[Federal Register Volume 76, Number 33 (Thursday, February 17, 2011)]
[Rules and Regulations]
[Pages 9229-9231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3598]
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LIBRARY OF CONGRESS
Copyright Office
37 CFR Part 201
[Docket No. RM 2009-4]
Administration of Copyright Office Deposit Accounts
AGENCY: Copyright Office, Library of Congress.
ACTION: Final rule.
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SUMMARY: The Copyright Office is amending its regulations to set the
minimum level of activity required to hold a deposit account at 12
transactions per year; require deposit account holders to maintain a
minimum balance in that account; require the closure of a deposit
account the second time it is overdrawn within any 12-month period; and
offer deposit account holders the option of automatic replenishment of
their account via their bank account or credit card.
DATES: Effective Date: May 1, 2011.
FOR FURTHER INFORMATION CONTACT: Tanya Sandros, Deputy General Counsel
or Chris Weston, Attorney Advisor. Copyright GC/I&R, P.O. Box 70400,
Washington, DC 20024. Telephone: (202) 707-8380. Telefax: (202) 707-
8366. All prior Federal Register notices and public comments in this
docket are available at http://www.copyright.gov/docs/deposit-acct/eservice/.
SUPPLEMENTARY INFORMATION:
Deposit Account Background
The Copyright Office maintains a system of deposit accounts for
those who frequently use its services. An individual or entity may
establish a deposit account, make advance deposits into that account,
and charge copyright fees against the balance instead of sending
separate payments with applications and other requests for services.
This process has proven to be more efficient and less expensive for
both the Office and the applicant than sending separate payments to the
Copyright Office for each application for registration or for other
services.
The goal of this Final Rule is to solve the problems associated
with the suspension of paper registration applications for lack of
deposit account funds. As explained in the October 8, 2010 Federal
Register Notice of Proposed Rulemaking (75 FR 62345), when the deposit
account being used for payment has insufficient funds to process a
paper application, the Copyright Office suspends processing of the
application to notify the account holder that replenishment of the
account is needed, and places the pending application and associated
deposit copies in temporary storage. The suspended applications, which
may number 3,000 or more at any one time, must be reviewed regularly by
Office staff to locate those that are newly funded and reprocess them.
Thus, insufficient deposit account funding effectively doubles--at a
minimum--the time Office staff must spend processing an application,
time that would otherwise be more profitably spent on processing
properly filed claims.
On average, one to three percent of paper applications for
registration are suspended each year due to lack of
[[Page 9230]]
sufficient deposit account funds. In fiscal 2010, between 6,000 and
7,000 applications were carried on hold monthly for insufficient
deposit account funds. The Office has expended substantial resources
managing these suspended applications and deposits. While the Office
assesses service charges for deposit account overdrafts ($165) and
dishonored deposit account replenishment checks ($85), see 37 CFR
201.3(d), these penalties do not recover all costs or solve the
fundamental problems associated with the additional handling and the
delay in processing underfunded applications for registration.
First Notice of Proposed Rulemaking and Public Comments
On July 14, 2009, the Copyright Office published a notice of
proposd rulemaking (NPRM) in the Federal Register, 74 FR 33930,
proposing that the problem of insufficient deposit account funds for
paper applications should be solved by requiring all deposit account
holders to file their applications via eService, the Office's
electronic registration system. An application for registration made
via eService cannot be completed until the method of payment is
verified by, for example, ensuring that sufficient funds are present in
the deposit account and payment has been made. This approach would have
been much more efficient than filing paper applications, which must go
through a number of processing steps before the validity of the
proffered method of payment can be ascertained. In addition, the
proposal noted that electronic registration benefits applicants in that
it offers a lower fee than paper registrations ($35 instead of $65) and
helps to establish an earlier effective date of registration.
The July 2009 NPRM garnered six public comments, three of which
supported the electronic filing requirement and three of which opposed
it. Most notably, the Motion Picture Association of America (MPAA)
challenged the initial proposed rule as premature and suggested an
alternative whereby each deposit account holder would be charged an up-
front $100 fee that would be held as a kind of security deposit with
which to dispose of underfunded registration applications. MPAA comment
2009 at 2. According to the MPAA proposal, if an applicant has
insufficient funds in its deposit account to pay for a paper
application, the Copyright Office should close the deposit account and
use the security deposit to pay for returning the application to the
applicant. The MPAA argued that rights-holders should not be denied the
option of continuing to use paper applications because of the actions
of ``irresponsible'' deposit account holders. See MPAA comment 2009 at
4.
The MPAA and two other commenters also expressed skepticism with
the efficiency and security of the eService system. A full discussion
of these issues appears in the Office's October 8, 2010 NPRM.
The Copyright Office carefully considered each of the comments
submitted in response to the July 9, 2009 NRPM, and was persuaded that
mandatory electronic application was not the most appropriate solution
to its problem of underfunded paper applications. While the Office
still felt strongly that electronic registration is more efficient than
paper registration, and redounds to the benefit of applicants as much
as to the benefit of the Office, it concluded that mandatory electronic
registration was an overbroad solution to the specific problems
described. See 75 FR 62345, 62347-8. The final rule requiring a minimum
deposit account balance and optional automatic replenishment discussed
herein is a more targeted response to the problems facing the Office.
Second Notice of Proposed Rulemaking; Comments; Final Rule
After considering the comments filed in response to the July 2009
NPRM, the Copyright Office explored other options for addressing its
problems with underfunded deposit accounts and in October 2010 proposed
a number of administrative requirements to solve the problem. The
Office received two comments favorable to the proposal--from Author
Services, Inc. and the MPAA--and has decided to adopt the proposed
regulatory amendments with two alterations. Specifically, the Office is
amending its regulations to (1) Set the minimum level of activity
required to hold a deposit account at 12 transactions per year; (2)
require deposit account holders to maintain a minimum balance in that
account; (3) mandate the closure of a deposit account the second time
it is overdrawn within any 12-month period; and (4) offer deposit
account holders the option of automatic replenishment of their account
via their bank account or credit card.
1. Mandatory Minimum Deposit Account Activity and Balance
The Deposit Account regulation--37 CFR 201.6(b)--currently reads,
``Persons or firms having a considerable amount of business with the
Copyright Office may, for their own convenience, prepay copyright
expenses by establishing a Deposit Account.''
The words ``a considerable amount of business'' will be replaced by
``12 or more transactions a year'' in order to more clearly delineate
the intended users of the deposit account program. The program's goal
is to better serve rights-holders who engage in regular, multiple
registrations and other transactions with the Copyright Office every
year, and the new language reflects this intent with specificity. The
12 transaction minimum is also consistent with prior Copyright Office
policy and conforms to the typical minimum level of activity of current
deposit account holders.
The Office is also instituting a requirement that every deposit
account holder must establish, in consultation with the Copyright
Office, a minimum balance for its deposit account. Ideally, this
balance will be the lowest amount a deposit account holder can have in
his or her account and still be able to pay for the regular number of
copyright registration applications. This amount will be set
collaboratively so that both the account holder and the office are
comfortable that it will be sufficient for the account holder's
expected activity. However, each account must have at least a minimum
balance of $450.
In the event a deposit account goes below its minimum balance, the
Copyright Office will automatically notify the account holder of this
situation. The minimum balance requirement is intended to act primarily
as an indicator to the account holder that the account may need
replenishment; going below a minimum balance will not in itself expose
the account holder to any adverse consequences.
2. Consequences of Overdrawing a Deposit Account
Upon the second occasion that a deposit account is overdrawn--
meaning the second time there is not enough money in an account to pay
the fee for a submitted registration--the account will be closed. The
MPAA, in its comment on the October 2010 notice, inquired ``whether it
might be appropriate to specify some time period during which two
overdrafts would result in the closure of a deposit account.'' MPAA
comment 2010 at 2. The Copyright Office finds merit in this suggestion,
and is adding a proviso that, in order to result in account closure,
both overdrafts must occur within the span of 12 months. This addition
will help ensure that the penalty for two overdrafts affects only
habitual abusers. Additionally, the overdraft rule in
[[Page 9231]]
practice will only affect deposit account holders who use paper
applications, because eService will not allow an application to be
submitted without sufficient funds.
However, a deposit account holder whose account is closed because
it has been overdrawn twice is not foreclosed from using a deposit
account in the future. The deposit account holder may re-open the
closed account on the condition that it is funded through the automatic
replenishment option. This requirement is to protect the account holder
from the risk of overdrawing again and to protect the Copyright Office
from the expense of handling suspended applications in the future.
3. Voluntary Automatic Replenishment
The Copyright Office will offer a voluntary automatic replenishment
program to all deposit account holders. Under this program, the deposit
account holder may provide pre-authorization to the Copyright Office to
replenish the account from the account holder's credit card or bank
account. Replenishment will take place when the deposit account goes
below its minimum balance, at which time the Office will immediately
notify the account holder that the account has fallen below the minimal
balance and that the account will be replenished in accordance with the
automatic replenishment agreement. The account holder will determine
the amount of replenishment at the time the account holder enters the
program.
Comments Received in Response to Question Regarding the Continued
Availability of Deposit Accounts
In its July 15th, 2009 NPRM, the Copyright Office sought public
comment on whether it should cease offering deposit accounts
altogether. It noted that, in an era when paper applications and
payment via check were the norm, a separate, simplified deposit account
system presented attractive efficiencies to frequent applicants and to
the Office. It also pointed out that in an era of electronic
registration and payment via corporate or other credit cards, the
administrative costs of maintaining a separate deposit account system
are no longer clearly offset by its advantages; hence, the reason for
the Office's inquiry concerning abolition of the deposit account
system.
Three of the four commenters who addressed this question argued
that eliminating deposit accounts would be harmful. Thus, the Copyright
Office acknowledged in its October 8, 2010 notice that deposit accounts
remain a useful and efficient option for copyright owners who
frequently use its services, including, but not limited to,
registration, and announced that it will continue to offer deposit
accounts for the foreseeable future, reserving its prerogative to
revisit the question of their utility and cost to the Office at a later
time.
At this time, the Office also notes that the change in policy for
administering Deposit Accounts will increase the effectiveness and
efficiency of the system for the Office and eliminate most of the
problems that generated the initial questions. Hence, in light of the
comments from the rights-holders and the new amendments announced
today, the Office will continue to offer Deposit Accounts.
List of Subjects in 37 CFR Part 201
Copyright, General provisions.
Final Regulation
In consideration of the foregoing, the Copyright Office amends 37
CFR Ch. II as follows:
PART 201--GENERAL PROVISIONS
0
1. The authority citation for part 201 continues to read as follows:
Authority: 17 U.S.C. 702, 708(c).
0
2. In Sec. 201.6, revise paragraph (b) to read as follows:
Sec. 201.6 Payment and refund of Copyright Office fees.
* * * * *
(b) Deposit accounts. (1) Persons or firms having 12 or more
transactions a year with the Copyright Office may prepay copyright
expenses by establishing a Deposit Account. The Office and the Deposit
Account holder will cooperatively determine an appropriate minimum
balance for the Deposit Account which, in no case, can be less than
$450, and the Office will automatically notify the Deposit Account
holder when the account goes below that balance.
(2) The Copyright Office will close a Deposit Account the second
time the Deposit Account holder overdraws his or her account within any
12-month period. An account closed for this reason can be re-opened
only if the holder elects to fund it through automatic replenishment.
(3) In order to ensure that a Deposit Account's funds are
sufficiently maintained, a Deposit Account holder may authorize the
Copyright Office to automatically replenish the account from the
holder's bank account or credit card. The amount by which a Deposit
Account will be replenished will be determined by the deposit account
holder. Automatic replenishment will be triggered when the Deposit
Account goes below the minimum level of funding established pursuant to
paragraph (b)(1) of this section, and Deposit Account holders will be
automatically notified that their accounts will be replenished. Funding
through automatic replenishment is required if a Deposit Account
holder, who has had an account closed because it has been overdrawn
twice within any 12 month period, wishes to re-open the account.
* * * * *
Dated: February 7, 2011.
Maria Pallante,
Acting Register of Copyrights.
Approved by
James H. Billington,
The Librarian of Congress.
[FR Doc. 2011-3598 Filed 2-16-11; 8:45 am]
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