[Federal Register Volume 66, Number 106 (Friday, June 1, 2001)]
[Rules and Regulations]
[Pages 29700-29704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13787]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Parts 252 and 257

[Docket No. RM 2001-3A CARP]


Cable and Satellite Statutory Licenses

AGENCY: Copyright Office, Library of Congress.

ACTION: Final rule.

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SUMMARY: The Copyright Office of the Library of Congress is adopting 
final regulations for filing a claim to royalties collected under the 
cable statutory license, 17 U.S.C. 111, and the satellite statutory 
license, 17 U.S.C. 119. Under the new rules, a party who files a joint 
claim on behalf of multiple copyright owners must list the name and 
address of each copyright owner to the joint claim.

EFFECTIVE DATE: July 1, 2001.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel or 
Tanya M. Sandros, Senior Attorney for Compulsory Licenses, Copyright 
Arbitration Royalty Panel, P.O. Box 70977, Southwest Station, 
Washington, D.C. 20024. Telephone: (202) 707-8380. Telefax: (202) 252-
3423.

SUPPLEMENTARY INFORMATION:

Background

    Each July, persons who are entitled to statutory license fees 
collected under the provisions of the cable statutory license, 17 
U.S.C. 111, and the satellite statutory license, 17 U.S.C. 119, must 
file a claim with the Copyright Office in accordance with its 
regulations in order to establish their claim to a share of the royalty 
fees. See 37 CFR 252.3 and 257.3. Historically, the filing requirements 
have been minimal, requiring only the identification of the claimant, 
contact information, a statement of the nature of the claimant's 
copyrighted work, at least one example of a secondary retransmission of 
the claimant's work during the previous calender year, an original 
signature of the claimant or a duly authorized representative of the 
claimant, and, in the case of a joint claim, a statement on the part of 
the entity filing the claim that authorization for filing the claim 
exists.
    On April 26, 2001, the Copyright Office published a Notice of 
Proposed Rulemaking, seeking comment on proposed amendments which were 
offered to clarify that the identity of each copyright owner must be 
listed on each claim. 66 FR 20958 (April 26, 2001). The need for this 
clarification

[[Page 29701]]

became apparent during a recent cable royalty distribution proceeding, 
when a party filed a claim for cable royalties in the name of a 
corporate entity that held no copyrights to programming which had been 
secondarily transmitted by a cable system during the relevant calendar 
year. See Docket No. 2000-2 CARP CD 93-97. The disputed claim was filed 
under the current regulations which allow ``any party'' claiming to be 
entitled to cable fees to make the claim. During the course of that 
proceeding, the Office observed that the language ``any party'' was 
quite broad and could include holders of one or more exclusive rights 
granted by copyright, as well as agents and representatives of 
copyright owners. See Order in Docket No. 2000-2 CARP CD 93-97 (June 
22, 2000).
    Specifically, the Office found that this language might plausibly 
be interpreted by the public as allowing the filing of a 
``placeholder'' claim. A ``placeholder'' claim is a claim filed by a 
person who is not a copyright owner, but who files a cable or satellite 
claim in his or her own name, and then later asserts claims to 
royalties on behalf of copyright owners whose works were retransmitted 
by a cable system or satellite carrier. Placeholder claims may be filed 
with the Copyright Office in the form of single claims, but in 
substance they are joint claims. Because the Copyright Office does not 
inquire as to the identity of the person or entity filing a cable or 
satellite claim (i.e. whether that person or entity is a copyright 
owner or another party), we cannot determine whether the claim is a 
properly filed single claim, or should be a joint claim identifying the 
appropriate represented copyright owners.
    Placeholder claims run afoul of the distribution process for cable 
and satellite royalties. The law states that cable and satellite 
royalties may only be distributed to copyright owners whose works were 
retransmitted by either cable systems or satellite carriers.\1\ Indeed, 
the purpose of filing claims is to permit identification of all 
copyright owners who are entitled to a distribution.\2\ Placeholder 
claims make it impossible to identify the copyright owners entitled to 
distribution. Further, both section 111 and section 119 plainly state 
that claims for royalty fees must be filed in the month of July to be 
eligible for distribution. Placeholder claims can circumvent this 
requirement by allowing the filer to enter into representation 
agreements with copyright owners after the July deadline, and 
effectively secure a distribution for those owners who had not filed 
timely claims. The Office has stated previously that it will not allow 
joint claims to be amended to add new parties after the July deadline, 
because this would thwart the purpose of the July filing requirement. 
59 FR 63025, 63028 (December 7, 1994). Placeholder claims can produce 
this result, because the identity of the copyright owners represented 
by the party filing the placeholder claim will not be known until 
Notices of Intent to Participate in a CARP proceeding are filed. 
Presumably, the party filing the placeholder claim could then sign 
representation agreements with copyright owners who had not filed their 
own claims up until that date.
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    \1\ Both section 111 and section 119 permit copyright owners to 
designate a common agent for payment of royalty fees. 17 U.S.C. 
111(d)(4)(A) & 119(b)(4)(A). We do not interpret this language as 
authorizing the filing of placeholder claims. Rather, this language, 
``[claimants] may designate a common agent to receive payment on 
their behalf,'' allows the Library to distribute royalties to 
someone other than the copyright owner, provided that the owner has 
previously informed the Copyright Office of the identity of the 
common agent.
    \2\ The one exception to this is allowing performing rights 
societies, who literally represent thousands of copyright owners, to 
file one claim on behalf of all their members and affiliates. As 
discussed above, the Copyright Royalty Tribunal created this 
exception, and the Copyright Office has adopted this practice.
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    We wish to put an end to placeholder claims. To this end, we 
proposed amendments to parts 252 and 257 of the rules to clarify that a 
claim filed with the Copyright Office must list the name of each 
copyright owner covered by the claim; and today, we are adopting the 
proposed amendments as final regulations. In addition, the amended 
rules will also require that a joint claim specify the name of the 
copyright owner for each listed copyrighted work. These rules shall 
govern the filing of cable and satellite claims beginning July 1, 2001.

Comments

    The Copyright Office received comments to its proposed rules from 
seven parties: the American Society of Composers, Authors and 
Publishers, Broadcast Music, Inc., and SESAC, Inc. (collectively, the 
``Performing Rights Organizations''); the Office of the Commissioner of 
Baseball, the National Basketball Association, the National Football 
League, and the National Hockey League (collectively, the 
``Professional Sports Leagues''); the Canadian Claimants Group; the 
National Association of Broadcasters (``NAB''); the Motion Picture 
Association of America (``MPAA''); Worldwide Subsidy Group (``WSG''); 
and Mark J. Davis (``Davis'').
    The commenters, in general, support the Office's endeavor to 
clarify its rules to eliminate any opportunity for a claimant to expand 
its claim after the July 31 filing deadline. The Performing Rights 
Organizations and the Professional Sports Leagues support the proposed 
modifications to Secs. 252.3 and 257.3 of title 37 of the Code of 
Federal Regulations without change. The remaining five commenters 
agreed with the proposed amendments but each sought additional 
modifications to the rules and/or clarification of the nature of the 
problem that prompted the Office to amend its rule.

Identification of Copyright Owners

    First, the purpose of the filing requirements is to establish each 
copyright owner's entitlement to the cable and satellite royalties in 
accordance with the provisions set forth in the law. A fundamental 
requirement is to file a claim with the Copyright Office during the 
month of July for royalties collected the prior calendar year. No claim 
can be filed without identifying the copyright owner.
    Prior to the recent cable distribution proceeding, Docket No. 2000-
2 CARP CD 93-97, we had thought the rules had made it clear that the 
identity of each copyright owner must be disclosed. Consequently, a 
joint claim had to include the name of each copyright owner on whose 
behalf the claim was made. Certain parties, e.g. the Professional 
Sports Leagues and the MPAA, who have historically participated in 
these proceedings, also understood this to be the law and saw no 
ambiguity in the wording of the rules.
    But what was clear and unambiguous to these parties and the Office 
was not so obvious to new participants. In July of 1998, the Office 
received a claim from a single entity which turned out to be an agent 
filing on behalf of a number of copyright owners. Because the Office 
recognized that there were arguably ambiguities in the regulation at 
that time, the Office allowed the claim and further fact-finding was 
conducted by a Copyright Arbitration Royalty Panel (``CARP'') for the 
purpose of establishing which copyright owners and which programs were 
covered by the initial filing.
    To avoid such problems in the future, the Office issued proposed 
rules for the purpose of clarifying that each claim must list the name 
of each copyright owner on whose behalf the claim is filed and it must 
do so during the time period established by Congress.
    Only WSG makes any objection to the new rules. WSG argues that the

[[Page 29702]]

proposed rules ``are little more than another obstacle that could 
result in the denial of valid claims.'' WSG comment at 4. WSG reaches 
this conclusion based upon its analysis of the United States statutory 
mechanism for filing claims for retransmission royalties with 
procedures used in Europe, Australia and Asia. It concludes that the 
United States system is more complex, restrictive, time consuming and 
expensive. To make its case, WSG highlights the statutory requirement 
that claims to cable and satellite royalties must be filed with the 
Copyright Office during the month of July each year. It cites this 
requirement as an example of the formalistic restrictions placed on the 
copyright owners and seems to urge the Office to impose fewer 
restrictions on the claimants, such as not requiring the identification 
of the copyright owner at the time the claim is filed. Moreover, WSG 
argues that the imposition of the requirement could result in the 
denial of a valid claim, especially where the agent has secured timely 
and proper authority to make the filing.
    However, we fail to see how an agent or a copyright owner is 
disadvantaged because the agent is required to list the name of each 
copyright owner to a joint claim. First, the agent must know who his 
clients are when he files the claim. Second, an initial claim may be 
further amended to add new copyright owners at any time during the 
month of July. Alternatively, the agent can file the claim on the last 
day of the filing period provided that the claim is either hand 
delivered to the Copyright Office or it is sent via first class mail 
and bears a July date stamp from the United States Postal Service. The 
only requirement is that the claim be timely filed with the Copyright 
Office and that it meet the minimal filing requirements, including a 
complete list of the copyright owners who are covered by the claim, 
their respective addresses and an example of a secondary transmission 
of a work owned by one of the listed copyright owners. The copyright 
owner of this work must be identified.
    Adherence to this fundamental filing requirement will, as MPAA 
points out, simplify litigation and reduce the associated costs. MPAA 
also contends that the simple rule change will facilitate settlement 
negotiations at an earlier phase in the distribution process. Even WSG 
agrees that the requirement to list each copyright owner to a joint 
claim will allow other parties a mechanism by which they can ascertain 
the extent of the claim and verify that the party making the claim has 
the necessary authority to make the filing.
    The name of each copyright owner is among the most fundamental 
elements required to establish a claim to copyright royalties and there 
can be no serious challenge to a rule requiring the identification of 
the party who is the beneficiary of the claim. Thus, we are adopting 
the amended rules.\3\
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    \3\ Although this rule change will resolve the identity of the 
claimants eligible to seek royalties, it does not identify which 
entity will ultimately represent the interests of the claimant in a 
proceeding before the Copyright Office or a CARP. This is the case 
because many copyright owners decide to engage independent counsel 
or an agent to negotiate on their behalf only after they file the 
initial claim. In these instances, it may not be clear who 
represents whom in a distribution proceeding until notices of intent 
to participate are filed with the Office. For example, in the 1997 
cable distribution proceeding, MPAA represented the interests of 
over 100 copyright owners but did not identify itself as the agent 
of these claimants until it filed its direct case on their behalf.
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Address and Contact Information

    The proposed rules also require that a joint claim include the 
address for each listed copyright owner. WSG does not object to the 
additional requirement, but it does not agree that the requested 
contact information need be filed at the same time as the initial 
claim. It argues that the information may not be readily available to 
the party filing the claim, especially when a first time claimant 
decides at the last minute to pursue its entitlement. For this reason, 
WSG proposes that the Office require a subsequent filing with the 
address and contact information for each claimant. In addition, WSG 
suggests that this information be submitted to the Copyright Office 
under seal of a protective order to avoid misuse of the information.
    WSG's arguments are unavailing on this point. Undoubtedly, most 
people could benefit from more time to meet a deadline, but the time 
for completing the process is limited. Thus, it is incumbent upon the 
claimant to begin the process early enough to gather the necessary 
information and submit it to the Office in a timely manner, either in 
his or her own claim or in a joint claim filed by the copyright owner's 
agent. Moreover, there is no justification for granting a copyright 
owner who chooses to file through an agent more time to submit the 
required information than that allotted to a copyright owner who 
submits a single claim in his or her own name. Identifying the address 
of a claimant is a simple matter involving information that should be 
readily available to the person filing the claim.
    For this reason, the Copyright Office rejects WSG's suggestion that 
copyright owners to a joint claim receive additional time to meet the 
Office's filing requirements. The Office also rejects the suggestion 
that the addresses and contact information for each joint claimant be 
submitted under a protective order. The requested information is by no 
means confidential. Quite the contrary, it is the most mundane, 
ordinary variety of information that is routinely disclosed in the 
ordinary course of business. There is no justification for redacting 
such information from a public record.

Program Listings

    Two commenters, WSG and Davis, seek modifications to the rules to 
require claimants to identify in their initial filing all programs for 
which they are making a claim. Davis maintains that the purpose of the 
claim in July is to clearly identify the claimants who are entitled to 
receive the royalty fees and the works upon which they base their 
claim. Davis argues that the identification of all programs at the 
initial stage of the distribution process will foster an early 
resolution of any outstanding controversies. He believes that an 
additional requirement to list all programs in the initial claim will 
not overburden the filer because the information is readily available 
from Cable Data Corporation or readily accessible from the claimant's 
business records.
    WSG supports similar modifications of the rules because it had 
difficulty ascertaining the validity of a claimant's entitlement to 
particular programs in a recent cable distribution proceeding. It too 
believes that a rule requiring disclosure of the programs owned or 
claimed by each claimant would aid in the just resolution of 
outstanding controversies.
    Davis and WSG, however, have formed their opinions based on a 
single experience in a Phase II distribution proceeding which, by its 
very nature, required the fact finders to sort out individual claims 
and determine the value of each claimant's programming. Lists of 
programs associated with particular claimants, however, are not needed 
in the early stages of the distribution process. Historically, parties 
have been able to negotiate settlement agreements between program 
categories without the aid of specific program information. 
Furthermore, parties have indicated that, in the case of a joint claim, 
it is both unnecessary and expensive to require the listing of a single 
specific program for each copyright owner listed in the claim. 59 FR 
23964 (May 9, 1994).
    The Office concludes that before making a determination on these 
proposals, it would be necessary to

[[Page 29703]]

explore this issue in a separate proceeding and provide an opportunity 
for comment from other parties.

Parent/Subsidiary Claims

    NAB supports the proposed rule changes, but it seeks clarification 
of the rule for filing a joint claim when the claim is filed in the 
name of a parent company on behalf of all its subsidiaries. It notes 
that ``group broadcast station owners sometimes follow the practice of 
filing a single claim on behalf of their entire group of owned 
stations,'' even though the parent company may only be the beneficial 
owner and not the legal owner of the retransmitted works. NAB comment 
at 2.
    However, it is clear that a claim which asserts rights to royalties 
on behalf of more than a single entity is a joint claim. Thus, the 
preceding example cited by NAB must be considered a joint claim and as 
such, it must list each claimant and include a concise statement of 
authorization. On this point, NAB asserts that the practice of reciting 
the relationship between the parent and the subsidiary should be 
sufficient to establish the parent entity's authority for filing the 
claim on behalf of itself and its subsidiaries and seeks to codify this 
understanding by including additional regulatory language. 
Specifically, NAB requests that the proposed regulation be amended to 
state that:

    A parent corporation of a copyright owner, or an entity 
controlling a copyright owner, may establish its authorization to 
file jointly on behalf of its subsidiary copyright owners by 
identifying the nature of the ownership or control relationship.

NAB comment at 3. The Office, however, declines to codify this practice 
without giving the public an opportunity to comment on the proposed 
changes.
    Moreover, what is required under the final rule is that the person 
or entity filing the claim, e.g., the parent corporation, ascertain 
whether it has the authority to file the claim on behalf of the listed 
joint claimants and include a concise statement of the authorization it 
has for making such claim. Of course, this statement is merely a 
representation to the Office that the authority for filing the claim 
exists and its validity may be tested at a later point in the 
distribution process.
    In the event the Office determines that a parent/subsidiary claim 
is a joint claim, NAB makes a second request. It asks for a liberal 
amendment policy under which the parent corporation can amend its claim 
to add additional subsidiaries not listed on the original claim. It 
argues that such amendments do not prejudice other parties because the 
original claim would provide notice to all parties of the scope and 
nature of the claim. While NAB suggests that the Office can offer such 
relief informally without a change to its rules, the Office disagrees.
    The final rule requires that, with one exception, a joint claim 
list each copyright owner. The one express exception--a longstanding 
one--applies to performing rights organizations. This exception to the 
requirement to list all copyright owners exists because the Office has 
recognized that the organizations' standard membership or affiliate 
agreements are a proper indication of authorization. Because the 
proposed rule states the circumstances under which a party need not 
adhere to specific filing requirements, the Office concludes that NAB's 
proposal would require promulgation of a similar regulation 
specifically granting liberal amendment procedures for parent 
corporations. Moreover, such change is beyond the scope of the proposal 
made in the current rulemaking proceeding, and other parties have not 
had the opportunity to comment on it. Thus, at this time the Office 
cannot entertain the NAB proposal.

Authorization

    The Canadian Claimant Group files a joint claim annually and 
``supports [the Office's] efforts to insure the integrity and 
transparency of the claims process.'' Canadian Claimant Group comment 
at 2. However, it has asked the Office to amend its rules further and 
make written authorizations available for inspection by other copyright 
owners upon request. This suggestion goes beyond the scope of the 
Office's proposal made in the current rulemaking proceeding, and the 
Office is not prepared to make such a change without giving other 
interested parties an opportunity to comment on the efficiencies and 
burdens associated with the additional requirement.

Statutory Authority

    The Library of Congress is adopting final regulations under its 
authority to establish regulations for the submission of cable 
statutory license claims and satellite statutory license claims. 17 
U.S.C. 111(d)(4)(A) and 119(b)(4)(A).

List of Subjects

37 CFR Part 252

    Copyright, cable television, claims.

37 CFR Part 257

    Copyright, satellite television, claims.

    For the reasons set forth in the preamble, the Library is amending 
parts 252 and 257 of 37 CFR Chapter II as follows:

PART 252--FILING OF CLAIMS TO CABLE ROYALTY FEES

    1. The authority citation for part 252 continues to read as 
follows:

    Authority: 17 U.S.C. 111(d)(4), 801, 803.


    2. Section 252.3 is revised to read as follows:


Sec. 252.3  Content of Claims.

    (a) Single claim. A claim filed on behalf of a single copyright 
owner of a work or works secondarily transmitted by a cable system 
shall include the following information:
    (1) The full legal name and address of the copyright owner entitled 
to claim the royalty fees.
    (2) A general statement of the nature of the copyright owner's work 
or works, and identification of at least one secondary transmission by 
a cable system of such work or works establishing a basis for the 
claim.
    (3) The name, telephone number, facsimile number, if any, and full 
address, including a specific number and street name or rural route, of 
the person or entity filing the single claim.
    (4) An original signature of the copyright owner or of a duly 
authorized representative of the copyright owner.
    (b) Joint claim. A claim filed on behalf of more than one copyright 
owner whose works have been secondarily transmitted by a cable system 
shall include the following information:
    (1) A list including the full legal name and address of each 
copyright owner to the joint claim entitled to claim royalty fees.
    (2) A concise statement of the authorization for the person or 
entity filing the joint claim. For this purpose, a performing rights 
society shall not be required to obtain from its members or affiliates 
separate authorizations, apart from their standard membership affiliate 
agreements, or to list the name of each of its members or affiliates in 
the joint claim as required by paragraph (b)(1) of this section.
    (3) A general statement of the nature of the copyright owners' 
works and identification of at least one secondary transmission of one 
of the copyright owners' works by a cable system establishing a basis 
for the joint claim and the identification of the copyright owner of 
each work so identified.
    (4) The name, telephone number, facsimile number, if any, and full 
address, including a specific number

[[Page 29704]]

and street name or rural route, of the person filing the joint claim.
    (5) Original signatures of the copyright owners to the joint claim 
or of a duly authorized representative or representatives of the 
copyright owners.
    (c) In the event that the legal name and/or address of the 
copyright owner entitled to royalties or the person or entity filing 
the claim changes after the filing of the claim, the Copyright Office 
shall be notified of the change. If the good faith efforts of the 
Copyright Office to contact the copyright owner or person or entity 
filing the claim are frustrated because of failure to notify the Office 
of a name and/or address change, the claim may be subject to dismissal.

PART 257--FILING OF CLAIMS TO SATELLITE CARRIER ROYALTY FEES

    3. The authority citation for part 257 continues to read as 
follows:

    Authority: 17 U.S.C. 119(b)(4).


    4. Section 257.3 is revised to read as follows:


Sec. 257.3  Content of Claims.

    (a) Single claim. A claim filed on behalf of a single copyright 
owner of a work or works secondarily transmitted by a satellite carrier 
shall include the following information:
    (1) The full legal name and address of the copyright owner entitled 
to claim the royalty fees.
    (2) A general statement of the nature of the copyright owner's work 
or works, and identification of at least one secondary transmission by 
a satellite carrier of such work or works establishing a basis for the 
claim.
    (3) The name, telephone number, facsimile number, if any, and full 
address, including a specific number and street name or rural route, of 
the person or entity filing the single claim.
    (4) An original signature of the copyright owner or of a duly 
authorized representative of the copyright owner.
    (b) Joint claim. A claim filed on behalf of more than one copyright 
owner whose works have been secondarily transmitted by a satellite 
carrier shall include the following information:
    (1) A list including the full legal name and address of each 
copyright owner to the joint claim entitled to claim royalty fees.
    (2) A concise statement of the authorization for the person or 
entity filing the joint claim. For this purpose, a performing rights 
society shall not be required to obtain from its members or affiliates 
separate authorizations, apart from their standard membership affiliate 
agreements, or to list the name of each of its members or affiliates in 
the joint claim as required by paragraph (b)(1) of this section.
    (3) A general statement of the nature of the copyright owners' 
works, identification of at least one secondary transmission of one of 
the copyright owners' works by a satellite carrier establishing a basis 
for the joint claim, and the identification of the copyright owner of 
each work so identified.
    (4) The name, telephone number, facsimile number, if any, and full 
address, including a specific number and street name or rural route, of 
the person filing the joint claim.
    (5) Original signatures of the copyright owners to the joint claim 
or of a duly authorized representative or representatives of the 
copyright owners.
    (c) In the event that the legal name and/or address of the 
copyright owner entitled to royalties or the person or entity filing 
the claim changes after the filing of the claim, the Copyright Office 
shall be notified of the change. If the good faith efforts of the 
Copyright Office to contact the copyright owner or person or entity 
filing the claim are frustrated because of failure to notify the Office 
of a name and/or address change, the claim may be subject to dismissal.

    Dated: May 25, 2001.
Marybeth Peters,
Register of Copyrights.
James H. Billington,
The Librarian of Congress.
[FR Doc. 01-13787 Filed 5-31-01; 8:45 am]
BILLING CODE 1410-33-P