Recent study on lost copyright royalties may reopen WTO case on Section 110 exemptions in U.S.

Copyright warningU.S. copyright law sets up a system within which the owner of copyrighted material may license that material to another party for public performance. In the world of music performance, many of those licenses are negotiated by performing rights organizations which represent copyright-owning songwriters and composers, including the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music Incorporated (BMI) and the Society of European Stage Authors and Composers (SESAC). Whenever copyright-protected music is recreated, broadcast or performed publicly, one of these organizations is usually involved in negotiating a license so that the broadcast or performance occurs legally within the bounds of the U.S. Copyright Act.

Not every business which serves as a performance venue for artists playing copyrighted music works or provides such music to its customers through the radio is required to enter into such a licensing agreement, however. The Fairness in Music Licensing Act of 1998 altered Section 110 of the Copyright Act to exempt a large number of bars and restaurants from having to enter into a licensing agreement with any of these performance rights organizations if a musician is performing music which is copyright-protected (U.S. law recognizes at least some copyright protections as soon as a piece of music is set in a fixed medium, even if that material isn’t registered with the U.S. Copyright Office). The measure itself followed lobbying from the National Restaurant Association (NRA) and other stakeholders from the restaurant industry who complained of “the coercive and disruptive tactics of music licensing companies.” A July 1997 hearing of the U.S. House of Representatives Committee on the Judiciary’s intellectual property subcommittee includes testimony from the NRA’s general counsel decrying licensing agents which would show up to bars or restaurants and demand fees for showing football games on television, arguing that the National Anthem or a song played during halftime is protected by copyright.

This November, a report from French consulting firm PMP Conseil made waves in the media for indicating that public performance exemptions in U.S. copyright law, such as Section 110 exemptions, cost copyright owners $150 million each year in lost royalties, $44 million of which is attributable to U.S. copyright owners in Europe. On November 11th, this study was presented by the International Council of Creators of Music (CIAM) at it’s annual conference in London. CIAM maintains that the U.S. is one of two “more economically developed countries” that have an exemption in place for playing music in bars, restaurants and retail establishments by radio or television.


The U.S. federal government will not want to harm the interests of American business owners in favor of copyright owners in Europe, but the recent CIAM conference will likely grow in focus as delegates from the conference are planning to bring the subject up with the European Commission. CIAM delegates are charging that Section 110 public performance exemptions are unlawful in light of international treaties, especially 1995’s Agreement on Trade-Related Aspects of International Property Rights (TRIPS). That treaty is administered by the World Trade Organization (WTO), of which the United States is a member.

The issues posed by Section 110 public performance exemptions was voiced by U.S. federal officials before the Fairness in Music Licensing Act was even enacted. In that same July 1997 House subcommittee hearing, then-Register of Copyrights Marybeth Peters offered this same argument about TRIPS in testimony she gave which expressed “concerns involving both domestic considerations, and the implications for the United States in connection with its international treaty obligations.” Peters’s testimony noted the obligations of the U.S. under the Berne Convention agreement, an international treaty first adopted in 1886 and eventually worked into the TRIPS treaty; the United States became a signatory to the Berne Convention in 1989. The Berne Convention agreement hinges on three principles: that nations in the convention must confer the same protections on copyright holders from other nations that are offered to its own citizens; works are automatically protected without requiring formal registration; and that protection is offered no matter whether member nations have their own formal copyright protections for works created in their own nations.

Peters also noted that Article 13 of TRIPS, which also governs copyright protections but doesn’t come from the Berne Convention, requires WTO members to “confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the rights holder.” As Peters noted in her House subcommittee testimony, the exemptions provided by the Fairness in Music Licensing Act are much broader than the “special case” exceptions permissible under TRIPS Article 13. “Allowing virtually every business to play music to its customers through loudspeakers or audiovisual devices would invite a difficult case against the United States for violating our TRIPS obligations,” Peters’s testimony reads.

The European Union has gone after the United States in the past for Section 110 exemptions for bars and restaurants. The EU filed a complaint with WTO back in January 1999 against the U.S. for the exemptions and argued the exemptions were illegal under Article 13 and the Berne Convention sections of TRIPS; the complaint also named Argentina, Brazil, Canada, Japan and Switzerland as third parties in the case. Europe and the U.S. agreed to enter into arbitration which is currently suspended but could be reactivated by either party at any time. Part of the Congressional response to this action was passage of the Trade Act of 2002 which established a fund for the payment of WTO dispute settlements. A WHO panel report issued in June 2000 concluded that some aspects of the Section 110 exemptions permissible in the United States is inconsistent with the Berne Convention and TRIPS Article 13. The last update on the Section 110 complaint at WTO came in March 2013 when the U.S. delegation sent its last monthly update on the dispute, noting that the temporary agreement on arbitration between the EU and the U.S. expired in December 2004. “The US Administration will work closely with the US Congress and will continue to confer with the European Union in order to reach a mutually satisfactory of this matter,” the report reads.


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