By Scott Hervey
On October 16 the Register of Copyrights issued an interpretation of Section 115 of the Copyright Act that will make it easier for record labels and cellular phone services to offer ringtones to consumers. The question, whether compositions used for ringtones [monophonic (single melody line) or polyphonic (melody and harmony)] or for master ringtones (ringtones taken from a master recording) fall under the compulsory license provisions of Section 115 of the Copyright Act, was referred to the Register of Copyrights by the Copyright Royalty Board (“CRB”) acting on a request from the RIAA. The decision – that ringtones (including monophonic and polyphonic ringtones, as well as mastertones) may be subject to a compulsory license – marks a major victory for record labels and cellular phone services looking to fuel the ringtone hungry market.
Prior to the decision, the standard for securing ringtone rights was to negotiate a license with the record company for the use of the master recording and then negotiate with the music publisher for a license to use the composition. Most music publishing companies insisted that ringtones did not fall under the compulsory license and they could therefore charge a higher rate than the statutory mechanical royalty rate, or withhold permission altogether. (For a discussion of the compulsory license, see Digital Applications of the Compulsory License at www.theiplawblog.com/archives/copyright-law.)
In August, 2006 the RIAA requested that the CRB refer a novel question of law to the Register of Copyrights regarding whether ringtones qualified for compulsory licensing under Section 115 of the Copyright Act. This Section provides that once a “phonorecord” of a musical work has been publicly distributed in the United States with the copyright owner’s consent, anyone else may, under certain circumstances and subject to limited conditions, obtain a compulsory license to make and distribute “phonorecords” of the song without express permission of the copyright owner. The Section specifically states that a compulsory license “includes the right of the compulsory licensee to distribute or authorize the distribution of a phonorecord by means of a digital transmission which constitutes a digital phonorecord delivery…”
The RIAA argued that ringtones are “digital phonorecord deliveries” (“DPD”) and are subject to compulsory licensing under the plain language of Section 115. Ringtones in general, and mastertones in particular, the RIAA argued, contain no new original material, are not derivative works. The music publishers who opposed the RIAA argued that ringtones involve only a portion of the underlying composition and as such are derivative works not covered by Section 115.
The Copyright Register stated that “[b]ased on the language of the statute, ringtones easily meet the requisite definitions under the Copyright Act to be included in the Section 115 licensing scheme.” Addressing the music publishers’ argument that ringtones are derivate works since they involve only a portion of the composition, the Register stated that the “Section 115 license is not limited to the reproduction and distribution of phonorecords of the entire musical work, and an excerpt may qualify for the statutory license if all other requirements are met.” “This provision of the Act does not expressly exclude ‘portions of works’ from its scope and we can not” the Register continued “assume that such treatment was intended in the absence of clear statutory language to the effect.”
Where the ringtone contains material other than excerpts from the master sound recording, the ringtone may be considered a derivative work and not subject to the compulsory license. For example, in Beyonce’s mastertone “Let Me Cater 2 You,” the ringtone contains a portion of the song, with an extra spoken line added at the end unaccompanied by music: “What’s up, this is Beyonce from Destiny’s Child and this call is for you.” Ringtones such as this, the Register concluded, may be subject to a separate license which must be negotiated with the copyright owner.
Now that the Register of Copyrights has determined that ringtones may fall under the licensing scheme of Section 115, the CRB has the authority to set the applicable license rates. Arguments on compulsory ringtone rates are set to take place in November.
Scott Hervey is a shareholder with Weintraub Genshlea Chediak Tobin & Tobin and practices in the firm’s technology and corporate sections. Scott’s practice primarily involves assisting companies in commercializing and protecting their intellectual property assets. Scott’s clients range from software companies to film production companies to digital content aggregators. For additional articles on IP law, visit www.theiplawblog.com.