retransmission of a nonsubscription broadcast transmission (subject to certain limitations in the
case of a retransmission of a radio station’s broadcast transmission),^3112 or (iii) as part of certain
other narrowly defined incidental transmissions or transmissions within or to a business
establishment for use in the ordinary course,^3113 is exempt from the digital performance right,
provided in each case that it is not “part of an interactive service.” The copyright statute defines
an “interactive service” as a service “that enables a member of the public to receive a
transmission of a program specially created for the recipient, or on request, a transmission of a
particular sound recording, whether or not as part of a program, which is selected by or on behalf
of the recipient.”^3114 Nonexempt digital audio transmissions that are not part of an “interactive
service” are subject to a statutory license as provided in Section 114(d)(2) of the copyright
statute, as discussed further in subsection 2 below. Those wishing to engage in digital audio
transmissions as part of an interactive service must negotiate individual licenses with the relevant
copyright holders.
In the late 1990’s, a controversy arose over whether FCC-licensed broadcasters, which
are exempt from paying royalties to sound recording copyright holders for traditional radio
broadcasting of those recordings, should remain exempt when streaming the same broadcast over
the 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 Copyright Office issued a final rule determining that AM/FM broadcast
signals transmitted simultaneously over a digital communications network such as the Internet
were not exempt under Section 114(d)(1)(A), and thus were subject to the digital performance
right of the DPRA.^3115
In its ruling, the Copyright Office determined that the exemption for “broadcast
transmission[s]” was limited to over-the-air transmissions by FCC-licensed broadcasters and thus
did not cover streaming.^3116 The Copyright Office also amended its regulatory definition of a
“Service” for purposes of the Section 114 statutory license to clarify that transmissions of a
broadcast signal over a digital communications network such as the Internet are not exempt from
copyright liability under Section 114(d)(1)(A) of the Copyright Act. The broadcasters
challenged the Copyright Office’s ruling in federal court.
In Bonneville Int’l Corp. v. Peters,^3117 the Third Circuit affirmed a district court’s ruling
upholding the Copyright Office’s ruling. The Third Circuit noted that, for AM/FM webcasting
transmission is “any transmission that is not a subscription transmission.” Id. § 114(j)(9). A "subscription"
transmission is “a transmission that is controlled and limited to particular recipients, and for which
consideration is required to be paid or otherwise given by or on behalf of the recipient to receive the
transmission or a package of transmissions including the transmission.” Id. § 114(j)(14).(^3112) Id. § 114(d)(1)(B).
(^3113) Id. § 114 (d)(1)(C).
(^3114) Id. § 114(j)(7).
(^3115) 65 Fed. Reg. 77292 (Dec. 11, 2000).
(^3116) Id. at 77301.
(^3117) 68 U.S.P.Q.2d 1545 (3d Cir. 2003).