[Federal Register: May 4, 1999 (Volume 64, Number 85)]


[Page 23875-23876]




Copyright Office

[Docket No. 99-3 CARP DD 95-98]


Ascertainment of Controversy for the Distribution of the 1995, 

1996, 1997, and 1998 Digital Audio Recording Royalty Funds

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice with request for comments.


SUMMARY: The Copyright Office of the Library of Congress directs all 

claimants to the royalty fees collected in 1995, 1996, 1997, and 1998 

for the distribution of digital audio recording devices and media to 

submit comments as to whether a controversy exists as to the 

distribution of the royalty fees in the 1995, 1996, 1997, and 1998 

Musical Works Funds.

DATES: Comments and notices of intent to participate are due by July 6, 


ADDRESSES: If sent BY MAIL, an original and 5 copies of written 

comments should be addressed to Office of the General Counsel, 

Copyright Arbitration Royalty Panel (CARP), P.O. Box 70977, Southwest 

Station, Washington, DC 20024. If DELIVERED BY HAND, an original and 5 

copies should be brought to: Office of the General Counsel, Copyright 

Office, Room LM-403, James Madison Memorial Building, 101 Independence 

Avenue, SE, Washington, DC 20559-6000.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 

Tanya M. Sandros, Attorney Advisor, Copyright Arbitration Royalty Panel 

(``CARP''). Telephone: (202) 707-8380. Telefax: (202) 252-3423.


I. Background

    The Audio Home Recording Act of 1992 (the ``Act''), Pub. L. 102-

563, requires manufacturers and importers to pay royalties on digital 

audio recording devices and media that are distributed in the United 

States. 17 U.S.C. 1003. The royalties are deposited with the Copyright 

Office for further distribution to interested copyright parties who 

file claims with the Copyright Office each year during January and 

February. 17 U.S.C. 1005, 1007.

    The Act provides that the royalties are divided between two funds: 

the Sound Recordings Fund and the Musical Works Fund. The Sound 

Recordings Fund receives 66 2/3% of the royalties and the Musical Works 

Fund receives the remaining 33 1/3%. These fees are allocated further 

to specific subfunds.

    The Sound Recordings Fund consists of four subfunds: the Featured 

Recording Artists Subfund, the Copyright Owners Subfund, the 

Nonfeatured Musicians Subfund, and the Nonfeatured Vocalists Subfund. 

The two subfunds created for the benefit of nonfeatured artists receive 

a total of 4% of the funds allocated to the Sound Recordings Fund. Of 

the remaining royalty fees in the Sound Recordings Fund, 60% is 

allocated to the Copyright Owners Subfund and 40% is allocated to the 

Featured Recording Artists Subfund. Similarly, the royalty fees 

allocated to the Musical Works Fund are equally divided between two 

subfunds, the Publishers Subfund and the Writers Subfund. 17 U.S.C. 


    Distribution of these fees may occur in one of two ways. If the 

claimants within each subfund agree among themselves how to distribute 

the royalty fees, the Librarian of Congress distributes the royalties 

to the claimants in accordance with their negotiated 

agreement.<SUP>1</SUP> 17 U.S.C. 1007(b). Alternatively, if the parties 

cannot reach an agreement, the Librarian of Congress must convene a 

copyright arbitration royalty panel (``CARP'') to determine the 

distribution of royalty payments.<SUP>2</SUP> 17 U.S.C. 1007(c). Before 

commencing a distribution proceeding, however, the Copyright Office 

must first ascertain whether a controversy exists concerning the 

distribution of the royalty fees among the copyright claimants to the 

funds available for distribution. 17 U.S.C. 803(d) and 1007(b).


    \1\ The claimants to the royalty fees in the Sound Recordings 

Funds have negotiated a universal settlement agreement among 

themselves for each year as to the proportionate share that each 

claimant receives from the subfunds. These agreements have made it 

unnecessary for the Librarian to convene a CARP and have allowed him 

to distribute all royalty fees allocated to the Sound Recordings 

Funds during 1993 to 1998.

    \2\ In 1996, the Librarian convened a CARP to determine the 

distribution of the 1992, 1993, and 1994 Musical Works Funds. See 62 

FR 6558 (February 12, 1997). The Librarian's final order determining 

the distribution of these funds based upon the CARP's findings was 

appealed to and recently upheld by the United States Court of 

Appeals for the District of Columbia Circuit.


II. Ascertainment of Controversy and Notices of Intent to 


    Section 251.45(a) of the Copyright Office regulations, title 37 of 

the Code of Federal Regulations, requires that:

    [T]he Librarian of Congress shall, after the time period for 

filing claims, publish in the Federal Register a notice requesting 

each claimant on the claimant list to negotiate with each other a 

settlement of their differences, and to comment by a date certain as 

to the existence of controversies with respect to the royalty funds 

described in the notice. Such notice shall also establish a date 

certain by which parties wishing to participate in the proceeding 

must file with the Librarian a notice of intention to participate.

The purpose of the negotiation requirement is to make all of the 

claimants within each fund/subfund aware of each other and to encourage 

active participation and open discussion on how to resolve each party's 

claim. The Copyright Office has compiled a list of claimants who have 

filed timely a claim to either of the two subfunds comprising each of 

the 1995, 1996, 1997, and 1998 Musical Works Funds.<SUP>3</SUP> 

Claimants must use these lists in negotiating settlement agreements 

concerning the distribution of the royalty fees.


    \3\ Copies of the claimant lists are available for viewing and 

copying between the hours of 8:30 a.m. and 5:00 p.m. at the: Library 

of Congress, Copyright Office, Licensing Division, Room LM-458, 

James Madison Building, 101 Independence Avenue, SE, Washington, DC 



    At the conclusion of the negotiation period, the claimants must 

submit to the Copyright Office comments identifying the existence of 

any settlement agreements and the existence of any remaining 

controversies. Participants must identify each subfund in the Musical 

Works Funds by year and indicate whether any controversy remains over 

the distribution of the royalty fees in that subfund or whether an 

agreement has been reached. In the case of an agreement, the notice 

must list the name of all claimants covered by the agreement. 

Participants must advise the Copyright Office of any controversy by the 

end of the comment period. The Office will not consider controversies 

which are brought to its attention after the close of the comment 


    Each claimant who intends to participate in the distribution of the 

1995, 1996, 1997, and 1998 Musical Works Funds must also file a notice 

of intent to participate. The notice must identify each year and each 

subfund in which the copyright owner has an

[[Page 23876]]

interest. Failure to file a timely Notice of Intent may preclude a 

party from participating in the distribution proceeding. The notices 

are due July 6, 1999.

III. Consolidation of Proceedings

    Section 801(d) of the Copyright Act, 17 U.S.C., as amended by the 

Technical Amendments to the Satellite Home Viewer Act of 1994, Pub. L. 

105-80, states that ``[t]he Librarian of Congress, upon the 

recommendation of the Register of Copyrights, . . . shall reimburse the 

arbitrators presiding in distribution proceedings at such intervals and 

in such manner as the Librarian shall provide by regulation. . . . 

Payments to the arbitrators shall be considered reasonable costs 

incurred by the Library of Congress and the Copyright Office for 

purposes of section 802(h)(1).'' Funds to pay the arbitrators come from 

the royalty funds under consideration in the distribution proceeding. 

Because there are insufficient funds available from the Musical Works 

Fund for any single year to cover the projected cost of an arbitration 

proceeding that would require oral testimony, the Copyright Office is 

consolidating the consideration of the distribution of the 1995, 1996, 

1997, and 1998 Musical Works Funds into a single proceeding in order to 

have sufficient funds to meet its financial obligations to the 


    Dated: April 28, 1999.

Marybeth Peters,

Register of Copyrights.

[FR Doc. 99-11182 Filed 5-3-99; 8:45 am]