[Federal Register Volume 87, Number 125 (Thursday, June 30, 2022)]
[Rules and Regulations]
[Pages 39000-39001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13944]


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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 370

[Docket No. 20-CRB-0007-RM]


Regulation Concerning Proxy Distributions for Unmatched Royalties 
Deposited During 2010-2018

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Final rule.

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SUMMARY: The Copyright Royalty Judges (Judges) are amending the 
applicable regulations to authorize the use of proxy reports of use to 
facilitate distribution of royalties collected for periods prior to 
January 1, 2019, for the licenses to make ephemeral reproduction and 
perform publicly sound recordings by means of digital audio 
transmissions. Proxy reports of use will be used for those services for 
which no reports of use were submitted or for which the reports of use 
were unusable.

DATES: Effective August 1, 2022.

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

SUPPLEMENTARY INFORMATION:

Background

    Sections 112 and 114 of the Copyright Act, title 17 of the United 
States Code, are the statutory licenses governing the public 
performance of sound recordings by certain types of eligible services 
\1\ by means of a digital audio transmission. 17 U.S.C. 112(e), 114. 
Services operating under these licenses are required to, among other 
things, pay royalty fees and report to copyright owners of sound 
recordings on the use of their works. Id. The Copyright Act directs the 
Judges to determine the royalty rates to be paid, 17 U.S.C. 
114(f)(1)(A), (f)(2)(A) and 17 U.S.C. 112(e)(3), and to establish 
regulations to give copyright owners reasonable notice of the use of 
their works and create and maintain records of use for delivery to 
copyright owners. 17 U.S.C. 114(f)(4)(A) and 17 U.S.C. 112(e)(4).
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    \1\ The types of eligible services consist of subscription, 
nonsubscription, satellite digital audio radio services, and 
business establishment services.
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    The purpose of the notice and recordkeeping requirement is to 
ensure that the royalties collected under the statutory licenses are 
distributed by a central source--a Collective--or other agents 
designated to receive royalties from the Collective to the correct 
recipients. The Judges promulgated final notice and recordkeeping 
regulations on October 13, 2009.\2\ See 74 FR 52418.
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    \2\ Until that time, interim regulations were in effect. See 71 
FR 59010 (Oct. 6, 2006).
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    On November 20, 2018, SoundExchange, Inc., the entity designated by 
the Judges as the Collective, requested that the Judges amend the 
applicable regulations to authorize SoundExchange ``to use proxy 
reporting data to distribute to copyright owners and performers certain 
sound recording royalties for periods before 2019 that are otherwise 
undistributable due to licensees' failure to provide reports of use'' 
or their provision of ``reports of use that are so deficient as to be 
unusable.'' Letter from Steven R. Englund, counsel for SoundExchange, 
Inc., Docket No. 20-CRB-0007-RM at 1 & n.1.
    In a second letter dated April 23, 2020 (April Letter), 
SoundExchange renewed its request. In the April Letter, SoundExchange 
stated it was holding approximately $32 million in statutory royalties 
for the period 2010 through 2018 and requested that the Judges 
authorize SoundExchange to distribute these royalties using the same 
``annual/license type methodology'' that the Judges approved in 2011. 
April Letter at 2, citing 37 CFR 370.3(i), 370.4(f). SoundExchange 
requested that the Judges change the dates in the cited regulations 
from ``2010'' to ``2019.''
    In May 2020, the Judges published a notice of proposed rulemaking 
(NPRM) seeking comment on SoundExchange's proposal. 85 FR 32323 (May 
29, 2020). In the notice, the Judges also announced that, if they 
adopted the proposed regulations, they intended to change the mandatory 
``shall'' to a permissive ``may'' to authorize the subject 
distributions. Comments responsive to the NPRM were due June 29, 2020.
    The Judges received three comments in response to the NPRM. One 
commenter, David Powell, filed a comment that in no way revealed an 
interest in the rulemaking proceeding. The comment of Sun-Glo Records, 
Inc. asserted an interest in recording royalties, but did not oppose 
the proposed rule change.
    The third comment was submitted by SoundExchange, and addresses 
specific topics concerning which the Judges had previously inquired in 
connection with this NPRM. Specifically, SoundExchange states in this 
comment that:
    (1) It agrees with the Judges that it is preferable to use 
permissive language (the word ``may'') that would merely allow 
SoundExchange to use proxy data to distribute the relevant royalties, 
rather than mandatory regulatory language (the word ``shall'');
    (2) It has exhausted all reasonable alternative means to obtain 
missing reports; and
    (3) Use of the proposed annual/license type method, as set forth in 
the proposed regulations, is a reasonable option.
    Given that the proxy will be applied to a small percentage of 
royalties for the relevant time period and that no viable alternatives 
have been provided, the Judges are adopting as final the proposed 
regulations as set forth in the NPRM allowing for the use of the proxy 
proposed by SoundExchange for the distribution of royalties for all 
periods before January 1, 2019. Adoption of the proposed regulations, 
especially in the absence of opposition to the proposed proxy, will 
promote the expeditious distribution of the affected royalties.

List of Subjects in 37 CFR Part 370

    Copyright, Sound recordings.

Final Regulations

    For the reasons set forth in the preamble, the Copyright Royalty 
Judges amend 37 CFR part 370 as follows:

[[Page 39001]]

PART 370--NOTICE AND RECORDKEEPING REQUIREMENTS FOR STATUTORY 
LICENSES

0
1. The authority citation for part 370 continues to read as follows:

    Authority: 17 U.S.C. 112(e)(4), 114(f)(4)(A), 803(b)(6)(A).


0
2. Section 370.3 is amended by revising paragraph (i) to read as 
follows:


Sec.  370.3  Reports of use of sound recordings under statutory license 
for preexisting subscription services.

* * * * *
    (i) In any case in which a preexisting subscription service has not 
provided a report of use required under this section for use of sound 
recordings under section 112(e) or section 114 of title 17 of the 
United States Code, or both, prior to January 1, 2019, reports of use 
for the corresponding calendar year filed by other preexisting 
subscription services may serve as the reports of use for the non-
reporting service, solely for purposes of distribution of any 
corresponding royalties by the Collective.

0
3. Section 370.4 is amended by revising paragraph (f) to read as 
follows:


Sec.  370.4  Reports of use of sound recordings under statutory license 
for nonsubscription transmission services, preexisting satellite 
digital audio radio services, new subscription services and business 
establishment services.

* * * * *
    (f) In any case in which a nonsubscription transmission service, 
preexisting satellite digital audio radio service, new subscription 
service, or business establishment service has not provided a report of 
use required under this section for use of sound recordings under 
section 112(e) or section 114 of title 17 of the United States Code, or 
both, prior to January 1, 2019, reports of use for the corresponding 
calendar year filed by other services of the same type may serve as the 
reports of use for the non-reporting service, solely for purposes of 
distribution of any corresponding royalties by the Collective.

    Dated: June 13, 2022.
Suzanne M. Barnett,
Chief U.S. Copyright Royalty Judge.

    Approved by:
Carla D. Hayden,
Librarian of Congress.
[FR Doc. 2022-13944 Filed 6-29-22; 8:45 am]
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