Private Use on Musical Works, Rights of Public

Performance, and Collecting Society Systems.

By' Judge Visit Sripibool

thus we are back at the beginning. Perhaps the most that can be said is that a relay-type system involving multiple speakers beyond that "commonly used in private homes" is prohibited. This rule overruled by the court in Buck v. Jewell-LaSalle Realty Company.(138)
In Claire's Boutiques, the court explained that transmission in another room from selling area is deemed as a private use.
In Cass County Music Commany v. Muedini,(139) the court reviewed Claire's Boutiques and distilled a four-part test to qualify for the exemption:

1 a single receiving apparatus is used;
2 the single receiving apparatus is of a ding commonly used in private homes;
3 the transmission is provided free of charge;
4 the transmission is not "further transmitted" to the public.
Additionally, the physical size of the establishment, while not determinative, is "relevant as indicative of the reach of the stereo system." Helpfully, the Claire's Boutiques court stated that "the entire sound system" should be examined. Parsing the phrase "receiving apparatus," Claire's Boutiques held that if "Congress had wanted the review to be limited to the receiver, it would have used the word 'receiver' and not receiving apparatus.' Apparatus signifies 'the totality of means by which a designated function is performed…or a group of machines used together…to accomplish a task.'"

In Cass County, as in most Section 110(5) cases, there was a single receiving apparatus and no fee was charged, so the issuer was whether the apparatus was of a kind commonly used in a private home. The restaurant had a public dining room of 1500 square feet and utilized nine speakers recessed into a dropped acoustic tile ceiling. Although the restaurant utilized a Radio Shack receiver, it had been souped up so that it could power 40 speakers. It had a separate control panel. The district court had held that it is "not unprecedented" to have nine speakers in a home system. The issue is not whether it is unprecedented, but whether, in the language of the statute, it is common. In reversing the district court, the court correctly held that when viewed in its totality the system was not commonly found in private homes, even though sophisticated home entertainment systems "often have multiple speakers to permit sound to be heard in various areas of a home"(140)

Unavoidably, when talking about private uses or uses without paying royalty even public performance it must look into an international dispute concerning music royalties and collecting societies occurring between U.S and EU. The case was settled by WTO(141)
In June 2000, the dispute Panel of the World Trade Organization (WTO) published its final report, ruling against a recent amendment of U.S. copyright law that allows music to be played in public without the payment of royalties. The case was brought by the European Union, based on a complaint by the Irish Copyright Collection Society, IMRO, which feared for a reduction of income of European songwriters caused by this U.S. legislation. The EU based its complaint on an alleged violation of the TRIPS Agreement together with Article 11(1)(ii) and 11bis(1)(iii) of the Berne Convention (Berne), whereas the U.S. founded its defense on claiming the minor exceptions provisions in Article 13 of TRIPS.

The following examines the broader context of the WTO decision and the ongoing underlying conflict between songwriters and users of copyrighted music in the United States. It also presents a summary of the results of the Commission's examination report, with respect to compatibility with international copyright law agreements, which have been confirmed to a large extent by the WTO Panel Report. The results of the WTO Panel Report shall be summed up briefly.(142)

I. Fairness in Music Licensing Act

In October 1998, the Fairness in Music Licensing Act was adopted together with, and as the second part of, the Copyright Term Extension Act in the USA in the form of a Copyright Act Amendment Act, entering into effect 90 days later. Although the extension of the protected period for copyright works to the European standard of 70 years after the death of the author is to be welcomed, the second part of the Act is regarded as a "bitter pill" administered to the authors, drastically restricting the licensing and payment obligation for the public communication of radio and TV broadcasts in stores, restaurants and bars. For the international music licensing business, the new legislation on the highest-turnover music market in the world will mean substantial financial losses even for non-American collecting societies. Accordingly, these societies have requested an EC Commission examination with respect to the new Act. The following examines critically the provisions of the U.S. legislation, its background and the expected consequences.

II. Previous Legal Situation: Public Communications
Under Aiken Exemption

Copyright protection against the public communication of music in bars, restaurants, cafes and retail stores has during the last few years in The USA suffered a substantial decline in favor of the conflicting commercial interests of the users of music, as can be demonstrated in the light of the most important decisions.

Under the former 1909 Copyright Act, the law applying in the USA until 1976, as a matter of principle, only a commercial performance or communication of a copyrighted work, a "performance of profit," constitutes a relevant exploitation subject to the copyright holder's exclusive right. If there was no direct commercial interest, the communication was not protected. However, in the leading case of Herbert v. Shanley(143) in 1917, the Supreme Court held that the communication of music in a restaurant satisfied the "for profit" criterion since the music was part of the restaurant's atmosphere, just like the decoration, and consequently indirectly contributed to the increase in the restaurant's turnover through the overall impression offered to the clientele, even if there was no direct admission charge. This decision laid the foundation for an obligation to pay royalties for public communications in business operations, thus creating a participation right in public performances in the USA for the first time. The recognition that public performances are relevant exploitations for copyright purposes also formed the basis for the activity of the performing rights societies. The collecting societies for musical performance rights in the USA established themselves at this time, since it was they who thenceforward handled the exploitations subject to license and royalties for the entitled parties.

Technical Progress soon meant that the statutory term "performance" appeared too narrow, since the rise of radio and television broadcasts and the use of loudspeakers meant that the place of performance and the place of reception no longer needed to be identical. When such communications and further transmissions of radio broadcasts were used to make the broadcasts available to the public, case law developed the "multiple performance doctrine", which also qualified the communications following the first broadcast as a performance, without having to add a separate broadcasting right to the legislative text. In the leading decision of Buck v. Jewell-LaSalle Realty Company,(144) the Supreme Court held that the reception of a music broadcast with a radio appliance and the transmission thereof to the rooms in a hotel using a number of loudspeakers was to be regarded as a public performance and that therefore one transmission could establish a number of copyright-relevant acts of exploitation. This decision formed the basis for the second exploitation right and dominated subsequent case law on performing rights in the US for the next 37 years.

The 1976 Act abolished the general exclusion of nonprofit music performances and substituted a series of more specific limitation. Section 110 includes limitation on performances and displays in face-to-face teaching at nonprofit educational institutions, performances during services at places of religious assembly, and performances at retail record stores. Section 110 includes other limitations that relate to transmissions of work, but no Section 110 limitation includes a privilege to make or distribute copies.(145)

The decision in Twentieth Century v. Aiken(146) in 1975 saw the beginning of the reversal of author-friendly case law in the field of public communication in business operations. Aiken, the owner of a small fast-food restaurant, operated a radio with four loudspeakers on the ceiling in his business premises, which he used to receive radio programs licensed by the collecting societies to entertain his clientele. He did not hold a separate authorization to communicate the works of music transmitted to the public. The holders of rights in the compositions communicated in Aiken's restaurant, Twentieth Century Music Corporation, thereupon field an action for infringement. However, the Supreme Court, reversing the precedent in Jewell-LaSalle, held that there had been no infringement of copyright, since Aiken's actions could not be qualified as a performance within the meaning of the Act.(147) In the 1976 Copyright Act, promulgated the following year, abandoning the old for-profit rule and creating instead a restrictions model with standardized exceptions, the legislature acknowledged as a matter of principle that the communication of a broadcast to the public amounted to a public performance, but a the same time implemented the Supreme Court's opinion in Aiken by means of an exemption requiring neither permission nor the payment of royalties in Section 110(5) of the new Act. In Aiken, the court said that "no license is required by the Copyright Act…to sign a copyright lyric in the shower" because the Act confers on exclusive right to private performance.(148)

This so-called "homestyle" or "Aiken exemption" exempted communications of television or radio broadcasts, but not the playing of video and sound recordings, from the obligation requirement to obtain consent if the communication took place using a single receiver such as usually used in households, provided that the public was not charged a direct admission fee for the enjoyment of the communication and that the communication was not further transmitted to a larger number of spectators or listeners.

According to the intentions of the legislators, the regulation was originally meant for small businesses "where mum is behind the counter and dad is the cashier."(149) Although the courts initially complied with this interpretation and conscientiously examined the type of communication apparatus, intensity of use and the capacity and size of the business, the 1990s saw a substantial decline in this compliance. Strictly applying the bare words of the Act, the homestyle exemption also applied to high-turnover store chains with over a thousand branches in the USA and large retail surfaces, provided that the only radio or television set in each individual store corresponds with the dimensions commonly used in private households. The application of the homestyle exemption to chains of stores deserves criticism because a single user agreement with the company management can easily be concluded by the collecting societies to license all the branches, and thus there is no justification for exempting the use of copyrighted music from the obligation to pay royalties.

III New Provisions of Section 110(5) Copyright Act(150)

1. Background to Legislative Proceedings

A decisive influence on the adoption of the new Act was exercised by the trade federations of the food and drink industry and the retail trade, the National Restaurants Association, The National Licensed Beverages Association (NLBA) and the National Retail Federation, organizations with considerable political influence in the USA that had been urging a clarification of the legal situation under the Aiken exemption since the beginning of the 1990s and using intensive lobbying to demand an unambiguous exemption of their members from the scope of application of the obligation to pay royalties.
In 1995 and 1996, corresponding bills were submitted to the House of Representatives that linked the proposed extension of the Aiken exemption to the prolongation of Copyright protection to 70 years post mortem auctoris as demanded by the collecting societies and the associations of authors. This rapidly became a suitable

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(138) 283 U.S. 191(1931).
(139) 55 F.3d 263 (7th Cir. 1995).
(140) William F. Patry, Copyright Law and Practice 1997 Cumulative Supplement, The Bureau of National Affairs, Inc., Washington, D.C. 1997 at 180-181.

(141) See Goldmann, supra note 6, at 412-429.
(142) Id.
(143) 242 U.S. 591, 594, 595 (1917).
(144) 283 U.S. 191 (1931).
(145) See Chisum, Jacobs, supra note 10, at 4-131.
(146) 422 U.S. 151 (1975).
(147) In the opinion of the court, the decision fell to the advantage of Aiken in particular because he received licensed radio programs, while in Buck v. Jewell-LaSalle, the programs communicated were unlicensed.
(148) See Id, supra note 10.
(149) House Report No. 1476, 94th Congress, 2nd Sess., at 87 (1976).
(150) See Section 110, supra note 106.