[Federal Register Volume 67, Number 136 (Tuesday, July 16, 2002)]
[Notices]
[Pages 46698-46699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-17897]


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LIBRARY OF CONGRESS

Copyright Office

[Docket No. 2002-6 DD 99-01]


Ascertainment of Controversy for the Distribution of the 1999, 
2000 and 2001 Digital Audio Recording Royalty Funds

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice with request for comments and notices of intention to 
participate.

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SUMMARY: The Copyright Office of the Library of Congress directs all 
claimants to royalty fees collected in 1999, 2000 and 2001 for the 
distribution of digital audio recording devices and media to submit 
comments as to whether a controversy exists as to the distribution of 
the royalty fees in the 1999, 2000 and 2001 Musical Works Funds.

DATES: Comments and Notices of Intention to Participate are due 
September 16, 2002.

ADDRESSES: If sent by mail, an original and five copies of written 
comments and a Notice of Intention to Participate should be addressed 
to: Copyright Arbitration Royalty Panel (CARP), P.O. Box 70977, 
Southwest Station, Washington, DC 20024. If hand delivered, an original 
and five copies should be brought to the Office of the General Counsel, 
James Madison Memorial Building, Room LM-403, First and Independence 
Ave., SE., Washington, DC 20540.

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

SUPPLEMENTARY INFORMATION:

I. Background

    The Audio Home Recording Act of 1992 (the ``Act''), Public Law 102-
563, requires manufacturers and importers to pay royalties on digital 
audio recording devices and media that are distributed in the United 
States. 17 U.S.C. 1003. These royalties are deposited with the 
Copyright Office for further distribution among interested copyright 
parties, provided that the copyright owners file a claim with the 
Copyright Office each year during January and February. 17 U.S.C. 1005, 
1007.
    The Act provides that the royalties are divided between two funds: 
the Sound Recordings Fund and the Musical Works Fund. The Sound 
Recordings Fund receives 66\2/3\% of the royalties and the Musical 
Works Fund receives the remaining 33\1/3\%. These fees are allocated 
further to specific subfunds.
    The Sound Recordings Fund consists of four subfunds: the Featured 
Recording Artists Subfund, the Copyright Owners Subfund, the 
Nonfeatured Musicians Subfund, and the Nonfeatured Vocalists Subfund. 
The two subfunds created for the benefit of nonfeatured artists receive 
a total of 4% of the funds allocated to the Sound Recordings Fund. Of 
the remaining royalty fees in the Sound Recordings Fund, 60% is 
allocated to the Copyright Owners Subfund and 40% is allocated to the 
Featured Recording Artists Subfund. Similarly, the royalty fees 
allocated to the Musical Works Fund are equally divided between two 
subfunds, the Publishers Subfund and the Writers Subfund. 17 U.S.C. 
1006(b).
    Distribution of these fees may occur in one of two ways. If the 
claimants within each subfund agree among themselves how to distribute 
the royalty fees, the Librarian of Congress distributes the royalties 
to the claimants in accordance with their negotiated agreement.\1\ 17 
U.S.C. 1007(b). Alternatively, if the parties cannot reach an 
agreement, the Librarian of Congress must convene a copyright 
arbitration royalty panel (``CARP'') to determine the distribution of 
royalty payments.\2\ 17 U.S.C. 1007(c). Before commencing a 
distribution proceeding, however, the Copyright Office must first 
ascertain whether and to what extent a controversy exists concerning 
the distribution of the royalty fees among the copyright claimants to 
the funds available for distribution. 17 U.S.C. 803(d) and 1007(b).
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    \1\ Each year, the claimants to the royalty fees in the Sound 
Recordings Funds have negotiated a universal settlement agreement 
among themselves as to the proportionate share that each claimant 
receives from the subfunds. These agreements have made it 
unnecessary for the Librarian to convene a CARP and have allowed him 
to distribute all royalty fees allocated to the Sound Recordings 
Funds, including those fees allocated to the 1999, 2000 and 2001 
Sound Recordings Funds. See Orders, Docket No. 2000-5 DD 99 (June 2, 
2000); Docket No. 2001-4 CARP DD 2000 ((May 21, 2001); and Docket 
No. 2002-6 CARP DD 2001 (July 10, 2002).
    \2\ There have been two CARP proceedings to determine the final 
distribution of the royalty fees in the Musical Works Funds. In 
1996, the Librarian convened a CARP to determine the distribution of 
the 1992, 1993, and 1994 Musical Works Funds, and in 1998, the 
Librarian convened a second CARP to determine the distribution of 
the 1995, 1996, 1997, and 1998 Musical Works Funds. See 62 FR 6558 
(February 12, 1997) and 66 FR 9360 (February 7, 2001), respectively.
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II. Ascertainment of Controversy and Notices of Intention To 
Participate

    Section 251.45(a) of the Copyright Office regulations, title 37 of 
the Code of Federal Regulations, requires that:

[T]he Librarian of Congress shall, after the time period for filing 
claims, publish in the Federal Register a notice requesting each 
claimant on the claimant list to negotiate with each other a 
settlement of their differences, and to comment by a date certain as 
to the existence of controversies with respect to the royalty funds 
described in the notice. Such notice shall also establish a date 
certain by which parties wishing to participate in the proceeding 
must file with the Librarian a notice of intention to participate.

The purpose of the negotiation requirement is to make all of the 
claimants within each fund/subfund aware of each other and to encourage 
active participation and open discussion on how to resolve each party's 
claim. The Copyright Office has compiled a list of claimants who have 
timely filed a claim to either of the two subfunds comprising each of 
the 1999, 2000, and 2001 Musical Works Funds.\3\ Claimants must use 
these lists in negotiating settlement agreements concerning the 
distribution of the royalty fees.
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    \3\ Copies of the claimant lists are available for viewing and 
copying between the hours of 8:30 a.m. and 5 p.m. at the: Library of 
Congress, Copyright Office, Licensing Division, Room LM-458, James 
Madison Building, 101 Independence Avenue, SE., Washington, DC 
20557-6400.
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    At the conclusion of the negotiation period, the claimants must 
submit to the Copyright Office comments identifying the existence of 
any settlement agreements and the existence of any remaining 
controversies. Participants must identify each subfund in the Musical 
Works Funds by year and indicate whether any controversy remains over 
the distribution of the royalty fees in that subfund or whether an 
agreement has been reached. In the case of an agreement, the notice 
must list the name of all claimants covered by the agreement. 
Participants must advise the Copyright Office of any controversy by the 
end of the comment period. The Office will not consider controversies 
which are brought to its attention after the close of the comment 
period.
    Each claimant who intends to participate in the distribution of the 
1995, 1996, 1997, and 1998 Musical Works Funds must also file a Notice 
of Intention to participate. The notice must identify each year and 
each subfund in which the copyright owner has an interest. Failure to 
file a timely Notice

[[Page 46699]]

of Intention may preclude a party from participating in the 
distribution proceeding. These notices are due September 16, 2002.

III. Motion of Phase I Claimants for Partial Distribution

    During the pendency of any proceeding, the Librarian of Congress 
may distribute any amounts that are not in controversy, provided that 
sufficient funds are withheld to cover reasonable administrative costs 
and to satisfy all claims with respect to which a controversy exists 
under his authority set forth in section 1007(c) of the Copyright Act, 
title 17 of the United States Code. Pursuant to this provision, the 
American Society of Composers, Authors and Publishers; Broadcast Music, 
Inc.; SESAC, Inc.; The Harry Fox Agency, Inc.; and The Songwriters 
Guild of America (collectively, the ``Settling Parties'') submitted a 
motion to the Copyright Office on June 13, 2002, for a partial 
distribution of 95% of the Digital Audio Recording Funds Writers and 
Publishers Subfunds of 1999, 2000, and 2001 Musical Works royalty 
funds. The Motion states that the Settling Parties have reached a 
confidential settlement concerning their respective shares for the 
1999, 2000 and 2001 Musical Works Funds.
    A claimant who is not a party to the Settling Parties' Motion, but 
who files a Notice of Intention to Participate, may file a response to 
the motion no later than the due date set forth in this notice for 
comments on the existence of controversies and the Notices of Intention 
to Participate. The Motion of the Settling Parties for Partial 
Distribution of the 1999, 2000 and 2001 Musical Works Funds is 
available for inspection and copying in the Office of the General 
Counsel. The Office will consider the merits of this motion once all 
interested parties have been identified by the Notices of Intention 
requested herein and have had an opportunity to file responses to the 
motion.

IV. Consolidation of Proceedings

    The Copyright Office is consolidating the consideration of the 
distribution of the 1999, 2000 and 2001 Musical Works Funds into a 
single proceeding in order to address the merits of the Settling 
Parties' motion for a partial distribution of funds from the 1999, 2000 
and 2001 Musical Works Funds. The Copyright Office has routinely 
consolidated the consideration of the distribution of the Musical Works 
Funds for several years into a single proceeding where, as here, the 
issues regarding the distribution of the royalty fees are the same for 
each year. The Copyright Office continues this practice because 
consolidation of the consideration of the distribution of the 1999, 
2000 and 2001 Musical Works Funds provides a cost savings to the 
parties and to the Copyright Office and because it promotes 
administrative efficiencies.

    Dated: July 11, 2002.
Marilyn J. Kretsinger,
Assistant General Counsel.
[FR Doc. 02-17897 Filed 7-15-02; 8:45 am]
BILLING CODE 1410-33-P