[Federal Register: June 1, 2001 (Volume 66, Number 106)]

[Rules and Regulations]               

[Page 29700-29704]

-----------------------------------------------------------------------



LIBRARY OF CONGRESS



Copyright Office



37 CFR Parts 252 and 257



[Docket No. RM 2001-3A CARP]



 

Cable and Satellite Statutory Licenses



AGENCY: Copyright Office, Library of Congress.



ACTION: Final rule.



-----------------------------------------------------------------------



SUMMARY: The Copyright Office of the Library of Congress is adopting 

final regulations for filing a claim to royalties collected under the 

cable statutory license, 17 U.S.C. 111, and the satellite statutory 

license, 17 U.S.C. 119. Under the new rules, a party who files a joint 

claim on behalf of multiple copyright owners must list the name and 

address of each copyright owner to the joint claim.



EFFECTIVE DATE: July 1, 2001.



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

Tanya M. Sandros, Senior Attorney for Compulsory Licenses, Copyright 

Arbitration Royalty Panel, P.O. Box 70977, Southwest Station, 

Washington, D.C. 20024. Telephone: (202) 707-8380. Telefax: (202) 252-

3423.



SUPPLEMENTARY INFORMATION:



Background



    Each July, persons who are entitled to statutory license fees 

collected under the provisions of the cable statutory license, 17 

U.S.C. 111, and the satellite statutory license, 17 U.S.C. 119, must 

file a claim with the Copyright Office in accordance with its 

regulations in order to establish their claim to a share of the royalty 

fees. See 37 CFR 252.3 and 257.3. Historically, the filing requirements 

have been minimal, requiring only the identification of the claimant, 

contact information, a statement of the nature of the claimant's 

copyrighted work, at least one example of a secondary retransmission of 

the claimant's work during the previous calender year, an original 

signature of the claimant or a duly authorized representative of the 

claimant, and, in the case of a joint claim, a statement on the part of 

the entity filing the claim that authorization for filing the claim 

exists.

    On April 26, 2001, the Copyright Office published a Notice of 

Proposed Rulemaking, seeking comment on proposed amendments which were 

offered to clarify that the identity of each copyright owner must be 

listed on each claim. 66 FR 20958 (April 26, 2001). The need for this 

clarification



[[Page 29701]]



became apparent during a recent cable royalty distribution proceeding, 

when a party filed a claim for cable royalties in the name of a 

corporate entity that held no copyrights to programming which had been 

secondarily transmitted by a cable system during the relevant calendar 

year. See Docket No. 2000-2 CARP CD 93-97. The disputed claim was filed 

under the current regulations which allow ``any party'' claiming to be 

entitled to cable fees to make the claim. During the course of that 

proceeding, the Office observed that the language ``any party'' was 

quite broad and could include holders of one or more exclusive rights 

granted by copyright, as well as agents and representatives of 

copyright owners. See Order in Docket No. 2000-2 CARP CD 93-97 (June 

22, 2000).

    Specifically, the Office found that this language might plausibly 

be interpreted by the public as allowing the filing of a 

``placeholder'' claim. A ``placeholder'' claim is a claim filed by a 

person who is not a copyright owner, but who files a cable or satellite 

claim in his or her own name, and then later asserts claims to 

royalties on behalf of copyright owners whose works were retransmitted 

by a cable system or satellite carrier. Placeholder claims may be filed 

with the Copyright Office in the form of single claims, but in 

substance they are joint claims. Because the Copyright Office does not 

inquire as to the identity of the person or entity filing a cable or 

satellite claim (i.e. whether that person or entity is a copyright 

owner or another party), we cannot determine whether the claim is a 

properly filed single claim, or should be a joint claim identifying the 

appropriate represented copyright owners.

    Placeholder claims run afoul of the distribution process for cable 

and satellite royalties. The law states that cable and satellite 

royalties may only be distributed to copyright owners whose works were 

retransmitted by either cable systems or satellite carriers.\1\ Indeed, 

the purpose of filing claims is to permit identification of all 

copyright owners who are entitled to a distribution.\2\ Placeholder 

claims make it impossible to identify the copyright owners entitled to 

distribution. Further, both section 111 and section 119 plainly state 

that claims for royalty fees must be filed in the month of July to be 

eligible for distribution. Placeholder claims can circumvent this 

requirement by allowing the filer to enter into representation 

agreements with copyright owners after the July deadline, and 

effectively secure a distribution for those owners who had not filed 

timely claims. The Office has stated previously that it will not allow 

joint claims to be amended to add new parties after the July deadline, 

because this would thwart the purpose of the July filing requirement. 

59 FR 63025, 63028 (December 7, 1994). Placeholder claims can produce 

this result, because the identity of the copyright owners represented 

by the party filing the placeholder claim will not be known until 

Notices of Intent to Participate in a CARP proceeding are filed. 

Presumably, the party filing the placeholder claim could then sign 

representation agreements with copyright owners who had not filed their 

own claims up until that date.

---------------------------------------------------------------------------



    \1\ Both section 111 and section 119 permit copyright owners to 

designate a common agent for payment of royalty fees. 17 U.S.C. 

111(d)(4)(A) & 119(b)(4)(A). We do not interpret this language as 

authorizing the filing of placeholder claims. Rather, this language, 

``[claimants] may designate a common agent to receive payment on 

their behalf,'' allows the Library to distribute royalties to 

someone other than the copyright owner, provided that the owner has 

previously informed the Copyright Office of the identity of the 

common agent.

    \2\ The one exception to this is allowing performing rights 

societies, who literally represent thousands of copyright owners, to 

file one claim on behalf of all their members and affiliates. As 

discussed above, the Copyright Royalty Tribunal created this 

exception, and the Copyright Office has adopted this practice.

---------------------------------------------------------------------------



    We wish to put an end to placeholder claims. To this end, we 

proposed amendments to parts 252 and 257 of the rules to clarify that a 

claim filed with the Copyright Office must list the name of each 

copyright owner covered by the claim; and today, we are adopting the 

proposed amendments as final regulations. In addition, the amended 

rules will also require that a joint claim specify the name of the 

copyright owner for each listed copyrighted work. These rules shall 

govern the filing of cable and satellite claims beginning July 1, 2001.



Comments



    The Copyright Office received comments to its proposed rules from 

seven parties: the American Society of Composers, Authors and 

Publishers, Broadcast Music, Inc., and SESAC, Inc. (collectively, the 

``Performing Rights Organizations''); the Office of the Commissioner of 

Baseball, the National Basketball Association, the National Football 

League, and the National Hockey League (collectively, the 

``Professional Sports Leagues''); the Canadian Claimants Group; the 

National Association of Broadcasters (``NAB''); the Motion Picture 

Association of America (``MPAA''); Worldwide Subsidy Group (``WSG''); 

and Mark J. Davis (``Davis'').

    The commenters, in general, support the Office's endeavor to 

clarify its rules to eliminate any opportunity for a claimant to expand 

its claim after the July 31 filing deadline. The Performing Rights 

Organizations and the Professional Sports Leagues support the proposed 

modifications to Secs. 252.3 and 257.3 of title 37 of the Code of 

Federal Regulations without change. The remaining five commenters 

agreed with the proposed amendments but each sought additional 

modifications to the rules and/or clarification of the nature of the 

problem that prompted the Office to amend its rule.



Identification of Copyright Owners



    First, the purpose of the filing requirements is to establish each 

copyright owner's entitlement to the cable and satellite royalties in 

accordance with the provisions set forth in the law. A fundamental 

requirement is to file a claim with the Copyright Office during the 

month of July for royalties collected the prior calendar year. No claim 

can be filed without identifying the copyright owner.

    Prior to the recent cable distribution proceeding, Docket No. 2000-

2 CARP CD 93-97, we had thought the rules had made it clear that the 

identity of each copyright owner must be disclosed. Consequently, a 

joint claim had to include the name of each copyright owner on whose 

behalf the claim was made. Certain parties, e.g. the Professional 

Sports Leagues and the MPAA, who have historically participated in 

these proceedings, also understood this to be the law and saw no 

ambiguity in the wording of the rules.

    But what was clear and unambiguous to these parties and the Office 

was not so obvious to new participants. In July of 1998, the Office 

received a claim from a single entity which turned out to be an agent 

filing on behalf of a number of copyright owners. Because the Office 

recognized that there were arguably ambiguities in the regulation at 

that time, the Office allowed the claim and further fact-finding was 

conducted by a Copyright Arbitration Royalty Panel (``CARP'') for the 

purpose of establishing which copyright owners and which programs were 

covered by the initial filing.

    To avoid such problems in the future, the Office issued proposed 

rules for the purpose of clarifying that each claim must list the name 

of each copyright owner on whose behalf the claim is filed and it must 

do so during the time period established by Congress.

    Only WSG makes any objection to the new rules. WSG argues that the



[[Page 29702]]



proposed rules ``are little more than another obstacle that could 

result in the denial of valid claims.'' WSG comment at 4. WSG reaches 

this conclusion based upon its analysis of the United States statutory 

mechanism for filing claims for retransmission royalties with 

procedures used in Europe, Australia and Asia. It concludes that the 

United States system is more complex, restrictive, time consuming and 

expensive. To make its case, WSG highlights the statutory requirement 

that claims to cable and satellite royalties must be filed with the 

Copyright Office during the month of July each year. It cites this 

requirement as an example of the formalistic restrictions placed on the 

copyright owners and seems to urge the Office to impose fewer 

restrictions on the claimants, such as not requiring the identification 

of the copyright owner at the time the claim is filed. Moreover, WSG 

argues that the imposition of the requirement could result in the 

denial of a valid claim, especially where the agent has secured timely 

and proper authority to make the filing.

    However, we fail to see how an agent or a copyright owner is 

disadvantaged because the agent is required to list the name of each 

copyright owner to a joint claim. First, the agent must know who his 

clients are when he files the claim. Second, an initial claim may be 

further amended to add new copyright owners at any time during the 

month of July. Alternatively, the agent can file the claim on the last 

day of the filing period provided that the claim is either hand 

delivered to the Copyright Office or it is sent via first class mail 

and bears a July date stamp from the United States Postal Service. The 

only requirement is that the claim be timely filed with the Copyright 

Office and that it meet the minimal filing requirements, including a 

complete list of the copyright owners who are covered by the claim, 

their respective addresses and an example of a secondary transmission 

of a work owned by one of the listed copyright owners. The copyright 

owner of this work must be identified.

    Adherence to this fundamental filing requirement will, as MPAA 

points out, simplify litigation and reduce the associated costs. MPAA 

also contends that the simple rule change will facilitate settlement 

negotiations at an earlier phase in the distribution process. Even WSG 

agrees that the requirement to list each copyright owner to a joint 

claim will allow other parties a mechanism by which they can ascertain 

the extent of the claim and verify that the party making the claim has 

the necessary authority to make the filing.

    The name of each copyright owner is among the most fundamental 

elements required to establish a claim to copyright royalties and there 

can be no serious challenge to a rule requiring the identification of 

the party who is the beneficiary of the claim. Thus, we are adopting 

the amended rules.\3\

---------------------------------------------------------------------------



    \3\ Although this rule change will resolve the identity of the 

claimants eligible to seek royalties, it does not identify which 

entity will ultimately represent the interests of the claimant in a 

proceeding before the Copyright Office or a CARP. This is the case 

because many copyright owners decide to engage independent counsel 

or an agent to negotiate on their behalf only after they file the 

initial claim. In these instances, it may not be clear who 

represents whom in a distribution proceeding until notices of intent 

to participate are filed with the Office. For example, in the 1997 

cable distribution proceeding, MPAA represented the interests of 

over 100 copyright owners but did not identify itself as the agent 

of these claimants until it filed its direct case on their behalf.

---------------------------------------------------------------------------



Address and Contact Information



    The proposed rules also require that a joint claim include the 

address for each listed copyright owner. WSG does not object to the 

additional requirement, but it does not agree that the requested 

contact information need be filed at the same time as the initial 

claim. It argues that the information may not be readily available to 

the party filing the claim, especially when a first time claimant 

decides at the last minute to pursue its entitlement. For this reason, 

WSG proposes that the Office require a subsequent filing with the 

address and contact information for each claimant. In addition, WSG 

suggests that this information be submitted to the Copyright Office 

under seal of a protective order to avoid misuse of the information.

    WSG's arguments are unavailing on this point. Undoubtedly, most 

people could benefit from more time to meet a deadline, but the time 

for completing the process is limited. Thus, it is incumbent upon the 

claimant to begin the process early enough to gather the necessary 

information and submit it to the Office in a timely manner, either in 

his or her own claim or in a joint claim filed by the copyright owner's 

agent. Moreover, there is no justification for granting a copyright 

owner who chooses to file through an agent more time to submit the 

required information than that allotted to a copyright owner who 

submits a single claim in his or her own name. Identifying the address 

of a claimant is a simple matter involving information that should be 

readily available to the person filing the claim.

    For this reason, the Copyright Office rejects WSG's suggestion that 

copyright owners to a joint claim receive additional time to meet the 

Office's filing requirements. The Office also rejects the suggestion 

that the addresses and contact information for each joint claimant be 

submitted under a protective order. The requested information is by no 

means confidential. Quite the contrary, it is the most mundane, 

ordinary variety of information that is routinely disclosed in the 

ordinary course of business. There is no justification for redacting 

such information from a public record.



Program Listings



    Two commenters, WSG and Davis, seek modifications to the rules to 

require claimants to identify in their initial filing all programs for 

which they are making a claim. Davis maintains that the purpose of the 

claim in July is to clearly identify the claimants who are entitled to 

receive the royalty fees and the works upon which they base their 

claim. Davis argues that the identification of all programs at the 

initial stage of the distribution process will foster an early 

resolution of any outstanding controversies. He believes that an 

additional requirement to list all programs in the initial claim will 

not overburden the filer because the information is readily available 

from Cable Data Corporation or readily accessible from the claimant's 

business records.

    WSG supports similar modifications of the rules because it had 

difficulty ascertaining the validity of a claimant's entitlement to 

particular programs in a recent cable distribution proceeding. It too 

believes that a rule requiring disclosure of the programs owned or 

claimed by each claimant would aid in the just resolution of 

outstanding controversies.

    Davis and WSG, however, have formed their opinions based on a 

single experience in a Phase II distribution proceeding which, by its 

very nature, required the fact finders to sort out individual claims 

and determine the value of each claimant's programming. Lists of 

programs associated with particular claimants, however, are not needed 

in the early stages of the distribution process. Historically, parties 

have been able to negotiate settlement agreements between program 

categories without the aid of specific program information. 

Furthermore, parties have indicated that, in the case of a joint claim, 

it is both unnecessary and expensive to require the listing of a single 

specific program for each copyright owner listed in the claim. 59 FR 

23964 (May 9, 1994).

    The Office concludes that before making a determination on these 

proposals, it would be necessary to



[[Page 29703]]



explore this issue in a separate proceeding and provide an opportunity 

for comment from other parties.



Parent/Subsidiary Claims



    NAB supports the proposed rule changes, but it seeks clarification 

of the rule for filing a joint claim when the claim is filed in the 

name of a parent company on behalf of all its subsidiaries. It notes 

that ``group broadcast station owners sometimes follow the practice of 

filing a single claim on behalf of their entire group of owned 

stations,'' even though the parent company may only be the beneficial 

owner and not the legal owner of the retransmitted works. NAB comment 

at 2.

    However, it is clear that a claim which asserts rights to royalties 

on behalf of more than a single entity is a joint claim. Thus, the 

preceding example cited by NAB must be considered a joint claim and as 

such, it must list each claimant and include a concise statement of 

authorization. On this point, NAB asserts that the practice of reciting 

the relationship between the parent and the subsidiary should be 

sufficient to establish the parent entity's authority for filing the 

claim on behalf of itself and its subsidiaries and seeks to codify this 

understanding by including additional regulatory language. 

Specifically, NAB requests that the proposed regulation be amended to 

state that:



    A parent corporation of a copyright owner, or an entity 

controlling a copyright owner, may establish its authorization to 

file jointly on behalf of its subsidiary copyright owners by 

identifying the nature of the ownership or control relationship.



NAB comment at 3. The Office, however, declines to codify this practice 

without giving the public an opportunity to comment on the proposed 

changes.

    Moreover, what is required under the final rule is that the person 

or entity filing the claim, e.g., the parent corporation, ascertain 

whether it has the authority to file the claim on behalf of the listed 

joint claimants and include a concise statement of the authorization it 

has for making such claim. Of course, this statement is merely a 

representation to the Office that the authority for filing the claim 

exists and its validity may be tested at a later point in the 

distribution process.

    In the event the Office determines that a parent/subsidiary claim 

is a joint claim, NAB makes a second request. It asks for a liberal 

amendment policy under which the parent corporation can amend its claim 

to add additional subsidiaries not listed on the original claim. It 

argues that such amendments do not prejudice other parties because the 

original claim would provide notice to all parties of the scope and 

nature of the claim. While NAB suggests that the Office can offer such 

relief informally without a change to its rules, the Office disagrees.

    The final rule requires that, with one exception, a joint claim 

list each copyright owner. The one express exception--a longstanding 

one--applies to performing rights organizations. This exception to the 

requirement to list all copyright owners exists because the Office has 

recognized that the organizations' standard membership or affiliate 

agreements are a proper indication of authorization. Because the 

proposed rule states the circumstances under which a party need not 

adhere to specific filing requirements, the Office concludes that NAB's 

proposal would require promulgation of a similar regulation 

specifically granting liberal amendment procedures for parent 

corporations. Moreover, such change is beyond the scope of the proposal 

made in the current rulemaking proceeding, and other parties have not 

had the opportunity to comment on it. Thus, at this time the Office 

cannot entertain the NAB proposal.



Authorization



    The Canadian Claimant Group files a joint claim annually and 

``supports [the Office's] efforts to insure the integrity and 

transparency of the claims process.'' Canadian Claimant Group comment 

at 2. However, it has asked the Office to amend its rules further and 

make written authorizations available for inspection by other copyright 

owners upon request. This suggestion goes beyond the scope of the 

Office's proposal made in the current rulemaking proceeding, and the 

Office is not prepared to make such a change without giving other 

interested parties an opportunity to comment on the efficiencies and 

burdens associated with the additional requirement.



Statutory Authority



    The Library of Congress is adopting final regulations under its 

authority to establish regulations for the submission of cable 

statutory license claims and satellite statutory license claims. 17 

U.S.C. 111(d)(4)(A) and 119(b)(4)(A).



List of Subjects



37 CFR Part 252



    Copyright, cable television, claims.



37 CFR Part 257



    Copyright, satellite television, claims.



    For the reasons set forth in the preamble, the Library is amending 

parts 252 and 257 of 37 CFR Chapter II as follows:



PART 252--FILING OF CLAIMS TO CABLE ROYALTY FEES



    1. The authority citation for part 252 continues to read as 

follows:



    Authority: 17 U.S.C. 111(d)(4), 801, 803.





    2. Section 252.3 is revised to read as follows:





Sec. 252.3  Content of Claims.



    (a) Single claim. A claim filed on behalf of a single copyright 

owner of a work or works secondarily transmitted by a cable system 

shall include the following information:

    (1) The full legal name and address of the copyright owner entitled 

to claim the royalty fees.

    (2) A general statement of the nature of the copyright owner's work 

or works, and identification of at least one secondary transmission by 

a cable system of such work or works establishing a basis for the 

claim.

    (3) The name, telephone number, facsimile number, if any, and full 

address, including a specific number and street name or rural route, of 

the person or entity filing the single claim.

    (4) An original signature of the copyright owner or of a duly 

authorized representative of the copyright owner.

    (b) Joint claim. A claim filed on behalf of more than one copyright 

owner whose works have been secondarily transmitted by a cable system 

shall include the following information:

    (1) A list including the full legal name and address of each 

copyright owner to the joint claim entitled to claim royalty fees.

    (2) A concise statement of the authorization for the person or 

entity filing the joint claim. For this purpose, a performing rights 

society shall not be required to obtain from its members or affiliates 

separate authorizations, apart from their standard membership affiliate 

agreements, or to list the name of each of its members or affiliates in 

the joint claim as required by paragraph (b)(1) of this section.

    (3) A general statement of the nature of the copyright owners' 

works and identification of at least one secondary transmission of one 

of the copyright owners' works by a cable system establishing a basis 

for the joint claim and the identification of the copyright owner of 

each work so identified.

    (4) The name, telephone number, facsimile number, if any, and full 

address, including a specific number



[[Page 29704]]



and street name or rural route, of the person filing the joint claim.

    (5) Original signatures of the copyright owners to the joint claim 

or of a duly authorized representative or representatives of the 

copyright owners.

    (c) In the event that the legal name and/or address of the 

copyright owner entitled to royalties or the person or entity filing 

the claim changes after the filing of the claim, the Copyright Office 

shall be notified of the change. If the good faith efforts of the 

Copyright Office to contact the copyright owner or person or entity 

filing the claim are frustrated because of failure to notify the Office 

of a name and/or address change, the claim may be subject to dismissal.



PART 257--FILING OF CLAIMS TO SATELLITE CARRIER ROYALTY FEES



    3. The authority citation for part 257 continues to read as 

follows:



    Authority: 17 U.S.C. 119(b)(4).





    4. Section 257.3 is revised to read as follows:





Sec. 257.3  Content of Claims.



    (a) Single claim. A claim filed on behalf of a single copyright 

owner of a work or works secondarily transmitted by a satellite carrier 

shall include the following information:

    (1) The full legal name and address of the copyright owner entitled 

to claim the royalty fees.

    (2) A general statement of the nature of the copyright owner's work 

or works, and identification of at least one secondary transmission by 

a satellite carrier of such work or works establishing a basis for the 

claim.

    (3) The name, telephone number, facsimile number, if any, and full 

address, including a specific number and street name or rural route, of 

the person or entity filing the single claim.

    (4) An original signature of the copyright owner or of a duly 

authorized representative of the copyright owner.

    (b) Joint claim. A claim filed on behalf of more than one copyright 

owner whose works have been secondarily transmitted by a satellite 

carrier shall include the following information:

    (1) A list including the full legal name and address of each 

copyright owner to the joint claim entitled to claim royalty fees.

    (2) A concise statement of the authorization for the person or 

entity filing the joint claim. For this purpose, a performing rights 

society shall not be required to obtain from its members or affiliates 

separate authorizations, apart from their standard membership affiliate 

agreements, or to list the name of each of its members or affiliates in 

the joint claim as required by paragraph (b)(1) of this section.

    (3) A general statement of the nature of the copyright owners' 

works, identification of at least one secondary transmission of one of 

the copyright owners' works by a satellite carrier establishing a basis 

for the joint claim, and the identification of the copyright owner of 

each work so identified.

    (4) The name, telephone number, facsimile number, if any, and full 

address, including a specific number and street name or rural route, of 

the person filing the joint claim.

    (5) Original signatures of the copyright owners to the joint claim 

or of a duly authorized representative or representatives of the 

copyright owners.

    (c) In the event that the legal name and/or address of the 

copyright owner entitled to royalties or the person or entity filing 

the claim changes after the filing of the claim, the Copyright Office 

shall be notified of the change. If the good faith efforts of the 

Copyright Office to contact the copyright owner or person or entity 

filing the claim are frustrated because of failure to notify the Office 

of a name and/or address change, the claim may be subject to dismissal.



    Dated: May 25, 2001.

Marybeth Peters,

Register of Copyrights.

James H. Billington,

The Librarian of Congress.

[FR Doc. 01-13787 Filed 5-31-01; 8:45 am]

BILLING CODE 1410-33-P