[Federal Register Volume 66, Number 26 (Wednesday, February 7, 2001)]
[Notices]
[Pages 9360-9365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-3142]


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LIBRARY OF CONGRESS

Copyright Office

[Docket No. 99-3 CARP DD 95-98]


Distribution of 1995, 1996, 1997, and 1998 Digital Audio 
Recording Technology Royalties

AGENCY: Copyright Office, Library of Congress.

ACTION: Distribution Order.

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SUMMARY: The Librarian of Congress, upon the recommendation of the 
Register of Copyrights, is adopting the determination of the Copyright 
Arbitration Royality Panel (``CARP'') and issuing an order announcing 
the allocation of the royalty fees in the 1995, 1996, 1997, and 1998 
Musical Works Funds. These fees are paid to the Copyright Office by 
importers and manufacturers of Digital Audio Recording Devices and 
Media (``DART'') who distribute these products in the United States.

EFFECTIVE DATE: The percentages announced in this Order are effective 
as of February 7, 2001.

[[Page 9361]]


ADDRESSES: The full text of the CARP's report to the Librarian of 
Congress is available for inspection and copying during normal business 
hours in the Office of the General Counsel, James Madison Memorial 
Building, Room LM-403, First and Independence Avenue, SE, Washington, 
DC, 20559-6000.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 
Tanya M. Sandros, Senior Attorney, Copyright Arbitration Royalty Panel 
(``CARP''), PO Box 70977, Southwest Station, Washington, DC 20024. 
Telephone: (202) 707-8380. Telefax: (202) 252-3423.

SUPPLEMENTARY INFORMATION:

Background

    The Audio Home Recording Act of 1992, Public Law No. 102-563, 
requires manufacturers and importers of digital audio recording devices 
and media which are distributed in the United States to pay royalty 
fees to the Copyright Office. Upon receipt, the Copyright Office 
deposits these fees with the Treasury of the United States. 17 U.S.C. 
1005.
    Interested copyright parties must file a claim to these fees each 
year during January and February to establish their entitlement to a 
portion of the funds. How these funds are distributed to the various 
interested copyright parties is decided either by the parties or by 
Order of the Librarian, following a distribution proceeding conducted 
by a Copyright Arbitration Royalty Panel (``CARP''). 17 U.S.C. 1007.
    On May 4, 1999, the Copyright Office requested comments from the 
interested copyright parties as to the existence of controversy 
concerning the distribution of the DART royalty fees in the 1995, 1996, 
1997 and 1998 Musical Works Funds, and notices of intent to participate 
in any proceeding to determine the distribution of these funds. In 
addition, the Office announced that it was consolidating the 
consideration of the distribution of the 1995-1998 Musical Works Funds 
into a single proceeding in order to have sufficient funds to cover the 
cost of an arbitration proceeding. 64 FR 23875 (May 4, 1999).
    Ten parties filed comments on the existence of controversies and 
notices of intent to participate in this proceeding: Broadcast Music, 
Inc. (``BMI''); the American Society of Composers, Authors and 
Publishers (``ASCAP''); SESAC, Inc. (``SESAC''); the Harry Fox Agency 
(``HFA''); the Songwriters Guild of America (``SGA''); and Copyright 
Management, Inc. (``CMI'') (collectively, the ``Settling Parties''); 
Carl DeMonbrun/Polyphonic Music, Inc. (``DeMonbrun''); James Cannings/
Can Can Music (``Cannings''); Alicia Carolyn Evelyn (``Evelyn''); and 
Eugene ``Lampchops'' Curry/TaJai Music, Inc. (``Curry'').
    Prior to the commencement of the proceeding, Cannings and DeMonbrun 
notified the Office that they had settled their claims with the 
Settling Parties and that they were withdrawing from the proceeding. 
See Notices of Settlement and Withdrawals of Claims in Docket No.99-3 
DD 95-98 (dated November 10, 1999). This settlement resolved the 
remaining controversy over the distribution of the 1996 Musical Works 
Funds and left Evelyn's claim to a share of the royalty fees in the 
1995, 1997 and 1998 Writer's Subfunds and Curry's claim to a share of 
the royalty fees in both the 1995 and 1997 Writer's and Publisher's 
Subfunds to be determined.
    Each of the three participants filed his or her direct case with 
the Office on November 15, 1999, commencing the 45-day precontroversy 
discovery period. In addition, the Settling Parties filed a motion to 
dispense with formal hearings and to conduct the proceeding on the 
basis of written pleadings alone and a motion for full distribution of 
those funds not in controversy and a partial distribution of all 
remaining DART royalties.
    The Copyright Office granted the motion for a full distribution of 
those royalty fees that were no longer in controversy and granted in 
part the request for a partial distribution of the remaining funds. See 
Order in Docket No. 99-3 CARP DD 95-98 (December 22, 1999). However, 
the Office did not rule on the motion to dispense with formal hearings, 
choosing instead to designate the issue to the CARP. Id.
    On April 10, 2000, the Copyright Office announced the names of the 
three arbitrators chosen for this proceeding and the initiation of the 
180-day arbitration period in a Federal Register notice. 65 FR 19025 
(April 10, 2000). Shortly thereafter, the Chairperson of the panel 
resigned due to a perceived conflict of interest. Consequently, the 
Office suspended the 180-day period from May 16, 2000, until June 16, 
2000, and a new chairperson was selected during this period in 
accordance with 37 CFR 251.6(f).
    The first meeting between the parties and the arbitrators took 
place on June 19, 2000. The purpose of this initial encounter was to 
set the schedule for the proceeding and to resolve the two remaining 
procedural issues: whether to grant the Settling Parties' motion to 
suspend formal hearings and proceed on the basis of the formal record 
only and whether to allow the filing of a written rebuttal case. The 
CARP heard oral argument from the parties on these issues that day; and 
based upon these hearings, the Panel decided ``to waive the requirement 
of oral evidentiary hearings, to proceed upon the written record alone, 
and to permit the filing of written rebuttal cases.'' CARP Report, 
para. 24. See Order in Docket No. 99-3 CARP DD 95-98 (June 19, 2000). 
The Panel delivered its final report to the Copyright Office on 
November 9, 2000.

The Panel's Report

    Based upon the evidence offered in the written record, the Panel 
determined that the royalties in the 1995, 1997, and 1998 Musical Works 
Funds should be distributed as follows:
    To Mr. Curry: 0.001966% of both the 1995 Writers and Publishers 
Subfunds; and 0.001027% of both the 1997 Writers and Publishers 
Subfunds.
    To Ms. Evelyn: 0.000614% of the 1995 Writers Subfund; 0.000130% of 
the 1997 Writers Subfund and 0.000144% of the 1998 Writers Subfund.
    To the Settling Parties: 99.997420% of the 1995 Writers Subfund and 
99.998034% of the 1995 Publishers Subfund; 99.998843% of the 1997 
Writers Subfund and 99.998973% of the 1997 Publishers Subfund; and 
99.999856% of the 1998 Writers Subfund.
    As in the prior proceeding to determine the distribution of the 
1992-1994 Musical Works Funds, the CARP adopted the Settling Parties' 
methodology which gives Curry and Evelyn a share of the royalty fees 
from a particular subfund based upon the percentage of their song 
titles sold during the relevant time period. The Settling Parties 
receive all remaining royalty fees because they represent the interests 
of the remaining copyright owners entitled to receive a portion of 
these funds.

Standard of Review

    Section 802(f) of the Copyright Act directs that the Librarian 
shall adopt the report of the CARP ``unless the Librarian finds that 
the determination is arbitrary or contrary to the applicable provisions 
of this title.'' The Librarian of Congress has discussed his narrow 
scope of review in great detail in prior decisions and concluded that 
the use of the term ``arbitrary'' in this provision is no different 
than the ``arbitrary'' standard described in the Administrative 
Procedures Act, 5 U.S.C. 706(2)(A). See 63 FR 49823 (September 18, 
1998); 63 FR 25394 (May 8, 1998); 62 FR 55742

[[Page 9362]]

(October 28, 1997); 62 FR 6558 (February 12, 1997); 61 FR 55653 
(October 28, 1996). Thus, the standard of review adopted by the 
Librarian is narrow and provides that the Librarian will not reject the 
determination of a CARP unless its decision falls outside the ``zone of 
reasonableness'' that had been used by the courts to review decisions 
of the Copyright Royalty Tribunal. See National Cable Television Ass'n 
v. Copyright Royalty Tribunal, 724 F.2d 176, 182 (D.C. Cir. 1983). 
Moreover, based on a determination by the Register and the Librarian 
that the Panel's decision is neither arbitrary or contrary to law, the 
Librarian will adopt the CARP's determination even if the Register and 
the Librarian would have reached conclusion different from the 
conclusions reached by the CARP.
    The U.S. Court of Appeals for the District of Columbia has stated, 
however, that the Librarian would act arbitrarily if ``without 
explanation or adjustment, he adopted an award proposed by the Panel 
that was not supported by any evidence or that was based on evidence 
which could not reasonably be interpreted to support the award.'' See 
National Ass'n of Broadcasters v. Librarian of Congress, 146 F.3d 907, 
923 (D.C. Cir. 1998).
    For this reason, the Panel must provide a detailed rational 
analysis of its decision, setting forth specific findings of fact and 
conclusions of law. See National Cable Television Ass'n v. Copyright 
Royalty Tribunal, 689 F.2d 1077, 1091 (D.C. Cir. 1992), (requiring 
Copyright Royalty Tribunal to weigh all relevant considerations and set 
out its conclusions in a form that permits the court to determine 
whether it has exercised its responsibilities lawfully).
    It is then the task of the Register to review the Panel's report 
and make her recommendation to the Librarian as to whether it is 
arbitrary or contrary to the provisions of the Copyright Act and, if 
so, whether and in what manner, the Librarian should substitute his own 
determination.

Review of the CARP Report

a. Determination of the Panel

    The Panel found that the Settling Parties are entitled to 100% of 
the funds in the 1995, 1996, 1997, and 1998 Musical Works Funds minus 
the amount owed to Curry and Evelyn. The methodology used to determine 
Curry's and Evelyn's shares is identical to the method used to 
determine the distribution of the 1992, 1993, and 1994 Musical Works 
Funds in an earlier proceeding. See 62 FR 6558 (February 12, 1997). It 
is a simple arithmetic calculation which determines each individual 
claimant's share by calculating the number of song titles credited to 
the claimant and sold in year X and dividing that figure by the total 
number of song titles sold that year. This computation represents the 
claimant's proportionate share of the total royalties in year X.
    The Panel adopted the Settling Parties' formula, in part, because 
Curry and Evelyn, while objecting to the use of this same formulation, 
failed to offer any alternative systematic method or formula for 
calculating each party's share of the royalties. CARP Report Paras. 38, 
59. Instead, both Curry and Evelyn suggested that each of them is 
entitled to 1% of the royalty fees collected for any year to which they 
filed a claim. The Panel rejected this proposal because it fails to 
explain why two individual claimants are entitled to 1% of the annual 
funds when the total claimant pool numbers in the thousands. ``If each 
of the thousands of claimants represented in this proceeding were to 
receive 1% of the DART royalties available for distribution, the total 
claimed would quickly exceed 100%.'' CARP Report para. 59.
    Evelyn and Curry, however, do not accept the Settling Parties' 
contention that they represent thousands of claimants, arguing in their 
respective filings that the organizations and associations comprising 
the Settling Parties cannot represent individual claimants and act as 
their agent in these proceedings. See Curry's Direct Cast at 2; 
Evelyn's Rebuttal Case at Paras. 1-9; Evelyn Petition at 1-2.
    The Panel considered these allegations and found that the Settling 
Parties are ``interested copyright parties,'' pursuant to 17 U.S.C. 
1001(7) and may act as agents for their members. CARP Report para. 74. 
The Panel noted that an agency relationship is established for the 
purpose of a DART proceeding when an association or organizations files 
a DART claim on behalf of its members in accordance with Sec. 259.2(c) 
of the Copyright Office rules. This provision requires an organization 
or association, which acts as a common agent on behalf of the members 
of its organization, to obtain separate, specific and written 
authorization from each of its members or affiliates in order to file a 
DART claim; and it further requires that each claim list the name of 
each individual songwriter and music publisher on whose behalf the 
organization is filing its claim. CARP Report para. 75; see also, 37 
CFR 259.2(c) and 259.3(d). Based on these written expressions of the 
agency relationship, the CARP found that each of the Settling Parties 
has the authority to act as an agent for the members listed in the 
claims.
    The CARP then examined the record evidence and the Settling 
parties' formula for calculating Evelyn's and Curry's share. First, it 
considered the Settling Parties' use of SoundScan data to establish the 
universe of record sales for each year, including testimony from 
Michael Fine, co-founder and chief executive of SoundScan. It weighted 
Fine's testimony, which identified Sound Scan as a premier independent 
online information system that tracks music sales throughout the United 
States, against challenges from Evelyn and Curry, who argued that the 
SoundScan data was incomplete because it did not include record club, 
computer and foreign sales figures. CARP Report Paras. 32-33, 62. It 
found that Evelyn and Curry were correct to conclude that inclusion of 
such data would indeed increase their total record sales, but went on 
to note that it would also increase the total record sales figures for 
other claimants. It then accepted the Settling Parties' conclusion that 
adding to the universe of sales would in all likelihood decrease the 
amount of Evelyn's and Curry's awards. CARP Report para. 62. The Panel 
also rejected Curry's and Evelyn's assertion that the total record 
sales figures should be adjusted to include foreign record sales 
because it determined that such sales are not compensable under the 
Audio Home Recording Act. CARP Report para. 62. Furthermore, and more 
importantly, the CARP found that neither Curry nor Evelyn offered an 
alternative mechanism to use of the SoundScan data for figuring out how 
many records sales occurred. CARP Report Paras. 50-53, 62, 68-69. Thus, 
finding not other basis for determining the universe of total record 
sales in the written record, the Panel accepted the testimony of 
Michael Fine and his methodology for determining the total number of 
record sales in any given year. CARP Report para. 33.
    Next, the Panel scrutinized the evidence used to determine the 
number of record sales of Curry's and Evelyn's works. First, it found 
that Curry and Evelyn had submitted no evidence into the record of 
either record sales or performances of their works. This meant that the 
Settling Parties offered the only evidence on the number of record 
sales garnered by these claimants. CARP Report Paras. 64-65, 70. To 
make this determination, the Settling parties first identified the 
names of the record titles to which Curry and Evelyn have a claim for 
purposes of this proceeding by

[[Page 9363]]

reference to the list of titles identified for each claimant in the 
prior DART distribution proceeding, see Panel's Report in Docket No. 
95-1 CARP DD 92-94 at Paras. 34, 35, the songs listed on the DART 
claims, and by conducting a search of the allmusic.com website.\1\ 
Next, the Settling Parties identified the albums and singles which 
included these works by searching these titles in Phonolog, an industry 
standard directory that lists all records, CDs, cassettes, albums and 
singles issued in the United States. CARP Report Paras. 38-40. Once the 
titles were identified, it was a simple matter to use the SoundScan 
data to determine the number of unit sales per work for each year in 
controversy. CARP Report Paras. 44-47.
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    \1\ This website provides public access to a comprehensive 
database of information regarding recording artists, albums, and 
songs.
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    The CARP found that the evidence introduced by the Settling Parties 
identifying and quantifying the works of Evelyn and Curry was the only 
credible evidence in the record upon which to make a determination. 
CARP Report Paras. 63-72. In fact, the Panel found that the Settling 
Parties credited Evelyn and Curry with more than their actual 
percentage entitlement because no adjustment was made to reflect the 
co-authorship or co-publication of certain works. CARP Report para. 63. 
Thus, it adopted the evidence and conclusions offered by the Settling 
Parties and based its determination of Evelyn's and Curry's shares of 
the royalty fees on the Settling Parties' methodology. The CARP did so 
with full knowledge that the methodology had been used in the previous 
DART distribution proceeding and found to be ``logical and consistent'' 
by the Librarian of Congress and reviewed with approval by the United 
States Court of Appeals for the District of Columbia. CARP Report 
Paras. 78-79.

b. Petitions To Modify or Set Aside the Panel's Determination

    1. Evelyn's Petition: Section 251.55(a) of the rules provides that 
``[a]ny party to the proceeding may file with the Librarian of Congress 
a petition to modify or set aside the determination of a Copyright 
Arbitration Royalty Panel within 14 days of the Librarian's receipt of 
the panel's report of its determination.'' 37 CFR 251.55(a). Replies to 
petitions to modify are due 14 days after the filing of the petitions. 
37 CFR 251.55(b).
    Section 251.55 of the rules assists the Register of Copyrights in 
making her recommendation to the Librarian, and the Librarian in 
conducting his review of the CARP's decision by allowing the parties to 
the proceeding to raise specific objections to a CARP's determination. 
As required by section 802(f) of the copyright Act, if the Librarian 
determines that the Panel in this proceeding has acted arbitrarily or 
contrary to the provisions of the Copyright Act, he must ``after full 
examination of the record created in the arbitration proceeding, issue 
an order setting the * * * distribution of fees.'' 17 U.S.C. 802(f).
    Evelyn, who appeared pro se in this proceeding on behalf of 
herself, filed a petition to modify. Her petition attacks the Panel's 
report on three basic points. First, as a threshold issue, she claims 
that the entities comprising the Settling Parties, particularly the 
performing rights organizations and Gospel Music Coalition, have not 
properly filed claims to the DART royalties on behalf of their members. 
Evelyn Petition at 1-3. Second, she argues that the Panel disregarded 
statements and evidence offered by herself and Curry which contested 
and disproved the Settling Parties' findings of fact and conclusions of 
law. Id. at 4-5, 8. And third, she lists a number of perceived 
procedural irregularities that she claims led to disparate treatment of 
the individual claimants: (1) Acceptance by the Office of the Settling 
Parties' direct case which she asserts was not filed in accordance with 
the governing regulations; (2) return of her rebuttal case which was 
submitted during the 45-day precontroversy discovery period; and (3) 
failure of the CARP to request additional information from her to 
substantiate her claim. Id. at 5-6, 8.
    Curry, the other individual claimant participating in this 
proceeding, did not file a petition to modify.
    2. Settling Parties' Reply to Evelyn Petition to Modify: Settling 
Parties oppose the Evelyn petition on both procedural and substantive 
grounds. They contend that the petition is substantively deficient 
because it does not demonstrate in what way the CARP report is either 
arbitrary or contrary to law--the standard of review to be used by the 
Librarian in his review of the Panel's report. See 17 U.S.C. 802(f). In 
making this point, the Settling Parties addresses each of the legal 
issues raised by Evelyn.
    The Settling Parties also argue that the Librarian should reject 
Evelyn's petition because it fails to reference applicable sections of 
her proposed findings of fact and conclusions of law, as required under 
Sec. 251.55(a) of title 37 of the Code of Federal Regulations. They 
argue that failure to correctly reference her filings shows an apparent 
willful disregard for the requirements of the rule and warrants 
dismissal of the Petition. Settling Parties' Reply at 11-12.
    3. Sufficiency of Evelyn's Petition: Before the Register can 
address the issues raised by Evelyn's petition to modify the 
determination of the Panel, the Register must first address the 
Settling Parties' argument that the petition warrants dismissal for 
failure to comply with Sec. 251.55(a) of the CARP regulations. That 
section provides that each petition must ``state the reasons for 
modification or reversal of the panel's determination, and shall 
include applicable sections of the party's proposed findings of fact 
and conclusions of law.'' 37 CFR 251.55(a).
    The purpose of this requirement is to enable the Register and the 
Librarian to locate those portions of the testimony and filings that 
support a party's petition. Absent a showing of bad faith, the remedy 
for failure to comply with the regulation is an order from the 
Register, directing the offending party to amend his or her petition 
and include the proper citations to the relevant sections of the 
party's proposed findings of fact and conclusions of law. See 62 FR 
6560 (February 12, 1997).
    The Settling Parties point out that Evelyn had encountered the rule 
in the previous proceeding to determine the distribution of the 1992-
1994 DART royalty fees and argue that her ``apparent willful disregard 
for the requirements imposed by Rule 251.55 warrants dismissal of the 
Petition.'' Settling Parties' Reply at 12.
    While it is clear that Evelyn does not provide all relevant 
references to her proposed findings of fact and conclusions of law, she 
did make a good faith effort to comply with the regulation and supplied 
citations to the Settling Parties' Direct Case, the CARP Report and her 
own proposed findings of fact and conclusions of law. See e.g., Evelyn 
Petition at pp. 2, 5, 7. Moreover, the Library will accept a less than 
perfectly executed petition without amendment where the record is 
small, and it is reasonably easy to locate the cited information in the 
record. See 62 FR 6561 (February 12, 1997). Thus, Evelyn's petition has 
received full consideration.

c. The Register's Review and Recommendation

    The statutory criteria to be considered when deciding how to 
distribute the DART royalties are set forth in section 1006(c)(2) of 
the Copyright Act, title 17 of the United States Code. It states that a 
CARP may only consider ``the extent to which, during the relevant 
period * * * each musical work was

[[Page 9364]]

distributed in the form of digital musical recordings * * * or 
disseminated to the public in transmissions.'' In the first proceeding 
to determine the distribution of DART royalties, the Panel found, and 
the Library agreed, that the statute does not require the application 
of both criteria when evidence as to only one of the criteria has been 
presented by the parties to the proceeding. 62 FR 6561 (February 12, 
1997). This determination established a precedent for the presentation 
of and reliance on sales data alone for the purpose of determining each 
claimant's share of the royalty fees.
    Evelyn argues in her petition to modify that the first proceeding 
did not establish a binding precedent for all future distribution 
proceedings, but fails to offer an alternative approach or explain why 
the Panel should deviate from the methodology used in the first 
proceeding when the record evidence parallels the prior record in its 
approach. Every Petition at 7. Her assertion about the precedential 
effect of the first proceeding is not correct. Section 802(c) requires 
the Panel to ``act on the basis of a fully documented written record, 
prior decisions of the Copyright Royalty Tribunal, prior copyright 
arbitration Panel determinations, and rulings by the Librarian of 
Congress under section 801(c).''
    Had Evelyn offered evidence of public performances or evidence for 
ascertaining the scope of record sales in a different manner, the CARP 
could have adopted a different methodology for making the 
determinations. However, an assertion that she is entitled to 1% of the 
royalty fees in the funds to which she filed a claim is not evidence. 
See Proposed Distribution Order, Evelyn Proposed Findings of Fact and 
Conclusions of Law. It is merely a statement of opinion.
    Evelyn party has an opportunity to present evidence to the Panel 
when it files the direct case. The written direct case is the very 
foundation of a party's case and as such must include testimony and 
exhibits which, when taken together, support and prove a party's claim. 
See Order in Docket No. 95-1 CARP DD 92-94 (dated May 9, 1996). In 
Evelyn's case, she supplied only a list of her works. See Evelyn Direct 
Case, exhibit 1a-1d; CARP Report para.69. Evidently, she had thought 
the CARP would request additional information and evidence from her at 
a later date. Evelyn Petition at 8; Settling Parties' Reply at 8. While 
a CARP member may, in accordance with the regulations, request 
additional information from a party, he or she does so at his or her 
own discretion. See 37 CFR 251.46(d). It is not the function of the 
Panel to search for new evidence that favors a party's case. This is 
and remains each party's prime responsibility throughout the 
proceeding.
    In the current proceeding, the arbitrators chose not to request any 
additional information, evidently finding the evidence in the record 
sufficient upon which to make an informed decision. Because the 
Settling Parties offered the same type of evidence as that adopted in 
the prior DART distribution proceeding and neither Evelyn or Curry made 
a showing of changed circumstances or presented material evidence \2\ 
that would justify a rejection of the Settling Parties' evidence, the 
Panel's decision to follow the precedent is neither arbitrary nor 
contrary to law.
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    \2\ Evelyn claims that an increase in the number of songs for 
which she is making a claim constitutes changed circumstances and 
should alter the outcome of the CARP's decision. Evelyn Petition at 
8. However, there is no evidence in the record documenting sales of 
these works during the relevant period. CARP Report para.69.
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    Evelyn also asserts, as a threshold matter, that the performing 
rights organizations had no authority to file a claim on behalf of 
their members. The Panel discussed this issue fully in its report and 
found that each of the organizations and associations that comprise the 
Settling Parties meet the definition of ``interested copyright party'' 
and are entitled to file a claim on behalf of its members and 
represents their interests in a CARP proceeding. See, supra, discussion 
in Determination of the Panel. This reasoning fully complies with the 
Copyright Act, and therefore, the participation of the members of the 
Settling Parties, including the performing rights organizations, is not 
arbitrary.
    Evelyn also asserts that Gospel Music Coalition (``GMC'') failed to 
file a claim and therefore, cannot be represented by the Settling 
Parties. This assertion is clearly erroneous. A review of the Copyright 
Office records shows that GMC filed claims to the 1995, 1996, 1997 and 
1998 Musical Works Funds and did so in both subfunds. See, claim no. 7, 
1995 Publishers Subfund and claim no. 8, 1995 Writers Subfund; claim 
no. 9, 1996 Publishers Subfund and claim no. 7, 1996 Writers Subfund; 
claim no. 8, 1997 Publishers Subfund and claim no. 9, 1997 Writers 
Subfund; claim no. 8, 1998 Publishers Subfund and claim no. 8, 1998 
Writers Subfund.
    Based upon the proper filing of these claims, GMC was then free to 
negotiate a settlement agreement with the other parties who filed a 
claim to the same funds. 17 U.S.C. 1007(a)(2). This it did. On July 2, 
1999, the Copyright Office received official notification that Gospel 
Music Coalition had reached an agreement to settle its claims to the 
1995, 1996, 1997, and 1998 Musical Works Funds with respect to the 
Writers and Publishers Subfunds. See, Comments on the existence of 
controversies and notice of intent to participate of Broadcast Music, 
Inc., the American Society of Composers, Authors & Publishers, SESAC, 
Inc., The Harry Fox Agency, Inc., The Songwriters Guild of America and 
Copyright Management, Inc. as Settling Parties, Docket No. 99-3 CARP DD 
95-98, at 3. Consequently, Evelyn's suggestion that GMC improperly 
reached an agreement with the Settling Parties is incorrect.
    Another point Evelyn makes in her petition is that she received 
disparate treatment in this proceeding because of procedural 
irregularities. First, she argues that the Settling parties failed to 
submit their direct case in accordance with the CARP regulations. 
Section 251.45(b)(1)(i) of the rules requires that ``each party to the 
proceeding must effect actual delivery of a complete copy of its 
written direct case on each of the other parties to the proceeding no 
later than the first day of the 45-day period.'' In this proceeding, 
parties were directed to deliver copies of their direct cases to all 
parties on November 15, 1999. Evelyn, however, received her copy of the 
Settling Parties' direct case by special messenger at 3:30 a.m. on 
November 16, 1999, along with three additional motions.\3\ Evelyn 
Petition at 5.
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    \3\ Meanwhile, the Settling Parties had filed its direct case 
with the Copyright Office on November 15, 1999, in accordance with 
the Office's scheduling order.
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    The Panel's response to this issue was incorrect as a matter of 
law. It stated that the CARP rules do not require that each party 
receive pleadings simultaneously, citing Sec. 251.44(f). See CARP 
Report para. 19 n.5. The Panel failed to recognize that Sec. 251.45(b) 
of the CARP rules governs the filing of a direct case and specifically 
requires filing of direct cases to all parties on the same day. This 
misinterpretation, however, does not require that the Librarian set 
aside the entire decision or strike the Settling Parties' case because 
Evelyn never requested relief from the Copyright Office. Had Evelyn 
wished to contest the filing of the Settling Parties' direct case, she 
had only to file a motion with the Office seeking dismissal of the

[[Page 9365]]

Settling Parties' case or requesting an adjustment to the discovery 
schedule to make up for the lost time. She chose not to file such a 
motion, however, because she believed that ``the Copyright Office would 
(not) strike the case of the Settling Parties and leave only the two 
individual claimants in the case.'' Evelyn's Proposed Findings of Fact 
and Conclusions of Law at 3. Consequently, the Office had no reason to 
address the issue because Evelyn did not request any relief from the 
Office at the appropriate time. Furthermore, her continued involvement 
in the proceeding supports the Panel's conclusion that she did not 
suffer any undue harm because of the delay in the delivery of the 
direct case.
    Another procedural irregularity raised by Evelyn concerns the 
return of her rebuttal case. She filed it with the Copyright Office on 
November 24,1999, during the 45-day precontroversy discovery period. By 
Order, dated November 24, 1999, the Office rejected the pleading except 
for a single sentence which addressed a motion for a partial 
distribution then under consideration. The Order stated that ``[n]o 
provision is made in the rules or the Library's scheduling order for 
the filing of rebuttal cases at this stage of the proceeding. Rebuttal 
cases, if required at all, are filed with the CARP after consideration 
of the written direct cases.'' Evelyn refiled her rebuttal case on July 
28, 2000, and it was considered by the CARP at that time. Consequently, 
Evelyn suffered no prejudice from the Office's decision to strike her 
rebuttal case when it was first filed prematurely.
    Evelyn makes one additional procedural challenge in her petition. 
She contends that the Settling parties did not provide sworn testimony 
to establish a universe of sales. Evelyn Petition at 8. Specifically, 
she objects to the inclusion of Michael Fine's prior testimony from the 
1992-1994 DART distribution proceedings on the SoundScan data. This 
testimony established the basis for determining total record sales and 
record sales for Curry and Evelyn. CARP Report para. 32. She states 
that there were problems with his testimony in the 1992-1994 DART 
distribution proceedings but does not discuss what these problems were 
or why they have a bearing on the current proceeding. In any event, no 
problem was identified in the last proceeding concerning this 
testimony; thus, under the CARP rules, the Settling Parties were free 
to designate a portion of past records to be included in their direct 
case. 37 CFR 251.43. Had the Panel not allowed the incorporation of 
Fine's past testimony, it would have acted contrary to the law, unless 
it had reason to strike the testimony for good cause shown.
    Evelyn's final challenge focuses on the Settling Parties' 
methodology. She, like Curry before her in the 1992-1994 DART 
distribution proceeding, objects to the use of a methodology that only 
requires a showing of the number of record sales for the individual 
claimants. She contends that no claim can be termed a ``de minimus 
claim'' until it is measured against the entitlement of others. Evelyn 
Petition at 3. In response, the Panel noted that the courts have 
repudiated as wasteful a requirement that all claimants in a given 
distribution proceeding prove their entitlement through the 
presentation of detailed data for every individual work. CARP Report 
para. 76. In National Association of Broadcaster v. Copyright Royalty 
Tribunal, 772 F.2d 922, 939 (D.C. Cir. 1985), the case cited by the 
Panel in its report, the court wisely noted that to do otherwise would 
effectively eliminate the likelihood of settlements because a single 
claimant--no matter how modest that claimant's likely share under even 
the most sanguine review--could choose not to settle with the other 
claimants and require a full hearing on all claims, even those not in 
controversy.
    For all the reasons set forth in the prior discussion, the Register 
concludes that the Panel did not act arbitrarily or contrary to the 
provisions of the Copyright Act in determining the value of Curry's and 
Evelyn's DART claims and recommends that the Librarian adopt without 
amendment the Panel's Report and recommendation for the allocation of 
the 1995, 1997 and 1998 Musical Works Funds.

Order of the Librarian of Congress

    Having duly considered the recommendation of the Register of 
Copyrights regarding the report of the Copyright Arbitration Royalty 
panel concerning the distribution of the 1995, 1997 and 1998 Musical 
Works Funds, the Librarian of Congress fully endorses and adopts her 
recommendation to accept the Panel's decision. For the reasons stated 
in the Register's recommendation, the Librarian is exercising his 
authority under 17 U.S.C. 802(f) and is issuing an order announcing the 
allocation of the royalty fees in the 1995, 1997 and 1998 Musical Works 
Funds.
    Wherefore, it is ordered that the royalty fees in the 1995, 1997 
and 1998 Musical Works Funds shall be distributed according to the 
following percentages:

------------------------------------------------------------------------
                                                         1995
                                             ---------------------------
                                                             Publishers
                                               Writers (%)       (%)
------------------------------------------------------------------------
Curry.......................................      0.001966      0.001966
Evelyn......................................      0.000614           N/A
Settling parties............................     99.997420     99.998034
 
    n,sTotal...............................        100.00        100.00
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                         1997
                                             ---------------------------
                                                             Publishers
                                               Writers (%)       (%)
------------------------------------------------------------------------
Curry.......................................      0.001027      0.001027
Evelyn......................................      0.000130           N/A
Settling parties............................     99.998843     99.998973
 
    n,sTotal...............................        100.00        100.00
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                         1998
                                             ---------------------------
                                                             Publishers
                                               Writers (%)       (%)
------------------------------------------------------------------------
Curry.......................................           N/A           N/A
Evelyn......................................      0.000144           N/A
Settling parties............................     99.999856        100.00
 
    n,sTotal...............................        100.00        100.00
------------------------------------------------------------------------

    As provided in 17 U.S.C. 802(g), the period for appealing this 
Order to the United States Court of Appeals for the District of 
Columbia is thirty (30) days from the effective date of this Order.

    Dated: January 30, 2001.
Marybeth Peters,
Register of Copyrights.
    Approved by:
James H. Billington,
The Librarian of Congress.
[FR Doc. 01-3142 Filed 2-6-01; 8:45 am]
BILLING CODE 1410-33-P