[Federal Register: November 1, 2006 (Volume 71, Number 211)] [Notices] [Page 64303-64317] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr01no06-121] ======================================================================= ----------------------------------------------------------------------- LIBRARY OF CONGRESS Copyright Office [Docket No. RF 2006-1] Mechanical and Digital Phonorecord Delivery Rate Adjustment Proceeding AGENCY: Copyright Office, Library of Congress. ACTION: Final Order. ----------------------------------------------------------------------- SUMMARY: The Copyright Royalty Board, acting pursuant to statute, referred two novel questions of law to the Register of Copyrights. Specifically, the Copyright Royalty Board requested a decision by the Register of Copyrights regarding whether ringtones are subject to the statutory license for making and distributing phonorecords under the Copyright Act, and if so, what legal conditions and/or limitations would apply. The Register of Copyrights, in a timely fashion, transmitted a Memorandum Opinion to the Copyright Royalty Board stating, with certain caveats, that the statutory license applies to ringtones. DATES: Effective Date: October 16, 2006. FOR FURTHER INFORMATION CONTACT: Ben Golant, Senior Attorney, and Tanya M. Sandros, Associate General Counsel, Copyright GC/I&R, P.O. Box 70400, Southwest Station, Washington, DC 20024. Telephone: (202) 707- 8380. Telefax: (202) 707-8366. SUPPLEMENTARY INFORMATION: In the Copyright Royalty and Distribution Reform Act of 2004, Congress amended Title 17 to replace the copyright arbitration royalty panel with the Copyright Royalty Board (``Board''). One of the functions of the new Board is to make determinations and adjustments of reasonable terms and rates of royalty payments as provided in sections 112(e), 114, 115, 116, 118, 119 and 1004 of the Copyright Act. In any case in which a novel question of law concerning an interpretation of a provision of the Copyright Act is presented in a ratesetting proceeding, the Board has the authority to request a decision of the Register of Copyrights (``Register''), in writing, to resolve such questions. See 17 U.S.C. 802(f)(1)(B)(i). For this purpose, a ``novel question of law'' is a question of law that has not been determined in prior decisions, determinations, and rulings described in Section 803(a) of the Copyright Act. On August 1, 2006, the Recording Industry Association of America (``RIAA'') requested that the Board refer a question to the Register of Copyrights regarding the eligibility of ringtones (i.e., short digital sound recording file distributed for use in a cellular telephone or similar device) for statutory licensing under Section115 of the Copyright Act. An opposition to the RIAA`s referral motion was submitted, collectively, by the National Music Publishers Association, Inc., the Songwriters Guild of America, and the Nashville Songwriters Association International (``Copyright Owners''). After considering the arguments of the parties, the Board agreed that the matters raised by the RIAA motion did present novel questions of law and agreed to submit the questions to the Register. Accordingly, on September 14, 2006, the Board transmitted to the Register: (1) an Order, dated August 18, 2006, referring two novel questions of law; and (2) the Initial and Reply Briefs filed with the Board by RIAA and the Copyright Owners. The Board`s transmittal triggered the 30-day decision period prescribed in Section 802 of the Copyright Act. This statutory provision states that the Register ``shall transmit his or her decision to the Copyright Royalty Judges within 30 days after the Register of Copyrights receives all of the briefs or comments of the participants.'' See17 U.S.C. 802(f)(1)(B)(i). On October 16, 2006, the Register transmitted a Memorandum Opinion to the Board that answered the novel questions of law. To provide the public with notice of the decision rendered by the Register, the Memorandum Opinion is reproduced in its entirety, below. Dated: October 26, 2006 Marybeth Peters, Register of Copyrights. Before the U.S. Copyright Office Library of Congress Washington, D.C. 20559 Docket No. RF 2006-1 In the Matter of Mechanical and Digital Phonorecord Delivery Rate Adjustment Proceeding MEMORANDUM OPINION I. Introduction On September 14, 2006, the Copyright Royalty Board (``Board''), acting on a request by the Recording Industry Association of America, Inc. (``RIAA''), and pursuant to 17 U.S.C. Sec. 802(f)(1)(B), referred two novel questions of law\1\ to the Register of Copyrights (``Register''). Specifically, the Board requested a decision by the Register as to the following: --------------------------------------------------------------------------- \1\ A ``novel question of law'' is a question of law that has not been determined in prior decisions, determinations, and rulings described in Section 803(a) of the Copyright Act. See 17 U.S.C. Sec. 802(f)(1)(B)(ii). --------------------------------------------------------------------------- 1. Does a ringtone, made available for use on a cellular telephone or similar device, constitute delivery of a digital phonorecord that is subject to statutory licensing under 17 U.S.C. Sec. 115, irrespective of whether the ringtone is monophonic (having only a single melodic line), polyphonic (having both melody and harmony), or a mastertone (a digital sound recording or excerpt thereof)? 2. If so, what are the legal conditions and/or limitations on such statutory licensing?\2\ --------------------------------------------------------------------------- \2\ See Mechanical and Digital Phonorecord Delivery Rate Adjustment Proceeding, Order Granting in Part the Request for Referral of a Novel Question of Law, Docket No. 2006-3 CRB DPRA (Aug. 18, 2006) (``Order''). --------------------------------------------------------------------------- In sum, and as stated more fully below, we believe that ringtones (including monophonic and polyphonic ringtones, as well as mastertones) qualify as digital phonorecord deliveries (``DPDs'') as defined in 17 U.S.C. Sec. 15. Apart from meeting the formal requirements of Section 115 (e.g., service of a notice of intention to obtain a compulsory license under Section 115(b)(1), submission of statements of account and royalty payments, etc.), whether a particular ringtone falls within the scope of the statutory license will depend primarily upon whether what is performed is simply the original musical work (or a portion thereof), or a derivative work (i.e., a musical work based on the original musical work but which is recast, transformed, or adapted in such a way that it becomes an original work of authorship and would be entitled to copyright protection as a derivative work). Procedural Background. On August 1, 2006, the RIAA requested that the Copyright Royalty Board refer a question to the Register of Copyrights regarding the eligibility of a mastertone, a short digital sound recording file distributed for use in a cellular telephone or similar device, for statutory licensing under 17 U.S.C. Sec. 115.\3\ An opposition to the RIAA`s [[Page 64304]] referral motion was submitted, collectively, by the National Music Publishers Association, Inc., the Songwriters Guild of America, and the Nashville Songwriters Association International (``Copyright Owners''). After considering the arguments of the parties, the Board agreed that the matters raised by the RIAA motion did present novel questions of law and agreed to submit the questions to the Register. --------------------------------------------------------------------------- \3\ The Copyright Royalty Board is currently conducting a proceeding to determine the reasonable rates and terms for the making and distribution of phonorecords under the Section 115 license. See Adjustments or Determination of Compulsory License Rates for Making and Distributing Phonorecords, 71 Fed Reg 1454 (Jan. 9, 2006). The answers to the two questions referred to the Register will help determine the scope of the ratesetting proceeding before the Board. --------------------------------------------------------------------------- Accordingly, on September 14, 2006, the Board transmitted to the Register of Copyrights the following: (1) the Order, dated August 18, 2006, referring two novel questions of law; and (2) the Initial and Reply Briefs filed with the Board by RIAA and the Copyright Owners. The Board`s transmittal triggered the 30-day decision period prescribed in Section 802(f)(1)(B) of the Copyright Act. This statutory provision states that the Register of Copyrights ``shall transmit his or her decision to the Copyright Royalty Judges within 30 days after the Register of Copyrights receives all of the briefs or comments of the participants.''\4\ --------------------------------------------------------------------------- \4\ 17 U.S.C. Sec. 802(f)(1)(B). --------------------------------------------------------------------------- In addition to reviewing the Initial Briefs and Reply Briefs filed in this proceeding, the Office concluded that it would be helpful to conduct oral argument relating to the novel questions of law.\5\ On October 4, 2006, the Copyright Office convened a hearing and questioned counsel on matters raised in the briefs filed by RIAA and Copyright Owners.\6\ --------------------------------------------------------------------------- \5\ See In the Matter of Mechanical and Digital Phonorecord Delivery Rate Adjustment Proceeding, Notice of Oral Argument, Docket No. RF 2006-1 (Sept. 28, 2006). \6\ We note that for demonstration purposes at the oral argument, RIAA and Copyright Owners have created CDs containing many examples of ringtones as well as full length versions of some of the musical works from which the ringtones were based. Copyright Owners` CD also contains ringtones downloaded from specific mobile phone operators. These CDs are now part of the record in this proceeding as is the oral testimony of the parties. --------------------------------------------------------------------------- Summary of Arguments. RIAA argues that ringtones are digital phonorecord deliveries as that term is defined in the Copyright Act and are subject to statutory licensing under the plain language of Section 115, without limitation. It argues that ringtones in general and mastertones,\7\ in particular, contain no new original material, are not protectable as derivative works, and therefore cannot infringe on the derivative work rights of the Copyright Owners. Moreover, even if they were derivative works, RIAA argues that Section 115(a)(2), the arrangement privilege, expressly authorizes their creation. In any event, RIAA argues that once the copyright owner of a musical work distributes a new ringtone to the public, anyone can obtain a statutory license to use the musical work in that ringtone. RIAA concludes that the Register should find that ringtones are subject to statutory licensing under Section 115 of the Copyright Act, and all of the conditions under the provision should apply. --------------------------------------------------------------------------- \7\ These types of ringtones are described in more detail below. --------------------------------------------------------------------------- Copyright Owners assert that all ringtones are excluded from the Section 115 statutory license. They argue that the statutory license for making and distributing phonorecords of musical works is narrow in scope and does not encompass ringtones. They argue that ringtones are not covered by Section 115 because they involve only a portion of the underlying composition, not the entire musical work. Copyright Owners argue that ringtones are derivative works and thus fall outside the express language of the statute. As for Section 115(a)(2), they argue that ringtones cannot be considered ``arrangements'' as that term is understood in the music industry, and in any event, ringtones change the basic melody and fundamental character of the musical work. Copyright Owners also argue that ringtones fail to satisfy Section 115's requirement that the phonorecords be distributed for private use. Copyright Owners conclude that although variations exist among ringtones, none of them fit within the Section 115 licensing scheme. Summary of Decision. We find that ringtones (including monophonic and polyphonic ringtones, as well as mastertones) are phonorecords and the delivery of such by wire or wireless technology meets the definition of DPD set forth in the Copyright Act. However, there are a variety of different types of ringtones ranging from those that are simple excerpts taken from a larger musical work to ones that include additional material and may be considered original musical works in and of themselves. Ringtones that are merely excerpts of a preexisting sound recording fall squarely 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.\8\ 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. For those ringtones that are covered by Section 115 of the Copyright Act, all of the rights, conditions, and requirements in the Act would apply. For those ringtones that fall outside the scope of Section 115, the rights at issue must be acquired through voluntary licenses. While the Copyright Royalty Judges need not know which specific ringtones fall within/outside the scope of the license for the purpose of setting rates, and the parties have not asked the Register to undertake such a granular analysis here, we nevertheless offer some guidance on the legal matters raised in this proceeding. --------------------------------------------------------------------------- \8\ We note that Section 115 permits the creation of derivative works, but this privilege under the statutory license is limited to making musical arrangements necessary to conform it to the style or manner of interpretation of the performance involved. 17 U.S.C. Sec. 115(a)(2). For purposes of our discussion in this proceeding, when we refer to derivative works not covered by Section 115, we mean those types of works that exhibit a degree of ``originality'' as that term is defined in court precedent. The addition of original material would not only take a ringtone outside the scope of the privilege of making arrangements, it would also take the ringtone outside the Section 115 license altogether. --------------------------------------------------------------------------- II. Section 115 of the Copyright Act Almost a century ago, Congress added to the Copyright Act the right for copyright owners to make and distribute, or authorize others to make and distribute, mechanical reproductions (known today as phonorecords) of their musical compositions. Due to its concern about potential monopolistic behavior, Congress also created a statutory license, Section 115 of the Act, to allow anyone to make and distribute a mechanical reproduction of a musical composition without the consent of the copyright owner provided that the person adhered to the provisions of the license, most notably paying a statutorily established royalty to the copyright owner. Although originally enacted to address the reproduction of musical compositions on perforated player piano rolls, the statutory license has for most of the past century been used primarily for the making and distribution of phonorecords and, more recently, for the digital delivery of music online.\9\ --------------------------------------------------------------------------- \9\ Statement of Marybeth Peters, Register of Copyrights, Before the Subcommittee on Intellectual Property: Music Licensing Reform, U.S. House of Representatives, 109th Cong., 1st Sess. at 20 (June 21, 2005). --------------------------------------------------------------------------- [[Page 64305]] In 1995, Congress recognized that ``digital transmission of sound recordings [was] likely to become a very important outlet for the performance of recorded music.''\10\ Moreover, it realized that ``[t]hese new technologies also may lead to new systems for the electronic distribution of phonorecords with the authorization of the affected copyright owners.''\11\ For these reasons, Congress made changes to Section 115 to meet the challenges of providing music in a digital format when it enacted the Digital Performance Right in Sound Recordings Act of 1995 (``DPRA'')\12\ which also granted copyright owners of sound recordings an exclusive right to perform their works publicly by means of a digital audio transmission subject to certain limitations.\13\ Specifically, Congress wanted to reaffirm the mechanical rights of songwriters and music publishers in the new world of digital technology. The changes to Section 115 were also designed to minimize the burden on transmission services by placing record companies in the position to license not only their own rights, but also, if they chose to do so, the rights of writers and music publishers to authorize digital phonorecord delivery.\14\ It is the DPRA amendments to Section 115 that are of particular interest here. --------------------------------------------------------------------------- \10\ S. Rep. No. 104-128, 104th Cong., 1st Sess. at 14 (1995). \11\ Id. \12\ Pub. L. No. 104-39, 109 Stat. 336 (1995). \13\ See 17 U.S.C. Sec. 114. \14\ S. Rep. No. 104-128, at 37 (1995). --------------------------------------------------------------------------- III. Ringtone Types Before addressing the questions raised by the Copyright Royalty Judges, we must first determine the scope of the subject matter in this proceeding. According to RIAA, a ringtone is a digital file, generally no more that 30 seconds in length, played by a cellular phone or other mobile device to alert the user of an incoming call or message.\15\ RIAA states that, initially, mobile carriers and other ringtone vendors distributed synthesized ringtones that embodied versions of musical works, but not recorded performances by featured recording artists. It states that these earlier forms of ringtones are commonly known as ``monophonic'' ringtones (having only a single melodic line) and ``polyphonic'' ringtones (having both melody and harmony). RIAA explains that typical commercial monophonic and polyphonic ringtones consist of a segment of the musical work representing its ``hook,'' or most memorable portion of the melody, with little or no revision.\16\ --------------------------------------------------------------------------- \15\ Cellular phones typically have the ability to accept downloads of ringtones, usually directly over the cellular telephone network. Over the last decade, a new consumer market has developed for musical ringtones. According to RIAA, the vast majority of ringtones (99 percent) now in the marketplace consist of excerpts from sound recordings. Oral Argument Transcript at 7, 10. \16\ RIAA Initial Brief at 3-4; see also Neil J. Rosini and Michael I. Rudell, Ring Tone Revenues Foster Copyright Detente, 234 N.Y.L.J. 3, col. 1 (2005) (``Originally, musical ring tones were only available in `monophonic' form: a simple series of tones-each a single note-that might remind one of several bars from a favorite CD as performed by a very simple computer. Technology then advanced to the `polyphonic' level, which are like monophonic ring tones with multiple notes played at the same time, creating harmonies. They sound closer to that favorite CD, but without original instrumentation or vocals.'')(Hereinafter ``Rosini and Rudell''). --------------------------------------------------------------------------- RIAA states that advances in technology now allow mobile devices to play digital copies of commercial sound recordings. As a result, mobile phone manufacturers are incorporating the functionality of stand-alone portable digital music players, thus permitting consumers to download sound recordings via the Internet or a computer connected to the Internet. RIAA states that, in addition to full song downloads of commercial recordings to such phones, there is consumer demand for downloads of shorter (partial-copy) excerpts of sound recordings for use as ringtones. These ringtones are commonly referred to as ``mastertones.''\17\ RIAA asserts that mastertones are displacing monophonic and polyphonic ringtones as the ringtone of choice amongst consumers.\18\ RIAA acknowledges that record companies and ringtone vendors must obtain licenses to reproduce and distribute the relevant musical works in ringtones and that Section 115 exists to enable use of musical works when licenses are not otherwise available.\19\ --------------------------------------------------------------------------- \17\ RIAA explains that record companies hire contractors to select hooks from popular sound recordings and then create ringtones including these hooks. Oral Argument Transcript at 10. \18\ See Rosini and Rudell (Mastertones ``not only sound like a favorite CD but are that favorite CD.''). \19\ RIAA Initial Brief at 4-5. --------------------------------------------------------------------------- Copyright Owners describe ringtones as ten-to-thirty-second ``snippets'' of full-length musical works that are created to serve as ringers on cell phones and other mobile devices.\20\ Copyright Owners alternatively describe a ringtone as a ten-to-thirty-second derivation of a musical work, sometimes repeated in a ``looping'' sequence and sometimes not.\21\ Copyright Owners assert that the creation of ringtones, including mastertones, involves ``substantial'' creativity and ``significant'' changes to the underlying work. They state, for example, that making a ringtone requires creative determinations as to which portions of the work should be selected to best capture the ``hook'' of the full length recording and also to be most appealing as ringtones. They further state that many mastertones are designed to be looped, repeating the selected portions of the song multiple times until the phone or mobile device is answered.\22\ Some songs have multiple hooks, each of which can be made into a separate ringtone. Other ringtones, they assert, include new content not present in the underlying work.\23\ --------------------------------------------------------------------------- \20\ Copyright Owners Initial Brief at 1-2. \21\ Id. at 9. We note that looping involves a portion of a musical performance that is then sequenced in a repetitive manner. \22\ RIAA states that ringtone producers do not intentionally create looping sequences; instead, looping is the product of cellphones that do not have adequate storage capacity (memory). Oral Argument Transcript at 13-14. \23\ Copyright Owners Reply Brief at 5, 7. --------------------------------------------------------------------------- Analysis. While RIAA and the Copyright Owners may disagree as to the amount of creativity it takes to create a ringtone, they do agree that, in general, ringtones are a unique category of sound recordings that are used to announce an incoming call. The most rudimentary ringtone, in musical terms, is the monophonic ringtone that only contains a musical work`s melody (or a portion of the melody). One level up the musical hierarchy is the polyphonic ringtone that contains a work`s melody and harmony (or a portion thereof). The most musically complex ringtones are mastertones. A mastertone is a portion of a pre- existing full length musical work that may play sequentially or is looped in a sequence. A mastertone could also contain a portion of a musical work combined with a message from the recording artist designed specifically for the ringtone user. It is important to note that there are also non-musical ringtones that are becoming increasingly popular with consumers.\24\ As discussed below, different types of ringtones may be treated differently for Section 115 purposes. --------------------------------------------------------------------------- \24\ See Rosini and Rudell (``[C]onsumers aren`t settling merely for musical ringtones and ringbacks. Audio clips from films and television programs; comic routines from Comedy Central; pithy observations by Donald Trump; and announcement of baseball plays are also available as ring tones.''); see also http://cyberextazy.wordpress.com/2006/09/01/ringtones-in-mtvs-video-music-awards/ , Ringtones in MTV`s Video Music Awards(Sept. 1, 2006) (stating that ringtones are evolving into watchtones, which are ringtones combined with video clips). --------------------------------------------------------------------------- [[Page 64306]] IV. The Applicability of Section 115 to Ringtones Statutory Language. Section 115 of the Copyright Act provides a ``compulsory license to make and distribute phonorecords'' of any musical work previously recorded once a phonorecord of a nondramatic musical work has been ``distributed to the public in the United States under authority of the copyright owner.''\25\ Such a license ``includes the right of the compulsory licensee to distribute or authorize the distribution of a phonorecord of a nondramatic musical work by means of a digital transmission which constitutes a digital phonorecord delivery.''\26\ The term ``digital phonorecord delivery'' or ``DPD'' is defined, in part, as ``each individual delivery of a phonorecord by digital transmission of a sound recording which results in a specifically identifiable reproduction by or for any transmission recipient of a phonorecord of that sound recording.''\27\ --------------------------------------------------------------------------- \25\ 17 U.S.C. Sec. 115(a)(1). \26\ 17 U.S.C. Sec. 115(c)(3)(A). \27\ 17 U.S.C. Sec. 115(d). The legislative history accompanying this provision states, inter alia, that: (1) the phrase ``specifically identifiable reproduction'' should be understood to mean a reproduction specifically identifiable to the transmission service; and (2) a transmission by a noninteractive subscription transmission service that transmits in real time a continuous program of music selections chosen by the transmitting entity, for which the consumer pays a monthly fee would generally not be considered a DPD. --------------------------------------------------------------------------- Congress created the statutory mechanical license, as part of the Copyright Act of 1909, to prevent monopolistic control over musical works while ensuring that music publishers and songwriters receive an appropriate royalty.\28\ Congress revisited the issue of statutory licensing in 1976 and 1995 and has reaffirmed these same purposes.\29\ Congress added the DPD provisions to Section 115, as part of the DPRA of 1995, with support of the music publishers, noting: ``The intention in extending the mechanical compulsory license to digital phonorecord deliveries is to maintain and reaffirm the mechanical rights of songwriters and music publishers as new technologies permit phonorecords to be delivered by wire or over the airwaves rather than by the traditional making and distribution of records, cassettes, and CDs.''\30\ The question presented here is whether ringtones qualify as digital phonorecord deliveries within the scope of Section 115.\31\ --------------------------------------------------------------------------- \28\ SeeH. R. Rep. No. 60-2222, at 7 (1909) (``The main object to be desired in expanding copyright protection accorded to music has been to give to the composer an adequate return for the value of his composition, and it has been a serious and difficult task to combine the protection of the composer with the protection of the public, and to so frame an act that it would accomplish the double purpose of securing to the composer an adequate return for all use made of his composition and at the same time prevent the formation of oppressive monopolies, which might be founded upon the very rights granted to the composer for the purpose of protecting his interests.)'' \29\ See H. R. Rep. No. 94-1476, at 107 (1976) (``[A] compulsory licensing system is still warranted as a condition for the rights of reproducing and distributing phonorecords of copyrighted music.''). \30\ See S. Rep. No. 104-128, at 37 (1995). \31\ We note that the Harry Fox Agency, Inc., a subsidiary of the National Music Publishers Association and the leading musical work licensing agency, released a notice in 2004 informing all licensees of its stated position that Section 115 does not cover ringtones or mastertones. See Mario F. Gonzales, Are Musical Compositions Subject to Compulsory Licensing for Ringtones?, 12 UCLA Ent. L. Rev. 11, 11-12 (2004). RIAA asserts that its dispute with the Harry Fox Agency over the interpretation of Section 115 remains unresolved and ``has cast a pall of legal uncertainty over the ringtone market.'' RIAA Initial Brief at 6. --------------------------------------------------------------------------- RIAA argues that, under the plain language of the Copyright Act, a distribution of a ringtone is a DPD subject to statutory licensing under the Copyright Act. RIAA asserts that a ringtone results from the fixation of a series of musical, spoken, or other sounds and therefore meets the definition of a ``sound recording'' in Section 101 of the Copyright Act; its fixation in a material object is a ``phonorecord.'' According to RIAA, it is a phonorecord of the relevant musical work as well. In the case of a mastertone, the sound recording is a clip of the commercially distributed recording. In the case of monophonic and polyphonic ringtones, the fixed sounds are rendered by a synthesizer in the telephone and so do not represent ambient sound in a recording studio.\32\ --------------------------------------------------------------------------- \32\ Id. at 6-7. --------------------------------------------------------------------------- RIAA asserts that downloads of ringtones are DPDs because, when a ringtone is downloaded, there is a digital transmission of the sound recording that results in a specifically identifiable reproduction for the transmission recipient. RIAA argues that the statutory license under Section 115 includes the right of the licensee to distribute ringtones just as it includes the right of the licensee to make and authorize other kinds of downloads.\33\ RIAA asserts that statutory licensing of ringtones is consistent with Congressional intent, as they are just the type of new technology contemplated by Congress to be included within the scope of the DPRA.\34\ --------------------------------------------------------------------------- \33\ Id. at 8. \34\ Id. at 21, 23. --------------------------------------------------------------------------- Copyright Owners do not argue that ringtones are not DPDs, stating instead that since ringtones are not covered by Section 115, there is no need to address the question.\35\ Rather, Copyright Owners argue that the statutory license for making and distributing phonorecords or musical works is narrow in scope and does not encompass uses such as ringtones. They assert that the inclusion of ringtones within the statutory license would contravene Congress` intent that Section 115 be a narrowly construed exception to certain exclusive rights of the musical work copyright owner. Copyright Owners state that, as a ``limited exception'' to certain exclusive rights granted to copyright owners, courts consistently have held that the statutory license ``be construed narrowly, lest the exception destroy, rather than prove, the rule.''\36\ --------------------------------------------------------------------------- \35\ Oral Argument Transcript at 55. \36\ Copyright Owners Initial Brief at 5, citing Fame Publishing Co. v. Alabama Custom Tape, Inc., 507 F. 2d 667, 670 (5th Cir. 1975)(noting that the compulsory license provision of the 1909 Copyright Act is a limited exception to the copyright holder`s exclusive right to decide who shall make use of his composition). --------------------------------------------------------------------------- With regard to the DPRA of 1995, Copyright Owners assert that Congress` clarification that Section 115 covered not only ``brick and mortar'' sales did not extend the license to cover any and all digital uses. They state that the existing limitations on the scope of the license did not change and that use of a work prior to publication, the creation of derivative works, and the synchronization of a musical work, are uses that remain outside of the license, whether in digital or physical form.\37\ --------------------------------------------------------------------------- \37\ Copyright Owners Initial Brief at 7-8. --------------------------------------------------------------------------- Copyright Owners assert that RIAA`s interpretation of Section 115 would ``potentially open the door'' to licensing of snippets of musical works used to enhance all sorts of other consumer products and devices, such as musical car alarms or doorbells. They state that the licensing of musical works for functional uses in consumer products is not what Congress intended when it enacted Section 115.\38\ --------------------------------------------------------------------------- \38\ Copyright Owners Reply Brief at 14-15. --------------------------------------------------------------------------- RIAA, in its Reply, asserts that the statutory mechanical license has been a fixture of U.S. copyright law for nearly a century and argues that it should be construed in accordance with its terms. RIAA contests Copyright Owners` view that Section 115 should be construed narrowly, noting that the legislative history accompanying the 1976 Copyright Act states: ``The fundamental question of whether to retain the compulsory license or do away with it altogether was a major issue during earlier stages of the program for general revision of the copyright law. At the hearings it was apparent that the argument on this point had shifted, and the real issue was not whether to retain [[Page 64307]] the compulsory license but how much the royalty rate under it should be . .[gteqt].[gteqt]. The Committee`s conclusion on this point remains the same as in 1967: `that a compulsory license system is still warranted as a condition for the rights of reproducing and distributing phonorecords of copyrighted music.`''\39\ RIAA adds that Congress did not narrow the license through adoption of the DPRA in 1995, but rather stated that it was ``extending the mechanical compulsory license to digital phonorecord deliveries'' and that its purpose was to ``maintain and reaffirm'' that the Section 115 license would apply to ``new technologies.''\40\ RIAA concludes that although some details of the Section 115 license have changed over the years, nothing in these enactments or the legislative history thereof suggests that Congress intended a narrow reading of the statute. --------------------------------------------------------------------------- \39\ RIAA Reply Brief at 3, citing H.R. Rep. No. 94-1476, at 107 (1976). \40\ Id. at 4, citing S.Rep. No. 104-128, at 37 (1995). --------------------------------------------------------------------------- Analysis. We find that ringtones meet the definition of DPDs. The issue presented is one of pure statutory construction and there is no actual dispute on this point.\41\ Based 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. First, we hold that a ringtone meets the definition of ``sound recording'' under Section 101 of the Act as a work that results from ``the fixation of a series of musical, spoken, or other sounds,''\42\ and that the sound recording is fixed in the form of a ``phonorecord,'' defined in the statute as a ``material object in which sounds are fixed by any method now known or later developed.''\43\ The phonorecord here is the actual sound recording file stored as a ``download'' on either the cell phone`s hard drive or on a cell phone`s removable memory storage disk.\44\ When downloaded through the Internet or by wireless transmission, a ringtone is part of a ``digital phonorecord delivery'' and a digital transmission of a sound recording which results in a ``specifically identifiable reproduction'' by or for any transmission recipient of a phonorecord of that sound recording.\45\ We also believe that our statutory analysis comports with Congressional intent. Ringtones are delivered by means of the type of ``new technologies'' Congress intended to be included when it enacted the DPRA in 1995.\46\ --------------------------------------------------------------------------- \41\ Id. at 2, citing Doyle v. Huntress, Inc., 419 F.3d 3, 7-8 (1st Cir. 2005) (``A question of statutory construction presents a purely legal question.''); Blackman v. District of Columbia, 2006 WL 2034355, *6 (DC Cir. 2006) (statutory construction begins with ``the language itself, the specific context in which that language is used, and the broader context of the statute as a whole[.]''). \42\ 17 U.S.C. Sec. 101 (```Sound recordings' are works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as disks, tapes, or other phonorecords, in which they are embodied.''). \43\ 17 U.S.C. Sec. 101 (```Phonorecords` are material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term `phonorecords` includes the material object in which the sounds are first fixed.''). \44\ See S. Rep. No. 104-128, at 39 (1995) (stating that storage of data in a ``computer memory'' is ``technically the making of a phonorecord.''). \45\ 17 U.S.C. Sec. 115(d). \46\ See S. Rep. No. 104-128, at 37 (1995) --------------------------------------------------------------------------- We disagree with Copyright Owners that Congress did not intend for ringtones to be the kind of use of musical works contemplated for inclusion under the Section 115 license.\47\ While we adhere to the general proposition that statutory licenses are to be construed narrowly,\48\ we find that Section 115, as amended by the DPRA, purposefully broadened the scope of the statutory license to cover DPDs, and ringtones appear to fit comfortably within the definition of DPDs. On this note, we recognize that Copyright Owners have cited Fame Publishing Co. v. Alabama Custom Tape, Inc., 507 F. 2d at 670, to support their narrow construction argument. However, we find this citation is inapt because the case arose out of a dispute concerning statutory language found in the 1909 Act that is not present in the current version of Section 115. In any event, the legislative history of the Copyright Act of 1909 states that from its inception, this compulsory license was intended to include all ``mechanical reproductions'' and that one of its purposes was ``to secure to the composer an adequate return for all use made of his composition[.]''\49\ (emphasis added). While the concept of the cellular phone ringtone undoubtedly would have astonished the members of the 1909 Congress, the license they devised was broad enough to include ringtones. Whether our interpretation ``opens the door'' to licensing of snippets of musical works to be used in car alarms or doorbells is a question that is outside the scope of this proceeding. --------------------------------------------------------------------------- \47\ We are not saying that Congress specifically contemplated ringtones and their inclusion in the Section 115 license. Rather, ringtones generally fall into the class of ``new technologies'' that Congress concluded should be included within the expanded statutory license. \48\ See Public Performance of Sound Recordings: Definition of a Service, Docket No. RM 2000-B, 65 FR 77,292, 77,297 (Dec. 11, 2000) (noting that the Copyright Office has historically construed limitations on copyright narrowly, especially those constrained by a compulsory license.). \49\ See H. R. Rep. No. 60-2222, at 7 (1909). --------------------------------------------------------------------------- Works or Portions of Works. According to Copyright Owners, Section 115 is expressly limited to the making and distributing of phonorecords of ``works,'' not portions of works such as ringtones. Copyright Owners argue that because a ringtone is not a reproduction of the entire musical work, it is not subject to the statutory license. They argue that Section 115 throughout its provisions makes clear that a ``work,'' and not a ``portion'' of a work, is its subject. Copyright Owners state that this result was not an accident of drafting nor is it an unintended source of statutory ambiguity. They state that Congress had no difficulty using the term ``portions'' where in fact that concept was intended, such as in Sections 108(h)(1) and 110(2) of the Copyright Act.\50\ Copyright Owners assert that this interpretation is confirmed by Section 115's legislative history which mentions ``cover records'' as well as cassettes and CDs.\51\ --------------------------------------------------------------------------- \50\ Section 108(h)(1) states in part ``a library or archives. . .may reproduce, distribute, display, or perform in facsimile or digital form a copy or phonorecord of such work, or portions thereof, for purposes of preservation, scholarship, or research.'' Section 110(2) refers to ``the performance of a nondramatic literary or musical work or reasonable and limited portions of any other work, or display of a work in an amount comparable to that which is typically displayed in the course of a live classroom session, by or in the course of a transmission.'' \51\ Copyright Owners Initial Brief at 9-11, citing Supplementary Register`s Report on the General Revision of the U.S. Copyright Law: 1965 Revision Bill, House Comm. on the Judiciary, 89th Cong., Copyright Law Revision Part 6, at 54 (Comm. Print 1965) (discussing ``cover'' records); H.R. Rep. No. 90-83, at 67 (1967) (referring to ``disks and audio tapes''); S. Rep. No. 104-128, at 37 (1995) (``extending the mechanical compulsory licenses. . .as new technologies permit phonorecord to be delivered by wire or over airwaves rather than by traditional making and distributing of record, cassettes and CDs''). --------------------------------------------------------------------------- Copyright Owners remark that it is obvious that the Section 115 license applies only to physical or digital phonorecords of complete works since industry practices have developed on the basis of this interpretation of Section 115. They state, for example, that partial uses of compositions, such as medleys and samples, are licensed in market transactions. They further state that legal commentators have recognized that the Section 115 license does not apply to digital sampling and that it would have to be modified in order to include sampling within its scope.\52\ --------------------------------------------------------------------------- \52\ Id. at 11, citing Jennifer R.R. Mueller, Note: All Mixed Up: Bridgeport Music v. Dimension Films and De Minimis Digital Sampling, 81 IND. L.J. 435, 461 (Winter 2006). --------------------------------------------------------------------------- [[Page 64308]] RIAA asserts that Section 115 applies to whole musical works as well as portions of musical works, and that any other reading would be inconsistent with other provisions of the Copyright Act.\53\ RIAA states that if the Copyright Owners are correct that the Copyright Act distinguishes between ``works'' and ``portions of works,'' then reproduction and distribution of ringtones would be permissible without a license as the provisions under Section 106 granting the exclusive rights to reproduction and distribution only refer to ``works,'' not ``portions of works.'' RIAA remarks that the Copyright Owners do not intend that interpretation nor is it a correct one. RIAA adds that Copyright Owners` approach to what constitutes a ``work'' would make other phrases in the statute superfluous. It notes, for example, that one of the factors used in determining whether a use of a work is a fair use under Section 107(3) is the ``amount and substantiality of the portion used in relation to the copyrighted work as a whole.'' The phrase ``as a whole'' would be superfluous if a ``work'' in the Act must always be the whole work and not a portion thereof.\54\ RIAA asserts that although unstated, Copyright Owners apparently are relying on the canon of statutory construction expressio unius est exclusio alterius, which provides a general inference that omissions in statutory text are intentional.\55\ RIAA notes, however, that this maxim ``requires great caution in its application'' and should be disregarded where ``its application would thwart the legislative intent made apparent by the entire act.''\56\ It states that such caution should be exercised here because, unlike most of the relevant language in Section 115, the references to ``portions'' of works that Copyright Owners cite did not appear in the 1976 Act and were only added years later. RIAA asserts that there is no indication that either amendment was intended to affect the interpretation of the provisions of the Copyright Act enacted more that twenty years before. RIAA concludes that two isolated references in the Copyright Act to ``portions of works'' cannot imply that the hundreds of unadorned references to ``works'' apply only to works in their entirety.\57\ --------------------------------------------------------------------------- \53\ RIAA Reply Brief at 7. \54\ Id. at 9, citing 17 U.S.C. Sec. 107(3) \55\ Id. at 8, citing 2A Sutherland, Statutes and Statutory Construction, Sec. 47:25 (Norman Singer ed., 6th ed. 2005). \56\ Id. \57\ Id. at 7, 9. --------------------------------------------------------------------------- RIAA notes that Copyright Owners` argument that ringtones are analogous to sampling is equally misplaced. It states that ringtones are excerpts that are taken from musical works and distributed as such; samples, however, are short excerpts that are blended into what are clearly new creative works. RIAA asserts that the fact that the latter are licensed apart from Section 115 does not imply that the former should be.\58\ Analysis. 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. We believe that the Copyright Act`s language and purpose are broad and that ``portions of works'' should be treated the same as any other type of work under Section 115. This provision of the Act does not expressly exclude ``portions of works'' from its scope and we cannot assume that such treatment was intended in the absence of clear statutory language to that effect.\59\ Contrary to Copyright Owners` assertion, we cannot find support for such a limited and narrow reading of the Act in the legislative history they cite.\60\ --------------------------------------------------------------------------- \58\ Id. at n.8. \59\ We agree with RIAA that Section 115 makes no distinction between downloads of song excerpts and full songs delivered by online music services such as Apple`s iTunes Music Store and Verizon Wireless` V Cast Music Store. See RIAA Initial Brief at 1. \60\ See n. 51, supra --------------------------------------------------------------------------- Moreover, we believe that Copyright Owners` citations to Sections 108 and 110 are inapt as these provisions were not enacted contemporaneously with Section 115 and cannot be read to provide any guidance as to Congressional intent or the purpose of the statutory license. We note, in particular, that their interpretation of Section 110(2) defies legislative intent as well as common sense.\61\ Under Copyright Owners` interpretation, educators using the distance education exemption could transmit limited portions of works other than nondramatic literary or musical works, but if they transmit a performance of a nondramatic literary or musical work, they would have to transmit the entire work as a transmission of a portion of the work would not be permitted. Congress certainly did not intend this result. --------------------------------------------------------------------------- \61\ See 17 U.S.C. Sec. 110(2) (discussing works ``produced or marketed primarily for performance or display as part of mediated instructional activities transmitted via digital networks . . .''). --------------------------------------------------------------------------- We also find that Copyright Owners` reading of the Copyright Act, if adopted, would render certain provisions of the statute superfluous. For example, well-settled interpretation of and practice under Section 118 of the Act would be undermined if Copyright Owners` interpretation were correct. Under this provision, licensing agreements and related fees negotiated between noncommercial broadcasting entities and copyright owners of published nondramatic musical works are subject to ratesetting by the Copyright Royalty Board.\62\ While Section 118 expressly refers to ``works,'' it has been understood to include portions of works as well. For example, under 37 CFR Sec. 253.7(b)(3), which implements the rates set for the Section 118 statutory license, ``a `Concert Feature` shall be deemed to be the nondramatic presentation in a program of all or part of a symphony, concerto, or other serious work originally written for concert performance or the nondramatic presentation in a program of portions of a serious work written for opera performances.''\63\(emphasis added). If we were to accept Copyright Owners` argument that the Act covers only full musical works, and not portions of musical works, then the Board could never set such rates pursuant to Section 253.7. This result, we believe, was not intended by Congress. --------------------------------------------------------------------------- \62\ See 17 U.S.C. Sec. 118. Section 118(d) gives public broadcasters permission to engage in certain ``activities with respect to published nondramatic musical works and published pictorial, graphic, and sculptural works . . .'' Under Section 118(d)(1), one of the activities is ``the performance or display of a work.'' 17 U.S.C. Sec. 118(d)(1). \63\ See37 CFR Sec. 253.7(b)(3). --------------------------------------------------------------------------- We also believe that Copyright Owners analogy to sampling is inapt. Sampling generally refers to the appropriation of sounds from an existing sound recording for transformative use along with other sounds in a new work. A mastertone, in contrast, is taken from a single work, in the form of an excerpt. Marketplace Developments. According to Copyright Owners, the statutory license was instituted to ensure a market where none existed, but there is an active market for freely negotiated licenses already in place. They assert that the Register of Copyrights has stated that ringtones are a subject more appropriately left to market forces than government regulation and that ``there is no need for Government to legislate what the parties can negotiate themselves.''\64\ They state that Copyright Owners and record labels, recognizing that ringtones are not DPDs subject to the statutory license, [[Page 64309]] have entered into voluntary license agreements granting the labels the right to create ringtones at specified mutually-negotiated royalty rates.\65\ Copyright Owners assert that these voluntary licenses provide further support that ringtones are outside the narrow scope of Section 115. They conclude that there exists a vibrant and growing market for ringtones, which makes it unnecessary and inappropriate to include ringtones within Section 115.\66\ --------------------------------------------------------------------------- \64\ Copyright Owners Initial Brief at 8, citing Copyright Office Views on Music Licensing Reform. Hearings Before the Subcomm. on Courts, the Internet, and Intellectual Property. House Comm. on the Judiciary, 109th Cong., at 20 (2005) (Statement of Marybeth Peters, Register of Copyrights) \65\ For example, Copyright Owners cite the November 1, 2004 Sony BMG/EMI Music Publishing Agreement that granted the former the right to create ringtones embodying EMI compositions \66\ Copyright Owners Initial Brief at 4. --------------------------------------------------------------------------- According to RIAA, Copyright Owners mischaracterize current marketplace conditions and the Register`s prior testimony, which, in any instance, are both irrelevant. RIAA asserts that the Register`s testimony was in the context of an express legislative invitation to explore revision of the statute. The reform proposal presented by the Register, if adopted by Congress, would have repealed the statutory license and omitted from a successor licensing system the statutory treatment of ``ringtunes'' and certain other types of works. RIAA notes that the Register`s reform proposal is not law, but Section 115 is.\67\ --------------------------------------------------------------------------- \67\ RIAA Reply Brief at 4, citing Music Licensing Reform. Subcomm. on Intellectual Property, Senate Comm. on the Judiciary, 109th Cong. (July 12, 2005) (Statement of Marybeth Peters, Register of Copyrights). --------------------------------------------------------------------------- RIAA disputes Copyright Owners` claims that the purpose of the statutory license was to ensure a market where none existed and that the ringtone market is thriving. As to the former point, RIAA asserts that Section 115 was enacted to protect the market from a ``great music monopoly,'' not to create a market.\68\ With regard to the latter point, RIAA asserts that although the U.S. has the world`s largest music market, the U.S. ringtone market represents only a fraction of worldwide sales, with the bulk of the market in Europe and Asia. Moreover, aside from the EMI agreement cited by Copyright Owners, there are no other major ringtone licensing agreements of importance. RIAA states that with tens of thousands of music publishers, the need to clear all these rights through negotiation is a burden on the market and it is not surprising that the U.S. offerings lag behind other parts of the world. RIAA concludes that some mastertone agreements are no substitute for the Section 115 license.\69\ --------------------------------------------------------------------------- \68\ RIAA Reply Brief at 5, citing Melville B. Nimmer & David Nimmer, Nimmer on Copyright Sec. 8.04[A] (2004). \69\ Id. at 6-7. --------------------------------------------------------------------------- In Reply, Copyright Owners reiterate that the market for ringtones is thriving and no compulsory license is needed to ensure its continued growth. The suggestion by RIAA that, absent compulsory licensing, music publishers will ``prevent the commercialization'' of ringtones is belied by the years of voluntary licensing of compositions by music publishers for such uses.\70\ --------------------------------------------------------------------------- \70\ Copyright Owners Reply Brief at 15-16, citing Rudell and Rosini, (noting that U.S. ringtone sales in 2005 was approximately $500 million). --------------------------------------------------------------------------- Analysis. The general success, or lack thereof, of the marketplace for ringtones is not dispositive, or even necessarily relevant, in this analysis. Commercial negotiations involving the use of copyrighted works cannot annul the force and effect of existing law, unless Congress explicitly so states. We in fact note that, despite the existence of the Section 115 license, the vast majority of sound recordings are made pursuant to direct licenses from music publishers or the Harry Fox Agency rather than under the provisions of the statute. These commercial agreements, however, do not negate the existence of the statutory license. Moreover, reliance on the statements made by the Register of Copyrights is both inappropriate and inapt. These statements were proposals for revising the law, not interpretations of the existing regulatory regime. V. Derivative Works Section 115 and Derivative Works. Section 101 of the Copyright Act defines a derivative work as a ``work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications, which as a whole, represent an original work of authorship, is a derivative work.''\71\ Congress used one defined term, ``derivative work,'' to specify both that derivative works are protectable under Section 103 of the Copyright Act and that the copyright owner has the exclusive right to prepare derivative works under Section 106(2) of the Copyright Act.\72\ According to the Act`s legislative history, Section 115 exists to permit artists and record companies to create sound recordings, which are a type of derivative work.\73\ --------------------------------------------------------------------------- \71\ 17 U.S.C. Sec. 101. \72\ Section 103 states that ``the copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material.'' 17 U.S.C. Sec. 103(b). Section 106 states that ``[s]ubject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following. . . (2) prepare derivative works based upon the copyrighted work. . .'' 17 U.S.C. Sec. 106(2). \73\ See H. R. Rep. No. 94-1476, at 108-09 (1976) (noting that a Section 115 license permits either the creation of a new sound recording or a duplication of an existing one with the consent of the sound recording copyright owner). --------------------------------------------------------------------------- Copyright Owners generally assert that ringtones fall outside the ambit of the statutory license because they are derivative works. They argue that ringtones exceed the scope of the Section 115 license by infringing the copyright owners` exclusive right to prepare derivative works. They assert that Section 115 subjects only the rights to reproduce and distribute phonorecords of works to the statutory license, leaving derivative works outside its scope. Copyright Owners argue that ringtones fit squarely within the derivative work definition because they are based on pre-existing works, and typically reduce a three-to-five minute work to an abridged ten-to-thirty second work.\74\ --------------------------------------------------------------------------- \74\ Copyright Owners Initial Brief at 12-13. Copyright Owners note that the Copyright Board of Canada recently observed in a proceeding to set the rates for ringtones that ``mastertones are created by taking an actual segment of a sound recording after determining which number of seconds out of a work will be most appropriate for the market.'' Id., citing Copyright Board of Canada, Collective Administration of Performing Rights and of Communications Rights, Statement of Royalties to be Collected by SOCAN for the Communication to the Public by Telecommunication, In Canada, of Musical or Dramatico-Musical Works, Tariff No. 24-Ringtones (2003- 2005) (Aug. 18, 2006) at 13. In response, RIAA notes that this statement by the Copyright Board confirms its supposition that the selection of a mastertone from the underlying musical work is a ``trivial omission.'' RIAA Reply Brief at n. 10. --------------------------------------------------------------------------- RIAA asserts that the legal tests for protection of derivative works and infringement of the derivative work right are identical and, in any event, require originality.\75\ It states that ``[F]or the derivative work right to be infringed, the defendant must have created a derivative work, and for the derivative work to have been created, the Act requires the contribution of expressive content capable of standing on its own as a copyrightable work.''\76\ RIAA cites a string of precedent to support its position that derivative works must be original to be afforded copyright [[Page 64310]] protection.\77\ RIAA states that for mastertones, the trivial action of copying a clip from an existing sound recording does not stand on its own as meriting copyright protection.\78\ RIAA also asserts that there is no precedent in copyright law for the proposition that every partial reproduction of a work constitutes a separate derivative work. RIAA concludes that ringtones are nothing more than partial copies that lack sufficient originality to be protected as derivative works or to infringe the derivative works right.\79\ RIAA concludes that because ringtones do not fit under the definition of derivative works in Section 101 of the Act, the making of a ringtone cannot be excluded under Section 115 on this basis. --------------------------------------------------------------------------- \75\ RIAA Initial Brief at 11, citing Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 346 (1991) (``Originality is a constitutional requirement.''). \76\ Id. at 11-12, citing 2 Paul Goldstein, Copyright Sec. 7.3 (3d ed. 2005). \77\ See id. at 12-14, 20, citing Woods v. Bourne Co., 60 F.3d 978, 989 (2d Cir. 1995)(holding that a musical work must have ``substance added making the piece to some extent a new work'' and that only the ``addition of such new material would entitle the creator to a copyright on the new material.''); Lee v. Deck the Walls, Inc., 925 F. Supp. 576 (N.D. Ill 1996), aff'd on other grounds sub nom., Lee v. A.R.T. Co., 125 F.3d 580 (7th Cir. 1997)(holding that notecard art image deposited on tile and covered with epoxy is not copyrightable because the work does not contain any original artistic expression); Peker v. Masters Collection, 96 F. Supp. 2d 216 (E.D.N.Y. 2000) (holding that an oil painting reproduction, made by transfer of a copy of a copyrighted painting from a poster to a canvas with the addition of resin to create a brushed-on look of the original was not a derivative work because there was no originality that would be considered copyrightable); Precious Moments, Inc. v. La Infantil, Inc., 971 F. Supp. 66, 67 (D. Puerto Rico, 1997) (stating that originality is required for a derivative work to be copyrightable). \78\ Id. at 2. \79\ Id. at 10, citing Nimmer on Copyright Sec. 8.09[A] (noting that no reported case finds the holder of a reproduction license barred from making trivial changes to a work even without a separate license to make derivative works). --------------------------------------------------------------------------- Analysis. As an initial matter, we agree with Copyright Owners` assertion that Section 115, by its terms, concerns only the rights to reproduce and distribute phonorecords of works, leaving derivative works outside its confines. Thus, consideration of the derivative work right is important only to the extent that a ringtone which is adjudged to be a derivative work cannot be licensed under Section 115. To be considered a derivative work, a ringtone must exhibit a degree of originality sufficient enough to be copyrightable.\80\ With regard to the appropriate legal test regarding copyrightability, we believe that Feistis controlling precedent here.\81\ In Feist, the Supreme Court observed that ``as a constitutional matter, copyright protects only those constituent elements of a work that possess more than a de minimis quantum of creativity,'' and that there can be no copyright in work in which ``the creative spark is utterly lacking or so trivial as to be virtually nonexistent.''\82\ As illustrated below, there are ringtones that may be considered derivative works because they exhibit a degree of originality and creativity. However, there are many other ringtones that would not be considered derivative works because they exhibit only trivial changes from the underlying work. Those ringtones would not be considered derivative works and would be within the scope of the statutory license. --------------------------------------------------------------------------- \80\ We recognize that in one sense, every ringtone will be a derivative work, in that every sound recording of music is a derivative work; the underlying work is the musical composition itself. See H. R. Rep. No. 94-1476, at 108-109 (1976) The issue before us is not whether a ringtone is a derivative work; by definition it is. Rather, the question is whether a musical composition as recorded in a ringtone infringes the derivative work right in the original musical composition. When we refer to ringtones as ``derivative works'' in this Memorandum Opinion, we are referring not to the sound recording, but to the musical composition recorded in the ringtone. See also, n. 8, supra. \81\ Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991). Original, as the term is used in copyright, means that: (1) the work was independently created by the author (as opposed to copied from other works); and (2) it possesses at least some minimal degree of creativity. Id. at 345. When we refer to ``originality'' in this Memorandum Opinion, we are referring not to independent creation, but to creativity. \82\ Id. at 359, 363; see also Woods v. Bourne Co., 841 F. Supp. 118, 122 (S.D.N.Y. 1994) (quoting Fred Fisher, Inc. v. Dillingham, 298 F. 145, 148 (S.D.N.Y. 1924) (holding that a derivative work must be ``substantially a new and original work, not a copy of a piece already produce