Compulsory licenses allow owners of copyright licenses or patents to be the only ones with the right to use their copyrighted material. Copyright law allows creators to have specific rights over their works, which includes the right to perform, distribute, or reproduce their work. If someone else wants to distribute or reproduce their work, they must get permission from the copyright owner first. If they don't obtain permission, the original owner can sue for infringement.

Copyright and Compulsory Licenses

There are some circumstances, also known as compulsory licenses, where it's not required to get a copyright owner's permission as long as the user pays certain fees and follows rules the law sets. Common examples of compulsory licenses are used by cable providers, music companies, satellite television providers, and webcasters. This license lets a singer or musician record and sell their version of a song that was previously recorded, as long as they pay royalties to the person who wrote the original composition and is the copyright holder.

An exception to the rule exists under intellectual property law where the owner keeps the exclusive rights to decide if they want to license to others or not. They can decide if they'll let indie artists create a new version of their popular song. When phonorecords have been distributed publicly in the United States and the copyright owner gives consent, anyone can get a compulsory license. This means they're allowed to make and distribute their own song without getting express permission from the original owner. Some don't allow others to make new recordings, such as the late singer Prince.

Compulsory License Steps

Certain regulations are required when reporting to the copyright's holder and when paying royalties.  A document titled the Notice of Intention is first sent to the copyright holder and lists the intention of the new artist to release their version of the song. It will also state the following about the album:

  • Title
  • Artist
  • Date of release
  • How many CDs were manufactured

This gets sent before distribution and includes a certain fee that the Copyright Office sets which is called the statutory rate or statutory fee. To see what the current rate is visit the Copyright Office website and look for "mechanical royalty rate." If a song's length is three minutes and there are 5,000 CDs made by the artist that has the song on it, the copyright holder would receive $455. No paperwork is sent by the copyright holders, and instead, a license gets granted automatically. No return paperwork is needed.

How Compulsory Licenses Work

A compulsory license is one of the most commonly used in the music industry. A recording artist is not required to use the compulsory license, as many artists get permission directly from the original song owner and try to negotiate a lower rate. The compulsory license only authorizes the song to be used for musical compositions that are non-dramatic. It is not allowed to be used for dramatic compositions, such as an overture to a musical or in the opera. Phonorecords can only be distributed in public, which means they can't be used for the soundtrack of a television show.

The licensee is allowed to create a new arrangement of the song as long as the fundamental character stays the same. The court has the right to tell a copyright owner to allow a license to be granted to an innocent infringer instead of having it stopped. In countries such as the United States that subscribe to the Universal Copyright Convention, an author might need to allow a compulsory license to another subscribing government in order to translate their work into the country's main language, such as if there hasn't been a published translation in the past seven years.

Compulsory License Limitations

A general rearrangement can be made of a recording, but the new singer can't obtain a compulsory license if the sheet music is rearranged in their composition. The copyright holder also has the right to be the first one to release their song. Therefore, a compulsory mechanical license can only be obtained if the song has been released previously.

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