BILL ANALYSIS C.S.H.B. 1530 By: Eiland 4-11-95 Committee Report (Substituted) BACKGROUND Restaurants, retail shops, professional offices and other places open to the public are required by federal law to pay copyright fees for playing music. Music licensing organizations such as Broadcast Music Inc. and the American Society of Composers, Authors and Publishers act as intermediaries between the artists and their works and those establishments which broadcast public performances of these artists' work. Background music, music used in television broadcasts, Karaoke, elevator background music and even music played on the telephone while callers are on hold fall under the application of this federal act. The standard practice for licensing organizations to collect fees for background music usually begins with an agent of the organization randomly entering a business unannounced to inspect the way a public performance of the works they license is being used. The agent then sends an un-itemized bill to the proprietor with a letter warning that failure to pay violates federal law and will result in significant fines. PURPOSE To provide regulation of copyright royalty collection practices. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. SHORT TITLE. Provides that the Act may be cited as the Copyright Royalty Collection Practices Act. SECTION 2. DEFINITIONS. Defines: (a) "Copyright owner"; (b) "Performing rights society"; (c) "Proprietor"; (d) "Royalty". SECTION 3. LICENSING NEGOTIATIONS. Provides that when offering a contract for the payment of royalties to a proprietor, a performing rights society shall provide the following: (a) a schedule of rates and terms under the contract; (b) the opportunity to review the most current available list of the members or affiliates represented by the society; (c) notice that it will make available, upon written request, the most current available listing of the copyrighted musical works in such performing rights society's repertory. SECTION 4. FORM OF CONTRACT. States that every contract between a performing rights society and proprietor for the payment of royalties shall: (a) be in writing; (b) be signed by the parties; (c) include the following: (1) proprietor's name, business address, and the name and location of each place of business to which the contract applies; (2) name and address of the performing rights society; (3) duration of the contract; (4) schedule of rates and terms of the royalties to be collected under the contract. SECTION 5. IMPROPER LICENSING PRACTICES. No performing rights society, or any agent or employee shall: (a) collect a fee not covered by a contract complying with this Act. SECTION 6. CIVIL REMEDIES: INJUNCTION. Provides any person damaged by a violation of this Act with a cause of action in which an injunction and actual damages incurred may be recovered with costs of court and attorney's fees. SECTION 7. APPLICATION. Clarifies that the Act does not apply to contracts between performing rights societies, broadcasters, or to motion picture or audiovisual works. SECTION 8. SEVERABILITY. Provides that the provisions of the Act are severable should any provision be found invalid. SECTION 9. Effective date: September 1, 1995. SECTION 10. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1. Changed so as to not specify a particular placement within a code or statute. Provides a short title for reference. Deleted the definition "area" to avoid the difficulty of identifying similar proprietors in a 25-mile radius of each location. SECTION 2. (a) Deleted reference to similar works to avoid the unintentional inclusion of copyrighted works. (c) Reference to "similar businesses" deleted to assure that businesses not intended to be covered by the Act did not come within its preview. (d) Removes copyright owners from the definition of royalties to assure that the Act does not apply to artists or composers. SECTION 3. Amended to allow time for providing the materials required by the Act. Also deleted to avoid the difficulty of identifying similar proprietors in a 25-mile radius of each location. (c) Amended to make the proprietor provide a written request as well as pay for the listing. This was changed due to the volume of works covered by the license. Deletes the case of a performing rights society offering discounts to proprietors. Deleted because discounts are not allowed under a Federal consent decree. Deleted explanation of any exceptions to the copyright laws, including the "home-style" exemption. Deleted to avoid providing legal advice by a layperson. Deleted the failure to comply is a violation of the provisions. Deleted to avoid providing legal advice by a layperson. SECTION 4. Changed "Form of Contract" to clarify that the Act only applies to contracts between performing rights societies and proprietors. Deleted that the contract would not exceed one year. Deleted to allow contracts up to the federal limit of five years. (c)(2) Deleted copyright owners because the Act does not apply to them. Deleted that if requested, the contract be put in a format convenient to the proprietor. This is covered in another section of the Act. Deleted the requirement of an itemization showing the charge for each activity on all billings. Deleted to avoid differing billing standards from state-to-state. SECTION 5. (a) Deleted reference to other fees which are not covered in the contract. Deleted using profane or obscene language to the proprietor. Deleted as redundant of other provisions of law. Deleted placing phone calls without disclosing information of the call. Deleted to allow monitoring of the use of music by a proprietor. Deleted causing expense by any medium of communication without disclosing information of the call or message. Deleted to avoid questions concerning the ability to charge for on-line services. Deleted divulging any information concerning a proprietor. Deleted to avoid conflicts with other provisions of the law. Deleted fine paid for each violation. Deleted due to concerns over the impact of enforcement on agents of performing rights societies. SECTION 6. Shortened for brevity and conciseness in expression. $1,000 minimum penalty removed as it might unduly impact the collection of royalties. SECTION 7. Amended to assure that the Act would not reach to audio/visual works, cable, or prohibitions on bootlegging of copyrighted works. SUMMARY OF COMMITTEE ACTION The Business and Industry Committee considered H.B. 1530 in a public hearing on March 28, 1995. The committee considered a complete substitute for H.B. 1530. The substitute was withdrawn without objection. The following persons testified for H.B. 1530: Richard E. Galvan, representing himself; Glen Garey, representing the Texas Restaurant Association; Bob Stout, representing Mitchell Energy and Development Corporation; and Richie Jackson, representing the Texas Restaurant Association. The following persons testified against H.B. 1530: George Cisneros, representing himself; Margaret A. Boulware, representing herself; Chris Wall, representing himself; David Halley, Jr., representing himself; Marcia Ball, representing herself; Richard Perna, representing himself; Daniel Gold, representing Broadcast Music, Incorporated (BMI); Pat Collins, representing ASCAP; Laurie Hughes, representing SESAC, Inc.; Harry B. Friedman II, representing himself; Jeff A. McDaniel, representing ASCAP; Mike Workman, representing the Texas Music Industry Council. H.B. 1530 was referred to the following subcommittee: Representatives Corte-chair, Rhodes, Giddings. H.B. 1530 was considered in subcommittee in a formal meeting on April 6, 1995. The subcommittee considered a complete committee substitute for H.B. 1530. The substitute was adopted without objection. H.B. 1530, as substituted, was reported favorably to the full committee by a record vote of 2 (two) ayes, 0 (zero) nays, 0 (zero) present-not-voting, 1 (one) absent. H.B. 1530 was considered on subcommittee report by the full committee in a public hearing on April 11, 1995. The full committee adopted the committee substitute without objection. H.B. 1530, as substituted, was reported favorably with the recommendation that it do pass and be printed and be sent to the Committee on Local and Consent Calendars, by a record vote of 9 (nine) ayes, 0 (zero) nays, 0 (zero) present-not-voting, 0 (zero) absent.