Advanced Copyright Issues on the Internet - Fenwick & West LLP

case of a retransmission of a radio station’s broadcast transmission), 2163 or (iii) as part of certainother narrowly defined incidental transmissions or transmissions within or to a businessestablishment for use in the ordinary course, 2164 is exempt from the digital performance right,provided in each case that it is not “part of an interactive service.” The copyright statute definesan “interactive service” as a service “that enables a member of the public to receive atransmission of a program specially created for the recipient, or on request, a transmission of aparticular sound recording, whether or not as part of a program, which is selected by or on behalfof the recipient.” 2165 Nonexempt digital audio transmissions that are not part of an “interactiveservice” are subject to a statutory license as provided in Section 114(d)(2) of the copyrightstatute, as discussed further in subsection 2 below. Those wishing to engage in digital audiotransmissions as part of an interactive service must negotiate individual licenses with therelevant copyright holders.In the late 1990’s, a controversy arose over whether FCC-licensed broadcasters, whichare exempt from paying royalties to sound recording copyright holders for traditional radiobroadcasting of those recordings, should remain exempt when streaming the same broadcast overthe Internet. The broadcasters argued such streaming should be classified as an exempt“nonsubscription broadcast transmission” under Section 114(d)(1)(A) of the copyright statute.On Dec. 11, 2000, the <strong>Copyright</strong> Office issued a final rule determining that AM/FM broadcastsignals transmitted simultaneously over a digital communications network such as the Internetwere not exempt under Section 114(d)(1)(A), and thus were subject to the digital performanceright of the DPRA. 2166In its ruling, the <strong>Copyright</strong> Office determined that the exemption for “broadcasttransmission[s]” was limited to over-the-air transmissions by FCC-licensed broadcasters andthus did not cover streaming. 2167 The <strong>Copyright</strong> Office also amended its regulatory definition ofa “Service” for purposes of the Section 114 statutory license to clarify that transmissions of abroadcast signal over a digital communications network such as the Internet are not exempt fromcopyright liability under Section 114(d)(1)(A) of the <strong>Copyright</strong> Act. The broadcasterschallenged the <strong>Copyright</strong> Office’s ruling in federal court.In Bonneville Int’l Corp. v. Peters, 2168 the Third Circuit affirmed a district court’s rulingupholding the <strong>Copyright</strong> Office’s ruling. The Third Circuit noted that, for AM/FM webcastingto be exempt under Section 114(d)(1)(A) from the digital audio transmission performancecopyright, it must be 1) noninteractive, 2) nonsubscription and 3) broadcast. Because the parties2163 Id. § 114(d)(1)(B).2164 Id. § 114 (d)(1)(C).2165 Id. § 114(j)(7).2166 65 Fed. Reg. 77292 (Dec. 11, 2000).2167 Id. at 77301.2168 68 U.S.P.Q.2d 1545 (3d Cir. 2003).- 472 -