[Federal Register: June 11, 1996 (Volume 61, Number 113)]
[Page 29573-29575]



Copyright Office
[Docket No. 96-3 CARP-SRA]

Rate Adjustment for the Satellite Carrier Compulsory License

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of negotiation period; precontroversy discovery 


SUMMARY: The Copyright Office is announcing a two month voluntary 
negotiation period for the purpose of determining the royalty fees to 
be paid by satellite carriers under the satellite carrier compulsory 
license. The Office is also announcing the dates for the filing of 
Notices of Intent to Participate in the rate adjustment proceeding, as 
well as the precontroversy discovery schedule and the initiation of 
arbitration proceedings.

DATES: Notices of Intent to Participate are due no later than August 
30, 1996.

ADDRESSES: If sent by mail, an original and five copies of the Notice 
of Intent to Participate should be addressed to: Copyright Arbitration 
Royalty Panel (CARP), P.O. Box 70977, Southwest Station, Washington, DC 
20024. If hand delivered, an original and five copies of the Notice of 
Intent to Participate should be brought to: Office of the Copyright 
General Counsel, James Madison Memorial Building, Room 407, First and 
Independence Avenue, S.E., Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: William Roberts, Senior Attorney, 
Copyright Arbitration Royalty Panel (CARP), or Tanya Sandros, CARP 
Specialist, P.O. Box 70977, Southwest Station, Washington, DC 20024. 
Telephone (202) 707-8380. Telefax: (202) 707-8366.


I. Background

    The satellite carrier compulsory license establishes a statutory 
copyright licensing scheme for satellite carriers that retransmit 
television broadcast

[[Page 29574]]

signals to satellite dish owners for their private home viewing. 17 
U.S.C. 119. First created by Congress in the Satellite Home Viewer Act 
of 1988, the satellite license was reauthorized for another five years 
in the Satellite Home Viewer Act of 1994. See Public Law No. 103-369, 
108 Stat. 3481 (1994). It is currently slated to expire on December 31, 
1999. Satellite carriers pay royalties based on a flat, per subscriber, 
per month fee. Congress initially wrote the fees into the statute in 
1988, so that carriers at that time were required to pay twelve cents 
per subscriber per month for the retransmission of superstation 
signals, and three cents per subscriber per month for the 
retransmission of network signals. Congress, however, provided for an 
adjustment of these rates in the 1988 Home Viewer Act. The fees could 
be set by voluntary negotiation between satellite carriers and 
copyright owners, or by binding arbitration for those parties failing 
to reach an agreement. No voluntary negotiations were reached, and in 
1992, the former Copyright Royalty Tribunal convened a three-person 
arbitration panel to set the new rates. The new rates adopted by the 
panel, and approved by the Tribunal, were seventeen and a half cents 
per subscriber for superstations subject to syndicated exclusivity, 
fourteen cents per subscriber for superstations not subject to 
syndicated exclusivity,<SUP>1 and six cents per subscriber for network 

    \1\ The reference to ``syndicated exclusivity'' is to the 
Federal Communications Commission's regulations regarding the rights 
of television broadcasters to purchase exclusive rights to 
programming within their local service areas. Often referred to as 
``syndex,'' these rules permit a broadcaster who has purchased 
exclusive rights to insist that the local cable operator carrying 
the same programming delete it from its lineup. The arbitration 
panel determined that Congress intended in 1988 for the FCC to 
impose syndex restrictions on the satellite industry by requiring 
the Commission to conduct a feasibility study. See Pub.L.No. 100-
667, 102 Stat. 3949 (1988). When the FCC concluded that such 
imposition was not technically possible, the arbitration panel chose 
to compensate copyright owners for loss of exclusivity rights by 
imposing a higher seventeen and a half cent fee for superstation 
signals that, if retransmitted by cable systems, would have been 
entitled to syndex protection. See 57 FR 19052 (May 1, 1992).

    When Congress reauthorized the satellite license in 1994, it 
adopted the rates set by the arbitration panel. However, section 119(c) 
directs the Librarian of Congress to conduct proceedings to amend the 
current rates. This notice begins the process mandated by the statute.

II. Voluntary Negotiation Period

    Section 119(c)(2)(A) of the Copyright Act, 17 U.S.C., provides that 
``[o]n or before July 1, 1996, the Librarian of Congress shall cause 
notice to be published in the Federal Register of the initiation of 
voluntary negotiation proceedings for the purpose of determining the 
royalty fee to be paid by satellite carriers under subsection 
(b)(1)(B).'' This notice initiates the voluntary negotiation period.
    The statute does not provide for how long the voluntary negotiation 
period is to last. In the 1992 rate adjustment proceeding, the 
Copyright Royalty Tribunal allowed the parties six months to negotiate 
their differences. See 56 FR 29951 (July 1, 1991). The arbitration 
proceeding involved in that rate adjustment, however, was significantly 
different than the current system. The current rate adjustment, for 
those parties that do not reach a voluntary agreement, is governed by 
the provisions of chapter 8 of the Copyright Act, and involves the 
convening of a Copyright Arbitration Royalty Panel (CARP). Because it 
is a CARP proceeding, the Library must apply the rules and regulations 
of 37 C.F.R. part 251, which include the filing of written direct cases 
and a discovery period prior to the initiation of the CARP. Because 
section 119(c)(3)(A) provides that the Librarian must ``[o]n or before 
January 1, 1997, . . . publish[] in the Federal Register . . . 
initiation of arbitration proceedings . . .,'' the Library cannot grant 
the parties a six month negotiation period prior to the submission of 
written direct cases and conduct of discovery, and still be able to 
convene the CARP by January 1, 1997.
    Consequently, the Library has decided to designate the voluntary 
negotiation period commencing July 1, 1996, and concluding August 30, 
1996, which will afford the parties a two month negotiation period. We 
note that the Library has published this notice prior to the July 1 
date, and we would encourage the parties to begin negotiations as soon 
as possible so as to maximize their allotted time. Of course, the 
parties are free, and are encouraged to continue negotiations even 
after the CARP process has begun.

III. Notices of Intent to Participate

    Any party wishing to participate in the satellite carrier 
compulsory license rate adjustment proceeding must file a Notice of 
Intent to Participate no later than the close of business on August 30, 
1996. Failure to file a timely Notice of Intent to Participate will 
preclude a party from participating in the rate adjustment proceeding.

IV. Precontroversy Discovery Schedule and Procedures

    Any party that has filed a timely Notice of Intent to Participate 
is entitled to participate in the precontroversy discovery period. Each 
party may request of an opposing party nonprivileged documents 
underlying facts asserted in the opposing party's written direct case. 
The precontroversy discovery period is limited to discovery of 
documents related to written direct cases and any amendments made 
during the period.
    The Library of Congress rules do not specify any particular steps 
or regimen to the precontroversy discovery period. We believe, however, 
that it is necessary to establish procedural dates for exchange of 
documents and filing of motions within the 45-day period to provide 
order and allow discovery to proceed smoothly and efficiently. The need 
for such a schedule, and selection of the dates, is underscored by the 
potentially large number of CARP proceedings that must be scheduled 
during 1996-1997. In order to coordinate and manage all of these 
proceedings, we are establishing the following precontroversy discovery 
schedule with corresponding deadlines:

                    Action                              Deadline        
Filing of Written Direct Cases...............  Sept. 27, 1996.          
Requests for Underlying Documents Related to   Oct. 7, 1996.            
 Written Direct Cases.                                                  
Responses to Requests for Underlying           Oct. 11, 1996.           
Completion of Document Production............  Oct. 16, 1996.           
Follow-Up Requests for Underlying Documents..  Oct. 21, 1996.           
Responses to Follow-Up Requests..............  Oct. 28, 1996.           
Motions Related To Document Production.......  Oct. 31, 1996.           
Production of Documents in Response to Follow- Nov. 5, 1996.            
 Up Requests.                                                           
All Other Motions, Petitions, and Objections.  Nov. 12, 1996.           

[[Page 29575]]

    The precontroversy discovery period, as specified by Sec. 251.45(b) 
of the CARP rules, begins on September 27, 1996. The purpose of this 
date is to mark the date by which all parties, including the Copyright 
Office, have in their possession a copy of each party's written direct 
case. Service of the written direct cases on all parties, and filing 
with the Copyright Office, must therefore take place on or before that 
date. It is recommended that each party serve and file its written 
direct case by hand to ensure timely receipt. Failure to submit a 
timely filed written direct case will result in dismissal of that 
party's case. Parties must comply with the form and content of written 
direct cases as prescribed in Sec. 251.43.
    After the filing of written direct cases, document production will 
proceed according to the above-described schedule. Each party may 
request underlying documents related to each of the other parties' 
written direct cases by October 7, 1996, and responses to those 
requests are due by October 11, 1996. Documents which are produced as a 
result of the requests must be exchanged by October 16, 1996. It is 
important to note that all initial document requests must be made by 
October 7, 1996. Thus, for example, if one party asserts facts that 
expressly rely on the results of a particular study that was not 
included in the written direct case, another party desiring production 
of that study must make its request by October 7; otherwise, the party 
is not entitled to production of the study.
    The precontroversy discovery schedule also establishes deadlines 
for follow-up discovery requests. Follow-up requests are due by October 
21, 1996. Any documentation produced as a result of a follow-up request 
must be exchanged by November 5, 1996. An example of a follow-up 
request would be as follows. In the above example, one party expressly 
relies on the statistics from a particular study, but the study itself 
is not included in its written direct case. As noted above, a party 
desiring production of that study or survey must make its request by 
October 7. If, after receiving a copy of the study, the reviewing party 
determines that the study heavily relies on the results of a 
statistical survey, it would be appropriate for that party to make a 
follow-up request for production of the statistical survey by the 
October 21 deadline. Again, failure to make a timely follow-up request 
would waive that party's right to request production of the survey.
    In addition to the deadlines for document requests and production, 
there are two deadlines for the filing of precontroversy motions. 
Motions related to document production must be filed by October 31, 
1996. Typically, these are motions to compel production of requested 
documents for failure to produce them, but they may also be motions for 
protective orders. Finally, all other motions, petitions, and 
objections must be filed by November 12, 1996, the final day of the 45-
day precontroversy discovery period. These motions, petitions, and 
objections include, but are not limited to, objections to arbitrators 
who are on the arbitrator list under 37 CFR 251.4, and petitions to 
dispense with formal hearings under 37 CFR 251.41(b).
    Due to time limitations between procedural steps of the 
precontroversy discovery schedule, we are requiring that all discovery 
requests and responses to such requests be served by hand or sent by 
fax to the party to whom such response or request is directed.
    Filing and service of all precontroversy motions, petitions, 
objections, oppositions, and replies shall be as follows. In order to 
be considered properly filed with the Librarian and/or Copyright 
Office, all pleadings must be brought to the Copyright Office at the 
following address no later than 5 p.m. of the filing deadline date: 
Office of the Register of Copyrights, Room 403, James Madison Memorial 
Building, 101 Independence Avenue, S.E., Washington, D.C. 20540. The 
form and content of all motions, petitions, objections, oppositions, 
and replies filed with the Office must be in compliance with 37 CFR 
251.44(b)-(e). As provided in Sec. 251.45(b), oppositions to any 
motions or petitions must be filed with the Office no later than seven 
business days from the date of filing of such motion or petition. 
Replies are due five business days from the date of filing of such 
oppositions. Service of all motions, petitions, objections, 
oppositions, and replies must be made on counsel or the parties by 
means no slower than overnight express mail on the same day the 
pleading is filed.

V. Initiation of Arbitration

    Section 119(c)(3) provides that ``[o]n or before January 1, 1997, 
the Librarian of Congress shall cause notice to be published in the 
Federal Register of the initiation of arbitration proceedings'' for the 
purpose of adjusting satellite royalty rates. The Library has 
determined, through experience from prior CARP proceedings, that it 
needs roughly 45 days to rule on all precontroversy motions and 
petitions, as well as to assist in the timely selection of arbitrators. 
The Office recognizes that due to the holiday season it is unwise to 
have the proceeding start earlier in December. Consequently, to reduce 
the potential for lost time, the 180-day arbitration period for 
adjustment of the section 119 satellite carrier compulsory license 
royalty rates will begin on December 31, 1996. The schedule of the 
arbitration proceeding will be established by the CARP after the three 
arbitrators have been selected. Delivery of the rate adjustment 
decision of the arbitrators to the Librarian, in accordance with 17 
U.S.C. 802(e), must be no later than June 27, 1997.

    Dated: June 5, 1996.
Marilyn J. Kretsinger,
Acting General Counsel.
    Approved by:
James H. Billington,
The Librarian of Congress.
[FR Doc. 96-14748 Filed 6-10-96; 8:45 am]