[Federal Register Volume 73, Number 98 (Tuesday, May 20, 2008)]
[Rules and Regulations]
[Pages 29071-29073]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-11274]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Parts 201

[Docket No. RM 2008-5]


Late-Filed and Underpaid Royalties

AGENCY: Copyright Office, Library of Congress.

ACTION: Final rule.

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SUMMARY: The Copyright Office is amending its rules governing the 
payment of interest on late or underpaid royalty fees under the 
Copyright Act to clarify when interest for late and underpayments is 
due in light of the Copyright Office's electronic funds transfer 
requirement. In addition, the Copyright Office amends the rules to add 
text that was inadvertently deleted by a previous rulemaking action. 
The Copyright Office also makes a technical correction to its satellite 
carrier requirements to recognize changes made to Section 119 in 2004.

EFFECTIVE DATE: May 20, 2008.

FOR FURTHER INFORMATION CONTACT: Ben Golant, Assistant General Counsel, 
and Tanya M. Sandros, General Counsel, Copyright GC/I&R, P.O. Box 
70400, Washington, DC 20024. Telephone: (202) 707-8380. Telefax: (202) 
707-8366.

SUPPLEMENTARY INFORMATION: On August 10, 2006, the Copyright Office 
published a final rule requiring the submission of royalty fees to be 
made by electronic funds transfer (``EFT''). 71 FR 45739 (August 10, 
2006). The purpose of this notice is to make technical amendments to 
Section 201.17(i) and other similar rules for satellite carriers and 
digital audio recording technologies to clarify when interest accrues 
for late and underpayments in light of the recent EFT requirement. In 
addition, we intend to re-insert regulatory text, originally contained 
in Section 201.17(i)(2), that was incorrectly deleted from Title 37 CFR 
when the EFT requirements were adopted.

I. Electronic Funds Transfer Requirement

    Under the new EFT regulations, 37 CFR 201.17(i), a number of 
changes were made regarding the payment of copyright royalties. The 
most important change was that payment could only be made through an 
electronic funds transfer. This change eliminates the options of 
payment by certified or cashier's check, or money order. Most payors 
already use EFTs, and requiring the use of EFTs substantially enhances 
the efficiency of the collection process. The regulations also require 
that the parties submit specific identifying and linking information as 
part of the EFT, and/or as part of a ``remittance advice'' which 
accompanies Statement(s) of Account, and that the ``remittance advice'' 
be faxed or emailed to the Licensing Division. Failure to submit the 
EFT in accordance with the rules may require the remitter to resubmit 
the EFT correctly. Should this occur, the remitter will be responsible 
for any assessed interest charge that accrues as a result of a late 
payment or an underpayment.
    The rules now include a waiver provision for those situations where 
there may be circumstances which make it virtually impossible for a 
remitter to use the electronic payment option or imposes a financial or 
other hardship. Requests for a waiver must include a statement setting 
forth the reasons why the waiver should be granted and the statement 
must be signed by a duly authorized representative of the entity making 
the payment, certifying that the

[[Page 29072]]

information provided is true and correct.

II. Proposed Amendments

    Section 201.17(c)(1) states that:

Statements of Account shall cover semiannual accounting periods of 
(i) January 1 through June 30, and (ii) July 1 through December 31, 
and shall be deposited in the Copyright Office, together with the 
total royalty fee for such accounting periods . . . .by not later 
than the immediately following August 29, if the Statement of 
Account covers the January 1 through June 30 accounting period, and 
by not later than the immediately following March 1, if the 
Statement of Account covers the July 1 through December 31 
accounting period.

    Section 201.17(i)(2) (before it was deleted) stated that:

Royalty fee payments submitted as a result of late or amended 
filings shall include interest. Interest shall begin to accrue 
beginning on the first day after the close of the period for filing 
statements of account for all underpayments of royalties for the 
cable compulsory license occurring within that accounting period. 
The accrual period shall end on the date appearing on the certified 
check, cashier's check, money order or electronic payment submitted 
by a cable system, provided that such payment is received by the 
Copyright Office within five business days of that date. If the 
payment is not received by the Copyright Office within five business 
days of its date, then the accrual period shall end on the date of 
the actual receipt by the Copyright Office.

    Morever, Section 201.17(i)(2)(iii) (before it was deleted) stated 
that ``Interest is not required to be paid on any royalty underpayment 
or late payment from a particular accounting period if the interest 
charge is less than or equal to five dollars ($5.00).''
    It is important to note that the Copyright Office's regulations 
concerning interest and accrual vis-a-vis late-filed SOAs for satellite 
carriers is different than that for cable operators. Section 
201.11(i)(1) states:

Royalty fee payments submitted as a result of late or amended 
filings will include interest. Interest will begin to accrue 
beginning on the first day after the close of the period for filing 
statements of account for all underpayments or late payments of 
royalties for the satellite carrier statutory license for secondary 
transmissions for private home viewing occurring within that 
accounting period. The accrual period will end on the date appearing 
on the certified check, cashier's check, money order, or electronic 
payment submitted by a satellite carrier, provided that such payment 
is received by the Copyright Office within five business days of 
that date. If the payment is not received by the Copyright Office 
within five business days of its date, the accrual period will end 
on the date of actual receipt by the Copyright Office. (Emphasis 
added)

    The Copyright Office's regulations regarding interest and accrual 
vis-a-vis late-filed SOAs for digital audio recording devices is 
comparable to that for satellite carriers. Section 201.28(l)(1) states:

Royalty payments submitted as a result of late payments or 
underpayments shall include interest, which shall begin to accrue on 
the first day after the close of the period for filing Statements of 
Account for all late payments or underpayments of royalties 
occurring within that accounting period. The accrual period for 
interest shall end on the date appearing on the certified check, 
cashier's check, money order, or electronic payment submitted by the 
manufacturing or importing party, if the payment is received by the 
Copyright Office within five business days of that date. If the 
payment is not received by the Copyright Office within five business 
days of its date, the accrual period shall end on the date of actual 
receipt by the Copyright Office. (Emphasis added)

    We note that the five-day language, contained in Section 
201.17(i)(2) of the Copyright Office's rules (before it was deleted), 
does not extend the Statement of Account filing period deadlines. 
However, the appropriate interest accrual period for late-filed SOAs 
has been subject to dispute because the ``five business day'' language 
of Section 201.17(i)(2) applies, on its face, to underpayments, not to 
late payments. It has been the Copyright Office's Licensing Division's 
practice that interest on late payments begins to accrue on the first 
day after the close of the period for filing statements of account 
until the date payment is received by the Copyright Office. If the 
``five business day'' language applied in the instance of late 
payments, which it does not under the practices of the Copyright 
Office, then the amount of interest due would be less.
    Given the facts and circumstances, and the need for clarity and 
administrative consistency, technical amendments to the existing 
regulations are appropriate. We propose to amend Section 201.17(i) by 
adding the phrase ``late payments'' to the existing regulatory 
language. In the interest of consistency, this change would make the 
rule largely parallel to Sections 201.11(i) and 201.28(l). As such, all 
royalty payments made by EFT must be made the day they are due. 
Interest will begin to accrue the next day for all late-filed 
submissions and on royalties that are underpaid. The accrual period 
ends when a full royalty payment is received by the Copyright Office.
    We also propose to modify the ``five business day'' rule, currently 
found in all three regulations, and apply it only to those 
circumstances where a waiver of the EFT rule is granted by the 
Copyright Office. While the Office has received very few waivers since 
the EFT regulations were implemented, we still believe that special 
provisions concerning royalty payments by check are appropriate. In 
cases where a waiver is granted, the accrual period ends on the date 
the mailed payment is postmarked. However, if the payment is not 
received by the Copyright Office within five business days of its due 
date, then the accrual period shall end on the date of the actual 
receipt by the Copyright Office.
    Finally, Section 201.11(i) is amended to recognize that in 2004, 
Congress expanded Section 119 to include secondary transmissions to 
commercial establishments. Satellite Home Viewer Extension and 
Reauthorization Act of 2004, a part of the Consolidated Appropriations 
Act of 2004. See Pub. L. No. 108-447, 118 Stat. 3394 (2004) (``Section 
107'').

List of Subjects in 37 CFR Part 201

    Copyright.

Proposed Regulation

0
In consideration of the foregoing, the Copyright Office is amending 
part 201 of 37 CFR, chapter II in the manner set forth below:

PART 201-GENERAL PROVISIONS

0
1. The authority citation for part 201 continues to read as follows:

    Authority: 17 U.S.C. 702.

0
2. Revise Sec.  201.11(i)(1) to read as follows:


Sec.  201.11  Satellite carrier statements of account covering 
statutory licenses for secondary transmissions.

* * * * *
    (i) * * *
    (1) Interest. Royalty fee payments submitted as a result of late or 
amended filings will include interest. Interest will begin to accrue 
beginning on the first day after the close of the period for filing 
statements of account for all underpayments or late payments of 
royalties for the satellite carrier statutory license for secondary 
transmissions for private home viewing and viewing in commercial 
establishments occurring within that accounting period. The accrual 
period shall end on the date the electronic payment submitted by a 
satellite carrier is received by the Copyright Office. In cases where a 
waiver of the electronic funds transfer requirement is approved by the 
Copyright Office, and royalties payments are either late or underpaid, 
the accrual period shall end on the date the payment is postmarked. If 
the payment is not received by the Copyright Office within five 
business

[[Page 29073]]

days of its date, then the accrual period shall end on the date of the 
actual receipt by the Copyright Office.
* * * * *

0
3. Amend Sec.  201.17 by adding paragraph (i)(4) to read as follows:


Sec.  201.17  Statements of account covering compulsory licenses for 
secondary transmissions by cable systems.

* * * * *
    (i) * * *
    (4) Royalty fee payments submitted as a result of late or amended 
filings shall include interest. Interest shall begin to accrue 
beginning on the first day after the close of the period for filing 
statements of account for all late payments and underpayments of 
royalties for the cable statutory license occurring within that 
accounting period. The accrual period shall end on the date the 
electronic payment submitted by a cable operator is received. The 
accrual period shall end on the date the electronic payment submitted 
by a satellite carrier is received by the Copyright Office. In cases 
where a waiver of the electronic funds transfer requirement is approved 
by the Copyright Office, and royalties payments are either late or 
underpaid, the accrual period shall end on the date the payment is 
postmarked. If the payment is not received by the Copyright Office 
within five business days of its date, then the accrual period shall 
end on the date of the actual receipt by the Copyright Office.
* * * * *

0
4. Revise Sec.  201.28(l))(1) to read as follows:


Sec.  201.28  Statements of account for digital audio recording devices 
or media.

* * * * *
    (l) * * *
    (1) Royalty payments submitted as a result of late payments or 
underpayments shall include interest, which shall begin to accrue on 
the first day after the close of the period for filing Statements of 
Account for all late payments or underpayments of royalties for the 
digital audio recording obligation occurring within that accounting 
period. The accrual period shall end on the date the electronic payment 
submitted by the remitter is received. In cases where a waiver of the 
electronic funds transfer requirement is approved by the Copyright 
Office, and royalties payments are either late or underpaid, the 
accrual period shall end on the date the payment is postmarked. If the 
payment is not received by the Copyright Office within five business 
days of its date, then the accrual period shall end on the date of the 
actual receipt by the Copyright Office.
* * * * *

    Dated: April 30, 2008.
Marybeth Peters,
Register of Copyrights.
    Approved by:
James H. Billington,
The Librarian of Congress.
[FR Doc. E8-11274 Filed 5-19-08; 8:45 am]
BILLING CODE 1410-30-S