[Federal Register Volume 72, Number 160 (Monday, August 20, 2007)]
[Notices]
[Pages 46516-46520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-16267]


=======================================================================
-----------------------------------------------------------------------

LIBRARY OF CONGRESS

Copyright Royalty Board

Docket No. 2005-4 CRB CD 2003]


Distribution of the 2003 Cable Royalty Fund

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Notice announcing partial Phase I settlement and soliciting 
comments on motion for further distribution.

-----------------------------------------------------------------------

SUMMARY: The Copyright Royalty Judges are announcing a partial Phase I 
settlement in connection with the 2003 cable royalty fund. The Judges 
are also soliciting comments on a motion for further distribution in 
connection with that fund.

DATES: Comments are due on or before September 19, 2007.

ADDRESSES: Comments may be sent electronically to [email protected]. In the 
alternative, send an original, five copies, and an electronic copy on a 
CD either by mail or hand-delivery. Please do not use multiple means of 
transmission. Comments may not be delivered by an overnight delivery 
service other than the U.S. Postal Service Express Mail. If by mail 
(including overnight delivery), comments must be addressed to: 
Copyright Royalty Board, P.O. Box 70977, Washington, DC 20024-0977. If 
hand delivered by a private party, comments must be brought to the 
Library of Congress, James Madison Memorial Building, LM-401, 101 
Independence Ave., SE., Washington, DC 20559-6000. If delivered by a 
commercial courier, comments must be delivered to the Congressional 
Courier Acceptance Site located at 2nd and D Street, NE., Washington, 
DC. The envelope must be addressed to: Copyright Royalty Board, Library 
of Congress, James Madison Memorial Building, LM-403, 101 Independence 
Ave., SE., Washington, DC 20559-6000.

FOR FURTHER INFORMATION CONTACT: Richard Strasser, Senior Attorney, or 
Gina Giuffreda, Attorney Advisor, by telephone at (202) 707-7658 or e-
mail at [email protected].

SUPPLEMENTARY INFORMATION: 

Background

    Each year, semiannually, cable systems must submit royalty payments 
to the Register of Copyrights as required by the statutory license set 
forth in section 111 of the Copyright Act for the retransmission to 
cable subscribers of over-the-air television and radio broadcast 
signals. See 17 U.S.C. 111(d). These royalties are then distributed to 
copyright owners whose works were included in a qualifying 
retransmission and who timely filed a claim for royalties. Allocation 
of the royalties collected occurs in one of two ways. In the first 
instance, these funds will be distributed through a negotiated 
settlement among the parties. 17 U.S.C. 111(d)(4)(A). If the claimants 
do not reach an agreement with respect to the royalties, the Copyright 
Royalty Judges (``Judges'') must conduct a proceeding to determine the 
distribution of any royalties that remain in controversy. 17 U.S.C. 
111(d)(4)(B).

August 2005 Motion for Partial Distribution

    On August 31, 2005, a group of claimants filed a motion with the 
Copyright Royalty Board (``CRB''), requesting a partial distribution of 
50% of the 2003 cable royalty fund (``2003 Fund''). Motion of Phase I 
Claimants for Partial Distribution. On September 13, 2005, the proposal 
was published in the Federal Register. Docket No. 2005-4 CRB CD 2003, 
70 FR 53973. In the notice, the CRB sought comment on whether any 
controversy exists that would preclude the distribution of 50% of the 
2003 cable royalty funds to the Phase I claimants.\1\ The CRB also 
sought comment on the existence of any controversies to the 2003 cable 
royalty funds, either at Phase I or Phase II, with respect to the 50% 
of those funds that would remain if the partial distribution were 
granted. 70 FR at 53973-53974.
---------------------------------------------------------------------------

    \1\ Historically, cable royalty proceedings have occurred in two 
phases. In Phase I, royalties have been divided among the categories 
of broadcast programming represented in the proceeding. The 
categories into which copyright owners have divided themselves in 
Phase I have remained largely unchanged over time. See Distribution 
of 1998 and 1999 Cable Royalty Funds, Docket No. 2001-8 CARP CD 98-
99, 69 FR 3606, 3607 (Jan. 26, 2004) ((1) movies and syndicated 
television programs (known as ``Program Suppliers'' and represented 
by the Motion Picture Association of America, Inc. (``MPAA'')); (2) 
sports programming (referred to as ``Joint Sports Claimants'' and 
includes sports programming belonging to the National Football 
League, National Hockey League, National Basketball Association, and 
National Collegiate Athletic Association); (3) commercial broadcast 
programming (consists of copyright owners of commercial radio and 
television programming and represented by the National Association 
of Broadcasters, Inc. (``NAB'')); (4) religious broadcast 
programming (referred to as ``Devotional Claimants'' and consists of 
various copyright owners of religious programming); (5) public 
television broadcast programming (referred to as ``PBS'' and 
consists of various copyright owners of television programs 
broadcast by the Public Broadcasting Service)); (6) Canadian 
broadcast programming (referred to as ``Canadian Claimants'' and 
consists of various Canadian copyright owners whose programs are 
retransmitted by cable systems located near the U.S./Canada border); 
(7) public radio broadcast programming (referred to as ``NPR'' and 
consists of various copyright owners of radio programs transmitted 
by National Public Radio); and (8) music (referred to as ``Music 
Claimants'' and consists of copyrighted programming belonging to 
songwriters and music publishers and represented by the American 
Society of Composers, Authors and Publishers (``ASCAP''), Broadcast 
Music, Inc. (``BMI'') and SESAC, Inc.). See also 1989 Cable Royalty 
Distribution Proceeding, Docket No. CRT 91-2-89CD, 57 FR 15286, 
15287 (April 27, 1992) ((1) Program Suppliers; (2) Sports; (3) U.S. 
Noncommercial Television (PBS); (4) U.S. Commercial Television 
(NAB); (5) Music; (6) Devotional Claimants; (7) Canadian Claimants; 
(8) Non-Commercial Radio (NPR); and (9) Commercial Radio).
    In Phase II, royalties are divided among claimants within a 
particular category. See Distribution Order in Docket No. 94-3 CARP 
CD-90-92, 61 FR 55653, 55655 (Oct. 28, 1996).
---------------------------------------------------------------------------

    The CRB received eleven comments in response to the notice, one of 
which was from the Independent Producers Group (``IPG'').\2\ In its 
comment, IPG notified the CRB that it maintains claims on behalf of 
certain unnamed producers and distributors of devotional programming 
and that a controversy exists with respect to the 2003 cable royalty 
fund. IPG stated: ``The extent of the controversy is not known at this 
time, however, the reservation of at least 2% of the cable proceedings 
funds as relates to claims on behalf of devotional programming, 
together with Phase I Claimants' pledges to return any amounts finally 
awarded in excess of sums partially released, is deemed sufficient to 
protect the interests of devotional programming claimants.'' Id.
---------------------------------------------------------------------------

    \2\ IPG Comment, dated October 25, 2005. On October 25, 2005, 
IPG filed a motion with the CRB requesting that the CRB accept its 
late-filed comment. See Independent Producers Group's Motion to 
Accept Late-Filed Comments on the Existence of Controversies and 
Notice of Intent to Participate in Phase I and Phase II Hearings.
    The CRB also received a comment from claimants representing 
program suppliers. This comment is discussed below.
---------------------------------------------------------------------------

    IPG also stated that it maintains claims on behalf of certain 
unnamed producers and distributors of syndicated programming (which IPG 
refers to as ``program suppliers'') and asserted that a controversy 
exists with respect to that category of funds. With respect to

[[Page 46517]]

program suppliers, IPG stated: ``The extent of the controversy is not 
known at this time, however, the reservation of at least 50% of the 
cable proceedings funds as relates to claims on behalf of syndicated 
programming, together with Phase I Claimants' pledges to return any 
amounts finally awarded in excess of sums partially released, is deemed 
sufficient to protect the interests of syndicated programming 
claimants.'' Id.
    IPG also stated that it maintains claims on behalf of certain 
unnamed producers and distributors of Spanish-language programming. IPG 
stated:

    [a]t an appropriate later date, IPG intends to submit a formal 
motion with the Copyright Office to create the new category of 
``Spanish-Language Programming.'' Spanish-Language Programming 
constitutes a significant percentage of retransmitted programming 
and, for the reasons to be articulated in the motion, constitute[s] 
a unique category of broadcast programming that is retransmitted by 
cable system operators. In connection herewith, IPG asserts that a 
controversy exists with respect to the 2003 cable royalty fund, 
subject to certification of [S]panish-language programming as a 
category. The extent of the controversy is not known at this time, 
however, the reservation of at least 2% of the cable proceedings 
funds as relates to claims on behalf of [S]panish-language 
programming, together with Phase I Claimants' pledges to return any 
amounts finally awarded in excess of sums partially released, is 
deemed sufficient to protect the interests of [S]panish-language 
programming claimants.

Id.

    IPG also asserted that a conflict exists with respect to the 2003 
cable royalty fund in Phase II of the syndicated programming, sports 
programming, devotional programming and Spanish-language programming 
categories. With respect to Phase II, IPG stated:

    The extent of the controversy is not known at this time, 
however, the reservation of at least (i) 20% of the program supplier 
category funds, (ii) 2% of the sports programming category funds, 
(iii) 50% of the devotional programming category funds, and (iv) 80% 
of the [S]panish-language programming category funds, together with 
Phase I Claimants' pledges to return any amounts finally awarded in 
excess of sums partially released, is deemed sufficient to protect 
IPG's interests.

Id. IPG also stated that it intended to participate in any Phase I 
proceedings involving devotional programming, syndicated programming, 
and Spanish-language programming.
    On October 26, 2005, the CRB denied the August 31, 2005 Motion of 
Phase I Claimants for Partial Distribution. In its order denying the 
motion, the CRB discussed the comments it received in response to the 
September 13, 2005 Federal Register notice, stating: ``[w]hile many 
identified the existence of a controversy at both Phase I and Phase II, 
none objected to the 50% partial distribution'' proposed in the Phase I 
claimants' motion. Nevertheless, the CRB denied the motion based 
largely on the claimants' statement in their motion and a subsequent 
comment from an individual claimant suggesting that more than 50% of 
the royalties in the 2003 fund was still in controversy. Based on this 
information, the CRB concluded that 100% of the funds remained in 
controversy and therefore the CRB was not authorized to distribute any 
funds at that time.
    In particular, the CRB stated:

    Program Suppliers argue that a distribution can be made under 
[17 U.S.C.] 801(b)(3)(A) provided no party objects to the 
distribution, though 100% of the funds remain in controversy. The 
Board does not share this interpretation of the provision. Section 
801(b)(3)(A) was crafted to enable the Board to make a distribution 
of royalties without conducting a proceeding, either in full or in 
part, provided that the parties agreed that the requested amount was 
not in controversy. This provision is in contrast to 801(b)(3)(C), 
where a partial distribution may be made of royalties, with the 
agreement of the parties, regardless of whether those royalties are 
in controversy.* * * [A]s the Board observed in the September 13, 
2005, satellite Order [Docket No. 2005-2 CRB SD 2001-2003] it cannot 
[authorize a partial distribution of royalty funds under 17 U.S.C. 
801(b)(3)(C)] without announcing the negotiation period and 
initiating the proceeding [required by that section of the Copyright 
Act]. Consequently, for the Board to distribute any royalties prior 
to this period, it must determine that their distribution is not in 
controversy.

Distribution Order at 2, Docket No. 2005-4 CRB CD 2003 (Oct. 26, 2005).
    The CRB reiterated its position in its March 21, 2006 Order Denying 
Petition for Reconsideration. In that order the CRB stated:

    Copyright Act Section 801(b)(3) allows the Board to make partial 
distributions, prior to the commencement of the distribution 
proceedings, only ``to the extent that the [Judges] have found that 
the distribution of such fees is not subject to controversy.'' * * * 
The Phase I parties' August 31 Motion did not even aver that only 
50% of the 2003 cable royalty fund remains in controversy. To the 
contrary, the Board was affirmatively advised (Motion at 4 n.2) that 
the Phase I parties reserved the right to seek shares of the fund, 
in subsequent contested distribution proceedings, without 
limitation. And, in a separate submission, designed to drive this 
point home, the Program Suppliers, who traditionally form one of the 
largest Phase I claimants' groups, stated * * * that ``the entire 
2003 Cable Fund remains in controversy.'' In this case, the record 
plainly cannot support a finding that 50% of the 2003 cable fund is 
not in controversy.

Order Denying Petition for Reconsideration at 3 n.6, Docket No. 2005-4 
CRB CD 2003 (March 21, 2006).

August 2006 Motion for Partial Distribution

    On August 1, 2006, a group of Phase I claimants, pursuant to 
sections 801(b)(3)(A) and 111(d)(4)(C) of the Copyright Act (17 U.S.C. 
801(b)(3)(A) and 111(d)(4)(C)) filed a second motion requesting partial 
distribution of 50% of the 2003 cable royalty funds. Motion of Phase I 
Claimants for Distribution of Royalties, Docket No. 2005-4 CRB CD 2003. 
In that motion, the moving claimants stated:

    In August 2005 the Phase I Parties requested that the Board 
distribute to each Party a specified share of 50% of the 2003 Funds. 
The Board denied that request because it concluded, on the record 
before it, that a controversy existed over all of the 2003 Funds. 
Here, however, the Phase I Parties are requesting that the Board 
distribute 50% of the 2003 Funds to the Phase I Parties 
collectively. The Phase I Parties have agreed that, as a group, they 
are entitled to at least 50% of the 2003 Funds and that no 
controversy exists over the distribution of that 50% to the group.

Id., citations omitted.

    The motion continued: ``The Phase I Parties have just recently 
learned that [IPG] filed two pleadings [sic] in this docket on October 
28, 2005, one of which asserted an interest in the 2003 Funds'' \3\ The 
motion continued: ``[w]hile IPG is not a party to the motion, the Phase 
I Parties cannot contemplate any reasonable basis on which IPG could 
assert a claim to 50% or more of the 2003 Funds.'' Id. at n.1.
---------------------------------------------------------------------------

    \3\ Given that no proceeding in this matter has been commenced, 
no official service list has been compiled. Compare 37 CFR 350.4(g) 
(``The [Judges] will compile and distribute, to those parties who 
have filed a petition to participate that has been accepted by the 
[Judges], the official service list of the proceeding. In all 
filings, a copy shall be served upon counsel of all other parties 
identified in the service list, or, if the party is unrepresented by 
counsel, upon the party itself.''). As noted in note 2 above and 
accompanying text, instead of two pleadings, IPG actually filed a 
comment in response to the CRB's request for comments in the 
September 13, 2005, Federal Register notice and a motion to accept 
the comment late.
---------------------------------------------------------------------------

    On August 11, 2006, IPG filed a response to the Phase I claimants' 
partial distribution request. Comments of Independent Producers Group 
to Motion of Phase I Claimants for Distribution of Royalties, Docket 
No. 2005-4 CRB CD 2003. In its response IPG stated, after noting that 
the CRB had not addressed its previous filings in the matter:

    [I]f IPG's motion and filings are granted, IPG will be a 
participant in both Phase I and Phase II proceedings relating to the 
2003

[[Page 46518]]

cable royalty pool. The Phase I Claimants' Motion thereby affects 
IPG's rights by seeking distribution of fifty percent (50%) of the 
available funds within the 2003 cable royalty pool. Such agreement 
amongst the signatory Phase I Claimants has occurred in the absence 
of IPG's consent or participation, as IPG is not yet formally 
established as a Phase I participant. According to such agreement, 
fifty percent of the available funds will be distributed to a Common 
Agent, who will thereafter distribute funds to the respective Phase 
I Claimants.
    IPG has no objection to the Motion, subject to the 
qualifications of distribution set forth therein. Notwithstanding, 
IPG asks that the Board additionally clarify that following the 
distribution from the Common Agent to the respective Phase I 
Claimants, that further distribution to claimants (or 
representatives thereof) within the particular categories be 
prohibited absent an agreement amongst Phase II parties within such 
categories, or application to the Board. In prior proceedings, 
certain Phase I parties that also are Phase II participants have 
received advance royalty distributions, then unilaterally 
distributed such funds exclusively to themselves and their 
represented claimants without the knowledge or consent of the other 
Phase II parties or the CARP. Such process has therefore transformed 
an unobjectionable distribution to Phase I parties into a very 
objectionable backdoor means of Phase II distribution, and without 
any notice to multiple Phase II parties or any opportunity to 
object.
    Of the Phase I categories participating in the Motion, IPG has 
Phase II claims within the Program Supplier, Sports Programming and 
Devotional categories. IPG's claims are substantial, and in the 
lattermost category IPG's claims appear to be larger than all other 
Phase II parties combined, by whatever criteria of distribution can 
be employed.

Id. at 1-2.

    In a response filed with the CRB on August 16, 2006, the Phase I 
claimants disputed IPG's assertions and allegations and stated ``the 
50% of the 2003 Funds that remain in controversy after the requested 
distribution will indisputably be more than adequate to satisfy any IPG 
royalty claims that might be substantiated in these proceedings.'' 
Reply in Support of Motion of Phase I Claimants for Distribution of 
Royalties at 3 (footnote omitted), Docket No. 2005-4 CRB CD 2003.
    In an August 23, 2006 order, the Judges granted the Phase I 
claimants' motion for partial distribution. Distribution Order, Docket 
No. 2005-4 CRB CD 2003 (``2006 Distribution Order''). In that order, 
the Judges stated: ``Representatives of the Phase I Parties seek full 
distribution of 50% of the 2003 cable royalty funds. Unlike their 
previous request for a partial distribution under 17 U.S.C. 
801(b)(3)(C) prior to the commencement of a proceeding, the Phase I 
Parties now represent that there is no controversy as to a distribution 
of 50% of royalties under 17 U.S.C. 801(b)(3)(A).'' Id., citations and 
note omitted.
    The Judges continued:

    [IPG] submitted what it styled as a ``comment,'' stating that it 
did not object to the Phase I Parties' motion but that it did object 
to any subsequent distribution of royalties within each category. In 
other words, IPG would agree to a dissemination of royalties to the 
common agent designated by the Phase I Parties, but the agent could 
not make a further distribution to any copyright owners until all 
Phase II controversies have been resolved.
    The Board is granting the Phase I Parties' motion under 17 
U.S.C. 801(b)(3)(A). That provision permits the Board to distribute 
royalties ``to the extent that the [Judges] have found that the 
distribution of such fees is not subject to controversy.'' Id. The 
Phase I Parties assert that 50% of the 2003 cable royalties are not 
subject to a controversy and IPG has not challenged that assertion. 
The Board is also rejecting IPG's request to prohibit the common 
agent receiving the royalties from distributing them to parties 
within the Phase I categories. Not only would IPG's request 
frustrate the purpose of making a Phase I distribution, it is 
contrary to well-established precedent.

Id., citing National Assoc. of Broadcasters v. Copyright Royalty 
Tribunal, 772 F.2d 922, 939 (D.C. Cir. 1985) (claimant with no claim to 
settled royalties not permitted to ``upset the settlement apple 
cart.'').
    The Judges stated further, ``[b]ecause the distribution is being 
made under 17 U.S.C. 801(b)(3)(A), no publication of the distribution 
in the Federal Register is necessary. Likewise, no obligation to return 
funds is necessary.'' 2006 Distribution Order at 2.

June 2007 Motion for Further Distribution

    On June 8, 2007, a group of Phase I claimants (``settling 
claimants''), pursuant to section 801(b)(3)(C) of the Copyright Act, 17 
U.S.C. 801(b)(3)(C), filed a Notice of Partial Phase I Settlement and 
Motion for Further Distribution. In the filing, the claimants 
represented that they have reached a settlement of all outstanding 
Phase I controversies regarding distribution of the 2003 Fund among the 
claimants to which Phase I royalties have been allocated in the past, 
with the exception of the Canadian Claimants. The settling claimants 
state that the Copyright Office is holding in reserve approximately 50% 
of the 2003 Fund (estimated to be $70,417,221 as of March 31, 2007). 
The settling claimants request that the Judges: (1) Authorize a 
distribution of 0.18% of the 2003 Fund to NPR; (2) maintain for the 
Devotional Claimants (a subgroup of the settling claimants) 0.5% of the 
2003 Fund; \4\ (3) reserve 5.5% of the 2003 Fund to satisfy ongoing 
disputes between the Canadian Claimants and the settling claimants; (4) 
request comment from interested claimants on the extent to which any 
Phase II controversies exist and the amount that should be withheld to 
account for such controversies; and (5) authorize a lump sum 
distribution of all the remaining 2003 Fund to the settling claimants, 
except NPR and the Devotional Claimants. The settling claimants agree 
to identify a common agent to receive the lump sum distribution.
---------------------------------------------------------------------------

    \4\ The motion states that the Devotional Claimants do not seek 
a further partial distribution at this time and ask that the Judges 
hold their share pending resolution of their Phase II controversies.
---------------------------------------------------------------------------

IPG's Opposition

    IPG opposes the Phase I claimants' motion for further distribution. 
Independent Producers Group's Opposition to ``Phase I Claimants'' 
Notice of Partial Phase I Settlement and Motion for Further 
Distribution,'' Docket No. 2005-4 CRB CD 2003 (June 15, 2007). In that 
filing, IPG details its previous filings with the CRB in this matter, 
stating that IPG ``represents the interests of no less than 200 film 
and television producers, and [intends] to participate in Phase I 
proceedings relating to interests existent in the Program Suppliers, 
Devotional and Spanish-language Programming category,'' the latter of 
which, as IPG notes, has yet to be designated as a Phase I category. 
IPG states its belief that its October 25, 2005 filings (see note 2 
above) are still pending with the CRB. IPG also alleges that it has 
been frozen out of Phase I settlement negotiations. IPG contends that 
it should be provided an opportunity to make a prima facie showing of 
the value of its members' programming and should be advanced ``some 
portion of the funds withheld by the CRB.'' Id., emphasis in original. 
Finally, IPG contends that it was not served with the Phase I 
claimants' motion in a timely manner.
    In its reply, the Phase I claimants contend that IPG is ineligible 
``to receive a portion of the partial distribution of the 2003 Fund 
because it has not established its entitlement to any royalties in a 
prior proceeding.'' Phase I Claimants' Reply to Independent Producers 
Group's Opposition to ``Phase I Claimants'' Notice of Partial Phase I 
Settlement and Motion for Further Distribution'' at 1, Docket No. 2005-
4 CRB CD 2003 (June 21, 2007).\5\ The

[[Page 46519]]

Phase I claimants also assert that ``[g]ranting the Motion simply will 
not prejudice IPG in any way, because the process sufficiently protects 
whatever claims IPG successfully proves as part of the final 
determination of the allocation of the 2003 Fund.'' Id.
---------------------------------------------------------------------------

    \5\ IPG's share of cable royalty revenues was litigated 
previously under the Copyright Arbitration Royalty Panel (``CARP'') 
system. See Distribution of 1993, 1994, 1995, 1996 and 1997 Cable 
Royalty Funds, Docket No. 2000-2 CARP CD 93-97, 69 FR 23821 (Apr. 
30, 2004). In that matter, the Librarian of Congress convened a CARP 
to resolve a dispute within the syndicated programming category 
between the MPAA and IPG over the division of royalties collected in 
1997 for the retransmission of movies and syndicated television 
series by cable systems. The Librarian rejected the CARP's initial 
and revised reports and remanded the matter for a new proceeding 
before a new CARP. The MPAA and IPG ultimately settled the dispute 
and the Librarian vacated as moot the order remanding the matter. 
The Librarian also vacated the CARP's initial and final 
determinations ``to make clear that those determinations have no 
precedential value.'' 69 FR at 23822.
---------------------------------------------------------------------------

Clarification Regarding the Status of IPG's October 25, 2005 Filings

    As discussed above, on October 25, 2005, in response to a Federal 
Register notice in which the CRB solicited comments on Phase I 
Claimants' August 31, 2005 motion for partial distribution, IPG 
submitted a comment and a motion to accept it late. IPG's comment, like 
others the CRB received in response to the notice, stated that there 
was a controversy that should preclude the CRB from granting the Phase 
I claimants' motion. The CRB agreed and denied the Phase I claimants' 
motion. See Distribution Order, Docket No. 2005-4 CRB CD 2003 (Oct. 26, 
2005); see also Order Denying Petition for Reconsideration (March 21, 
2006). To the extent that IPG's October 2005 motion was not already 
addressed in the denial of the Phase I claimants' motion for partial 
distribution, it is moot because the motion to which IPG's motion 
related has already been resolved.

Resolution of Phase I Claimants' 2007 Motion for Further Distribution

    Phase I claimants file their current motion pursuant to section 
801(b)(3)(C) of the Copyright Act. 17 U.S.C. 801(b)(3)(C). That section 
states in relevant part:

    Notwithstanding section 804(b)(8), the [Judges], at any time 
after the filing of claims under section 111 * * *, may, upon motion 
of one or more of the claimants and after publication in the Federal 
Register of a request for responses to the motion from interested 
claimants, make a partial distribution of such fees, if, based upon 
all responses received during the 30-day period beginning on the 
date of such publication, the [Judges] conclude that no claimant 
entitled to receive such fees has stated a reasonable objection to 
the partial distribution, and all such claimants--(i) agree to the 
partial distribution; (ii) sign an agreement obligating them to 
return any excess amounts to the extent necessary to comply with the 
final determination on the distribution of the fees made under 
subparagraph (B) [of section 801(b)(3) of the Copyright Act]; (iii) 
file the agreement with the [Judges]; and (iv) agree that such funds 
are available for distribution.

    Section 804(b)(8) of the Copyright Act states: ``With respect to 
proceedings under section 801(b)(3) concerning the distribution of 
royalty fees in certain circumstances under section 111 * * *, the 
[Judges] shall, upon a determination that a controversy exists 
concerning such distribution, cause to be published in the Federal 
Register notice of commencement of proceedings under this chapter.'' 17 
U.S.C. 804(b)(8). See also Copyright Act section 111(d)(4)(B) (``After 
the first day of August of each year, the [Judges] shall determine 
whether there exists a controversy concerning the distribution of 
royalty fees * * *. If the [Judges] find the existence of a 
controversy, [they] shall, pursuant to chapter 8 of this title, conduct 
a proceeding to determine the distribution of royalty fees.'').

Solicitation of Comments

    In light of the Phase I Claimants' Motion for Further Distribution 
and the Judges' obligations under Copyright Act sections 801(b)(3)(C) 
and 111(d)(4)(B), the Judges hereby request comment from interested 
persons regarding whether any claimant entitled to receive royalty fees 
from the 2003 Cable Fund has a reasonable objection to the proposed 
partial distribution. As discussed above, with respect to the proposed 
distribution, the settling Phase I claimants request that the Judges: 
(1) Authorize a distribution of 0.18% of the 2003 Fund to NPR; (2) 
maintain for the Devotional Claimants 0.5% of the 2003 Fund; (3) 
reserve 5.5% of the 2003 Fund to satisfy ongoing disputes between the 
Canadian Claimants and the settling claimants; and (4) authorize a lump 
sum distribution of all the remaining 2003 Fund to the settling 
claimants, except NPR and the Devotional Claimants. The Judges seek 
comment on the proposed distribution as a whole and on each of the four 
specific aspects of the proposal. In addition, the Judges seek comment 
on the specific percentage allocations that the Phase I claimants have 
proposed. In particular, with respect to element (4) of the proposal, 
the Judges seek comment on what percentage lump sum partial 
distribution would not be objectionable (e.g., would a 75 percent 
partial lump sum distribution be objectionable? if not, would a 50 
percent distribution be objectionable?). If the Judges find that a 
partial distribution is warranted, what conditions, if any, other than 
those required by section 801(b)(3)(C) of the Copyright Act, should the 
Judges impose on the claimants to whom the royalties are distributed?
    Moreover, the Judges seek comment on any potential Phase I or Phase 
II controversies.\6\ If commenters believe that a controversy exists, 
please specify the categories of claimants to which the controversy 
applies and estimate the percentage of funds subject to controversy. In 
addition, please specify whether the categories into which the 
claimants have traditionally divided themselves in Phase I proceedings 
\7\ are adequate to fairly represent the interests of all claimants or 
should additional categories of claimants be recognized. For commenters 
that favor recognition of additional claimant categories, please 
specify what those categories should be and why they are not currently 
adequately represented by the traditional claimant categories.
---------------------------------------------------------------------------

    \6\ Effective August 10, 2007, the Copyright Office terminated 
all pending distribution proceedings under Sections 111, 119 and 115 
of the Copyright Act of 1976. Those proceedings are null and void 
and new proceedings will have to be commenced before the Copyright 
Royatly Judges. 72 FR 45071.
    \7\ See note 1 above.
---------------------------------------------------------------------------

    If the Judges find that there is a controversy with respect to the 
distribution of royalty payments, section 804(b)(8) of the Copyright 
Act requires that the Judges ``cause to be published in the Federal 
Register notice of commencement of proceedings.'' For commenters that 
contend that a controversy exists, the Judges seek comment on whether a 
proceeding should be commenced at this time or whether such 
commencement should be delayed to permit negotiation among the 
claimants. If commenters believe that more time for negotiation is 
warranted, how much time should the Judges permit for negotiation 
before a proceeding is commenced?
    Certain claimants have expressed concerns regarding timely service 
of process in matters dealing with the distribution of royalty payments 
from the 2003 Fund. Current CRB regulations require that, once a 
proceeding has commenced, all parties on the official service list 
prepared by the CRB for that proceeding receive timely service of 
process. 37 CFR 350.4(g). CRB service rules do not, however, address 
the period prior to the commencement of a proceeding. As a result, it 
is not always possible for interested persons to become aware in a 
timely manner of motions and other filings that might

[[Page 46520]]

impact their interests. The Judges seek comment on what action, if any, 
the Judges should take to remedy this issue. For example, would posting 
all incoming filings or a notice that a filing has been made in a 
matter on the CRB Web site be sufficient notice to potential claimants 
and other interested persons in those instances prior to commencement 
of a proceeding? In the alternative, the Judges could adopt a rule 
requiring service of process prior to the commencement of a proceeding. 
If the Judges adopted such a rule, what sort of service should be 
required and to whom?
    For full consideration, comments should be received by September 
19, 2007.

    Dated: August 14, 2007.
James Scott Sledge,
Chief Copyright Royalty Judge.
 [FR Doc. E7-16267 Filed 8-17-07; 8:45 am]
BILLING CODE 1410-72-P