[Federal Register Volume 82, Number 75 (Thursday, April 20, 2017)]
[Proposed Rules]
[Pages 18601-18603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07403]


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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 350

[Docket No. 17-CRB-0013 RM]


Proceedings of the Copyright Royalty Board; Violation of 
Standards of Conduct

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Proposed rule.

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SUMMARY: The Copyright Royalty Judges propose to adopt a new Copyright 
Royalty Board rule that would authorize the Judges to bar, either 
temporarily or permanently, certain individuals and entities from 
participating in proceedings before the Judges.

DATES: Comments are due no later than May 22, 2017.

ADDRESSES: The proposed rule is posted on the agency's Web site 
(www.loc.gov/crb) and at Regulations.gov (www.regulations.gov). 
Interested parties may submit comments via email to [email protected]. Those 
who choose not to submit comments via email should see How to Submit 
Comments in the Supplementary Information section below for online and 
physical addresses and further instructions.

FOR FURTHER INFORMATION CONTACT: Anita Blaine, Program Specialist, at 
(202) 707-7658 or [email protected].

SUPPLEMENTARY INFORMATION: Regulations of the Copyright Royalty Board 
(CRB), 37 CFR part 350 (CRB Rules), address proceedings conducted by 
the Copyright Royalty Judges (Judges) under chapter 8 of the Copyright 
Act. 17 U.S.C. 801-805. Proceedings before the Judges are premised on 
the understanding that all participants, including party 
representatives, witnesses, attorneys, and agents, will provide only 
truthful evidence or testimony to the Board. For example, CRB Rule 
351.10 (a) states that ``[a]ll witnesses shall be required to take an 
oath or affirmation before testifying.'' 37 CFR 351.10 (b). The oath or 
affirmation requires the witness to state that the evidence he or she 
is about to offer will be truthful. Neither Rule 351.10 nor any other 
CRB rule or provision of the Copyright Act specifies consequences for 
presenting to the CRB false or misleading information or testimony, or 
for filing false royalty claims.\1\
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    \1\ See 18 U.S.C. 1621 re perjury.
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    In the few instances in which the Judges determined that a 
witness's testimony was not truthful, the Judges exercised their 
authority under Section 801(c) to strike the testimony from the record 
or to take such other action as the Judges believed was warranted under 
the circumstances. In 2008, for example, the Judges found that an 
expert witness knowingly affirmed incorrect testimony on the record and 
in the presence of the Judges. Order Striking Certain Witness Testimony 
and Refusing Witness as Expert at 3, Docket No. 2006-3 CRB DPRA (Feb. 
14, 2008). As a sanction for that false testimony, the Judges struck 
all of the witness's testimony that offered ``conclusions and opinions 
only admissible if presented as qualified expert testimony.'' Id. at 4. 
At the Judges' discretion, they retained portions of the witness's 
testimony that were ``merely reports or compilations of industry facts 
and data such as might have been presented by a lay witness familiar 
with the industry and having access to documents provided in 
discovery.'' Id.
    Under the Copyright Arbitration Royalty Panel system,\2\ a 
participant in Library of Congress royalty distribution proceedings, 
pled guilty to a count of mail fraud for making fraudulent submissions 
to the Copyright Office in which he used false aliases and fictitious 
business entities to claim entitlement to cable and satellite system 
retransmission royalties. U.S. v. Galaz,

[[Page 18602]]

No. 02-230 (D.D.C. May 30, 2002); U.S. v. Galaz, CR 02-0230-01 (D.D.C. 
Dec. 23, 2002).
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    \2\ The Copyright Arbitration Royalty Panels arbitrated royalty 
rate and distribution controversies prior to enactment of the 
Copyright Royalty and Distribution Reform Act of 2004, which 
initiated the Copyright Royalty Judges program.
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    After serving a prison term, and with approval of the sentencing 
court, the sanctioned individual continued to represent claimants in 
proceedings before the CRB. In one such proceeding, the Judges found 
that the same individual did not testify truthfully. Memorandum Opinion 
and Ruling on Validity and Categorization of Claims at 8, Docket Nos. 
2012-6 CRB CD 2004-09 (Phase II) and 2012-7 CRB SD 1999-2009 SD (Phase 
II) (March 13, 2015) (Memorandum Opinion and Ruling). In determining a 
sanction for the false testimony, the Judges analyzed whether they had 
authority to debar or otherwise disqualify a claimant representative 
for misconduct. The Judges concluded that ``[a]ssuming, without 
deciding, that the Judges do possess the inherent authority to debar or 
otherwise disqualify a claimant representative for misconduct, the 
Judges find that it would be inappropriate to exercise that authority 
in the absence of regulations governing how, and under what 
circumstances they may do so.'' Id. at 9. The Judges concluded that:

    Participants are entitled to ``official . . . guidance as to 
what acts will precipitate a complaint of misconduct, how charges 
will be made, met or refuted, and what consequences will flow from 
misconduct if found.'' Even though, in this particular instance, all 
of the participants know--or should know--that giving false 
testimony under oath in an official proceeding is serious 
misconduct, there is nevertheless no ``official guidance'' in either 
the Copyright Act or CRB Rules concerning the consequences of that 
misconduct. Sadly, this case highlights the urgent need for such 
official guidance.

Id., quoting Gonzales v. Freeman, 334 F.2d 570, 578 (D.C. Cir. 1964) 
(internal citation omitted).
    In the absence of official guidance on what consequences would flow 
from misconduct, the Judges denied the claimant representative 
presenting the witness the presumption of validity that each filed 
claim is compliant with the authority, veracity, and good faith 
standards now codified in 37 CFR 360.3(b)(1)(vi).\3\
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    \3\ In response to the Judges' remedy, the claimant 
representative asserted that it could overcome the loss of the 
presumption of validity by simply appointing an agent to adjudicate 
the claims that it had been hired to represent. The Judges responded 
that ``[g]iven the circumstances that have led to [the 
representative's] loss of the `presumption of validity,' such a 
transparent subterfuge could well constitute fresh and sufficient 
evidence to cast doubt on [the representative's] representation, 
underscoring the need to place the burden on [the representative] to 
substantiate its claims.'' Memorandum Opinion and Ruling at 12-13, 
n.14.
    Nevertheless, in a subsequent distribution proceeding, the same 
representative assigned its right to represent claims to a family 
member doing business under a newly-registered business name, 
perhaps with the intention of avoiding the loss of the presumption 
of validity. See, e.g., MPAA's Motion for Disallowance of Claims 
Made by Multigroup Claimants at 3, Docket Nos. 14-CRB-0010 CD and 
14-CRB-0011 SD (2010-2013) (Oct. 11, 2016). Regardless of the 
motivation behind the party's decision to replace itself as a claims 
representative with an affiliate in that particular proceeding, the 
claim representative's actions (about which the Judges do not 
currently opine) highlight the importance of a mechanism to sanction 
parties, witnesses, and counsel that violate CRB rules or the 
Judges' orders, or that otherwise engage in behavior that would 
warrant preventing them from future participation in proceedings 
before the Judges.
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    The Judges have indicated they would ``welcome petitions for 
rulemaking that discuss their authority to adopt, and recommend the 
content of, rules, if any, sanctioning misconduct on the part of 
counsel or parties in CRB proceedings.'' Memorandum Opinion and Ruling 
at 9 n.7. The Judges received none. The Judges, therefore, propose 
these regulations to establish and publicize standards of conduct and 
to enumerate, without limitation, responses to violations of those 
standards.
    In designing procedures for imposing appropriate sanctions for 
fraud or misrepresentation to the CRB, the Judges stress the importance 
of providing more consistent guidance to individuals and entities that 
have business before the CRB. In addition, the Judges recognize the 
value of providing a mechanism that is less prone to evasion than the 
ad hoc approaches the Judges have employed in the past.\4\ The Judges 
intend the proposed new rule to supplement rather than replace the 
case-specific evidentiary rulings or sanctions they have imposed in the 
past. Consistent with these goals, the Judges propose a new CRB Rule 
350.9: Violation of Standards of Conduct. The proposed new rule 
clarifies the expectation and requirement that all persons appearing in 
proceedings before the Judges act with integrity and in an ethical 
manner.
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    \4\ In the past to address objectionable behavior, the Judges 
have imposed, for example, discovery sanctions, evidentiary burden 
shifting, and have declined to consider material offered for the 
record.
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    The proposed new rule language authorizes the Judges, after notice 
and an opportunity for hearing, to deny, either temporarily or 
permanently, to a person or entity that violates the expected standards 
of conduct the privilege of participating as a representative, agent, 
witness, or attorney in a CRB proceeding. In particular, the proposed 
new language would authorize the Judges to deny participation to any 
attorney who has been suspended or disbarred by a court of the United 
States or of any State or to any person whose license to practice as an 
accountant, engineer, or other professional or expert, has been revoked 
or suspended in any State.
    Moreover, under the proposed rule, the Judges could bar 
participation by any person who has been convicted of a felony or a 
misdemeanor involving moral turpitude. The proposed new rule also would 
authorize the Judges to deny participation by any entity that employs 
or retains in any capacity any person described in paragraph (b)(1) to 
assist in administering the distribution of royalties to claimants or 
to submit or prepare royalty claims or evidence to be used in a 
proceeding before the Copyright Royalty Board.
    The proposed rule would authorize the Judges to deny participation 
by any person, agent, or attorney shown to be incompetent or 
disreputable. In addition, the proposed rule would authorize the 
Judges, after notice and opportunity for hearing, to deny participation 
by any person who knowingly or recklessly provides false oral or 
written testimony or who knowingly sponsors false documents under oath 
or affirmation in a proceeding. Finally, the proposed rule would 
authorize the Judges to deny participation by any person who has 
violated any CRB rule or regulation.
    The proposed rule would allow a person denied participation in a 
CRB proceeding or barred as a witness to apply for reinstatement at any 
time. The Judges may, in their discretion, permit a hearing on the 
reinstatement application, but the suspension or disqualification would 
continue unless and until the Judges have reinstated the applicant for 
good cause shown.

Solicitation of Comments

    The Judges seek comments on the proposed new rule. Preliminarily, 
the Judges believe the proposed rule is necessary to allow them to 
carry out their responsibilities under the Copyright Act and is 
consistent with the Judges' goal to provide consistent guidance to 
people and entities regarding the Judges' expectations of conduct in 
Copyright Royalty Board proceedings and other dealings with the 
Copyright Royalty Board. The Judges seek comments on whether they 
should adopt the proposed rule. Any commenter that does not believe the 
proposed rule is necessary or appropriate, must discuss any 
alternatives that the Judges have available that would allow them to 
continue to preserve the integrity of Copyright Royalty Board 
proceedings.

[[Page 18603]]

    The Judges also seek comments on whether the categories described 
in the proposed rule are sufficient for the Judges to achieve the goal 
of preserving the integrity of Copyright Royalty Board proceedings or 
whether additional categories also should be included. If so, which 
categories should be added? Should any of the proposed categories be 
removed from the proposal? If so, which categories and why? Should time 
limits be placed on any or all of the categories? For example, if a 
person violated a CRB rule in the distant past (e.g., 5 years ago? 10 
years ago?), should that person still be subject to a denial of 
participation in future proceedings? What criteria should the Judges' 
consider in determining whether a denial of participation should be 
temporary or permanent? If a claims representative is barred from 
participation in proceedings before the Judges, how should the claims 
that that person or entity represented be treated? For example, should 
the claimants be required to represent themselves (either individually 
or jointly) or should they be allowed to select a new representative? 
In the alternative, should the Judges assign the claims of a barred 
representative to another claims representative already participating 
in the proceeding?
    With respect to reinstatement applications, does the proposal 
provide a sufficient means for persons or entities to seek 
reinstatement? If not, what other means should be available? If the 
Judges deny a reinstatement application, when, if ever, should the 
applicant be permitted to file a subsequent application? For example, 
should there be a ``cooling off'' period between applications? If so, 
how long should that period be? In considering subsequent reinstatement 
applications, should the Judges apply the same standard as they applied 
in considering the first application or should a different standard 
apply (e.g., a showing of new evidence, other than the mere passage of 
time, subsequent to the initial application denial)?

How To Submit Comments

    Interested members of the public must submit comments to only one 
of the following addresses. If not submitting by email or online, 
commenters must submit an original of their comments, five paper 
copies, and an electronic version in searchable PDF format on a CD.
    Email: [email protected]; or
    Online: http://www.regulations.gov; or
    U.S. mail: Copyright Royalty Board, P.O. Box 70977, Washington, DC 
20024-0977; or
    Overnight service (only USPS Express Mail is acceptable): Copyright 
Royalty Board, P.O. Box 70977, Washington, DC 20024-0977; or
    Commercial courier: Address package to: Copyright Royalty Board, 
Library of Congress, James Madison Memorial Building, LM-403, 101 
Independence Avenue SE., Washington, DC 20559-6000. Deliver to: 
Congressional Courier Acceptance Site, 2nd Street NE and D Street NE., 
Washington, DC; or
    Hand delivery: Library of Congress, James Madison Memorial 
Building, LM-401, 101 Independence Avenue SE., Washington, DC 20559-
6000.

List of Subjects in 37 CFR Part 350

    Administrative practice and procedure, Copyright.

    For the reasons set forth in the preamble, the Copyright Royalty 
Board proposes to amend 37 CFR part 350 as follows:

PART 350--GENERAL ADMINISTRATIVE PROVISIONS

0
1. The authority citation for part 350 continues to read as follows:

    Authority: 17 U.S.C. 803.

0
2. Add Sec.  350.9 to read as follows:


Sec.  350.9  Violation of standards of conduct.

    (a) Standards of conduct. All persons appearing in proceedings 
before the Copyright Royalty Board are expected to act with integrity 
and in an ethical manner.
    (b) Suspension and debarment. After notice and opportunity for 
hearing, the Copyright Royalty Judges may deny, temporarily or 
permanently, the privilege of participating as a representative, agent, 
attorney, or witness in a proceeding before the Copyright Royalty Board 
to:
    (1) Any attorney who has been suspended or disbarred by a court of 
the United States or of any State; any person whose license to practice 
as an accountant, engineer, or other professional or expert has been 
revoked or suspended in any State; or any person who has been convicted 
of a felony or a misdemeanor involving moral turpitude. A disbarment, 
suspension, revocation, or conviction within the meaning of this 
section shall be deemed to have occurred when the disbarring, 
suspending, revoking, or convicting agency or tribunal enters its 
judgment or order, including a judgment or order on a plea of nolo 
contendere, regardless of whether the person has taken or could take an 
appeal of the judgment or order.
    (2) Any entity that employs or retains in any capacity any person 
described in paragraph (b)(1) of this section to assist in 
administering the distribution of royalties to claimants or to submit 
or prepare royalty claims or evidence to be used in a proceeding before 
the Copyright Royalty Board.
    (3) Any person, agent, or attorney shown to be incompetent or 
disreputable.
    (4) Any person who knowingly or recklessly provides false oral or 
written testimony or who knowingly sponsors false documents under oath 
or affirmation in a proceeding before the Copyright Royalty Board.
    (5) Any person who has violated any Copyright Royalty Board rules 
or regulations.
    (c) Reinstatement. A person denied the privilege of participating 
in a Copyright Royalty Board proceeding or barred as a witness under 
this rule may apply for reinstatement at any time, but no more often 
than once in a 12-month period measured from the time of disposition of 
an application. The Copyright Royalty Judges may, in their discretion, 
permit a hearing on the application. The suspension or disqualification 
shall continue unless and until the Judges have reinstated the 
applicant for good cause shown.

    Dated: April 7, 2017.
Suzanne M. Barnett
Chief Copyright Royalty Judge.
[FR Doc. 2017-07403 Filed 4-19-17; 8:45 am]
 BILLING CODE 1410-72-P