorization of the copyright owner—see example 1—and by many others.) The mechanical license does not apply to musical compositions that have never been distributed in phonorecords (e.g., that are unpublished or that have been distributed only in sheet music).

A mechanical license is also available to someone who wishes to duplicate and distribute an existing sound recording, rather than create a new one. However, there are two significant further conditions. First, the existing sound recording must have been lawfully made (and not be, for example, a bootleg copy). Second, permission of the right holder in the sound recording must be obtained.⁴¹ This will entail licensing the sound recording at a negotiated rate, as there is no mechanical license for reproduction and distribution of sound recordings. So, for example, someone who wanted to make and distribute phonorecords of Madonna's rendition of Like a Virgin (see example 6, above) as part of a series of "Great Songs of the 1980s" would first have to negotiate a license to reproduce the sound recording with the recording company that owns the rights. If the requestor obtained the license, he or she would then be entitled to a mechanical license (under the terms of the statute) to reproduce the underlying musical composition by Steinberg and Kelly.

In 1995, Congress amended the mechanical license provisions of the copyright law to embrace "digital phonorecord deliveries," that is, phonorecords delivered by means of digital transmission. The mechanical license now allows distribution of the musical composition not only in a phonorecord distributed in a physical format, such as a CD or audio DVD, but also by means of a digital delivery.

Because the requirements of the mechanical compulsory license can be burdensome (e.g., it requires a monthly accounting to copyright owners), reproduction of musical works in phonorecords is usually done pursuant to agreement. The statutory rate (see note 38) effectively acts as a "cap" on license fees; lower rates are often negotiated. Copyright owners of musical compositions are commonly represented by the Harry Fox Agency, an affiliate of the National Music Publishers Association. The Harry Fox Agency is not the only such agency, but it is the largest and best known. Many music publishers have authorized the Harry Fox Agency to license reproduction on their behalf to record companies and others. So, for example, if Josh Groban wished to record White Christmas, as a practical matter it would be done pursuant to an agreement between his recording company and the Harry Fox Agency on behalf of the Irving Berlin Music Company.

2.5.2 Public Performance of Musical Works

Public performance rights are a very important aspect of copyright in a musical composition. It is difficult for independent songwriters, composers, or music publishers to police the unauthorized performance of their works. Consequently, long ago, songwriters and publishers created associations—performing rights societies—to license public performance rights in their musical compositions and to police unauthorized performances. The principal performing rights societies in the United States today are ASCAP, BMI, and SESAC. Each society licenses, generally for a blanket annual fee, the nondramatic performing rights ("small rights") in all the musical compositions in its repertoire through a bulk, or collective, license. The societies' repertoires differ. The licensees of the performing rights societies are individuals and organizations that perform musical compositions (including webcasters, television and radio stations, orchestras, theme parks, stores, and restaurants, among others). The royalties that the performing rights societies receive are split 50–50 between the writers and the publishers and then distributed in proportion to the actual performance of the works, determined on the basis of monitoring, and in some cases of sampling, public performances of music. It is possible to get a performing rights license directly from the copyright owner (usually the music publisher), since the performing rights societies hold only nonexclusive rights, but it is usually more efficient to go through the performing rights societies.⁴²

Dramatic performing rights ("grand rights"), such as the use of musical compositions in the performance of plays or operas, as well as the right to reproduce musical compositions on the soundtracks of audiovisual works (known as "synchronization rights"), must be obtained from the music publisher.

2.6 Sound Recordings

The nature of legal protection for sound recordings varies according to the date on which the sound recording was first fixed.

2.6.1 Sound Recordings Fixed on or after February 15, 1972

Federal copyright law did not protect sound recordings until February 15, 1972. All sound recordings fixed, or recorded, on or after that date are eligible for federal copyright protection.⁴³ Madonna's sound recording of Like a Virgin (example 6) is protected by federal copyright law, as is the underlying musical composition.

2.6.2 Sound Recordings Fixed prior to February 15, 1972

Sound recordings fixed prior to February 15, 1972, remain eligible for state law protection. Many states protect pre-1972 sound recordings through criminal record piracy statutes, common law protection (against unfair competition, misappropriation, or infringement of common law copyright), or both.⁴⁴ When Congress created a unitary federal system of copyright in the 1976 Copyright Act and abolished state common law copyright, it nevertheless carved out pre-1972 sound recordings, leaving them eligible for state law protection.⁴⁵ The Copyright Act provides:

With respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any State shall not be annulled or limited by [Title 17, which includes federal copyright law] until February 15, 2067.⁴⁶

The sound recordings in example 1 (Bing Crosby/White Christmas), example 2 (New York Philharmonic/Mahler), and example 3 (Robert Frost/Frost poems) are all protected by state laws but not by federal copyright law. In the case of the New York Philharmonic's Mahler recording, the underlying work is in the public domain. Example 5 (Casals/Bach) is also protected by state law and will be discussed separately below.

The definition of "sound recording" specifically excludes "the sounds accompanying a motion picture or other audiovisual work."⁴⁷ Thus, soundtracks are treated with, and enjoy the same rights as, the motion picture or other audiovisual work of which they are a part and are not affected by this provision.⁴⁸

There is an exception to the rule that pre-1972 sound recordings are ineligible for federal copyright protection. The Uruguay Round Agreements Act (URAA),⁴⁹ passed in 1994, restored copyright in certain foreign works that were in the public domain for lack of compliance with U.S. formalities such as copyright notice and renewal. In the case of sound recordings, however, the law did more than merely restore copyright: it provided protection for foreign works that would never have been entitled to federal copyright protection, even if they had been published in the United States in the first instance. The law conferred copyright protection on eligible sound recordings of foreign origin fixed before February 15, 1972.⁵⁰ Restoration occurred automatically on January 1, 1996, for most works⁵¹ and was not conditioned on any act of the right holder. Restored works are protected for the remainder of the term that they would have been granted if they had not entered the public domain. Thus, at the time of restoration a Mexican sound recording published in 1965 was eligible for protection until 2040;⁵² that date was extended by 20 years (i.e., until 2060) by the Copyright Term Extension Act.

To be eligible for restoration of U.S. copyright, a foreign work had to be protected by copyright in its source country on the restoration date (January 1, 1996, for most works). In other words, if such a work had already entered the public domain in its source country by that time, it was not eligible for restoration. In most foreign countries, the term of protection for sound recordings (or "phonograms," as they are commonly called abroad) is 50 years from first publication or fixation. Foreign sound recordings published before 1946 were already in the public domain in their source countries on the restoration date and were not eligible for restoration. Thus, virtually all pre-1946 foreign sound recordings are in the public domain as far as U.S. federal copyright law is concerned. However, state law protection for these pre-1946 foreign sound recordings may still exist, despite their public domain status under federal copyright law. A New York court recently ruled that sound recordings in the public domain in their source countries can still enjoy protection in New York until the effective date of federal preemption, February 15, 2067.⁵³ Foreign recordings that were restored to federal copyright protection may be eligible for concurrent state and federal protection, although no case has yet arisen on this question.⁵⁴

The Goldsbrough Orchestra/Telemann recording in example 4, above, was restored to copyright in 1996, since it was still protected by copyright in its source country on that date. (It was protected there until 2002.) Its U.S. copyright protection will last until 2037 (1942 plus 95 years). The Casals/Bach recording in example 5, by contrast, was not restored to federal copyright protection, since it was already in the public domain in the United Kingdom, its source country, on January 1, 1996. It retains state law protection, at least in New York State, until 2067.

For those sound recordings that do enjoy federal copyright protection, including those fixed on or after February 15, 1972, and for earlier foreign sound recordings whose copyrights were restored, the principal rights of concern in this study are the reproduction right and the right of public performance.

2.6.3 Ownership of Rights in Sound Recordings

Rights in sound recordings are generally held by the record companies. There are four major labels (Sony BMG, EMI, Universal Music Group, and Warner Music Group) and thousands of small, independent companies. On policy matters, the major labels and some of the independents work together through a trade association known as the Recording Industry Association of America (RIAA). The labels themselves, not RIAA, license the reproduction of sound recordings. Recently, however, an organization called Sound Exchange was established to represent record companies and performing artists in collecting and distributing royalties from the digital audio transmission of their works. This new organization has a role that is somewhat analogous to that of the Harry Fox Agency and the performing rights societies.

2.6.4 Reproduction of Sound Recordings

Copyright-protected sound recordings enjoy an exclusive reproduction right. The reproduction and distribution of sound recordings, unlike that of musical compositions, is not subject to a compulsory license.⁵⁵

2.6.5 Public Performance of Sound Recordings

The public performance right in copyright-protected sound recordings is limited to the right "to perform the work publicly by means of a digital audio transmission." The law sets up a three-tiered system of protection for performances of sound recordings.⁵⁶ The first tier consists of certain types of public performances that are entirely exempt from the performance right. In other words, such performances may be made with no obligation to the sound recording copyright owner. Exempt activities include live performances, analog transmissions, traditional AM and FM broadcasts, public radio, background-music services, and performances and transmissions in business establishments such as stores and restaurants.⁵⁷

The second tier encompasses digital audio transmissions subject to a compulsory license. The sound recording copyright owner may not prevent these public performances, but the transmitting party must pay royalties to the sound recording copyright owner and performers at the rate set by the Librarian of Congress. Sound Exchange distributes those royalties to recording companies and performers. These performances include subscription digital transmissions (i.e., those limited to paying recipients) and certain eligible nonsubscription digital transmissions. A transmission may be made pursuant to the compulsory license if (1) it is not in the first tier (exempt) category, (2) it is accompanied, if feasible, with the title of the recording, the name of copyright owner, and other information concerning the sound recording and underlying musical work, and (3) the transmitting party meets a number of specific statutory requirements that diminish the risk that the transmissions will be copied or will substitute for having copies (e.g., it does not publish its program in advance, does not play more than a specified number of selections by a particular performer or from a particular phonorecord within a specified time period, and does not seek to evade these conditions by causing receivers to automatically switch program channels).⁵⁸

The third tier consists of certain digital audio transmissions that fall under neither the exemption (first-tier) nor the compulsory license (second-tier) category and thus require negotiating a license with the copyright owner. These are performances perceived to involve a high risk of copying (or of substituting for the sale of copies). They include interactive digital audio services (on-demand streaming) and nonsubscription transmissions that do not meet the conditions described above because, for example, the transmitting party publishes the program in advance or does not abide by the limitations concerning the number of selections from a particular phonorecord or performer that can be played in a specified time period.⁵⁹

FOOTNOTES

⁴ § 302(a).

⁵ A "work made for hire" is a work created by an employee in the course of his or her employment, or a commissioned work where the commissioning party and the creator agree in writing that the product will be a work made for hire. Only certain categories of works are eligible to be commissioned works made for hire. § 101. If a work qualifies as a work made for hire, the employer or commissioning party is considered the author and owns all rights, unless the parties agree otherwise in a signed writing. § 201(b).

⁶ A work is considered "published" when copies are distributed to the public "by sale or other transfer of ownership, or by rental, lease or lending. The offering to distribute copies . . . to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication. A public performance or display of a work does not of itself constitute publication." § 101.
    Under the 1909 Copyright Act, publication with notice was required to qualify for federal protection. A work published without notice went into the public domain. The notice requirement was eliminated by the Berne Convention Implementation Act of 1988.

⁷ Certain works of foreign origin whose copyrights were not renewed may have had their copyrights restored. See discussion in section 2.6 of this report.

⁸ All works unpublished at January 1, 1978, were given at least 25 years of federal copyright protection (that is, until December 31, 2002), but those that were published by December 31, 2002, were given 50 years of federal protection (until December 31, 2027). That date was extended by 20 years in the Sonny Bono Copyright Term Extension Act of 1998, so that those works published by the end of 2002 will remain protected under federal copyright law for a total of 70 years (until December 31, 2047).

⁹ § 101.

¹⁰ § 303(b). The law was passed because a significant number of phonorecords released before the current law took effect failed to include a copyright notice with respect to the underlying musical works, as many believed it was unnecessary as a matter of law and industry practice. Subsequently, some courts ruled that the distribution of phonorecords without notice under the 1909 Copyright Act injected the underlying musical works into the public domain. The 1997 amendment effectively extended the term of protection for some of the underlying musical works beyond what they would have had if they were published with notice on the phonorecord in the first instance. Melville D. Nimmer and David Nimmer, Nimmer on Copyright, § 4.05[B][2] at 429–32 (LexisNexis/Matthew Bender, 2004).
    What constitutes a publication of a pre-1972 sound recording is a matter of state law, and states are "free to depart from the Copyright Act's definition of publication." Paul Goldstein, Copyright, § 15.5.2 at 15:45 (Aspen, 2nd ed., 2004). Publication status of pre-1972 sound recordings may not be critical to state law protection. For example, the California civil code (see section 3.4 of this report) provides protection on the basis of the date of fixation, not of publication. See Capitol Records, Inc. v. Naxos of America, Inc., 4 N.Y.3d 540, 560 (2005). (In the absence of federal statutory protection, distribution of a sound recording "does not constitute a publication sufficient to divest the owner of common-law copyright protection.") (citations omitted).

¹¹ The provision quoted in text does not, by its terms, apply to anything other than musical works. The courts were divided on this issue prior to the amendment, so the status of material underlying a spoken-word, pre-1972 sound recording distributed without copyright notice is unclear. Compare La Cienega Music Co. v. ZZ Top, 53 F.3d 950 (9th Cir.), cert. denied, 116 S. Ct. 331 (1995), with Rosette v. Rainbo Record Mfg. Corp., 354 F. Supp. 1183 (S.D.N.Y. 1973), aff'd, 546 F.2d 461 (2d Cir. 1976).

¹² § 101.

¹³ For example, MAI Systems Corp. v. Peak Computer, 991 F.2d 511 (9th Cir. 1993), cert. dismissed, 114 S. Ct. 671 (1994). In a 2001 report to Congress, the Copyright Office observed, "Every court that has addressed the issue of reproductions in volatile RAM has expressly or impliedly found such reproductions to be copies within the scope of the reproduction right." U.S. Copyright Office, DMCA Section 104 Report 118 (August 2001).

¹⁴ See, for example, New York Times Co. v. Tasini, 533 U.S. 483, 498 (2001), stating that Lexis/Nexis, by selling copies of allegedly infringing materials through its database, is distributing copies to the public; Robert A. Gorman & Jane C. Ginsburg, Copyright: Cases and Materials 545–46 (Foundation Press, 6th ed., 2002).

¹⁵ § 101.

¹⁶ Id.

¹⁷ See, for example, Playboy Enters., Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993).

¹⁸ A donor of physical material frequently does not own the rights and therefore cannot convey them. For example, the writer, not the recipient, owns the copyright in letters, though the recipient owns the physical copies. Even when the donor owns the rights, they are transferred to the library or archives only if the gift includes a license or an assignment. § 202.

¹⁹ In some cases, courts have found that using a work for a different purpose provides a transformative element. See, for example, Kelly v. Arriba Soft Corp., 336 F.3d 811, 819 (9th Cir. 2003) (low-resolution "thumbnail" photos in defendant's search engine database deemed transformative since they serve a different function—improving access to information on the Internet—than do the photos themselves, which were created for an artistic/aesthetic purpose).

²⁰ For example, in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984)—commonly referred to as the "Betamax case"—the Supreme Court held that private, in-home copying of free television programs for time-shifting purposes was fair use.

²¹ Concerning the commercial aspect of archives, the legislative history of § 108 states:

[A] purely commercial enterprise could not establish a collection of copyrighted works, call itself a library or archive, and engage in for-profit reproduction and distribution of photocopies. Similarly, it would not be possible for a non-profit institution, by means of contractual arrangements with a commercial copying enterprise, to authorize the enterprise to carry out copying and distribution functions that would be exempt if conducted by the non-profit institution itself.
H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. 74 (1976) [hereinafter, House Report].

²² § 108(c). In limiting use of digital copies made pursuant to this section to library premises, Congress appears to have ignored the possibility that the work may have been distributed to the public in digital form. In that case, the limitation to use on the premises introduces a restriction on use of the copies that may not have existed with the original.

²³ § 108(i). Audiovisual news programs are a separate category. See § 108(f)(3).

²⁴ §§ 108(d), (e). Section 108 does not impose any liability for copyright infringement on a library or an archives for the unsupervised use of reproduction equipment on its premises as long as the equipment displays a notice that "the making of a copy may be subject to the copyright law." § 108(f)(1). However, § 108 does not excuse someone who uses the reproduction equipment or requests a copy under § 108(d) "from liability for copyright infringement for any such act, or for any later use of such copy . . . , if it exceeds fair use as provided by section 107." § 108(f)(2).

²⁵ § 108(g).

²⁶ Id. With regard to what qualifies as "such aggregate quantities as to substitute for a subscription to or purchase of such work," Congress looked to guidelines formulated by the National Commission on New Technological Uses of Copyrighted Works (CONTU) in consultation with representatives of library associations, publishers, and authors. The guidelines indicate, for example, that six or more copies of an article or articles from a given periodical within five years of a particular request constitute "aggregate quantities as to substitute. . . ." H.R. Rep. No. 94-1733 at 72-73 (1976). The CONTU guidelines are incorporated in the Conference Committee Report accompanying the 1976 Copyright Act. The committee cautioned, however, that the guidelines were not "explicit rules" governing all cases, but merely guidance in the "most commonly encountered interlibrary photocopying situations." It went on to observe that the guidelines "deal with an evolving situation that will undoubtedly require their continuous reevaluation and adjustment." Id. at 71.

²⁷ § 108(h). Laura Gasaway posits that as the library's purpose for reproduction, distribution, performance, or display is not limited to preservation but includes scholarship or research, this section can "presumably . . . serve as a collection building section" for works that meet its requirements. Laura N. Gasaway, "America's Cultural Record: A Thing of the Past?" Houston Law Review (40): 643, 661 (2003).

²⁸ "Preservation of Orphan Works Act," Title IV of the Family Entertainment and Copyright Act of 2005, Pub. L. No. 109-9, 119 Stat. 226-27 (2005).

²⁹ According to the House Report accompanying the 1976 Copyright Act, even though musical works are excluded from some of the specific privileges in § 108, fair use remains available with respect to such works: "In the case of music, for example, it would be fair use for a scholar doing musicological research to have a library supply a copy of a portion of a score or to reproduce portions of a phonorecord of a work." House Report, above note 21, at 78.

³⁰ § 108(f)(4).

³¹ § 109(a). There are exceptions for computer programs and sound recordings, designed to deter the development of a commercial rental market, although lending by nonprofit libraries or educational institutions is permitted. § 109(b).

³² In its DMCA Section 104 Report, above note 13, the Copyright Office rejected the argument that receipt of a copy by digital transmission should be treated in the same way as is receipt of a physical copy, with the recipient free to dispose of the digital copy at will. Digital transmission involves making, not merely transferring, a copy. The report expressed concern that application of the first sale doctrine would require deleting the sender's copy when it was sent to the recipient, a feature not generally available on software currently in use and unlikely to be done on a systematic basis by users. The office also rejected the assumption that forward-and-delete is completely analogous to transferring a physical copy, because delivery and return of a digital copy can be done almost instantaneously, so fewer copies can satisfy the same demand. Id. at 96-101.
    Even downloading a copy onto a disc to give away, at the same time erasing it from one's hard drive, is technically not permitted by the first sale doctrine since it involves creating a copy. It might, however, be considered fair use.

³³ § 110(2)(A).

³⁴ A "performing rights society" is defined in the Copyright Act as "an association, corporation, or other entity that licenses the public performance of nondramatic musical works on behalf of the copyright owners of such works, such as the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and SESAC, Inc." § 101.

³⁵ See section 4.3.2, "Webcasting."

³⁶ Al Kohn and Bob Kohn, Kohn on Music Licensing, 86–87 (Aspen Publishers, 3rd ed., 2002).

³⁷ Technically, copies of sound recordings are referred to as "phonorecords" under the Copyright Act. § 101.

³⁸ § 115. The statutory rate is currently 8.5 cents, or 1.65 cents per minute of playing time, whichever is greater. It will go up to 9.1 cents, or 1.75 cents per minute of playing time, whichever is greater, on January 1, 2006. See http://www.copyright.gov/carp/m200a.html.

³⁹ See § 115. There are, however, limitations on how much the musical composition may be changed. The artist may make a musical arrangement "to the extent necessary to conform it to the style or manner of interpretation of the performance involved," but the arrangement may not "change the basic melody or fundamental character" of the musical composition. Moreover, the arrangement may not be protected as a derivative work under the Copyright Act without the express consent of the copyright owner. § 115(a)(2).

⁴⁰ Thus, for example, reproductions of musical compositions on recordings made by background-music services such as Muzak are not covered by the mechanical license and must be negotiated, as those services are not making and distributing phonorecords to the public for personal use.

⁴¹ § 115 (a)(1). For recordings fixed before February 15, 1972, the right holder is the person who fixed the sound recording with an express license from the owner of copyright in the musical composition, or under a valid compulsory license. § 115(a)(1)(ii). Since the sound recording is a separate work, permission would have to be sought from the right holder in any event, but the effect of this provision is that if the sound recording right holder assents and all other conditions for the mechanical license are met, the copyright owner of the musical composition cannot deny permission to reproduce the composition as embodied in the sound recording. See Nimmer, above note 10, § 8.04[E][2] at 8-66.2 to 8-66.3. This provision is a partial codification of Dutchess Music Corp. v. Stern, 458 F.2d 1305 (9th Cir.), cert. denied, 409 U.S. 847 (1972) and related cases decided under the 1909 Act. See discussion in Nimmer, above note 10, at § 8.04[E][1], and § 8.04[E][2] at 8-64 to -66.3.

⁴² The "jukebox" compulsory license included as § 116 of the Copyright Act of 1976 has since been repealed and replaced with a new § 116 governing "Negotiated licenses for public performances by means of coin-operated phonorecord players." A "coin-operated phonorecord player" is a "machine or device . . . employed solely for the performance of nondramatic musical works by means of phonorecords being activated by the insertion of coins, currency, tokens or other monetary units or their equivalent. . . . " A computer server would not qualify as a "coin-operated phonorecord player," since it is not employed solely to perform nondramatic musical works, nor is it triggered by coins, currency or the like. Moreover, other aspects of § 116 make clear that it governs on-premises performances. In other words, the "jukebox" provisions of the Copyright Act have no relevance to Internet streaming.

⁴³ The Sound Recording Amendment, Pub. L. No. 92-140, § 3, 85 Stat. 391 (1971), passed on Oct. 15, 1971, granted copyright protection to sound recordings fixed on or after its effective date, which was four months later, on February 15, 1972.

⁴⁴ Nimmer states that "[t]he laws of almost every state render record piracy a criminal offense," but does not canvass the states. Nimmer, above note 10, § 8C.03 at 8C-9.

⁴⁵ Prior to the effective date of the 1976 Copyright Act, there were two systems of copyright in the country. State law protected unpublished works, and federal law protected published works if the putative copyright owner met the statutory requirements, such as affixing notice. If a work was published without meeting those requirements, it lost state law protection but was not eligible for federal protection, and so fell into the public domain. In Goldstein v. California, 412 U.S. 546 (1973), the Supreme Court held that California's protection for pre-1972 sound recordings was not preempted by federal copyright law or the Constitution, regardless of whether those recordings were published or unpublished. In other words, the court concluded that Congress had left the states free to act in this area.

⁴⁶ § 301(c).

⁴⁷ Id. § 101. Correspondingly, the definition of "motion picture" includes "accompanying sounds, if any." Id.

⁴⁸ Although the 1909 Copyright Act did not directly address sound recordings, the general understanding prior to the 1976 Copyright Act (and to the 1971 law granting copyright protection to sound recordings) was that the sounds accompanying a motion picture were an integral element of the work and embraced by the copyright in the motion picture. Thus, the exclusion of sounds accompanying a motion picture or other audiovisual work from the definition of "sound recording" in the 1971 law evidenced Congress's opinion that soundtracks were already protected. S. Rep. No. 92-72 at 5 (1971); H.R. Rep. No. 92-487, at 6 (1971); see also Nimmer, above note 10, § 2.09[E][2] at 2-163.

⁴⁹ Pub. L. No. 103-465, 108 Stat. 4809 (1994).

⁵⁰ Id. § 514(a) (discussing the amended 17 U.S.C. § 104A(h)(6)(C)). Eligible sound recordings were those which were not in the public domain in their home country on the date of restoration; had at least one author or right holder who was a national or domiciliary of an eligible country when the work was created, and (if published) were published in an eligible country and not published in the United States within 30 days after foreign publication. Eligible countries include members of the Berne Convention, the World Intellectual Property Organization (WIPO) Copyright Treaty, the WIPO Performances and Phonograms Treaty, and World Trade Organization members that adhere to the Uruguay Round Agreements. Id. (discussing 17 U.S.C. § 104A(h)(6)(D)).

⁵¹ This was the date of restoration for works whose source countries were members of the Berne Convention or the World Trade Organization on that date; for other countries, it is the date of adherence. 17 U.S.C. § 104A(h)(2).

⁵² The Uruguay Round Agreements Act, Statement of Administrative Action, Pub. Law 103-465, 1994 U.S.C.C.A.N. 4040, 4290.

⁵³ See Capitol Records, Inc. v. Naxos of America, Inc., 4 N.Y.3d 540, 561–63 (2005), discussed in section 3.3 of this report.

⁵⁴ Section 301 of the copyright law, which provides for preemption of state law but preserves state law governing pre-1972 sound recordings until 2067, was not amended to exclude pre-1972 foreign sound recordings whose copyright was restored. Nor did Congress expressly indicate it intended concurrent federal and state protection. See Nimmer, above note 10, § 2.10[B][2].

⁵⁵ There is a limited privilege in § 112, discussed in section 2.4.5 of this report, to make copies to facilitate public performance of sound recordings via broadcast and webcast.

⁵⁶ Digital Performance Right in Sound Recordings Act of 1995, Pub. L. No. 104-39, 109 Stat. 336 (1995), as amended by the Digital Millennium Copyright Act of 1998, Pub. L. No. 105-304, 112 Stat. 2860 (1998) (codified in 17 U.S.C. § 114 (2000)).

⁵⁷ §§ 106(6), 114(b), (d)(1).

⁵⁸ § 114(d)(2).

⁵⁹ §§ 114(d)(2), (3), (4)(A).

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