MODIFICATIONS TO CABLE SYSTEM SECONDARY TRANSMISSION RIGHTS UNDER SECTION 111.

SEC. 104. MODIFICATIONS TO CABLE SYSTEM SECONDARY TRANSMISSION RIGHTS UNDER SECTION 111.(a) Heading Renamed.—(1) In general.—The heading of section 111 is amended by inserting at the end the following: “of broadcast programming by cable”.(2) Table of contents.—The table of contents for chapter 1 is amended by striking the item relating to section 111 and inserting the following: “111. Limitations on exclusive rights: Secondary transmissions of broadcast programming by cable.”. (b) Technical Amendment.—Section 111(a)(4) is amended by striking “; or” and inserting “or section 122;”.(c) Statutory License for Secondary Transmissions by Cable Systems.—Section 111(d) is amended—(1) in paragraph (1)—(A) in the matter preceding subparagraph (A)—(i) by striking “A cable system whose secondary” and inserting the following: “Statement of account and royalty fees.—Subject to paragraph (5), a cable system whose secondary”; and(ii) by striking “by regulation—” and inserting “by regulation the following:”;(B) in subparagraph (A)—124 STAT. 1232 (i) by striking “a statement of account” and inserting “A statement of account”; and(ii) by striking “; and” and inserting a period; and(C) by striking subparagraphs (B), (C), and (D) and inserting the following:“(B) Except in the case of a cable system whose royalty fee is specified in subparagraph (E) or (F), a total royalty fee payable to copyright owners pursuant to paragraph (3) for the period covered by the statement, computed on the basis of specified percentages of the gross receipts from subscribers to the cable service during such period for the basic service of providing secondary transmissions of primary broadcast transmitters, as follows:“(i) 1.064 percent of such gross receipts for the privilege of further transmitting, beyond the local service area of such primary transmitter, any non-network programming of a primary transmitter in whole or in part, such amount to be applied against the fee, if any, payable pursuant to clauses (ii) through (iv);“(ii) 1.064 percent of such gross receipts for the first distant signal equivalent;“(iii) 0.701 percent of such gross receipts for each of the second, third, and fourth distant signal equivalents; and“(iv) 0.330 percent of such gross receipts for the fifth distant signal equivalent and each distant signal equivalent thereafter.“(C) In computing amounts under clauses (ii) through (iv) of subparagraph (B)—“(i) any fraction of a distant signal equivalent shall be computed at its fractional value;“(ii) in the case of any cable system located partly within and partly outside of the local service area of a primary transmitter, gross receipts shall be limited to those gross receipts derived from subscribers located outside of the local service area of such primary transmitter; and“(iii) if a cable system provides a secondary transmission of a primary transmitter to some but not all communities served by that cable system—“(I) the gross receipts and the distant signal equivalent values for such secondary transmission shall be derived solely on the basis of the subscribers in those communities where the cable system provides such secondary transmission; and“(II) the total royalty fee for the period paid by such system shall not be less than the royalty fee calculated under subparagraph (B)(i) multiplied by the gross receipts from all subscribers to the system.“(D) A cable system that, on a statement submitted before the date of the enactment of the Satellite Television Extension and Localism Act of 2010, computed its royalty fee consistent with the methodology under subparagraph (C)(iii), or that amends a statement filed before such date 124 STAT. 1233 of enactment to compute the royalty fee due using such methodology, shall not be subject to an action for infringement, or eligible for any royalty refund or offset, arising out of its use of such methodology on such statement.“(E) If the actual gross receipts paid by subscribers to a cable system for the period covered by the statement for the basic service of providing secondary transmissions of primary broadcast transmitters are $263,800 or less—“(i) gross receipts of the cable system for the purpose of this paragraph shall be computed by subtracting from such actual gross receipts the amount by which $263,800 exceeds such actual gross receipts, except that in no case shall a cable system’s gross receipts be reduced to less than $10,400; and“(ii) the royalty fee payable under this paragraph to copyright owners pursuant to paragraph (3) shall be 0.5 percent, regardless of the number of distant signal equivalents, if any.“(F) If the actual gross receipts paid by subscribers to a cable system for the period covered by the statement for the basic service of providing secondary transmissions of primary broadcast transmitters are more than $263,800 but less than $527,600, the royalty fee payable under this paragraph to copyright owners pursuant to paragraph (3) shall be—“(i) 0.5 percent of any gross receipts up to $263,800, regardless of the number of distant signal equivalents, if any; and“(ii) 1 percent of any gross receipts in excess of $263,800, but less than $527,600, regardless of the number of distant signal equivalents, if any.“(G) A filing fee, as determined by the Register of Copyrights pursuant to section 708(a).”;(2) in paragraph (2), in the first sentence—(A) by striking “The Register of Copyrights” and inserting the following “Handling of fees.—The Register of Copyrights”; and(B) by inserting “(including the filing fee specified in paragraph (1)(G))” after “shall receive all fees”;(3) in paragraph (3)—(A) by striking “The royalty fees” and inserting the following: “Distribution of royalty fees to copyright owners.—The royalty fees”;(B) in subparagraph (A)—(i) by striking “any such” and inserting “Any such”; and(ii) by striking “; and” and inserting a period;(C) in subparagraph (B)—(i) by striking “any such” and inserting “Any such”; and(ii) by striking the semicolon and inserting a period; and(D) in subparagraph (C), by striking “any such” and inserting “Any such”;(4) in paragraph (4), by striking “The royalty fees” and inserting the following: “Procedures for royalty fee distribution.—The royalty fees”; and124 STAT. 1234(5) by adding at the end the following new paragraphs:“(5) 3.75 percent rate and syndicated exclusivity surcharge not applicable to multicast streams.—The royalty rates specified in sections 256.2(c) and 256.2(d) of title 37, Code of Federal Regulations (commonly referred to as the ‘3.75 percent rate’ and the ‘syndicated exclusivity surcharge’, respectively), as in effect on the date of the enactment of the Satellite Television Extension and Localism Act of 2010, as such rates may be adjusted, or such sections redesignated, thereafter by the Copyright Royalty Judges, shall not apply to the secondary transmission of a multicast stream.“(6) Verification of accounts and fee payments.—The Register of Copyrights shall issue regulations to provide for the confidential verification by copyright owners whose works were embodied in the secondary transmissions of primary transmissions pursuant to this section of the information reported on the semiannual statements of account filed under this subsection for accounting periods beginning on or after January 1, 2010, in order that the auditor designated under subparagraph (A) is able to confirm the correctness of the calculations and royalty payments reported therein. The regulations shall—“(A) establish procedures for the designation of a qualified independent auditor—“(i) with exclusive authority to request verification of such a statement of account on behalf of all copyright owners whose works were the subject of secondary transmissions of primary transmissions by the cable system (that deposited the statement) during the accounting period covered by the statement; and“(ii) who is not an officer, employee, or agent of any such copyright owner for any purpose other than such audit;“(B) establish procedures for safeguarding all non-public financial and business information provided under this paragraph;“(C)(i) require a consultation period for the independent auditor to review its conclusions with a designee of the cable system;“(ii) establish a mechanism for the cable system to remedy any errors identified in the auditor’s report and to cure any underpayment identified; and“(iii) provide an opportunity to remedy any disputed facts or conclusions;“(D) limit the frequency of requests for verification for a particular cable system and the number of audits that a multiple system operator can be required to undergo in a single year; and“(E) permit requests for verification of a statement of account to be made only within 3 years after the last day of the year in which the statement of account is filed.“(7) Acceptance of additional deposits.—Any royalty fee payments received by the Copyright Office from cable systems for the secondary transmission of primary transmissions that are in addition to the payments calculated and deposited in accordance with this subsection shall be deemed to have been deposited for the particular accounting period for which 124 STAT. 1235 they are received and shall be distributed as specified under this subsection.”.(d) Effective Date of New Royalty Fee Rates.—The royalty fee rates established in section 111(d)(1)(B) of title 17, United States Code, as amended by subsection (c)(1)(C) of this section, shall take effect commencing with the first accounting period occurring in 2010.(e) Definitions.—Section 111(f) is amended—(1) by striking the first undesignated paragraph and inserting the following:“(1) Primary transmission.—A ‘primary transmission’ is a transmission made to the public by a transmitting facility whose signals are being received and further transmitted by a secondary transmission service, regardless of where or when the performance or display was first transmitted. In the case of a television broadcast station, the primary stream and any multicast streams transmitted by the station constitute primary transmissions.”;(2) in the second undesignated paragraph—(A) by striking “A ‘secondary transmission’ ” and inserting the following:“(2) Secondary transmission.—A ‘secondary transmission’ ”; and(B) by striking “ ‘cable system’ ” and inserting “cable system”;(3) in the third undesignated paragraph—(A) by striking “A ‘cable system’ ” and inserting the following:“(3) Cable system.—A ‘cable system’ ”; and(B) by striking “Territory, Trust Territory, or Possession” and inserting “territory, trust territory, or possession of the United States”;(4) in the fourth undesignated paragraph, in the first sentence—(A) by striking “The ‘local service area of a primary transmitter’, in the case of a television broadcast station, comprises the area in which such station is entitled to insist” and inserting the following:“(4) Local service area of a primary transmitter.—The ‘local service area of a primary transmitter’, in the case of both the primary stream and any multicast streams transmitted by a primary transmitter that is a television broadcast station, comprises the area where such primary transmitter could have insisted”;(B) by striking “76.59 of title 47 of the Code of Federal Regulations” and inserting the following: “76.59 of title 47, Code of Federal Regulations, or within the noise-limited contour as defined in 73.622(e)(1) of title 47, Code of Federal Regulations”; and(C) by striking “as defined by the rules and regulations of the Federal Communications Commission,”;(5) by amending the fifth undesignated paragraph to read as follows:“(5) Distant signal equivalent.—“(A) In general.—Except as provided under subparagraph (B), a ‘distant signal equivalent’—124 STAT. 1236 “(i) is the value assigned to the secondary transmission of any non-network television programming carried by a cable system in whole or in part beyond the local service area of the primary transmitter of such programming; and“(ii) is computed by assigning a value of one to each primary stream and to each multicast stream (other than a simulcast) that is an independent station, and by assigning a value of one-quarter to each primary stream and to each multicast stream (other than a simulcast) that is a network station or a noncommercial educational station.“(B) Exceptions.—The values for independent, network, and noncommercial educational stations specified in subparagraph (A) are subject to the following:“(i) Where the rules and regulations of the Federal Communications Commission require a cable system to omit the further transmission of a particular program and such rules and regulations also permit the substitution of another program embodying a performance or display of a work in place of the omitted transmission, or where such rules and regulations in effect on the date of the enactment of the Copyright Act of 1976 permit a cable system, at its election, to effect such omission and substitution of a nonlive program or to carry additional programs not transmitted by primary transmitters within whose local service area the cable system is located, no value shall be assigned for the substituted or additional program.“(ii) Where the rules, regulations, or authorizations of the Federal Communications Commission in effect on the date of the enactment of the Copyright Act of 1976 permit a cable system, at its election, to omit the further transmission of a particular program and such rules, regulations, or authorizations also permit the substitution of another program embodying a performance or display of a work in place of the omitted transmission, the value assigned for the substituted or additional program shall be, in the case of a live program, the value of one full distant signal equivalent multiplied by a fraction that has as its numerator the number of days in the year in which such substitution occurs and as its denominator the number of days in the year.“(iii) In the case of the secondary transmission of a primary transmitter that is a television broadcast station pursuant to the late-night or specialty programming rules of the Federal Communications Commission, or the secondary transmission of a primary transmitter that is a television broadcast station on a part-time basis where full-time carriage is not possible because the cable system lacks the activated channel capacity to retransmit on a full-time basis all signals that it is authorized to carry, the values for independent, network, and noncommercial educational stations set forth in subparagraph (A), as the case may be, shall be multiplied by a fraction that is equal 124 STAT. 1237 to the ratio of the broadcast hours of such primary transmitter retransmitted by the cable system to the total broadcast hours of the primary transmitter.“(iv) No value shall be assigned for the secondary transmission of the primary stream or any multicast streams of a primary transmitter that is a television broadcast station in any community that is within the local service area of the primary transmitter.”;(6) by striking the sixth undesignated paragraph and inserting the following:“(6) Network station.—“(A) Treatment of primary stream.—The term ‘network station’ shall be applied to a primary stream of a television broadcast station that is owned or operated by, or affiliated with, one or more of the television networks in the United States providing nationwide transmissions, and that transmits a substantial part of the programming supplied by such networks for a substantial part of the primary stream’s typical broadcast day.“(B) Treatment of multicast streams.—The term ‘network station’ shall be applied to a multicast stream on which a television broadcast station transmits all or substantially all of the programming of an interconnected program service that—“(i) is owned or operated by, or affiliated with, one or more of the television networks described in subparagraph (A); and“(ii) offers programming on a regular basis for 15 or more hours per week to at least 25 of the affiliated television licensees of the interconnected program service in 10 or more States.”;(7) by striking the seventh undesignated paragraph and inserting the following:“(7) Independent station.—The term ‘independent station’ shall be applied to the primary stream or a multicast stream of a television broadcast station that is not a network station or a noncommercial educational station.”;(8) by striking the eighth undesignated paragraph and inserting the following:“(8) Noncommercial educational station.—The term ‘noncommercial educational station’ shall be applied to the primary stream or a multicast stream of a television broadcast station that is a noncommercial educational broadcast station as defined in section 397 of the Communications Act of 1934, as in effect on the date of the enactment of the Satellite Television Extension and Localism Act of 2010.”; and(9) by adding at the end the following:“(9) Primary stream.—A ‘primary stream’ is—“(A) the single digital stream of programming that, before June 12, 2009, was substantially duplicating the programming transmitted by the television broadcast station as an analog signal; or“(B) if there is no stream described in subparagraph (A), then the single digital stream of programming transmitted by the television broadcast station for the longest period of time.124 STAT. 1238“(10) Primary transmitter.—A ‘primary transmitter’ is a television or radio broadcast station licensed by the Federal Communications Commission, or by an appropriate governmental authority of Canada or Mexico, that makes primary transmissions to the public.“(11) Multicast stream.—A ‘multicast stream’ is a digital stream of programming that is transmitted by a television broadcast station and is not the station’s primary stream.“(12) Simulcast.—A ‘simulcast’ is a multicast stream of a television broadcast station that duplicates the programming transmitted by the primary stream or another multicast stream of such station.“(13) Subscriber; subscribe.—“(A) Subscriber.—The term ‘subscriber’ means a person or entity that receives a secondary transmission service from a cable system and pays a fee for the service, directly or indirectly, to the cable system.“(B) Subscribe.—The term ‘subscribe’ means to elect to become a subscriber.”.(f) Timing of Section 111 Proceedings.—Section 804(b)(1) is amended by striking “2005” each place it appears and inserting “2015”.(g) Technical and Conforming Amendments.—(1) Corrections to fix level designations.—Section 111 is amended—(A) in subsections (a), (c), and (e), by striking “clause” each place it appears and inserting “paragraph”;(B) in subsection (c)(1), by striking “clauses” and inserting “paragraphs”; and(C) in subsection (e)(1)(F), by striking “subclause” and inserting “subparagraph”.(2) Conforming amendment to hyphenate nonnetwork.—Section 111 is amended by striking “nonnetwork” each place it appears and inserting “non-network”.(3) Previously undesignated paragraph.—Section 111(e)(1) is amended by striking “second paragraph of subsection (f)” and inserting “subsection (f)(2)”.(4) Removal of superfluous ands.—Section 111(e) is amended—(A) in paragraph (1)(A), by striking “and” at the end;(B) in paragraph (1)(B), by striking “and” at the end;(C) in paragraph (1)(C), by striking “and” at the end;(D) in paragraph (1)(D), by striking “and” at the end; and(E) in paragraph (2)(A), by striking “and” at the end.(5) Removal of variant forms references.—Section 111 is amended—(A) in subsection (e)(4), by striking “, and each of its variant forms,”; and(B) in subsection (f), by striking “and their variant forms”.(6) Correction to territory reference.—Section 111(e)(2) is amended in the matter preceding subparagraph (A) by striking “three territories” and inserting “five entities”.(h) Effective Date With Respect to Multicast Streams.—124 STAT. 1239 (1) In general.—Subject to paragraphs (2) and (3), the amendments made by this section, to the extent such amendments assign a distant signal equivalent value to the secondary transmission of the multicast stream of a primary transmitter, shall take effect on the date of the enactment of this Act.(2) Delayed applicability.—(A) Secondary transmissions of a multicast stream beyond the local service area of its primary transmitter before 2010 act.—In any case in which a cable system was making secondary transmissions of a multicast stream beyond the local service area of its primary transmitter before the date of the enactment of this Act, a distant signal equivalent value (referred to in paragraph (1)) shall not be assigned to secondary transmissions of such multicast stream that are made on or before June 30, 2010.(B) Multicast streams subject to preexisting written agreements for the secondary transmission of such streams.—In any case in which the secondary transmission of a multicast stream of a primary transmitter is the subject of a written agreement entered into on or before June 30, 2009, between a cable system or an association representing the cable system and a primary transmitter or an association representing the primary transmitter, a distant signal equivalent value (referred to in paragraph (1)) shall not be assigned to secondary transmissions of such multicast stream beyond the local service area of its primary transmitter that are made on or before the date on which such written agreement expires.(C) No refunds or offsets for prior statements of account.—A cable system that has reported secondary transmissions of a multicast stream beyond the local service area of its primary transmitter on a statement of account deposited under section 111 of title 17, United States Code, before the date of the enactment of this Act shall not be entitled to any refund, or offset, of royalty fees paid on account of such secondary transmissions of such multicast stream.(3) Definitions.—In this subsection, the terms “cable system”, “secondary transmission”, “multicast stream”, and “local service area of a primary transmitter” have the meanings given those terms in section 111(f) of title 17, United States Code, as amended by this section.