[Federal Register: August 21, 2003 (Volume 68, Number 162)]
[Proposed Rules]
[Page 50493-50495]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21au03-21]
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LIBRARY OF CONGRESS
Copyright Office
37 CFR Part 263
[Docket No. 2002-1 CARP DTRA3]
Digital Performance Right in Sound Recordings and Ephemeral
Recordings
AGENCY: Copyright Office, Library of Congress.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Copyright Office of the Library of Congress is requesting
comment on proposed regulations that set rates and terms for the use of
sound recordings in eligible nonsubscription transmissions made by
noncommercial licensees, and for the making of related ephemeral
recordings. The rates and terms are for the 2003 and 2004 statutory
licensing period.
DATES: Comments are due no later than September 22, 2003.
ADDRESSES: An original and five copies of any comment shall be
delivered by hand to: Office of the General Counsel, James Madison
Memorial Building, Room LM-403, First and Independence Avenue, SE.,
Washington, DC 20559-6000; or mailed to: Copyright Arbitration Royalty
Panel (CARP), P.O. Box 70977, Southwest Station, Washington, DC 20024-
0977.
FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or
Tanya M. Sandros, Senior Attorney, Copyright Arbitration Royalty Panel
(CARP), P.O. Box 70977, Southwest Station, Washington, DC 20024.
Telephone: (202) 707-8380; Telefax: (202) 252-3423.
SUPPLEMENTARY INFORMATION: Since 1995, copyright owners of sound
recordings have had the exclusive right to perform their works publicly
by means of a digital audio transmission, subject to certain
limitations. 17 U.S.C. 106(6). Among the limitations on the performance
right was the creation of a new compulsory license for nonexempt,
noninteractive digital subscription transmissions. 17 U.S.C. 114.
Section 114 was later amended with the passage of the Digital
Millennium Copyright Act of 1998 (``DMCA''), Public Law 105-304, to
cover additional digital audio transmissions, including services making
eligible nonsubscription transmissions. The DMCA also created a new
statutory license to provide for the making of certain ephemeral
phonerecords that facilitate the making of digital audio transmissions
pursuant to the section 114 license. See 17 U.S.C. 112(e).
Rates and terms for use of sound recordings pursuant to these
licenses by eligible nonsubscription services and by business-to-
business establishment services were published in the Federal Register
on July 8, 2002, after a full hearing before a Copyright Arbitration
Royalty Panel (``CARP''), but these rates only applied to those
transmissions made through December 31, 2002. See 67 FR 45239 (July 8,
2002).
In accordance with section 114(f)(2)(C)(i)(II), the Copyright
Office initiated a new rate proceeding in January 2002 to set rates and
terms for the current license period, January 1, 2003 through December
31, 2004. The first step in the rate adjustment process is the
announcement of a voluntary six-month negotiation period See 67 FR 4472
(January 30, 2002). Although no agreements were reached during the
early stages of this proceeding, copyright owners and performers did
ultimately reach an agreement with certain licensees and the proposed
settlement was published in the Federal Register on May 20, 2003. 68 FR
27506 (May 20, 2003). This agreement, however, did not make any special
provisions for noncommercial entities who operate under the same
statutory licenses, because noncommercial webcasters were involved in
separate rate negotiations to establish an alternative rate structure
to the one that would be set in accordance with the procedures set
forth in 17 U.S.C. 112(e) and 114(f). These negotiations were conducted
in accordance with the Small Webcaster Settlement Act of 2002
(``SWSA''), Public Law 107-321, 116 Stat. 2780.
The SWSA was passed in 2002 to address certain concerns of small
webcasters with respect to the rates announced on July 8, 2002, and the
CARP process which established those rates. Basically, it gave small
commercial webcasters and noncommercial webcasters another opportunity
to negotiate a different and separate rate schedule applicable to their
use of sound recordings in digital transmissions for the period through
2004. The negotiations for these alternative agreements were conducted
sequentially. SoundExchange, an unincorporated division of the
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Recording Industry Association of America, Inc. that is authorized to
negotiate on behalf of copyright owners and performers, reached an
agreement with small commercial webcasters in December 2002. See 67 FR
78510 (December 24, 2002). Negotiations between SoundExchange and the
noncommercial webcasters followed and were completed in May 2003. The
SWSA agreement applicable to the noncommercial entities was published
in the Federal Register on June 11, 2003. 68 FR 35008 (June 11, 2003).
Noncommercial webcasters who wished to take advantage of the rates and
terms set forth in this agreement and had already made digital audio
transmissions were required to submit a completed and signed election
form to SoundExchange no later than 30 days after publication of the
rates and terms in the Federal Register. Noncommercial webcasters who
have not yet made a digital audio transmission may still elect to
operate under the SWSA provided that they file the election form no
later than the first date on which it would be obligated to make a
royalty payment. See 68 FR at 35009.
Shortly thereafter, SoundExchange, the American Council on
Education, and the Intercollegiate Broadcasting System, Inc., jointly
with Harvard Radio Broadcasting Co., Inc. filed a petition with the
Copyright Office for adjustment of the section 112 and 114 statutory
rates and terms applicable to noncommercial licensees, requesting that
the Office publish the proposed rates and terms for public comment
pursuant to 37 CFR 251.63(b). The proposed rates and terms are
identical to the applicable rates and terms for the period ending
December 31, 2002, as established in the Order of the Librarian of
Congress published July 8, 2002. See 67 FR 45239 (July 8, 2002).
The purpose for proposing these rates and terms is to ensure that a
statutory rate is set for noncommercial licensees, so that there is no
gap in the statutory rate scheme. Thus, a noncommercial licensee who
does not opt to operate under the rates and terms negotiated in the
SWSA agreement would operate according to the rates and terms announced
today, should they be adopted as final rules. However, noncommercial
webcasters who have elected to operate under the rates and terms
negotiated pursuant to the SWSA and published on June 11, 2003, will
not be affected by the proposed rates and terms announced today.
Section 251.63(b) of title 37 of the Code of Federal Regulations
allows the Librarian to adopt proposed rates and terms without
convening a CARP, provided that the proposed rates and terms are
published in the Federal Register and no interested party with an
intent to participate in the proceeding files a comment objecting to
the proposed terms. In other words, unless there is an objection from a
person with a significant interest in setting rates and terms
applicable to noncommercial licensees and who is prepared and eligible
to participate in a CARP proceeding, the Librarian can adopt the rates
and terms in the proposed settlement in final regulations without
convening a CARP. This procedure to adopt negotiated rates and terms in
the case where an agreement has been reached has been specifically
endorsed by Congress.
If an agreement as to rates and terms is reached and there is no
controversy as to these matters, it would make no sense to subject
the interested parties to the needless expense of an arbitration
proceeding conducted under [section 114(f)(2) (1995)]. Thus, it is
the Committee's intention that in such a case, as under the
Copyright Office's current regulations concerning rate adjustment
proceedings, the Librarian of Congress should notify the public of
the proposed agreement in a notice-and-comment proceeding and, if no
opposing comment is received from a party with a substantial
interest and an intent to participate in an arbitration proceeding,
the Librarian of Congress should adopt the rates embodied in the
agreement without convening an arbitration panel.
S. Rep. No. 104-128, at 29 (1995) (citations omitted).
Accordingly, the Copyright Office is granting the joint petition
filed on July 3, 2003, and is publishing for public comment the
proposed rates and terms embodied in the agreement. Any party who
objects to the proposed rates and terms set forth herein must file a
written objection with the Copyright Office and an accompanying Notice
of Intent to Participate, if the party has not already done so, in
accordance with the requirements set forth in the Copyright Office's
November 20, 2001, Notice. See 66 FR 58180, 58181 (November 20, 2001).
The content of the written challenge should describe the party's
interest in the proceeding, the proposed rule the party finds
objectionable, and the reasons for the challenge.
Only a party with a significant interest in these rates and terms
and who is prepared to participate in a CARP proceeding has standing to
object. A noncommercial webcaster that has elected to operate under the
rates and terms negotiated under the SWSA and published on June 11
would have no standing to object to the rates and terms announced
today.
If no comments are received, the regulations shall become final
upon publication of a final rule and shall cover the period from
January 1, 2003, to December 31, 2004.
Schedule for Filing a Written Direct Case
On August 18, 2004, the Copyright Office issued an order in this
proceeding in which it: (1) Announced the consolidation of this
proceeding with the proceeding to establish rates and terms for new
subscription services, Docket No. 2001-2-DTNSRA; (2) set forth a new
precontroversy discovery schedule and set a date for a meeting to
discuss administrative issues; (3) directed parties in this proceeding
to file a Notice of Intention to Submit a Written Direct Case; and (4)
set a new briefing schedule for filing oppositions and replies to the
pending motion to adopt the interim protective order.
Any new participants who may enter this proceeding by filing an
objection to the proposed rates and terms as they apply to
noncommercial entities must comply with the dates and requirements set
forth in the August 18 order. See http://www.copyright.gov/carp/order81803.pdf.
Accordingly, all parties to this proceeding, including
any new participants, must be prepared to file a written direct case
with the Copyright Office and serve a copy of the written direct case
on all parties to this proceeding on October 6, 2003.
List of Subjects in 37 CFR Part 263
Copyright, Digital audio transmissions, Performance right, Sound
recordings.
Proposed Regulation
In consideration of the foregoing, the Copyright Office proposes
adding part 263 to 37 CFR to read as follows:
PART 263--RATES AND TERMS FOR CERTAIN TRANSMISSIONS AND THE MAKING
OF EPHEMERAL REPRODUCTIONS BY NONCOMMERCIAL LICENSEES
Sec.
263.1 General.
263.2 Definitions.
263.3 Royalty Rates and Terms.
Authority: 17 U.S.C. 112(e), 114, 801(b)(1).
Sec. 263.1 General.
This part 263 establishes rates and terms of royalty payments for
the public performance of sound recordings in certain digital
transmissions by certain Noncommercial Licensees in accordance with the
provisions of 17 U.S.C. 114, and the making of ephemeral recordings by
certain
[[Page 50495]]
Noncommercial Licensees in accordance with the provisions of 17 U.S.C.
112(e), during the period 2003-2004.
Sec. 263.2 Definitions.
For purposes of this part, the following definition shall apply:
A Noncommercial Licensee is a person or entity that has obtained a
compulsory license under 17 U.S.C. 114 and the implementing regulations
therefor, or that has obtained a compulsory license under 17 U.S.C.
112(e) and the implementing regulations therefor to make ephemeral
recordings for use in facilitating such transmissions, and--
(a) Is exempt from taxation under section 501 of the Internal
Revenue Code of 1986 (26 U.S.C. 501);
(b) Has applied in good faith to the Internal Revenue Service for
exemption from taxation under section 501 of the Internal Revenue Code
and has a commercially reasonable expectation that such exemption shall
be granted, or
(c) Is a State of possession or any governmental entity or
subordinate thereof, or the United States or District of Columbia,
making transmissions for exclusively public purposes.
Sec. 263.3 Royalty Rates and Terms.
A Noncommercial Licensee shall in every respect be treated as a
``Licensee'' under part 262 of this chapter, and all terms applicable
to Licensees and their payments under part 262 of this chapter shall
apply to Noncommercial Licensees and their payment, except that a
Noncommercial Licensee shall pay royalties at the rates applicable to
such a ``Licensee,'' as currently provided in Sec. 261.3(a), (c), (d)
and (e) of this chapter, rather than at the rates set forth in Sec.
262.3(a) through (d) of this chapter.
Dated: August 18, 2003.
David O. Carson,
General Counsel.
[FR Doc. 03-21467 Filed 8-20-03; 8:45 am]
BILLING CODE 1410-33-P