[Federal Register Volume 66, Number 167 (Tuesday, August 28, 2001)]
[Proposed Rules]
[Pages 45241-45245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21561]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 201

[Docket No. RM 2001-6]


Compulsory License for Making and Distributing Phonorecords, 
Including Digital Phonorecord Deliveries

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Copyright Office of the Library of Congress is seeking 
comment on proposed amendments to the regulations governing the content 
and service of certain notices on the copyright owner of a musical 
work. The notice is served or filed by a person who intends to use the 
work to make and distribute phonorecords, including by means of digital 
phonorecord deliveries, under a compulsory license.

DATES: Comments are due no later than September 27, 2001.

ADDRESSES: An original and ten copies of any comment shall be delivered 
to: Office of the General Counsel, Copyright Office, James Madison 
Building, Room LM-403, First and Independence Avenue, SE, Washington, 
DC; or mailed to: Copyright Arbitration Royalty Panel (CARP), P.O. Box 
70977, Southwest Station, Washington, DC 20024-0977.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 
Tanya M. Sandros, Senior Attorney, Copyright Arbitration Royalty Panel, 
P.O. Box 70977, Southwest Station, Washington, DC 20024-0977. 
Telephone: (202) 707-8380. Telefax: (202) 252-3423.

SUPPLEMENTARY INFORMATION:

Background

    Section 115 of the Copyright Act, 17 U.S.C., provides that ``[w]hen 
phonorecords of a nondramatic musical work have been distributed to the 
public in the United States under the authority of the copyright owner, 
any other person * * * may, by complying with the provisions of this 
section, obtain a compulsory license to make and distribute 
phonorecords of the work.'' 17 U.S.C. 115(a)(1). The compulsory license 
set forth in section 115 permits the use of a nondramatic musical work 
without the consent of the copyright owner if certain conditions are 
met and royalties are paid. It does not, however, allow for the 
reproduction and distribution of a sound recording. These are the 
exclusive rights of the copyright owner of the sound recording and must

[[Page 45242]]

be cleared through a separate transaction.
    On November 1, 1995, Congress enacted the Digital Performance Right 
in Sound Recordings Act of 1995 (``DPRA''), Public Law 104-39 (1995). 
Among other things, this law clarified that the compulsory license for 
making and distributing phonorecords includes the distribution of a 
phonorecord of a nondramatic musical work by means of a digital 
phonorecord delivery (``DPD''). See 17 U.S.C. 115(c)(3)(A). A digital 
phonorecord delivery is

each individual delivery of a phonorecord by digital transmission of 
a sound recording which results in a specifically identifiable 
reproduction by or for any transmission recipient of a phonorecord 
of that sound recording, regardless of whether the digital 
transmission is also a public performance of the sound recording or 
any nondramatic musical work embodied therein.

17 U.S.C. 115(d). However, the right to make and distribute the sound 
recording embodied in the DPD is not covered under the section 115 
license. Therefore, the law clarifies that the making of a DPD 
constitutes an act of infringement under section 501 unless: (1) The 
copyright owner of the sound recording authorizes the making of the 
DPD, and (2) the owner of the copyright in sound recording or the 
entity making the digital phonorecord delivery has obtained a 
compulsory license under section 115 or has otherwise been authorized 
to distribute, by means of a digital phonorecord delivery, each musical 
work embodied in the sound recording. See 17 U.S.C. 115(c)(3)(H).
    In addition, the person intending to use the section 115 license 
must provide notice to the copyright owner of a musical work of his or 
her intent to use the copyright owner's work under the statutory 
license. Pursuant to section 115(b), the Register of Copyrights has 
issued regulations prescribing the form, content, and manner of service 
of the Notice of Intention to obtain the license. Final regulations 
governing the content and service of the notice were adopted on 
November 28, 1980. 45 FR 79038 (November 28, 1980). These rules were 
amended to accommodate the making and distribution of phonorecords by 
means of a digital phonorecord delivery. See 64 FR 41286 (July 30, 
1999).
    The current rules, however, make it difficult for new digital music 
services such as PressPlay and MusicNet, who intend to develop 
libraries of music with hundreds of thousands of titles and to offer 
these recordings to their subscribers for a fee, to use the compulsory 
license. See Brad King, Writers Song Sung Blue, Wired (July 25, 2001) 
http://www.wired.com/news/print/0,1294,45510,00.html. For instance, 
under the current rules, a music service has to serve a separate notice 
on the copyright owner for each work it intends to use even when the 
intent is to use multiple works owned by the same copyright owner. This 
requires useless duplication of certain information that could be 
readily included in a single notice. For this reason and others 
discussed herein, the Copyright Office is proposing amendments to its 
regulations in the following areas to improve the efficiencies 
associated with the service and filing of a Notice of Intention to use 
the section 115 license.\1\
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    \1\ This rulemaking does not, nor is it meant to, address the 
issues raised in an earlier Notice of Inquiry, concerning incidental 
DPDs, temporary copies, limited downloads, and on-demand streams. 
See 66 FR 14099 (March 9, 2001). Those issues will be addressed in a 
future Federal Register notice.
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    1. Service. Section 115(b)(1) requires the compulsory licensee to 
serve the required Notice of Intention on the copyright owner. Under 
the current regulations, the notice must be sent by certified mail or 
registered mail to the copyright owner identified in the registration 
records or other public records of the Copyright Office at the last 
address listed for such owner. However, these records may not 
accurately reflect current information concerning the name and/or the 
address of the copyright owner of the work. Thus, the Office is 
proposing to amend its rules in two ways.
    The first proposed change gives the potential licensee an option to 
refrain from searching or relying on the Copyright Office's records to 
determine the identity and/or address of the copyright owner and, 
instead, to serve the copyright owner at his or her current address 
when the person seeking the license knows the identity and the current 
address of the copyright owner of the reproduction and distribution 
rights. This alternative method of service will benefit those potential 
licensees who know the identity of the copyright owner and wish to 
avoid the time and expense associated with searching the registration 
and other public records in the Copyright Office, but it is not risk-
free. In the event the person or entity seeking to obtain the license 
chooses this option and mistakenly sends the notice to a person or 
entity who is not the actual copyright owner or to an incorrect 
address, this person bears all risk associated with the misdirected 
filing, including the likelihood that the compulsory license will not 
cover any activity taken by this person or entity under a mistaken 
assumption that the notice was properly served. Moreover, the proposed 
change does not, nor can it, alter the statutory requirement that 
notice be served on the copyright owner ``before or within thirty days 
after making, and before distributing any phonorecords of the work.'' 
17 U.S.C. 115(b)(1). If the actual copyright owner or the copyright 
owner's lawful agent has not been served within that time frame, 
digital phonorecord deliveries of the work identified in the notice 
cannot fall within the scope of the compulsory license. See 17 U.S.C. 
115(b)(2).
    Second, the Office is proposing amendments which would allow 
service of a Notice of Intention upon either the copyright owner or 
upon an agent authorized by the copyright owner to receive such 
notices. If a potential licensee chooses to serve a duly authorized 
agent of the copyright owner for purposes of complying with the notice 
requirements of this license, the agent must be specifically authorized 
to grant or administer the particular rights that are being licensed. 
In other words, an agent authorized to grant or administer the 
mechanical rights but not the DPD rights may accept notice on behalf of 
the copyright owner only from a licensee that intends to make and 
distribute physical phonorecords. Notice for the making of DPDs under 
the section 115 license would have to be served on a second agent who 
is authorized to grant or administer the DPD rights or, alternatively, 
on the copyright owner in accordance with the regulations governing 
proper notice.
    The Office is also proposing similar changes to the rules governing 
the service and filing of the statements of account for the limited 
purpose of allowing service upon a duly authorized agent of the 
copyright owner. These changes are being proposed merely to harmonize 
the service requirements in Sec. 201.19 with the proposed amendments to 
Sec. 201.18. No further changes to Sec. 201.19 are being considered at 
this time.
    Of course, there is no requirement that a copyright owner authorize 
an agent to grant or administer rights subject to the section 115 
compulsory license. Moreover, a person or entity who serves someone 
whom he or she believes to be an authorized agent bears the risk that 
he or she has not correctly identified the copyright owner's agent.
    2. Multiple Works. Another way to increase the efficiencies 
associated with the filing of Notices of Intention is to allow the 
listing of multiple works on a single notice in the case where the 
works are owned by the same copyright owner. For this reason, the 
Office is proposing to amend its rules to

[[Page 45243]]

eliminate the requirement that a separate Notice of Intention be served 
or filed for each nondramatic musical work embodied, or intended to be 
embodied, in phonorecords made under the compulsory license. See 37 CFR 
201.18(a)(2). The new rules will allow a licensee to list multiple 
titles on a single composite Notice of Intention so long as there is a 
common copyright owner for each work, who shall be so identified in the 
Notice itself, and the licensee pays the $12 filing fee for each title. 
The filing fee will cover the administrative costs associated with 
separately processing the information for each title in the notice. The 
proposed change should result in efficiencies for both the copyright 
owner and the licensee because it will eliminate the need to send 
multiple notices to the same copyright owner in cases where much of the 
information in the notices (i.e., the information required by 37 CFR 
201.18(c)(1)((i)-(iv)) would be identical.
    3. Content. The Copyright Office is proposing to amend its rules to 
require the identification of the copyright owner. This information 
will be particularly useful in those instances where the notice is sent 
to a duly authorized agent who may be receiving notices on behalf of 
multiple copyright owners.
    The Office is also proposing to add a requirement that, in the case 
where a person plans to file the Notice of Intention with the Copyright 
Office pursuant to Sec. 201.18(e)(1), the notice include an affirmative 
statement that the registration records or other public records of the 
Copyright Office have been searched and that the name and address of 
the copyright owner is not listed in these records.\2\ This requirement 
will serve as a reminder to the potential licensee that he or she has 
an obligation to search the public records of the Copyright Office 
before filing the required notice with this Office.
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    \2\ Section 201.18(e)(1) provides that if the registration 
records or other public records of the Copyright Office do not 
identify the name and address of the copyright owner of a particular 
work, a Notice of Intention with respect to that work may be filed 
with the Copyright Office.
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    4. Signature. The Office is further amending its rule to allow a 
duly authorized agent of the intended licensee to sign the notice of 
intention. An agent who signs on behalf of the licensee must be 
specifically authorized to execute the Notice of Intention on behalf of 
the licensee. A concise statement of authorization to that effect must 
be included in the Notice of Intention.
    5. Harmless errors. The statute requires that a person or entity 
who intends to use the compulsory license give notice to the copyright 
owner of the nondramatic musical work before or within thirty days 
after making, and before distributing any phonorecords of the work. The 
rules outline specific elements that are to be included in each notice. 
This information helps the copyright owner identify which of his or her 
works are being used under the license. Errors may occur in the 
preparation of these notices. However, potential licensees should not 
be denied the use of the license if such errors do not affect the legal 
sufficiency of the notice. For this reason, the Office is proposing to 
add a new section to clarify that such errors will be considered 
harmless and will not affect the validity of the notice. The Office 
does not anticipate that it will have any role in resolving disputes 
about whether an error in a notice is harmless. Such disputes will have 
to be adjudicated in the courts.
    6. Fee for filing Notices of Intention. 37 CFR 201.18(e)(3) 
provides, in pertinent part, that when a Notice of Intention is filed 
with the Office because the copyright owner is no longer at the last 
address indicated in the Copyright Office's records or has refused to 
accept delivery, no filing fee will be required. The Office proposes to 
amend Sec. 201.18(e)(3) to remove this provision. The fee charged for 
the filing of a Notice of Intention, like most other Copyright Office 
fees, is based upon full recovery of the Office's costs in performing 
the service. See Fees and Registration of Claims to Copyright, 64 FR 
29518 (June 1, 1999). The cost to the Office of processing the filing 
of a Notice of Intention is the same whether the copyright owner is not 
identified in the records of the Office or the copyright owner is no 
longer located at the address shown in the records of the Office or has 
refused to accept delivery. The Office believes that the filing fee 
should be charged in both cases.
    7. Certificate of Filing. 37 CFR 201.18(e)(1) provides, in 
pertinent part, that ``[u]pon request and payment of the fee specified 
in Sec. 201.3(e), a Certificate of Filing [of a Notice of Intention] 
will be provided to the sender.'' This Certificate of Filing is in 
addition to a written acknowledgment of receipt and filing that the 
Office routinely provides to a person who files a Notice of Intention.
    Currently, the Certificate of Filing states the date the Notice of 
Intention was filed, the name and address of the person or entity 
intending to obtain the compulsory license, and the title of the 
nondramatic musical work named in the Notice of Intention. However, 
under the proposed amendments to Sec. 201.18, Notices of Intention may 
list multiple titles. Hypothetically, a Notice of Intention could list 
the titles of hundreds or even thousands of works, if the works have a 
common copyright owner. The current Certificate of Filing is ill-suited 
for such Notices of Intention.
    Moreover, there is some question whether the Certificate of Filing 
serves any purpose, given that the Office routinely provides a written 
acknowledgment of receipt and filing. If a person wishes to obtain 
official certification of the filing of a Notice of Intention, perhaps 
a more appropriate means of certification would be for the Office to 
provide a certified copy of the Notice of Intention pursuant to the 
existing regulations governing certified copies of Copyright Office 
records. See 37 CFR 201.2(d).
    Accordingly, the Office proposes to delete the provision in 
Sec. 201.18(e)(1) that provides for a Certificate of Filing.
    Comments on the proposed changes shall be filed with the Copyright 
Office no later than 30 days after publication of this notice in the 
Federal Register.

List of Subjects in 37 CFR Part 201

    Copyright.

Proposed Regulation

    In consideration of the foregoing, the Copyright Office proposes 
amending part 201 of 37 CFR as follows:

PART 201--GENERAL PROVISIONS

    1. The authority citation for part 201 continues to read as 
follows:

    Authority: 17 U.S.C. 702.

    2. Section 201.18 is amended as follows:
    a. by revising paragraph (a)(1);
    b. by revising paragraph (a)(2);
    c. by revising paragraph (a)(3);
    d. by redesignating paragraph (a)(4) as paragraph (a)(5);
    e. by adding a new paragraph (a)(4);
    f. by revising paragaph (c)(1)(ii);
    g. by revising paragraph (c)(1)(v);
    h. by removing paragraphs (c)(1)(vi) through (c)(1)(x);
    i. by adding a new paragraph (c)(1)(vi);
    j. by revising paragraph (d);
    k. by revising paragraph (e); and
    l. by adding a new paragraph (f).
    The revisions and additions to Sec. 201.18 read as follows:

[[Page 45244]]

Sec. 201.18  Notice of intention to obtain a compulsory license for 
making and distributing phonorecords of nondramatic musical works.

    (a) General. (1) A ``Notice of Intention'' is a notice identified 
in section 115(b) of title 17 of the United States Code, and required 
by that section to be served on a copyright owner or, in certain cases, 
to be filed in the Copyright Office, before or within thirty days after 
making, and before distributing any phonorecords of the work, in order 
to obtain a compulsory license to make and distribute phonorecords of 
nondramatic musical works.
    (2) A Notice of Intention shall be served or filed for nondramatic 
musical works embodied, or intended to be embodied, in phonorecords 
made under the compulsory license. A Notice of Intention may designate 
any number of nondramatic musical works, provided that the copyright 
owner of each designated work or, in the case of any work having more 
than one copyright owner, any one of the copyright owners is the same 
and that the information required under paragraphs (c)(1)(i)-(iv) of 
this section does not vary for any musical work listed on the Notice of 
Intention. For purposes of this section, a notice which lists multiple 
works shall be considered a composite filing of multiple notices and 
fees shall be paid accordingly if filed in the Copyright Office under 
paragraph (e) of this section.
    (3) For the purposes of this section, the term copyright owner, in 
the case of any work having more than one copyright owner, means any 
one of the co-owners.
    (4) For the purposes of this section, service of a Notice of 
Intention on a copyright owner shall include service of the Notice on 
either the copyright owner or a duly authorized agent of the copyright 
owner, provided that the agent is authorized to grant or administer the 
particular rights that are being licensed. In the case where the work 
has more than one copyright owner, the service of the Notice on any one 
of the co-owners of the nondramatic musical work or upon a duly 
authorized agent of one of the co-owners shall be sufficient with 
respect to all co-owners.
* * * * *
    (c) Content.
    (1) * * *
    (ii) The telephone number, the full address, including a specific 
number and street name or rural route, of the place of business, and an 
e-mail address, if available, of the person or entity intending to 
obtain the compulsory license. A post office box or similar designation 
will not be sufficient for this purpose except where it is the only 
address that can be used in that geographic location.
* * * * *
    (v) For each nondramatic musical work embodied or intended to be 
embodied in phonorecords made under the compulsory license:
    (A) The title of the nondramatic musical work;
    (B) The name of the author or authors, if known;
    (C) A copyright owner of the work, if known;
    (D) The types of all phonorecord configurations already made (if 
any) and expected to be made under the compulsory license (for example: 
Single disk, long-playing disk, cassette, cartridge, reel-to-reel, a 
digital phonorecord delivery, or a combination of them);
    (E) The expected date of initial distribution of phonorecords 
already made (if any) or expected to be made under the compulsory 
license;
    (F) The name of the principal recording artist or group actually 
engaged or expected to be engaged in rendering the performances fixed 
on phonorecords already made (if any) or expected to be made under the 
compulsory license;
    (G) The catalog number or numbers, and label name or names, used or 
expected to be used on phonorecords already made (if any) or expected 
to be made under the compulsory license; and
    (H) In the case of phonorecords already made (if any) under the 
compulsory license, the date or dates of such manufacture.
    (vi) In the case where the notice will be filed with the Copyright 
Office pursuant to paragraph (e)(1) of this section, an affirmative 
statement that with respect to the nondramatic musical work named in 
the Notice of Intention, the registration records or other public 
records of the Copyright Office have been searched and do not identify 
the name and address of the copyright owner of such work.
* * * * *
    (d) Signature. The Notice shall be signed by the person or entity 
intending to obtain the compulsory license or by a duly authorized 
agent of such person or entity.
    (1) If the person or entity intending to obtain the compulsory 
license is a corporation, the signature shall be that of a duly 
authorized officer or agent of the corporation.
    (2) If the person or entity intending to obtain the compulsory 
license is a partnership, the signature shall be that of a partner or 
of a duly authorized agent of the partnership.
    (3) If the Notice is signed by a duly authorized agent for the 
person or entity intending to obtain the compulsory license, the agent 
must be specifically authorized to execute the Notice of Intention on 
behalf of the licensee and the Notice must include a concise statement 
of authorization to that effect.
    (e) Filing and service.
    (1) If, with respect to the nondramatic musical works named in the 
Notice of Intention, the registration records or other public records 
of the Copyright Office do not identify the copyright owner of such 
work and include an address for such owner, the Notice may be filed in 
the Copyright Office. Notices of Intention submitted for filing shall 
be accompanied by the fee specified in Sec. 201.3(e). A separate fee 
shall be assessed for each title listed in the Notice. Notices of 
Intention will be filed by being placed in the appropriate public 
records of the Licensing Division of the Copyright Office. The date of 
filing will be the date when the Notice and fee are both received in 
the Copyright Office. An acknowledgment of receipt and filing will be 
provided to the sender.
    (2) If the registration records or other public records of the 
Copyright Office identify the copyright owner of the nondramatic 
musical works named in the Notice of Intention and include an address 
for such owner, the Notice may be served on such owner by certified 
mail or by registered mail sent to the last address for such owner 
shown by the records of the Office. It shall not be necessary to file a 
copy of the Notice in the Copyright Office in this case.
    (3) If the Notice is sent by certified or registered mail to the 
last address for the copyright owner shown by the records of the 
Copyright Office and is returned to the sender because the copyright 
owner is no longer located at the address or has refused to accept 
delivery, the original Notice as sent shall be filed in the Copyright 
Office. Notices of Intention submitted for filing under this paragraph 
(e)(3) shall be submitted to the Licensing Division of the Copyright 
Office, and shall be accompanied by a brief statement that the Notice 
was sent to the last address for the copyright owner shown by the 
records of the Copyright Office but was returned, and by appropriate 
evidence that it was sent by certified or registered mail to that 
address. In these cases, the Copyright Office will specially mark its 
records to consider the date the original Notice was mailed, as shown 
by the evidence mentioned above, as the date

[[Page 45245]]

of filing. An acknowledgement of receipt and filing will be provided to 
the sender.
    (4) Alternatively, if the person or entity intending to obtain the 
compulsory license knows the name and address of the lawful copyright 
owner of the nondramatic musical work, the Notice of Intention may be 
served on this person or entity by sending the Notice via certified or 
registered mail to the address of the copyright owner identified in the 
Notice. For purposes of section 115(b)(1) of title 17 of the United 
States Code, the notice will not be considered properly served if the 
notice is mistakenly sent to a person or entity who is not the lawful 
copyright owner or duly authorized agent, or to an incorrect address.
    (f) Harmless errors. Harmless errors in a notice that do not 
materially affect the adequacy of the information required to serve the 
purposes of section 115(b)(1) of title 17 of the United States Code, 
shall not render the notice invalid.
    3. Section 201.19 is amended as follows:
    a. by revising paragraph (a)(3);
    b. by redesignating paragraphs (a)(4) through (11) as paragraph 
(a)(5) through (a)(12); and
    c. by adding a new paragraph (a)(4).
    The revisions and additions to Sec. 201.19 read as follows:


Sec. 201.19  Royalties and statements of account under compulsory 
license for making and distributing phonorecords of nondramatic musical 
works.

    (a) * * *
    (3) For the purposes of this section, the term copyright owner, in 
the case of any work having more than one copyright owner means any one 
of the co-owners.
    (4) For the purposes of this section, the service of a Statement of 
Account on a copyright owner under paragraph (e)(7) or (f)(7) of this 
section shall include service of the Statement of Account on an agent 
of the copyright owner who is duly authorized to grant or administer 
the particular rights being licensed. In the case where the work has 
more than one copyright owner, the service of the Statement of Account 
on one co-owner or upon a duly authorized agent of one of the co-owners 
shall be sufficient with respect to all co-owners.
* * * * *

    Dated: August 21, 2001.
Marybeth Peters,
Register of Copyrights.
[FR Doc. 01-21561 Filed 8-27-01; 8:45 am]
BILLING CODE 1410-31-P