within the scope of the statutory license, whereas those that contain additional
material may actually be considered original derivative works and therefore
outside the scope of the Section 115 license. Moreover, we decide that a ringtone
is made and distributed for private use even though some consumers may
purchase them for the purpose of identifying themselves in public. We also
conclude that if a newly created ringtone is considered a derivative work, and the
work has been first distributed with the authorization of the copyright owner, then
any person may use the statutory license to make and distribute the musical work
in the ringtone.^3302In Recording Industry Ass’n of America, Inc. v. Librarian of Congress,^3303 the D.C.
Circuit held that the Copyright Royalty Board’s imposition under the Section 115 compulsory
license of a 1.5% per month late fee and a 24 cent royalty for every ring tone sold using
copyrighted work were fair measures to compensate copyright owners when their work is copied
absent a negotiated license agreement and were therefore not arbitrary and capricious.
(g) Subsequent Determinations of Compulsory License Rates by the
CRB
After conducting rate determination proceedings in 2011-12, on Apr. 11, 2012, the CRB
received a motion to adopt a settlement reached by all participants in the proceeding, and
adopted the settlement pursuant to a determination published in Nov. 13, 2013 setting forth the
rates and terms for the Section 115 compulsory license for the use of musical works in physical
phonorecord deliveries, permanent digital downloads, ringtones, interactive streaming, limited
downloads, limited offerings, mixed service bundles, music bundles, paid locker services, and
purchased content locker services.^3304 The regulations promulgated by the CRB state (37 C.F.R.
§ 385.10), “Neither this subpart nor the act of obtaining a license under 17 U.S.C. 115 is
intended to express or imply any conclusion as to the circumstances in which any of the
exclusive rights of a copyright owner are implicated or a license, including a compulsory license
pursuant to 17 U.S.C. 115, must be obtained.”^3305 The regulations further state (37 C.F.R. §
385.25), “A compulsory license under 17 U.S.C. 115 extends to all reproduction and distribution
rights that may be necessary for the provision of the licensed subpart C activity, as defined in §
385.21, solely for the purpose of providing such licensed subpart C activity, as defined in §
385.21 (and no other purpose).”^3306
(^3302) 71 Fed. Reg. 64303, 64304 (Nov. 1, 2006).
(^3303) 608 F.3d 861 (D.C. Cir. 2010).
(^3304) 78 Fed. Reg. 67938 Nov. 13, 2013).
(^3305) Id. at 67942.
(^3306) Id. at 67951.