[Federal Register Volume 78, Number 214 (Tuesday, November 5, 2013)]
[Rules and Regulations]
[Pages 66276-66279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-26382]


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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 384

[Docket No. 2012-1 CRB Business Establishments II]


Determination of Rates and Terms for Business Establishment 
Services

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Final rule.

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SUMMARY: The Copyright Royalty Judges are publishing final regulations 
setting the rates and terms for the making of an ephemeral recording of 
a sound recording by a business establishment service for the period 
January 1, 2014, through December 31, 2018.

DATES: Effective date: January 1, 2014.

[[Page 66277]]


FOR FURTHER INFORMATION CONTACT: Richard Strasser, Senior Attorney, or 
Gina Giuffreda, Attorney Advisor. Telephone: (202) 707-8658. Email: 
[email protected].

SUPPLEMENTARY INFORMATION: In 1995, Congress enacted the Digital 
Performance in Sound Recordings Act, Public Law 104-39, which created 
an exclusive right for copyright owners of sound recordings, subject to 
certain limitations, to perform publicly sound recordings by means of 
certain digital audio transmissions. Among the limitations on the 
performance right was the creation of a statutory license for 
nonexempt, noninteractive digital subscription transmissions. 17 U.S.C. 
114(d).
    Congress expanded the scope of the section 114 statutory license in 
the Digital Millennium Copyright Act of 1998 (DMCA), Public Law 105-34. 
The DMCA authorizes the public performance of a sound recording when 
the sound recording is made by a preexisting satellite digital audio 
radio service or as part of an eligible nonsubscription transmission in 
accordance with the terms and rates of the statutory license. See 17 
U.S.C. 114(d). The DMCA also created a statutory license for the making 
of an ``ephemeral recording'' of a sound recording by certain 
transmitting organizations. 17 U.S.C. 112(e). This license allows 
entities that transmit performances of sound recordings to business 
establishments, pursuant to the limitations set forth in section 
114(d)(1)(C)(iv), to make an ephemeral recording to facilitate 
transmission of a public performance of a sound recording. Id. The 
license also provides a means by which a transmitting entity with a 
statutory license under section 114(f) can make more than one 
phonorecord permitted under the exemption set forth in section 112(a). 
Id.
    The Copyright Act requires the Copyright Royalty Judges (Judges) to 
conduct proceedings every five years to determine the rates and terms 
for ``the activities described in section 112(e)(1) relating to the 
limitation on exclusive rights specified by section 114(d)(1)(C)(iv).'' 
17 U.S.C. 801(b)(1), 804(b)(2).\1\ Thus, the Judges, in accordance with 
17 U.S.C. 804(b)(2), published a notice in the Federal Register 
commencing the current proceeding to set rates and terms for the 
section 112(e) license and requesting interested parties to submit 
their petitions to participate. 77 FR 133 (Jan. 3, 2012). In response 
to the notice, the Judges received petitions to participate from: 
Pandora Media, Inc.; Music Choice; DMX, Inc.; Muzak, LLC; Music 
Reports, Inc.; Clear Channel Broadcasting, Inc.; SoundExchange, Inc.; 
and Sirius XM Radio, Inc. The Judges set the timetable for the three-
month negotiation period, see 17 U.S.C. 803(b)(3), as well as a 
deadline of November 16, 2012, for the participants' submission of 
written direct statements. Subsequently, the Judges granted the 
participants' request to extend the deadline to November 29, 2012, in 
order to allow the participants to finalize a settlement agreement. See 
Order Granting Joint Motion for Extension of Time for Filing Written 
Direct Statements, Docket No. 2012-1 CRB Business Establishments II 
(Nov. 14, 2012). On November 29, 2012, the Judges received a Motion to 
Adopt Settlement stating that all participants had reached a settlement 
obviating the need for a hearing.
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    \1\ The Judges commenced a proceeding in 2007, as directed by 
section 804(b)(2) of the Copyright Act, and published final 
regulations in the Federal Register on March 27, 2008. 73 FR 16199. 
Therefore, commencement of the next proceeding--the current 
proceeding--was to occur in January 2012. 17 U.S.C. 804(b)(2).
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    Section 801(b)(7)(A) of the Copyright Act authorizes the Judges to 
adopt rates and terms negotiated by ``some or all of the participants 
in a proceeding at any time during the proceeding'' provided they are 
submitted to the Judges for approval. This section provides in part 
that the Judges must provide to both non-participants and participants 
to the rate proceeding who ``would be bound by the terms, rates, or 
other determination set by any agreement * * * an opportunity to 
comment on the agreement.'' 17 U.S.C. 801(b)(7)(A)(i). Participants to 
the proceeding may also ``object to [the agreement's] adoption as a 
basis for statutory terms and rates.'' Id.
    The Judges ``may decline to adopt the agreement as a basis for 
statutory terms and rates for participants that are not parties to the 
agreement,'' only ``if any participant [to the proceeding] objects to 
the agreement and the [Judges] conclude, based on the record before 
them if one exists, that the agreement does not provide a reasonable 
basis for setting statutory terms or rates.'' 17 U.S.C. 
801(b)(7)(A)(ii). Accordingly, on July 19, 2013, the Judges published a 
notice requesting comment on the proposed rates and terms. 78 FR 43094. 
The Judges received no comments or objections in response to the July 
19 notice.
    Having received no comments or objections to the proposal, the 
Judges, by this notice, are adopting as final regulations the rates and 
terms for the making of an ephemeral recording by a business 
establishment service for the period January 1, 2014, through December 
31, 2018.

List of Subjects in 37 CFR Part 384

    Copyright, Digital audio transmissions, Ephemeral recordings, 
Performance right, Sound recordings.

Final Regulations

    For the reasons set forth in the preamble, the Copyright Royalty 
Judges amend Part 384 of Chapter III of title 37 of the Code of Federal 
Regulations as follows:

PART 384--RATES AND TERMS FOR THE MAKING OF EPHEMERAL RECORDINGS BY 
BUSINESS ESTABLISHMENT SERVICES

0
1. The authority citation for part 384 continues to read as follows:

    Authority: 17 U.S.C. 112(e), 801(b)(1).


Sec.  384.1  [Amended]

0
2. Section 384.1 is amended as follows:
0
a. In paragraph (a), by removing ``Sec.  384.2(a)'' and adding ``Sec.  
384.2'' in its place, and by removing ``2009-2013'' and adding 
``January 1, 2014, through December 31, 2018'' in its place;
0
b. In paragraph (b), by removing ``licenses set forth in 17 U.S.C. 
112'' and adding ``license set forth in 17 U.S.C. 112(e)'' in its 
place; and
0
c. In paragraph (c), by removing ``services'' and adding ``Licensees'' 
in its place.

0
3. Section 384.2 is amended by revising the definition for ``Copyright 
Owner'' to read as follows:


Sec.  384.2  Definitions.

* * * * *
    Copyright Owners are sound recording copyright owners who are 
entitled to royalty payments made under this part pursuant to the 
statutory license under 17 U.S.C. 112(e).
* * * * *


Sec.  384.3  [Amended]

0
4. Section 384.3 is amended as follows:
0
a. In paragraph (a), by removing ``service pursuant to the limitation 
on exclusive rights specified by 17 U.S.C. 114(d)(1)(C)(iv)'' and 
adding ``Business Establishment Service'' in its place and removing 
``10%'' and adding ``12.5%'' in its place; and
0
b. In paragraph (b), by removing ``$10,000 for each calendar year'' and 
adding ``$10,000 for each calendar year of the License Period'' in its 
place.

0
5. Section 384.4 is amended as follows:

[[Page 66278]]

0
a. By revising the paragraph heading for paragraph (a);
0
b. In paragraph (b)(2)(i), by removing ``condition precedent in 
paragraph (b)(2) of this section'' and adding ``condition precedent in 
this paragraph (b)(2)'' in its place, and by removing ``authorized such 
Collective'' and adding ``authorized the Collective'' in its place;
0
c. By revising paragraphs (c) through (e);
0
d. By revising introductory text of paragraph (f);
0
e. In paragraph (f)(2), by removing ``facsimile number'' and adding 
``facsimile number (if any)'' in its place, and by removing 
``individual or individuals'' and adding ``person'' in its place;
0
f. In paragraph (f)(3), by removing ``handwritten'';
0
g. In paragraph (f)(3)(i), by removing ``a corporation'' and adding 
``corporation'' in its place;
0
h. In paragraph (f)(6), by removing ``a corporation'' and adding 
``corporation'' in its place;
0
i. In paragraph (f)(8), by removing ``if the Licensee is a corporation 
or partnership,'';
0
j. By revising paragraphs (g) and (h); and
0
k. By removing paragraph (i).
    The revisions read as follows:


Sec.  384.4  Terms for making payment of royalty fees and statements of 
account.

    (a) Payment to the Collective. * * *
* * * * *
    (c) Monthly payments. A Licensee shall make any payments due under 
Sec.  384.3(a) on a monthly basis on or before the 45th day after the 
end of each month for that month. All monthly payments shall be rounded 
to the nearest cent.
    (d) Minimum payments. A Licensee shall make any minimum payment due 
under Sec.  384.3(b) by January 31 of the applicable calendar year, 
except that payment by a Licensee that has not previously made 
Ephemeral Recordings pursuant to the license under 17 U.S.C. 112(e) 
shall be due by the 45th day after the end of the month in which the 
Licensee commences to do so.
    (e) Late payments. A Licensee shall pay a late fee of 1.0% per 
month, or the highest lawful rate, whichever is lower, if either or 
both a required payment or statement of account for a required payment 
is received by the Collective after the due date. Late fees shall 
accrue from the due date until both the payment and statement of 
account are received by the Collective.
    (f) Statements of account. For any part of the License Period 
during which a Licensee operates a Business Establishment Service, at 
the time when a minimum payment is due under paragraph (d) of this 
section, and by 45 days after the end of each month during the period, 
the Licensee shall deliver to the Collective a statement of account 
containing the information set forth set forth in this paragraph (f) on 
a form prepared, and made available to Licensees, by the Collective. In 
the case of a minimum payment, or if a payment is owed for such month, 
the statement of account shall accompany the payment. A statement of 
account shall contain only the following information:
* * * * *
    (g) Distribution of royalties. (1) The Collective shall promptly 
distribute royalties received from Licensees directly to Copyright 
Owners, or their designated agents, that are entitled to such 
royalties. The Collective shall only be responsible for making 
distributions to those Copyright Owners or their designated agents who 
provide the Collective with such information as is necessary to 
identify the correct recipient. The Collective shall distribute 
royalties on a basis that values all Ephemeral Recordings by a Licensee 
equally based upon the information provided under the reports of use 
requirements for Licensees contained in Sec.  370.4 of this chapter.
    (2) If the Collective is unable to locate a Copyright Owner 
entitled to a distribution of royalties under paragraph (g)(1) of this 
section within 3 years from the date of payment by a Licensee, such 
royalties shall be handled in accordance with Sec.  384.8.
    (h) Retention of records. Books and records of a Licensee and of 
the Collective relating to payments of and distributions of royalties 
shall be kept for a period of not less than the prior 3 calendar years.


Sec.  384.5  [Amended]

0
6. Section 384.5 is amended as follows:
0
a. In paragraph (a), by removing ``part'' and adding ``section'' in its 
place, and by removing ``account, any information'' and adding 
``account and any information'' in its place;
0
b. In paragraph (b), by removing ``The Collective shall have'' and 
adding ``The party claiming the benefit of this provision shall have'' 
in its place;
0
c. In paragraph (c), by removing ``activities directly related 
thereto'' and adding ``activities related directly thereto'' in its 
place;
0
d. In paragraph (d)(1), by removing ``work, require access to the 
records'' and adding ``work require access to Confidential 
Information'' in its place;
0
e. In paragraph (d)(2), by removing ``Collective committees'' and 
adding ``the Collective committees'' in its place, and by removing 
``confidential information'' and adding ``Confidential Information'' in 
its place each place it appears;
0
f. In paragraph (d)(3), by removing ``respect to the verification of a 
Licensee's royalty payments'' and adding ``respect to verification of a 
Licensee's statement of account'' in its place;
0
g. In paragraph (d)(4), by removing ``Copyright owners whose works'' 
and adding ``Copyright Owners, including their designated agents, whose 
works'' in its place, by removing ``, or agents thereof'', and by 
removing ``confidential information'' and adding ``Confidential 
Information'' in its place; and
0
h. In paragraph (e), by removing ``to safeguard all Confidential 
Information'' and adding ``to safeguard against unauthorized access to 
or dissemination of any Confidential Information'' in its place, and by 
removing ``belonging to such Collective'' and adding ``belonging to the 
Collective'' in its place.

0
7. Section 384.6 is amended by revising paragraph (d) to read as 
follows:


Sec.  384.6  Verification of royalty payments.

* * * * *
    (d) Acquisition and retention of report. The Licensee shall use 
commercially reasonable efforts to obtain or to provide access to any 
relevant books and records maintained by third parties for the purpose 
of the audit. The Collective shall retain the report of the 
verification for a period of not less than 3 years.
* * * * *

0
8. Section 384.7 is amended as follows:
0
a. In paragraph (a), by removing ``Provided'' and adding ``provided'' 
in its place; and
0
b. By revising paragraph (d).
    The revision reads as follows:


Sec.  384.7  Verification of royalty distributions.

* * * * *
    (d) Acquisition and retention of record. The Collective shall use 
commercially reasonable efforts to obtain or to provide access to any 
relevant books and records maintained by third parties for the purpose 
of the audit. The Copyright Owner requesting the verification procedure 
shall retain the report of the verification for a period of not less 
than 3 years.
* * * * *

0
9. Section 384.8 is revised to read as follows:

[[Page 66279]]

Sec.  384.8  Unclaimed funds.

    If the Collective is unable to identify or locate a Copyright Owner 
who is entitled to receive a royalty distribution under this part, the 
Collective shall retain the required payment in a segregated trust 
account for a period of 3 years from the date of distribution. No claim 
to such distribution shall be valid after the expiration of the 3-year 
period. After expiration of this period, the Collective may apply the 
unclaimed funds to offset any costs deductible under 17 U.S.C. 
114(g)(3). The foregoing shall apply notwithstanding the common law or 
statutes of any State.

    Dated: September 18, 2013.
Suzanne M. Barnett,
Chief Copyright Royalty Judge.
    Approved by:
James H. Billington,
Librarian of Congress.
[FR Doc. 2013-26382 Filed 11-4-13; 8:45 am]
BILLING CODE 1410-72-P