Authorizes recording artist royalty recipients to audit books and records of royalty reporting party; establishes conditions.

A BILL FOR AN ACT

SECTION 1. The legislature finds that the recording industry is an important industry to the State of Hawaii. Artistic labor is vital to maintaining a healthy and vibrant recording industry and is an important resource to the people of Hawaii. Every royalty artist should have the ability to conduct an audit to verify earnings reported under a recording contract.

The establishment of a set of basic audit practices will advance the interests of the artists, the recording industry, and the State as a whole. The purpose of this Act is to implement important public policy by establishing minimum audit procedures that apply to all royalty contracts in the recording industry in the State.

SECTION 2. Hawaii Revised Statutes is amended by adding a new section to be appropriately designated and to read as follows:

"§   -   Royalty recipient; auditing. (a) For the purpose of this section:

"Contract" means the furnishing of services in the production of sound recordings or audiovisual works, or both, as defined in section 101, Title 17 of the United States Code, containing the musical performances of a royalty recipient.

"Royalty recipient" means a party to a contract who has the right to receive royalties under that contract.

"Royalty reporting party" means the party obligated to pay royalties to the royalty recipient under a contract.

(b) Notwithstanding any provision of a contract, a royalty recipient may audit the books and records of the royalty reporting party to determine if the royalty recipient earned all of the royalties due the royalty recipient pursuant to the contract, provided that the royalty recipient:

(c) The royalty recipient shall retain a qualified royalty auditor of the royalty recipient's choice to conduct an audit described in this section.

(d) The royalty recipient may enter into a contingency fee agreement with the qualified royalty auditor.

(e) A qualified royalty auditor may conduct individual audits of the books and records of a royalty reporting party on behalf of different royalty recipients simultaneously.

(f) Except as otherwise required by law, a qualified royalty auditor shall not disclose any confidential information obtained solely during an audit without the express consent of the party or parties to whom the information is confidential. An auditor is not prohibited from disclosing, to the royalty recipient or an agent of the recipient on behalf of whom the auditor is conducting the audit, information directly pertaining to the royalty recipient's contract.

(g) The provisions of this section are in addition to any other rights provided by the contract between a royalty recipient and a royalty reporting party.

(h) Nothing in this section shall be deemed to extend any limitations period applicable to royalty accounting or payments not specifically addressed in this section.

(i) Nothing in this section shall be deemed to limit any rights provided by collective bargaining agreement or by applicable state or federal law."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.