Title 37: Patents, Trademarks, and Copyrights
Part 201—GENERAL PROVISIONS
Subchapter A—Copyright Office and Procedures
(a) General. This section prescribes rules pertaining to the filing of Statements of Account and royalty fees in the Copyright Office as required by 17 U.S.C. 1003(c) and 1004, in order to import and distribute, or manufacture and distribute, in the United States any digital audio recording device or digital audio recording medium.
(b) Definitions. For purposes of this section, the following definitions apply:
(1) Annual statement of account is the statement required under 17 U.S.C. 1003, to be filed no later than two months after the close of the accounting period covered by the annual statement.
(2) Device and medium have the same meaning as digital audio recording device and digital audio recording medium, respectively, have in 17 U.S.C. 1001.
(3) Digital audio recording product means digital audio recording devices and digital audio recording media.
(4) Generally accepted auditing standards (GAAS), means the auditing standards promulgated by the American Institute of Certified Public Accountants.
(5) Manufacturing or importing party refers to any person or entity that manufactures and distributes, and/or imports and distributes, any digital audio recording device or digital audio recording medium in the United States, and is required under 17 U.S.C. 1003 to file with the Copyright Office quarterly and annual Statements of Account.
(6) Product category of a device or medium is a general class of products made up of functionally equivalent digital audio recording products with substantially the same use in substantially the same environment, including, for example, hand-held portable integrated combination units (“boomboxes”); portable personal recorders; stand-alone home recorders (“tape decks”); home combination systems (“rack systems”); automobile recorders; configurations of tape media (standard cassettes or microcassettes); and configurations of disc media, such as 2½ inch, 3 inch, or 5 inch discs.
(7) Primary auditor is the certified public accountant retained by the manufacturing or importing party to audit the amounts reported in the annual Statement of Account submitted to the Copyright Office. The primary auditor may be the certified public accountant engaged by the manufacturing or importing party to perform the annual audit of the party's financial statement.
(8) Quarterly statement of account is the statement accompanying royalty payments required under 17 U.S.C. 1003, to be filed for each of the first three quarters of the accounting year, and no later than 45 days after the close of the quarterly period covered by the statement.
(9) Technology of a device or medium is a digital audio recording product-type distinguished by different technical processes for digitally recording musical sounds, such as digital audio tape recorders (DAT), digital compact cassettes (DCC), or recordable compact discs, including minidiscs (MD).
(10) Distribute, manufacture, transfer price, and serial copying have the meanings set forth in 17 U.S.C. 1001.
(c) Accounting periods and filing deadlines—
(1) Election of filing basis. Statements of Account may be filed on either a calendar or fiscal year basis at the election of the manufacturing party. The election of a calendar or fiscal year basis must be made when the manufacturing or importing party files its first quarterly Statement of Account by appropriate designation on the Form DART/Q submitted. Thereafter the specific calendar or fiscal-year accounting period must be designated on each quarterly Statement of Account. The filing basis may be changed at any time upon notification in writing to the Register of Copyrights, accompanied by a statement of reasons as to why the change is to be made and a statement that such change will not affect the aggregate royalties due under the earlier basis. The notification of change in filing basis must be made at least two months before the date the next quarterly Statement of Account is due to be filed.
(2) Quarterly filings. Quarterly Statements of Account shall be filed on Form DART/Q and shall cover a three-month period corresponding to the calendar or fiscal year of the filing party. A quarterly statement shall be filed no later than 45 days after the close of the period it covers.
(3) Annual filings. Annual Statements of Account shall be filed on Form DART/A and shall cover both the fourth quarter of an accounting year and the aggregate of the entire year corresponding to the calendar or fiscal accounting year elected. An annual statement shall be filed no later than two months after the close of the period it covers. The appropriate royalty payment, calculated according to the instructions contained in Form DART/A, shall accompany the annual Statement of Account covering royalties due for the filing year: that is, royalties for the fourth quarter and any additional royalties that are due because of adjustments in the aggregate amounts of devices or media distributed.
(4) Early or late filings. Statements of Account and royalty fees received before the end of the particular accounting period covered by the statement will not be processed by the Office. The statement must be filed after the close of the relevant accounting period. Statements of Account and royalty fees received after the 45-day deadline for quarterly statements or the two-month deadline for annual statements will be accepted for whatever legal effect they may have and will be assessed the appropriate interest charge for the late filing.
(1) Each quarterly or annual Statement of Account shall be submitted on the appropriate form prescribed by the Copyright Office. Computation of the royalty fee shall be in accordance with the procedures set forth in the forms and this section. Statement of Account forms are available free from the Copyright Office website. Copies of Statement of Account forms transmitted to the Office by fax will not be accepted.
(2) Forms prescribed by the Copyright Office are designated Quarterly Statement of Account for Digital Audio Recording Products (Form DART/Q) and Annual Statement of Account for Digital Audio Recording Products (Form DART/A).
(e) Contents of quarterly Statements of Account—
(1) Quarterly period and filing. Any quarterly Statement of Account shall cover the full quarter of the calendar or fiscal accounting year for the particular quarter for which it is filed. A separate quarterly statement shall be filed for each quarter of the first three quarters of the accounting year during which there is any activity relevant to the payment of royalties under 17 U.S.C. 1004. The annual Statement of Account identified in paragraph (f) of this section incorporates the fourth quarter of the accounting year.
(2) General content. Each quarterly Statement of Account shall be filed on Form DART/Q, the “Quarterly Statement of Account for Digital Audio Recording Products,” and shall include a clear statement of the following information:
(i) A designation of the calendar or fiscal year of the annual reporting period;
(ii) A designation of the period, including the beginning and ending day, month, and year of the period covered by the quarter;
(iii) The full legal name of the manufacturing and/or importing party, together with any “doing-business-as” names used by such person or entity for the purpose of conducting the business of manufacturing, importing, or distributing digital audio recording products;
(iv) The full mailing address of the manufacturing or importing party, including a specific number and street name, or rural route and box number, of the place of business of the person or entity. A post office box or similar designation will not be sufficient for this purpose except where it is the only address that can be used in that geographic location;
(v) A designation of the manufacturing or importing party status, i.e., “Manufacturer,” “Importer,” or “Manufacturer and Importer;”
(vi) The designation “Product Categories” together with the product categories of the digital audio recording products manufactured or imported and distributed during the quarter covered by the statement;
(vii) The designation “Technologies” together with the technologies of the digital audio recording products manufactured or imported and distributed under the AHRA during the quarter covered by the statement;
(viii) The designation “Series or Model Number” followed by the model or series numbers of the digital audio recording products manufactured or imported and distributed under the AHRA during the quarter covered by the statement;
(ix) The “fee code” associated with the product;
(x) The “source code” for the product category;
(xi) The “transfer price” of the product;
(xii) The “number of units distributed” for each product;
(xiii) The “minimum fee per unit” for each product;
(xiv) The statutory royalty “rate” for digital audio recording devices or media;
(xv) The “rate fee” for each product;
(xvi) The appropriate “maximum fee per unit” for each product;
(xvii) The “maximum fee” for each product; and
(xviii) A computation of the total royalty payable for the quarter covered by the statement. Filing parties may not round off the figures they list in Space C, the computation section of the form, except for the figure representing the total royalty fee due; in that case, numbers ending in 50 to 99 cents may be rounded up to the next dollar, and numbers ending in one to 49 cents may be rounded down to the next dollar;
(3) Royalty payments and accounting.
(i) The royalty specified in 17 U.S.C. 1004 shall accompany the quarterly and annual Statements of Account. No royalty is payable for redistribution of the same product item unless a credit has been taken for such items. Where royalties are payable for the period covered by the statement, the Statement of Account shall contain the following information for each unique combination of product category, technology, series or model number, fee code, source code, and transfer price:
(A) The total number of digital audio recording media distributed, multiplied by the statutory royalty rate of three percent (3%) of the transfer price;
(B) The total number of digital audio recording devices distributed for which the statutory royalty rate of two percent (2%) of the transfer price is payable, multiplied by such percentage rate of the transfer price;
(C) The total number of digital audio recording devices distributed for which the statutory maximum royalty is limited to eight dollars ($8.00), multiplied by such eight dollar amount;
(D) The total number of digital audio recording devices distributed for which the statutory maximum royalty is limited to twelve dollars ($12.00), multiplied by such twelve dollar amount; and
(E) The total number of digital audio recording devices distributed for which the statutory minimum royalty is limited to one dollar ($1.00), multiplied by such one dollar amount.
(ii) The amount of the royalty payment shall be calculated in accordance with the instructions specified in the quarterly Statement of Account form. Payment shall be made as specified in §201.28(h).
(4) Reduction of royalty fee.
(i) Section 1004(a)(2)(A) of title 17 of the United States Code, provides an instance in which royalty payments may be reduced if the digital audio recording device and such other devices are part of a physically integrated unit, the royalty payment shall be based on the transfer price of the unit, but shall be reduced by any royalty payment made on any digital audio recording device included within the unit that was not first distributed in combination with the unit.
(ii) Notice of this provision together with directions for possible application to a product is contained in the DART/Q Form.
(5) Contact party. Each Statement of Account shall include the name, address, and telephone and fax numbers of an individual whom the Copyright Office can write or call about the Statement of Account.
(6) Credits for returned or exported products. When digital audio recording products first distributed in the United States for ultimate transfer to United States consumers are returned to the manufacturer or importer as unsold or defective merchandise, or are exported, the manufacturing or importing party may take a credit to be deducted from the royalties payable for the period when the products were returned or exported. The credit may be taken only for returns or exports made within two years following the date royalties were paid for the products. This credit must be reflected in the manufacturing or importing party's quarterly or annual Statement of Account. If the manufacturer or importer later redistributes in the United States any products for which a credit has been taken, these products must be listed on the Statement of Account, and a new computation of the royalty fee must be made based on the transfer price of the products at the time of the new distribution.
(7) Oath and signature. Each Statement of Account shall include the handwritten signature of an authorized officer, principal, or agent of the filing party. The signature shall be accompanied by:
(i) The printed or typewritten name of the person signing the quarterly Statement of Account;
(ii) The date the document is signed;
(iii) The following certification:
I, the undersigned, hereby certify that I am an authorized officer, principal, or agent of the “manufacturing or importing party” identified in Space B.
Penalties for fraud and false statements are provided under 18 U.S.C. 1001 et. seq.
(f) Contents of annual Statements of Account—
(1) General contents. Each annual Statement of Account shall be filed on form DART/A, “Annual Statement of Account for Digital Audio Recording Products.” It must be filed by any importer or manufacturer that distributed in the United States, during a given calendar or fiscal year, any digital audio recording device or digital audio recording medium. The annual statement shall cover the aggregate of the distribution of devices and media for the entire year corresponding to the calendar or fiscal year elected. The annual Statement of Account shall contain the information, oath, and certification prescribed in paragraphs (e)(2)(i) through (e)(7)(iii) of this section, and shall cover the entire accounting year, including the fourth quarter distribution, and shall also provide for the reconciliation of the aggregated accounting of digital audio recording devices and media for the reported accounting year.
(2) Reconciliation. Any royalty payment due under sections 1003 and 1004 of title 17 that was not previously paid with the filing party's first three quarterly Statements of Account, shall be reconciled in the annual statement. Reconciliation in the annual Statement of Account provides for adjustments for reductions, refunds, underpayments, overpayments, credits, and royalty payments paid in Quarters 1, 2, and 3, and shall be computed in accordance with the instructions included in the annual Statement of Account. Errors that require reconciliation shall be corrected immediately upon discovery.
(3) Accountant's opinion. Each annual Statement of Account or any amended annual Statement of Account shall be audited by the primary auditor as defined in paragraph (b)(7) of this section. An amendment may be submitted to the Office either as a result of responses to questions raised by a Licensing Division examiner or on the initiative of the manufacturing or importing party to correct an error in the original Statement of Account.
(i) The audit shall be performed in accordance with generally accepted auditing standards (GAAS). The audit may be performed in conjunction with an annual audit of the manufacturing or importing party's financial statements.
(ii) The CPA shall issue a report, the “primary auditor's report,” reflecting his or her opinion as to whether the annual statement presents fairly, in all material respects, the number of digital audio recording devices and media that were imported and distributed, or manufactured and distributed, by the manufacturing or importing party during the relevant year, and the amount of royalty payments applicable to them under 17 U.S.C. chapter 10, in accordance with that law and these regulations.
(iii) The primary auditor's report shall be filed with the Copyright Office together with the annual Statement of Account, within two months after the end of the annual period for which the annual Statement of Account is prepared. The report may be qualified to the extent necessary and appropriate.
(iv) The Copyright Office does not provide a specific form, or require a specific format, for the CPA's review; however, in addition to the above, certain items must be named as audited items. These include the variables necessary to complete Space C of the Statement of Account form. The CPA may place his or her opinion, which will serve as the “primary auditor's report,” in the space provided on Form DART/A, or may attach a separate sheet or sheets containing the opinion.
(v) The auditor's report shall be signed by an individual, or in the name of a partnership or a corporation, and shall include city and state of execution, certificate number, jurisdiction of certificate, and date of opinion. The certificate number and jurisdiction are not required if the report is signed in the name of a partnership or a corporation.
(g) Copies of statements of account. A licensee shall file an original and one copy of the statement of account with the Licensing Division of the Copyright Office.
(h) Royalty fee payment.
(1) All royalty fees must be paid by electronic funds transfer, and must be received in the designated bank by the filing deadline for the relevant accounting period. The following information must be provided as part of the EFT and/or as part of the remittance advice as provided for in circulars issued by the Copyright Office:
(i) Remitter's name and address;
(ii) Name of a contact person, telephone number and extension, and email address;
(iii) The actual or anticipated date that the EFT will be transmitted;
(iv) Type of royalty payment (i.e., DART);
(v) Total amount submitted via the EFT;
(vi) Total amount to be paid by year and period;
(vii) Number of Statements of Account that the EFT covers;
(viii) ID numbers assigned by the Licensing Division;
(ix) Legal name of the owner for each Statement of Account.
(2) The remittance advice shall be attached to the Statement(s) of Account. In addition, a copy of the remittance advice shall be emailed or sent by facsimile to the Licensing Division.
(3) The Office may waive the requirement for payment by electronic funds transfer as set forth in paragraph (1) of this section. To obtain a waiver, the remitter shall submit to the Licensing Division at least 60 days prior to the royalty fee due date a certified statement setting forth the reasons explaining why payment by an electronic funds transfer would be virtually impossible or, alternatively, why it would impose a financial or other hardship on the remitter. The certified statement must be signed by a duly authorized representative of the entity making the payment. A waiver shall cover only a single payment period. Failure to obtain a waiver may result in the remittance being returned to the remitter.
(i) Documentation. All filing parties shall keep and retain in their possession, for at least three years from the date of filing, all records and documents necessary and appropriate to support fully the information set forth in quarterly and annual statements that they file.
(j) Corrections, supplemental payments, and refunds—
(1) General. Upon compliance with the procedures and within the time limits set forth in this paragraph (i), corrections to quarterly and annual Statements of Account will be placed on record, and supplemental royalty fee payments will be received for deposit, or refunds without interest will be issued, in the following cases:
(i) Where, with respect to the accounting period covered by the quarterly or annual Statement of Account, any of the information given in the statement filed in the Copyright Office is incorrect or incomplete; or
(ii) Where, for any reason except that mentioned in paragraph (j)(2) of this section, calculation of the royalty fee payable for a particular accounting period was incorrect, and the amount deposited in the Copyright Office for that period was either too high or too low.
(2) Corrections to quarterly or annual Statements of Account will not be placed on file, supplemental royalty fee payments will not be received for deposit, and refunds will not be issued, where the information in the Statements of Account, the royalty fee calculations, or the payments were correct as of the date on which the accounting period ended, but changes (for example, cases where digital audio recording media were exported) took place later.
(3) Requests that corrections to annual or quarterly Statements of Account be accepted, that fee payments be accepted, or that refunds be issued shall be addressed to the Licensing Division of the Copyright Office, and shall meet the following conditions:
(i) The request shall be made in writing and must clearly identify the manufacturing or importing party making the request, the accounting period in question, and the purpose of the request. A request for a refund must be received in the Copyright Office before the expiration of two months from the last day of the applicable Statement of Account filing period. Telephone or similar unsigned requests that meet these conditions may be permitted, where a follow-up written request detailing the same information is received by the Copyright Office within 14 days after the required 60-day period.
(ii) The request must clearly identify the incorrect or incomplete information formerly filed and must provide the correct or additional information.
(iii) In the case where a royalty fee was miscalculated and the amount deposited with the Copyright Office was too large or too small, the request must be accompanied by an affidavit under the official seal of any officer authorized to administer oaths within the United States, or a statement in accordance with 28 U.S.C. 1746, made and signed in accordance with paragraph (e)(7) of this section. The affidavit or statement shall describe the reasons why the royalty fee was improperly calculated and include a detailed analysis of the proper royalty calculation.
(iv) Following final processing, all requests will be filed with the original Statement of Account in the records of the Copyright Office. Nothing contained in this paragraph shall be considered to relieve manufacturing or importing parties of their full obligations under title 17 of the United States Code, and the filing of a correction or supplemental payment shall have only such effect as may be attributed to it by a court of competent jurisdiction.
(A) The request must be accompanied by a filing fee in the amount prescribed in §201.3(e) for each Statement of Account involved. Payment of this fee may be in the form of a personal or company check, or a certified check, cashier's check, or money order, payable to the Register of Copyrights. No request will be processed until the appropriate filing fees are received.
(B) Requests that a supplemental royalty fee payment be deposited must be accompanied by a remittance in the full amount of such fee. Payment of the supplemental royalty fee must be in the form of a certified check, cashier's check, money order, or electronic payment payable to the Register of Copyrights. No such request will be processed until an acceptable remittance in the full amount of the supplemental royalty fee has been received.
(vi) All requests submitted under paragraph (j) of this section must be signed by the manufacturing or importing party named in the Statement of Account, or the duly authorized agent of that party in accordance with paragraph (e)(7) of this section.
(vii) A request for a refund is not necessary where the Licensing Division, during its examination of a Statement of Account or related document, discovers an error that has resulted in a royalty overpayment. In this case, the Licensing Division will forward the royalty refund to the manufacturing or importing party named in the Statement of Account. The Copyright Office will not pay interest on any royalty refunds.
(k) Examination of Statements of Account by the Copyright Office.
(1) Upon receiving a Statement of Account and royalty fee, the Copyright Office will make an official record of the actual date when such statement and fee were physically received in the Copyright Office. Thereafter, the Licensing Division will examine the statement for obvious errors or omissions appearing on the face of the documents and will require that any such obvious errors or omissions be corrected before final processing of the document is completed. If, as the result of communications between the Copyright Office and the manufacturer or importer, an additional fee is deposited or changes or additions are made in the Statement of Account, the date that additional deposit or information was actually received in the Office will be added to the official record.
(2) Completion by the Copyright Office of the final processing of a Statement of Account and royalty fee deposit shall establish only the fact of such completion and the date or dates of receipt shown in the official record. It shall not be considered a determination that the Statement of Account was, in fact, properly prepared and accurate, that the correct amount of the royalty was deposited, that the statutory time limits for filing had been met, or that any other requirements of 17 U.S.C. 1001 et. seq. were fulfilled.
(l) Interest on late payments or underpayments.
(1) Royalty payments submitted as a result of late payments or underpayments shall include interest, which shall begin to accrue on the first day after the close of the period for filing Statements of Account for all late payments or underpayments of royalties for the digital audio recording obligation occurring within that accounting period. The accrual period shall end on the date the electronic payment submitted by the remitter is received. In cases where a waiver of the electronic funds transfer requirement is approved by the Copyright Office, and royalties payments are either late or underpaid, the accrual period shall end on the date the payment is postmarked. If the payment is not received by the Copyright Office within five business days of its date, then the accrual period shall end on the date of the actual receipt by the Copyright Office.
(2) The interest rate applicable to a specific accounting period shall be the Current Value of Funds rate in accordance with the Treasury Financial Manual, at 1 TFM 6-8025.40, in effect on the first business day after the close of the filing deadline for the relevant accounting period. The interest rate for a particular accounting period may be obtained by consulting the Federal Register for the applicable Current Value of Funds Rate, or by contacting the Licensing Division of the Copyright Office.
(3) Interest is not required to be paid on any royalty underpayment or late payment from a particular accounting period if the interest charge is five dollars ($5.00) or less.
(m) Confidentiality of Statements of Account. Public access to the Copyright Office files of Statements of Account for digital audio recording products shall not be provided. Access will only be granted to interested copyright parties in accordance with regulations prescribed by the Register of Copyrights pursuant to 17 U.S.C. 1003(c).
[59 FR 4589, Feb. 1, 1994, as amended at 64 FR 36575, July 7, 1999; 65 FR 48914, Aug. 10, 2000; 70 FR 30367, May 26, 2005; 70 FR 38022, July 1, 2005; 71 FR 45740, Aug. 10, 2006; 72 FR 33692, June 19, 2007; 73 FR 29073, May 20, 2008; 82 FR 9358, Feb. 6, 2017; 83 FR 51841, Oct. 15, 2018]