C

ONGRESS is con-
sidering
ground-breaking
amendment to

the Copyright Act' that - will open the consumer marketplace to digital audio recording technology (DART). Because DART systems allow users to make virtually perfect copies of source music, it

is billion-dollar news for the stagnant consumer electronics business. It has already attracted considerable attention. At least three DART formats have emerged - Sony is pushing both a tape-based system (Rotary Head Digital Audio Tape or R-DAT) and a newer one based on compact disks (the Mini-Disk), while Philips has countered with a tape-based sys. tem (Digital Compact Cassette or DCC).

The pending legislation reflects the real news about DART that it has finally won the blessing of the music publishing industry after years of opposition. Fearing DART as a formida ble tool for piracy, most music publishers had refused to release titles in the new format. And Sony was sued for contributory infringement❜

when, last year, it began the U.S. distribution of its R-DAT system, although the machines included an anti-piracy circuit (the Se-1 rial Copy Management System or SCMS) that allows the user to make only first-generation copies of copyrighted source material.

The music industry's sudden change of heart occurred this July, in a compromise announced by leading groups in the music and consumer electronics industries. The DART system vendors agreed to pay royalties to music copyright owners on sales of DART equipment and blank media, and to include the SCMS circuit in consumer DART equipment. In return, all home audio recording will be exempt from copyright infringement challenge.

The sponsors of DART quickly translated this compromise into companion bills S.1623 and H.R. 3204.5 The bills' prompt appearance, their strong bipartisan sponsorship and their scope and detail, all reflect the importance of Congressional action. It is the last, pivotal step in opening up

marily allected
"interested copyright
terested manufacturi
ers, fundamental (
scope, identify the kinds
and media that it will
hardware, the relevant term
ital audio recording devi
"digital audio interface devic
media, it is “digital audio reco
medium."*"*

The current wording of these terms reflects a drafting dilem They must not encroach uniairly neighboring digital information-1 dling systems such as camcorder and computer diskettes. must address all present technologies that permit digital r cording of music.

The bills' drafters have lavor strategy of broad inclusion with ceptions for categories of products such as computer data storage media. and audio recording devices whose primary aim is recording "nonmusi cal" sounds. This strategy, while understandable, is not yet successh Some of its shortcomings are cussed below.

Royalty System

The proposed royalty system is implemented in Subchapter 8." Blank media will pay a one-time royalty equal to 3 percent of the "transler price. Recording devices will pay a royalty equal to 2 percent, subject to a minimum of $1 and a maximum of $8 per device (812 where one package contains two or more distinct recording devices). During the sixth year aller the new law takes effect, and sanually thereaher, any "interested copyright party" may petition to increase these caps on the device royalty rate.

The royalty pool among claimants has year sales or airtime works or sound recor

is actua

thirds being reserved in

Recordings Fund and the

marked for

within each

pre-allocatio

Musical Wo

there are

Claimants within a Fund are sup posed to agree on work-by-w

cations of the Fund's royalties, and will enjoy antitrust immunity for this limited purpose; if they don't agree the Tribunal will set the per-wor alty. And, while parties can neg different administrative systems, they cannot vary the statutory notice requirements, the royalty rates, or the pre-allocation of the royalties between and within the two Funds.

Subchapter C11 requires SCMS copylimiting circuitry in every "digital au dio recording device or interface device" made, imported or distribut ed in the United States. To determine whether a given device complies with SCMS, the legislation refers to a "technical reference document."***

The technical reference document does not yet exist, but is to be devel uped during the committee process. The Secretary al Commerce will publish the technical reference document when the new law takes effect, and will also issue orders for special compliance problems, for new devices. and for updating SCMS standards.

To protect the SCMS regime from "end runs," Subchapter C lorbids any traffic in devices of services whose ̈primary purpose or effect" is to by pass or disable the SCMS circuitry in any digital audio recording or interlace device, and prohibits anyone from encoding or publicly transmit ting any sound recording with inaccurate information about its copyright status.

Remedies

Subchapter D offers a variety of civil remedies ranging from the recov ery of unpaid royalties and interest. through awards of actual and statu tury damages, to injunctive and other equitable relief. In appropriate cases, the court can award costs and Trasonabir attorneys' fees.

These remedies are available through actions brought in the appropriate federal district court. Potential pinintills include not only interested

Of the three, this definition has perhaps the most distressing implica. tions. It means “any machine or device that supplies a digital audio signal through a nonprofessional interface."" This is so broad that, unless it is somehow restricted by the constituent phrases “digital audio sig. nal" and "nonprofessional interface," it would extend not only to every computer, but to every motherboard, every bus and every cable that can carry a digital signal about audiospectrum information. Surely Congress does not intend to regulate every piece of wire as a “digital audio interface device"?

But a search for the needed restrictions is discouraging. The legislation does not define “digital audio signal,” but on any reasonable reading it is not sufficiently restrictive. Defining it as, say, "a signal that contains information encoded in digital form that, when decoded and played through appropriate transducers, is perceived as sound." is no answer. This doesn't limit the definition of the "interface" through which such signals pass.

As for "nonprofessional interface," the legislation merely states that it will be defined and described in the yet-unwritten "technical reference

document." This is not reassuring. and not just because it is a loose thread to be tidied up in the Congressional committee process. Rather, it is very possible that the definition, when it appears, will do nothing to narrow the reach of "interface."

Let's take an educated guess at how "nonprofessional interface" will be defined. The qualifier "nonprofessional" suggests that only "professional” interfaces will escape the SCMS regime. If the technical reference document uses the restrictive approach taken by the legislation for digital audio recording devices seeking the "professional model product" exemp. tion,” a small set of interfaces will be classified as "professional" and by default, all others will need to include the SCMS circuits.

Any current attempt to understand "digital audio recording interface” therefore ends either in a question mark or with the real possibility that the SCMS regime will govern every. thing but an elite class of “profession· al" interfaces. It is disappointing and disquieting that our best hope for acceptably limiting the scope of "interface" is that a technical fix for the term might emerge as a by-product of describing the difference between "professional" and "nonprofessional” versions.

Summary

The impressive superstructure of the legislation rests, it seems, on halfdeveloped and perhaps intractable ideas. It will take time and expertise to refine them into a form acceptable to groups such as the computer industry. whose livelihood the legislation would otherwise inadvertently affect Thus, even if the legislation faces no other obstacle, the need to develop fair and precise definitions could lock the bills in committee for some time

That gives us little reason to hope for DART systems under the Christmas

tree.

(1) Digital audio recording terkinishagers rety on anakig/digital conversion deviers muaral information from the traditio form intu digital form and bark kurms of music are mandleste

ing wave forms, lur example at audio electronic circuits By contrast, digital form consists of discrete samples analog waveform that are taken at a freq spell above the limit of human hearing —32 KHz, 44.1 KHz or 48 KHz — and 1 binary code form. Because digital e error correction messages to be includ with the information about the music. I nal signal can be reconstructed perfectly. allows digital systems to eliminate the and other signal degradation to which systems are vulnerable.

(2) Cahn a Sony Inc., SDNY 98-Clv. 4537 (Justy 9, 1990). This case was brought as a class a by Hal David. Sammy Cahn, Fort Knox Music, Trio Music Co. and' Peer International Inc.. behall of 40,000 songwriters and music publial era. It was dismissed without prejudice as part of the July 11, 1991 "peace treaty" between_the electronics and music industries.

(3) See the July 11, 1991 press release tional Music Publishers Association and other trade groups. See also the Wall Street Journal, July 12, 1991 at BS ("Electronics, Music Indus tries Set Pact on Digital Recording Use Home").

(4) 5. 1623, 1024 Cong, 1st Sess (1991). The Senate bill was introduced by Senator DeConcini (D-Ariz.) on August 1, 1991 a ferred to the Senate Judiciary Committe dition to Senator DeConcini, its spe Daniel K. Inouye (D-Hawaii), Orrin G. Utah): Conrad Burns (RMontana); Breaux (D-Louisiana); Edward M. Kennedy Massachusetts); Albert Gore, Jr. (DTennan Slade Gorton (R-Washington); Allense D'An (R-New York); Patrick J. Leahy (D-Vermont) Alan Cranston (D-California).

(5) H.R. 3204, 102d Cong., 1st Sess. (1991). House bill was introduced by Congressm Brooks (D-Texas) and Bill Hughes (D-N.J.) August 2, 1991 and referred jointly to the Committees on the Judiciary, Energy and

and Ways and Means.

for example 17 USC II (

sury license of arcendary transmission (compulsory mechanical krensr to ma distribuir phonorecards); 8116 (compulsory cense for jukebos periørmances); and Bila (compulsory license for noncommercial broadcasting).

(15) 5. 1623, 1828 Cong. Ist Sras. (1991). M1021 and 1022.

(16) id. #1021(a) (1) (A) and 81022(a) The "technical reference document" is defined 1001(13) as the document bearing that name · such document appears in the report of the Committer on the Judiciary to the Senate reporting lavorably the bill" that becomes enacted Chapter 10 of 17 USC.

(17) Id.

1031 and 1032.

(18) id 81001(3). (19) Id. 81001(1). (20) 17 USC MI.

(21) The acronym for Musical Instrument Digital Interface, the industry standard that estab lishes the sampling rate and other technical parameters needed for digital musical devices (like synthesizers and samplers) to

(22) S. 1623, 1024 Cong., lat 81001(3) (A). See also 81001(10) lishes the technical criteria for whether a device is a "professional uct." These criteria include “a and reporting system of error cod cording and playback" (81001(10) (B) record and repe

(1) (1)X

(81001(10) (8)

ning to

mat providing read" " (81001(10)