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Private Use on Musical Works, Rights of Public

Performance, and Collecting Society Systems.

By' Judge Visit Sripibool

lever for the music-exploiting industry: no support for the prolongation of the protected period without adoption of the desired exemption.
In October 1995, the performing rights societies concluded a temporary compromise with the NLBA in the form of a global contract exempting a considerable number of bars and restaurants from the licensing obligation. Dissatisfied with this concession, the other trade associations, however, continued to insist on a legislative solution. In 1996 and 1997, two additional amended bills, the first moderate, the second more extreme and exempting all communications irrespective of the type and size of the business and communication apparatus, reduced the political room for maneuver for the U.S. Copyright Office and the collection societies, which were vehemently opposing these bills. Marybeth Peters, in her function as Register of Copyrights, already at this point referred to the possible infringement of international copyright agreements if the draft were o come into force. A further amended "compromise" version taking into account the size of the business operation was ultimately adopted.

2. Contents of the New Regulations

The Act now in force provides for a significant extension of the former Aiken exemption. Section 110(5)(b) of the Copyright Act lays down that all types of bars and restaurants ("food service or drinking establishments") of an area of less than 3,750 square feet need not pay any fees for the public communication of the music with respect to radio or television transmissions of works of music or a further transmission by a cable or satellite. For business operations other than restaurants or bars, the exception applies to all establishments. These include hairdressers and shoe stores, workshops and banks, just to name a few, with an area of less than 2,000 square feet.
In both cases, the number of playing appliances and loudspeakers is limited. With audio equipment, no more than six loudspeakers may be used, with a maximum of four in sing room. In the case of audio-visual equipment, a maximum of four appliances may be used with a maximum of one per room and with screens not exceeding a specific size, and likewise connected to a maximum of six loudspeakers.
Three other conditions must be satisfied cumulatively for the exemption from license and royalties to apply: no admission fees may be charged for the enjoyment of the broadcast transmissions, there may be no further transmission to a larger public outside the business operation and the broadcast transmissions must be licensed radio or television programs. Finally, the Act makes it clear that the exemptions described are not for instance aimed generally at reducing the rates for musical performances.
The playing of recording media such as CDs and cassettes continues to be subject to permission and payment of a fee and is not covered by the new exemption.

3. Effects to be Expected of Legislative Amendment

The new text of Section 110(5) of the Copyright Act exempts a large number of smaller businesses in the USA-bars, restaurants, stores, beauty salons, workshops, etc.-from the obligation to pay royalties for the communication of music, including many businesses that even before were hardly affected by the collecting societies as a result of the previous Aiken exemption. In any event, the three performing rights societies,

ASCAP, BMI and SESAC, did not pursue a tight network of comprehensive inspections and licensing comparable to that of the German GEMA, and for this reason the collecting societies, income from performing rights was also comparatively meager a compared with their European counterparts.
The manner and extent of the reproduction appliances now permitted indicate that the exemption is no longer a mere homestyle exemption for a single radio but allows radio and TV transmissions to be made available to the clientele to a considerable extent. In the USA it is estimated that around 70% of restaurants and stores would be exempt from paying royalties and that an annual loss of income of around US$ 10 million can be expected. However, the U.S. legislation also affects foreign music copyright holders whose works-depending on locality and type of music-are played more or less frequently in the United States and who must likewise reckon with cuts in their foreign revenue through the effects of the reciprocal treaties and collection by the collecting societies.

IV. Examination Procedure of European Commission

1. Initiation of Procedure

On April 21, 1997, the Irish collecting society IMRO filed an objection to the EC Commission pursuant to Article 4 of Council Regulation No. 3286/94 dated December 22, 1994, directed against the original homestyle exemption and the amendments to the US Copyright Act still in legislative proceedings at the time. The said EC Regulation regulates Community procedures in the field of joint trade policy for the exercise of the Community's rights according to international rules, in particular the rules of the WTO, and grants EC Member States the possibility of initiating joint procedures against infringement of international trade rules.
The Application to the Commission by IMRO, whose repertoire is used relatively intensively by Irish radio stations and in Irish pubs, was supported by GESAC, the European association of collecting societies. It argued that the U.S. amendment of Section 110(5) of the Copyright Act represented an obstacle to trade for cross-border licensing transactions for musical rights, and at the same time infringed various provisions of international agreements. IMRO claimed that the consequences of the Fairness in Music Licensing Act would have detrimental effects on trade pursuant to Article 2(4) of Regulation No.3286/94, since not only would the European collecting societies suffer substantial losses in income but there would also be a negative influence on the export of music to the USA as a result of the reduced income opportunities.
The Commission commenced the requested Community examination procedure in summer 1977. This procedure included a comprehensive investigation of the legal situation in the USA and the alleged effects on international licensing practice in the light of the regulations of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and the Berne. It also relied on estimates by the U.S.collecting societies. The Commission focused on three questions: (1) Does the exemption in Article 110(5) Copyright Act represent an infringement of TRIPS?; (2) Does this result in an obstacle to trade that can be contested by the EU?; (3) Is the initiation of dispute settlement proceeding in the interests of the Community?

The procedure examined both the previous and the new legal situation. To begin with, the Commission examined the Aiken exemption in its current form for compatibility with TRIPS and, via the reference in Article 9(1) TRIPS, with the compulsory standard of protection in Berne.

2. Infringement of Article 9(1) TRIPS in Conjunction with Article 11 and
11bis of Berne.

The TRIPS Agreement was concluded in 1994 with the participation of the USA and the EU Member States, and in Article 9(1) obliges the signatories to comply with the minimum protection rights of Article 1 to 21 of Berne, with the result that a signatory state automatically infringes the TRIPS obligations it if fails to provide the minimum protection required by the Berne. According to Article 11bis (1)(3) of the Berne, the public communication via loudspeaker of works transmitted by radio or television is part of the minimum protection under the Convention. Although this does not cover the further transmission of transmitted works by cable, this is in event covered by Article 11(1)(2) of the convention, which concerns any communication of protected works of music to the public. This right does not apply without restrictions, but can be subjected to conditions and exemptions by the Berne member states. Thus Article 11bis (2) provides that the Convention States may determine the conditions for the rights granted in Article 11bis (1), provided that the authors' right to a reasonable remuneration is not impaired. In this way, the Convention permits a reduction of the exploitation right to a claim to royalties, but not an exemption free of royalties to the benefit of commercial businesses, which therefore undoubtedly fail to achieve the level of protection required by the Berne.
In its examination, the Commission took into account the fact that in addition to the wording of the Berne the de minimis rule laid in Article 9(2) of the Convention could also cover other insignificant exemptions from copyright protection if these only concerned narrowly restricted cases, did not conflict with the rightholders' interests and did not go beyond a normal use of the work. The broad practical scope of application of for commercial purposes and the uncompensated cancellation of the right in the immediate scope of protection of Article 11bis (1)-(3) of the Berne show clearly that this is no longer a case of a small exemption that can be justified in exceptional cases.
Thus, without doubt, there has been an impairment of the scope of protection of Article 9(1) of TRIPS.

3.Exception Pursuant to Article 13 TRIPS?

According to Article 13 of TRIPS, the signatory states should limit restriction and exceptions to the exclusive rights to certain special cases that neither impair the normal exploitation of the work nor unreasonably infringe the justified interests of the rightholder. In its wording, Article 13 obviously follows Article 9(2) of the Berne, which, however, only refers to reproductions of a work and allows national legislatures to exempt certain special cases from the copyright holder's right of prohibition. Article 13 TRIPS is thus one of the regulations that not only refers to the protection provisions of the Berne Union, but also has an independent substantive law content. For this reason, it may have priority over other limitation rules in the Berne. Despite the general


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