Summer 2017 Federal Copyright and Trade Secret Legislation Update

5 min

Since the Summer 2016 update, the 114th session of Congress has ended and a new Congress has begun its term. Within its first six months, members of the 115th Congress have introduced new legislation regarding digital rights. Several copyright bills referenced in previous Legislation Updates have been reintroduced, and new proposed legislation would reform and modernize the U.S. Copyright Office. Moreover, before leaving office, President Obama signed a bill that governs the ability of businesses to remove online comments or other consumer-posted information, including postings that contain trade secrets.


Two pieces of legislation introduced in the current session propose administrative changes to the U.S. Copyright Office. First, the Register of Copyrights Selection and Accountability Act of 2017 (H.R. 1695/S. 1010) would alter the appointment process for the head of the Copyright Office. Currently, the Copyright Office is part of the Library of Congress, and the Register of Copyrights is hired by the Librarian of Congress. This legislation would allow the President to appoint the Register, subject to confirmation by the Senate. The bill also limits the Register to a ten-year term, unless renewed by another presidential nomination and Senate confirmation. And as a response to recent court challenges to the Office's authority to issue regulations, the bill would provide the Office with more regulatory authority and autonomy. On April 26, the House passed the Register of Copyrights Selection and Accountability Act with bipartisan support, and it is currently under review in the Senate.

Second, the Copyright Office for the Digital Economy (CODE) Act (H.R. 890) was reintroduced in the current session. This legislation, which was first discussed in the 2016 Legislation Update, also seeks to amend the appointment process for the head of the U.S. Copyright Office. The CODE Act would remove the Office from the purview of the Library of Congress and require its Register to be appointed by the President and confirmed by the Senate. The Register would not be eligible for reappointment. The bill proposes additional changes to the U.S. copyright system, such as requiring the Register to establish a Copyright Advisory Board to advise the Copyright Office and provide information on emerging technology. However, as the CODE Act and the Register of Copyrights Selection and Accountability Act propose to alter the appointment process in different ways, it does not appear likely that both pieces of legislation would pass in their current forms.

The Fair Play Fair Pay Act of 2017 (H.R. 1836) would amend federal copyright law to require that terrestrial AM and FM radio broadcasters pay royalties to the owner of a copyrighted sound recording for its performance, just as Internet and digital services are required to pay. The goal of the bill is to equalize the current music licensing system by leveling the playing field between traditional broadcasters and digital streaming services. The current copyright regime benefits radio broadcasters by exempting them from such performance royalties. This legislation would further extend a copyright owner's rights to include the exclusive right to perform or authorize the performance of a sound recording by means of any audio transmission. The Fair Play Fair Pay Act had previously been introduced in 2015 but failed to pass, partly because of extensive opposition from radio broadcasters.

The You Own Devices Act (YODA) (H.R. 905) has also been reintroduced in the House. This legislation aims to limit the ability of companies to use restrictions on the software within devices to prevent the device owners from selling or leasing it. The bill would extend the first sale doctrine, codified in Section 109 of the Copyright Act, by applying it to any computer program that enables a machine or other product to operate. This would allow the owner to transfer an authorized copy of the computer program when the owner sells, leases, or otherwise transfers the device. It also prohibits this right to transfer the computer program from being waived by any agreement.

Finally, the Allocation for Music Producers (AMP) Act (H.R. 881) has been revived in the 115th Congress. This bill attempts to update and reform music licensing by altering the way record producers and other persons involved in the production of a sound recording are paid. The proposal would amend Section 114 of the Copyright Act. The AMP Act requires the Copyright Royalty Judges to implement a policy allowing for the acceptance of instructions from owners of an exclusive right to publicly perform a sound recording by means of a digital audio transmission. These instructions provide for the distribution of a portion of the royalty payments to a producer, mixer, or sound engineer who was a part of the process of creating the sound recording. The AMP Act would create a permanent and consistent process for producers and engineers to receive royalty payments.

Trade Secrets

President Obama signed the Consumer Review Fairness Act of 2016 (CRFA) into law on December 14, 2016. The CRFA is designed to protect consumers' ability to share honest—and perhaps negative—opinions about products and services, including in online forums or on social media. The law voids any provisions in form contracts that (i) prohibit or restrict consumers from providing reviews or assessments about the products and services that they purchase or lease; (ii) impose penalties or fees against a person who gives a review; or (iii) require people to give up their intellectual property rights in the content of their reviews. Such provisions were once standardized and commonplace in consumer-facing contracts and terms of use. Now, inclusion of these restrictions is illegal under the CRFA, as enforced by the Federal Trade Commission and by state attorneys general. However, the CRFA reserves the right of businesses hosting online consumer reviews to remove comments or other consumer-posted information containing trade secrets. Businesses may also take down posts containing privileged or confidential commercial and financial information. Therefore, the CRFA does not restrict a business's ability to protect its trade secrets from exposure in reviews or other consumer-posted content.

As discussed above, the current Congress has been active in proposing and considering meaningful legislation in the digital rights space, particularly in the realm of copyrights. Interested parties should monitor these bills, and look for further updates from Venable's Intellectual Property team on important developments.