Authorizes recording artist royalty recipients to audit books and records of royalty reporting party; establishes conditions. (SD1)

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 recording artist should have the ability to conduct an audit to verify earnings and royalties 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:

"§   -   Action for an accounting. (a) For the purpose of this section:

"Participation contract" means an agreement pursuant to which a royalty payor is obligated to make royalty payments to a royalty recipient who furnishes services in the production of sound recordings or audiovisual works, or both, as defined in title 17 United States Code section 101, containing the musical performances of a royalty recipient.

"Royalty payment" means the payment of a percentage or share of revenues, proceeds, product, sales, or profits derived from a participation contract, whether referred to as a royalty payment in the participation contract or considered to be a royalty payment by the parties to the participation contract.

"Royalty payor" means a party to a participation contract who has the obligation to pay a royalty recipient under a participation contract.

"Royalty recipient" means a party to a participation contract who has the right to receive a royalty payment under the participation contract.

(b) Any person or entity who is a royalty recipient under a participation contract shall be entitled to a decree from a circuit court in the State compelling an accounting of all revenues and profits, if any, derived from the participation contract; provided that:

(c) Upon the establishment that the royalty recipient is entitled to an accounting under this section, the court shall compel the royalty payor to produce to the royalty recipient all documents relating to the determination of the percentage of revenue and sales due to the royalty recipient under the participation contract.

(d) During the court compelled accounting, if it is determined that the amount due and owed to the royalty recipient bringing the action is greater than the amount that has been paid by the royalty payor to the royalty recipient for the same calendar year, the royalty recipient shall be entitled to a money judgment in the amount of the difference.

(e) The prevailing party in any action for an accounting commenced under this section shall be entitled to an award of all of the prevailing party's costs, including reasonable attorneys' fees incurred in the prosecution or defense of the action. Specifically, if the compelled accounting establishes that the royalty recipient was entitled to an amount greater than the amount the royalty recipient had been paid by the royalty payor under the participation contract, the royalty recipient will be entitled to a reimbursement of all of the costs and fees incurred in performing the audit or professional review of the compelled accounting.

SECTION 3. New statutory material is underscored.

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