[Code of Federal Regulations]
[Title 37, Volume 1]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 37CFR201.19]

[Page 450-459]
 
              TITLE 37--PATENTS, TRADEMARKS, AND COPYRIGHTS
 
                                CONGRESS
 
PART 201--GENERAL PROVISIONS--Table of Contents
 
Sec. 201.19  Royalties and statements of account under compulsory license for making and distributing phonorecords of nondramatic musical works.

    (a) Definitions. (1) A Monthly Statement of Account is a statement 
accompanying monthly royalty payments identified in section 115(c)(5) of 
title 17 of the United States Code, as amended by Pub. L. 94-553, and 
required by that section to be made under the compulsory license to make 
and distribute phonorecords of nondramatic musical works.
    (2) An Annual Statement of Account is a statement identified in 
section 115(c)(5) of title 17 of the United States Code, as amended by 
Pub. L. 94-553, and required by that section to be filed for every 
compulsory license to make and distribute phonorecords of nondramatic 
musical works.
    (3) For the purposes of this section, the term copyright owner, in 
the case of any work having more than one copyright owner means any one 
of the co-owners. In such cases, the service of a Statement of Account, 
on one co-owner under paragraph (e)(7) or (f)(7) of this section shall 
be sufficient with respect to all co-owners.
    (4) For the purposes of this section, a compulsory licensee is a 
person or entity exercising the compulsory license to make and 
distribute phonorecords of nondramatic musical works as provided under 
section 115 of title 17 of the United States Code.
    (5) For the purposes of this section, a digital phonorecord delivery 
shall be treated as a type of phonorecord configuration, and a digital 
phonorecord delivery shall be treated as a phonorecord, with the 
following clarifications:
    (i) A digital phonorecord delivery shall be treated as a phonorecord 
made and distributed on the date the phonorecord is digitally 
transmitted; and
    (ii) A digital phonorecord delivery shall be treated as having been 
voluntarily distributed and relinquished from possession, and a 
compulsory licensee shall be treated as having permanently parted with 
possession of a digital phonorecord delivery, on the date that the 
phonorecord is digitally transmitted.
    (6) Except as provided in paragraph (a)(5), a phonorecord is 
considered voluntarily distributed if the compulsory licensee has 
voluntarily and permanently parted with possession of the phonorecord. 
For this purpose, and subject to the provisions of paragraph (d) of this 
section, a compulsory licensee

[[Page 451]]

shall be considered to have ``permanently parted with possession'' of a 
phonorecord made under the license:
    (i) In the case of phonorecords relinquished from possession for 
purposes other than sale, at the time at which the compulsory licensee 
actually first parts with possession;
    (ii) In the case of phonorecords relinquished from possession for 
purposes of sale without a privilege of returning unsold phonorecords 
for credit or exchange, at the time at which the compulsory licensee 
actually first parts with possession;
    (iii) In the case of phonorecords relinquished from possession for 
purposes of sale accompanied by a privilege of returning unsold 
phonorecords for credit or exchange:
    (A) At the time when revenue from a sale of the phonorecord is 
``recognized'' by the compulsory licensee; or
    (B) Nine months from the month in which the compulsory licensee 
actually first parted with possession, whichever occurs first.

For these purposes, a compulsory licensee shall be considered to 
``recognize'' revenue from the sale of a phonorecord when sales revenue 
would be recognized in accordance with generally accepted accounting 
principles as expressed by the American Institute of Certified Public 
Accountants or the Financial Accounting Standards Board, whichever would 
cause sales revenue to be recognized first.
    (7) To the extent that the terms reserve, credit and return appear 
in this section, such provisions shall not apply to digital phonorecord 
deliveries.
    (8) A phonorecord reserve comprises the number of phonorecords, if 
any, that have been relinquished from possession for purposes of sale in 
a given month accompanied by a privilege of return, as described in 
paragraph (a)(5)(iii) of this section, and that have not been considered 
voluntarily distributed during the month in which the compulsory 
licensee actually first parted with their possession. The initial number 
of phonorecords comprising a phonorecord reserve shall be determined in 
accordance with generally accepted accounting principles as expressed by 
the American Institute of Certified Public Accountants or the Financial 
Accounting Standards Board.
    (9) A negative reserve balance comprises the aggregate number of 
phonorecords, if any, that have been relinquished from possession for 
purposes of sale accompanied by a privilege of return, as described in 
paragraph (a)(5)(iii) of this section, and that have been returned to 
the compulsory licensee, but because all available phonorecord reserves 
have been eliminated, have not been used to reduce a phonorecord 
reserve.
    (10) An incomplete transmission is any digital transmission of a 
sound recording which, as determined by means within the sole control of 
the distributor, does not result in a specifically identifiable 
reproduction of the entire sound recording by or for any transmission 
recipient.
    (11) A retransmission is a subsequent digital transmission of the 
same sound recording initially transmitted to an identified recipient 
for the purpose of completing the delivery of a complete and usable 
reproduction of that sound recording to that recipient.
    (b) Accounting requirements where sales revenue is ``recognized''. 
Where under paragraph (a)(5)(iii)(A) of this section, revenue from the 
sale of phonorecords is ``recognized'' during any month after the month 
in which the compulsory licensee actually first parted with their 
possession, said compulsory licensee shall reduce particular phonorecord 
reserves by the number of phonorecords for which revenue is being 
``recognized,'' as follows:
    (1) If the number of phonorecords for which revenue is being 
``recognized'' is smaller than the number of phonorecords comprising the 
earliest eligible phonorecord reserve, this phonorecord reserve shall be 
reduced by the number of phonorecords for which revenue is being 
``recognized.'' Subject to the time limitations of subparagraph (B) of 
this Sec. 201.19(a)(5)(iii), the number of phonorecords remaining in 
this reserve shall be available for use in subsequent months.
    (2) If the number of phonorecords for which revenue is being 
``recognized'' is greater than the number of phonorecords comprising the 
earliest eligible phonorecord reserve but less

[[Page 452]]

than the total number of phonorecords comprising all eligible 
phonorecord reserves, the compulsory licensee shall first eliminate 
those phonorecord reserves, beginning with the earliest eligible 
phonorecord reserve and continuing to the next succeeding phonorecord 
reserves, that are completely offset by phonorecords for which revenue 
is being ``recognized.'' Said licensee shall then reduce the next 
succeeding phonorecord reserve by the number of phonorecords for which 
revenue is being ``recognized'' that have not been used to eliminate a 
phonorecord reserve. Subject to the time limitations of subparagraph (B) 
of this Sec. 201.19(a)(5)(iii), the number of phonorecords remaining in 
this reserve shall be available for use in subsequent months.
    (3) If the number of phonorecords for which revenue is being 
``recognized'' equals the number of phonorecords comprising all eligible 
phonorecord reserves, the person or entity exercising the compulsory 
license shall eliminate all of the phonorecord reserves.
    (c) Accounting requirements for offsetting phonorecord reserves with 
returned phonorecords. (1) In the case of a phonorecord that has been 
relinquished from possession for purposes of sale accompanied by a 
privilege of return, as described in paragraph (a)(5)(iii) of this 
section, where the phonorecord is returned to the compulsory licensee 
for credit or exchange before said compulsory licensee is considered to 
have ``permanently parted with possession'' of the phonorecord under 
paragraph (a)(5) of this section, the compulsory licensee may use such 
phonorecord to reduce a ``phonorecord reserve,'' as defined in paragraph 
(a)(6) of this section.
    (2) In such cases, the compulsory licensee shall reduce particular 
phonorecord reserves by the number of phonorecords that are returned 
during the month covered by the Monthly Statement of Account in the 
following manner:
    (i) If the number of phonorecords that are returned during the month 
covered by the Monthly Statement is smaller than the number comprising 
the earliest eligible phonorecord reserve, the compulsory licensee shall 
reduce this phonorecord reserve by the total number of returned 
phonorecords. Subject to the time limitations of paragraph (B) of 
Sec. 201.19(a)(5)(iii), the number of phonorecords remaining in this 
reserve shall be available for use in subsequent months.
    (ii) If the number of phonorecords that are returned during the 
month covered by the Monthly Statement is greater than the number of 
phonorecords comprising the earliest eligible phonorecord reserve but 
less than the total number of phonorecords comprising all eligible 
phonorecord reserves, the compulsory licensee shall first eliminate 
those phonorecord reserves, beginning with the earliest eligible 
phonorecord reserve, and continuing to the next succeeding phonorecord 
reserves, that are completely offset by returned phonorecords. Said 
licensee shall then reduce the next succeeding phonorecord reserve by 
the number of returned phonorecords that have not been used to eliminate 
a phonorecord reserve. Subject to the time limitations of paragraph (B) 
of Sec. 201.19(a)(5)(iii), the number of phonorecords remaining in this 
reserve shall be available for use in subsequent months.
    (iii) If the number of phonorecords that are returned during the 
month covered by the Monthly Statement is equal to or is greater than 
the total number of phonorecords comprising all eligible phonorecord 
reserves, the compulsory licensee shall eliminate all eligible 
phonorecord reserves. Where said number is greater than the total number 
of phonorecords comprising all eligible phonorecord reserves, said 
compulsory licensee shall establish a ``negative reserve balance,'' as 
defined in paragraph (a)(7) of this section.
    (3) Except where a negative reserve balance exists, a separate and 
distinct phonorecord reserve shall be established for each month during 
which the compulsory licensee relinquishes phonorecords from possession 
for purposes of sale accompanied by a privilege of return, as described 
in paragraph (a)(5)(iii) of this section. In accordance with paragraph 
(B) of Sec. 201.19(a)(5)(iii), any phonorecord remaining in a particular 
phonorecord reserve nine months from the month in

[[Page 453]]

which the particular reserve was established shall be considered 
``voluntarily distributed''; at that point, the particular monthly 
phonorecord reserve shall lapse and royalties for the phonorecords 
remaining in it shall be paid as provided in paragraph (e)(4)(ii) of 
this section.
    (4) Where a negative reserve balance exists, the aggregate total of 
phonorecords comprising it shall be accumulated into a single balance 
rather than being separated into distinct monthly balances. Following 
the establishment of a negative reserve balance, any phonorecords 
relinquished from possession by the compulsory licensee for purposes of 
sale or otherwise, shall be credited against such negative balance, and 
the negative reserve balance shall be reduced accordingly. The nine-
month limit provided by paragraph (B) of Sec. 201.19(a)(5)(iii) shall 
have no effect upon a negative reserve balance; where a negative reserve 
balance exists, relinquishment from possession of a phonorecord by the 
compulsory licensee at any time shall be used to reduce such balance, 
and shall not be considered a ``voluntary distribution'' within the 
meaning of paragraph (a)(5) of this section.
    (5) In no case shall a phonorecord reserve be established while a 
negative reserve balance is in existence; conversely, in no case shall a 
negative reserve balance be established before all available phonorecord 
reserves have been eliminated.
    (d) Situations in which a compulsory licensee is barred from 
maintaining reserves. Notwithstanding any other provisions of this 
section, in any case where, within three years before the phonorecord 
was relinquished from possession, the compulsory licensee has had final 
judgment entered against it for failure to pay royalties for the 
reproduction of copyrighted music on phonorecords, or within such period 
has been definitively found in any proceeding involving bankruptcy, 
insolvency, receivership, assignment for the benefit of creditors, or 
similar action, to have failed to pay such royalties, that compulsory 
licensee shall be considered to have ``Permanently parted with 
possession'' of a phonorecord made under the license at the time at 
which that licensee actually first parts with possession. For these 
purposes the ``compulsory licensee,'' as defined in Sec. 201.19(a)(4), 
shall include:
    (1) In the case of any corporation, the corporation or any director, 
officer, or beneficial owner of twenty-five percent (25%) or more of the 
outstanding securities of the corporation;
    (2) In all other cases, any entity or individual owning a beneficial 
interest of twenty-five percent (25%) or more in the entity exercising 
the compulsory license.
    (e) Monthly statements of account--(1) Forms. The Copyright Office 
does not provide printed forms for the use of persons serving Monthly 
Statements of Account.
    (2) General content. A Monthly Statement of Account shall be clearly 
and prominently identified as a ``Monthly Statement of Account Under 
Compulsory License for Making and Distributing Phonorecords,'' and shall 
include a clear statement of the following information:
    (i) The period (month and year) covered by the Monthly Statement;
    (ii) The full legal name of the compulsory licensee, together with 
all fictitious or assumed names used by such person or entity for the 
purpose of conducting the business of making and distributing 
phonorecords;
    (iii) The full address, including a specific number and street name 
or rural route, of the place of business of the compulsory licensee. 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;
    (iv) The title or titles of the nondramatic musical work or works 
embodied in phonorecords made under the compulsory license and owned by 
the copyright owner being served with the Monthly Statement and the name 
of the author or authors of such work or works, if known;
    (v) For each nondramatic musical work that is owned by the same 
copyright owner being served with the Monthly Statement and that is 
embodied in phonorecords covered by the compulsory license, a detailed 
statement of all of the information called for in paragraph (e)(3) of 
this section;

[[Page 454]]

    (vi) The total royalty payable for the month covered by the Monthly 
Statement, computed in accordance with the requirements of this section 
and the formula specified in paragraph (e)(4) of this section, together 
with a statement of account showing in detail how the royalty was 
computed; and
    (vii) In any case where the compulsory licensee falls within the 
provisions of paragraph (d) of this section, a clear description of the 
action or proceeding involved, including the date of the final judgment 
or definitive finding described in that paragraph.
    (3) Specific content of monthly statements: Identification and 
accounting of phonorecords. (i) The information called for by paragraph 
(e)(2)(v) of this section shall, with respect to each nondramatic 
musical work, include a separate listing of each of the following items 
of information:
    (A) The number of phonorecords, including digital phonorecord 
deliveries, made during the month covered by the Monthly Statement;
    (B) The number of phonorecords that, during the month covered by the 
Monthly Statement and regardless of when made, were either:

    Relinquished from possession for purposes other than sale;
    Relinquished from possession for purposes of sale without any 
privilege of returning unsold phonorecords for credit or exchange;
    Relinquished from possession for purposes of sale accompanied by a 
privilege of returning unsold phonorecords for credit or exchange;
    Returned to the compulsory licensee for credit or exchange;
    Placed in a phonorecord reserve (except that if a negative reserve 
balance exists give either the number of phonorecords added to the 
negative reserve balance, or the number of phonorecords relinquished 
from possession that have been used to reduce the negative reserve 
balance);
    Never delivered due to a failed transmission; or
    Digitally retransmitted in order to complete a digital phonorecord 
delivery.

    (C) The number of phonorecords, regardless of when made, that were 
relinquished from possession during a month earlier than the month 
covered by the Monthly Statement but that, during the month covered by 
the Monthly Statement either have had revenue from their sale 
``recognized'' under paragraph (a)(5)(iii) of this section, or were 
comprised in a phonorecord reserve that lapsed after nine months under 
paragraph (B) of Sec. 201.19(a)(5)(iii).
    (ii) Each of the items of information called for by paragraph 
(e)(3)(i) of this section shall also include, and if necessary shall be 
broken down to identify separately, the following:
    (A) The catalog number or numbers and label name or names, used on 
the phonorecords;
    (B) The names of the principal recording artist or group engaged in 
rendering the performances fixed on the phonorecords;
    (C) The playing time on the phonorecords of each nondramatic musical 
work covered by the statement; and
    (D) Each phonorecord configuration involved (for example: single 
disk, long-playing disk, cartridge, cassette, reel-to-reel, digital 
phonorecord delivery, or a combination of them).
    (E) The date of and a reason for each incomplete transmission.
    (4) Royalty payment and accounting. (i) The total royalty called for 
by paragraph (e)(2)(vi) of this section shall, as specified in section 
115(c)(2) of title 17 of the United States Code, be payable for every 
phonorecord ``voluntarily distributed'' during the month covered by the 
Monthly Statement.
    (ii) The amount of the royalty payment shall be calculated in 
accordance with the following formula:

    Step 1: Compute the number of phonorecords shipped for sale with a 
privilege of return. This is the total of phonorecords that, during the 
month covered by the Monthly Statement, were relinquished from 
possession by the compulsory licensee, accompanied by the privilege of 
returning unsold phonorecords to the compulsory licensee for credit or 
exchange. This total does not include: (1) Any phonorecords relinquished 
from possession by the compulsory licensee for purposes of sale without 
the privilege of return; and (2) any phonorecords relinquished from 
possession for purposes other than sale.
    Step 2: Subtract the number of phonorecords reserved. This involves 
deducting, from the subtotal arrived at in Step 1, the number of 
phonorecords that have been placed in the phonorecord reserve for the 
month covered by the Monthly Statement. The number of

[[Page 455]]

phonorecords reserved is determined by multiplying the subtotal from 
Step 1 by the percentage reserve level established under Generally 
Accepted Accounting Practices. This step should be skipped by a 
compulsory licensee barred from maintaining reserves under paragraph (d) 
of this section.
    Step 3: Add the total of all phonorecords that were shipped during 
the month and were not counted in Step 1. This total is the sum of two 
figures: (1) The number of phonorecords that, during the month covered 
by the Monthly Statement, were relinquished from possession by the 
compulsory licensee for purposes of sale, without the privilege of 
returning unsold phonorecords to the compulsory licensee for credit or 
exchange; and (2) the number of phonorecords relinquished from 
possession by the compulsory licensee, during the month covered by the 
Monthly Statement, for purposes other than sale.
    Step 4: Make any necessary adjustments for sales revenue 
``recognized,'' lapsed reserves, or reduction of negative reserve 
balance during the month. If necessary, this step involves adding to or 
subtracting from the subtotal arrived at in Step 3 on the basis of three 
possible types of adjustments:
    (a) Sales revenue ``recognized.'' If, in the month covered by the 
Monthly Statement, the compulsory licensee ``recognized'' revenue from 
the sale of phonorecords that had been relinquished from possession in 
an earlier month, the number of such phonorecords is added to the Step 3 
subtotal;
    (b) Lapsed reserves. If, in the month covered by the Monthly 
Statement, there are any phonorecords remaining in the phonorecord 
reserve for the ninth previous month (that is, any phonorecord reserves 
from the ninth previous month that have not been offset under FOFI, the 
first-out-first-in accounting convention, by actual returns during the 
intervening months), the reserve lapses and the number of phonorecords 
in it is added to the Step 3 subtotal.
    (c) Reduction of negative reserve balance. If, in the month covered 
by the Monthly Statement, the aggregate reserve balance for all previous 
months is a negative amount, the number of phonorecords relinquished 
from possession by the compulsory licensee during that month and used to 
reduce the negative reserve balance is subtracted from the Step 3 
subtotal.
    (d) Incomplete transmissions. If, in the month covered by the 
Monthly Statement, there are any digital transmissions of a sound 
recording which do not result in specifically identifiable reproductions 
of the entire sound recording by or for any transmission recipient, as 
determined by means within the sole control of the distributor, the 
number of such phonorecords is subtracted from the Step 3 subtotal.
    (e) Retransmitted digital phonorecords. If, in the month covered by 
the Monthly Statement, there are retransmissions of a digital 
phonorecord to a recipient who did not receive a complete and usable 
phonorecord during an initial transmission, and such transmissions are 
made for the sole purpose of delivering a complete and usable 
reproduction of the initially requested sound recording to that 
recipient, the number of such retransmitted digital phonorecords is 
subtracted from the Step 3 subtotal.
    Step 5: Multiply by the statutory royalty rate. The total monthly 
royalty payment is obtained by multiplying the subtotal from Step 3, as 
adjusted if necessary by Step 4, by the statutory royalty rate of 5.7 
cents or 1.1 cents per minute or fraction of playing time, whichever is 
larger.

    (iii) Each step in computing the monthly payment, including the 
arithmetical calculations involved in each step, shall be set out in 
detail in the Monthly Statement.
    (5) Clear statements. The information required by paragraphs (e) (2) 
and (3) of this section involves intelligible, legible, and unambiguous 
statements in the Monthly Statements of Account itself and without 
incorporation of facts or information contained in other documents or 
records.
    (6) Oath and signature. Each Monthly Statement of Account shall 
include the handwritten signature of the compulsory licensee. If that 
compulsory licensee is a corporation, the signature shall be that of a 
duly authorized officer of the corporation; if that compulsory licensee 
is a partnership, the signature shall be that of a partner. The 
signature shall be accompanied by:
    (i) The printed or typewritten name of the person signing the 
Monthly Statement of Account;
    (ii) The date of signature;
    (iii) If the compulsory licensee is a partnership or a corporation, 
by the title or official position held in the partnership or corporation 
by the person signing the Monthly Statement of Account;
    (iv) A certification of the capacity of the person signing; and
    (v) The following statement:

    I certify that I have examined this Monthly Statement of Account and 
that all statements of fact contained herein are true, complete, and 
correct to the best of my knowledge, information, and belief, and are 
made in good faith.


[[Page 456]]


    (7) Service. (i) Each Monthly Statement of Account shall be served 
on the copyright owner to whom or which it is directed, together with 
the total royalty for the month covered by the Monthly Statement, by 
certified mail, or by registered mail on or before the 20th day of the 
immediately succeeding month. It shall not be necessary to file a copy 
of the Monthly Statement in the Copyright Office.
    (ii)(A) In any case where a Monthly Statement of Account is sent by 
certified mail or registered mail and is returned to the sender because 
the copyright owner is not located at that address or has refused to 
accept delivery, or in any case where an address for the copyright owner 
is not known, the Monthly Statement of Account, together with any 
evidence of mailing, may be filed in the Licensing Division of the 
Copyright Office. Any Monthly Statement of Account submitted for filing 
in the Copyright Office shall be accompanied by a brief statement of the 
reason why it was not served on the copyright owner. A written 
acknowledgement of receipt and filing will be provided to the sender.
    (B) The Copyright Office will not accept any royalty fees submitted 
with Monthly Statements of Account under Sec. 202.19(e)(7)(ii).
    (C) Neither the filing of a Monthly Statement of Account in the 
Copyright Office, nor the failure to file such Monthly Statement, shall 
have effect other than that which may be attributed to it by a court of 
competent jurisdiction.
    (D) No filing fee will be required in the case of Monthly Statements 
of Account submitted to the Copyright Office under this 
Sec. 201.19(e)(7)(ii). Upon request and payment of the fee specified in 
Sec. 201.3(e), a Certificate of Filing will be provided to the sender.
    (iii) A separate Monthly Statement of Account shall be served for 
each month during which there is any activity relevant to the payment of 
royalties under section 115 of Title 17, United States Code, and under 
this section. The Annual Statement of Account identified in paragraph 
(f) of this section does not replace any Monthly Statement of Account.
    (f) Annual statements of account--(1) Forms. The Copyright Office 
does not provide printed forms for the use of persons serving Annual 
Statements of Account.
    (2) Annual period. Any Annual Statement of Account shall cover the 
full fiscal year of the compulsory licensee.
    (3) General content. An Annual Statement of Account shall be clearly 
and prominently identified as an ``Annual Statement of Account Under 
Compulsory License for Making and Distributing Phonorecords,'' and shall 
include a clear statement of the following information:
    (i) The fiscal year covered by the Annual Statement;
    (ii) The full legal name of the compulsory licensee, together with 
all fictitious or assumed names used by such person or entity for the 
purpose of conducting the business of making and distributing 
phonorecords;
    (iii) A statement of the nature of the business organization used by 
the compulsory licensee in connection with the making and distribution 
of phonorecords (for example, a corporation, a partnership, or an 
individual proprietorship); additionally:
    (A) If the compulsory licensee is a corporation registered with the 
Securities and Exchange Commission under section 12 of the Securities 
and Exchange Act of 1934, the Annual Statement shall state that this is 
the case.
    (B) If the compulsory licensee is a corporation that is not 
registered with the Securities and Exchange Commission under section 12 
of the Securities and Exchange Act of 1934, the Annual Statement shall 
include a list of the names of the corporation's directors and officers, 
and the names of each beneficial owner of twenty-five percent (25%) or 
more of the outstanding securities of the corporation.
    (C) In all other cases, the Annual Statement shall include the names 
of each entity or individual owning a beneficial interest of twenty-five 
percent (25%) or more in the entity exercising the compulsory license. 
If a corporate entity is named in response to this paragraph (C), then: 
If that corporation is registered with the Securities and Exchange 
Commission under section 12 of the Securities and Exchange Act of

[[Page 457]]

1934, the Annual Statement shall so state; if that corporation is not so 
registered, the Annual Statement shall include a list of the 
corporation's directors and officers, and the names of each beneficial 
owner of twenty-five percent (25%) or more of the outstanding securities 
of that corporation;
    (iv) The full address, including a specific number and street name 
or rural route, or the place of business of the compulsory licensee. 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) The title or titles of the nondramatic musical work or works 
embodied in phonorecords made under the compulsory license and owned by 
the copyright owner being served with the Annual Statement and the name 
of the author or authors of such work or works, if known;
    (vi) The playing time of each nondramatic musical work on such 
phonorecords;
    (vii) For each nondramatic musical work that is owned by the same 
copyright owner being served with the Annual Statement and that is 
embodied in phonorecords covered by the compulsory license, a detailed 
statement of all of the information called for in paragraph (f)(4) of 
this section;
    (viii) The total royalty payable for the fiscal year covered by the 
Annual Statement computed in accordance with the requirements of this 
section, together with a statement of account showing in detail how the 
royalty was computed. For these purposes, the applicable royalty as 
specified in section 115(c)(2) of title 17 of the United States Code, 
shall be payable for every phonorecord ``voluntarily distributed'' 
during the fiscal year covered by the Annual Statement;
    (ix) The total sum paid under Monthly Statements of Account by the 
compulsory licensee to the copyright owner being served with the Annual 
Statement during the fiscal year covered by the Annual Statement; and
    (x) In any case where the compulsory license falls within the 
provisions of paragraph (d) of this section, a clear description of the 
action or proceeding involved, including the date of the final judgment 
or definitive finding described in that paragraph.
    (4) Specific content of annual statements: Identification and 
accounting of phonorecords. (i) The information called for by paragraph 
(f)(3)(vii) of this section shall, with respect to each nondramatic 
musical work, include a separate listing of each of the following items 
of information separately stated and identified for each phonorecord 
configuration (for example, single disk, long playing disk, cartridge, 
cassette, or reel-to-reel) made:
    (A) The number of phonorecords made through the end of the fiscal 
year covered by the Annual Statement, including any made during earlier 
years;
    (B) The number of phonorecords which have never been relinquished 
from possession of the compulsory licensee through the end of the fiscal 
year covered by the Annual Statement;
    (C) The number of phonorecords involuntarily relinquished from 
possession (as through fire or theft) of the compulsory licensee during 
the fiscal year covered by the Annual Statement and any earlier years, 
together with a description of the facts of such involuntary 
relinquishment;
    (D) The number of phonorecords ``voluntarily distributed'' by the 
compulsory licensee during all years before the fiscal year covered by 
the Annual Statement;
    (E) The number of phonorecords relinquished from possession of the 
compulsory licensee for purposes of sale during the fiscal year covered 
by the Annual Statement accompanied by a privilege of returning unsold 
records for credit or exchange, but not ``voluntarily distributed'' by 
the end of that year;
    (F) The number of phonorecords ``voluntarily distributed'' by the 
compulsory licensee during the fiscal year covered by the Annual 
Statement, together with:
    (1) The catalog number or numbers, and label name or names, used on 
such phonorecords; and
    (2) The names of the principal recording artists or groups engaged 
in rendering the performances fixed on such phonorecords.
    (ii) If the information given under paragraphs (A) through (F) of 
this

[[Page 458]]

Sec. 201.19(f)(4)(i) does not reconcile, the Annual Statement shall also 
include a clear and detailed explanation of the difference. For these 
purposes, the information given under such paragraphs shall be 
considered not to reconcile if, after the number of phonorecords given 
under paragraphs (B), (C), (D), and (E) are added together and that sum 
is deducted from the number of phonorecords given under paragraph (A), 
the result is different from the amount given under paragraph (F).
    (5) Clear statement. The information required by paragraph (f)(3) of 
this section involves intelligible, legible, and unambiguous statements 
in the Annual Statement of Account itself and [subject to paragraph 
(f)(3)(iii)(A)] without incorporation by reference of facts or 
information contained in other documents or records.
    (6) Signature and certification. (i) Each Annual Statement of 
Account shall include the handwritten signature of the compulsory 
licensee. If that compulsory licensee is a corporation, the signature 
shall be that of a duly authorized officer of the corporation; if that 
compulsory licensee is a partnership, the signature shall be that of a 
partner. The signature shall be accompanied by: (A) The printed or 
typewritten name of the person signing the Annual Statement of Account; 
(B) the date of signature; (C) if the compulsory licensee is a 
partnership or a corporation, by the title or official position held in 
the partnership or corporation by the person signing the Annual 
Statement of Account; and (D) a certification of the capacity of the 
person signing.
    (ii)(A) Each Annual Statement of Account shall also be certified by 
a licensed Certified Public Accountant. Such certification shall consist 
of the following statement:

    We have examined the attached ``Annual Statement of Account Under 
Compulsory License For Making and Distributing Phonorecords'' for the 
fiscal year ended (date) of (name of the compulsory licensee) applicable 
to phonorecords embodying (title or titles of nondramatic musical works 
embodied in phonorecords made under the compulsory license) made under 
the provisions of section 115 of title 17 of the United States Code, as 
amended by Pub. L. 94-553, and applicable regulations of the United 
States Copyright Office. Our examination was made in accordance with 
generally accepted auditing standards and accordingly, included tests of 
the accounting records and such other auditing procedures as we 
considered necessary in the circumstances.
    In our opinion the Annual Statement of Account referred to above 
presents fairly the number of phonorecords embodying each of the above-
identified nondramatic musical works made under compulsory license and 
voluntarily distributed by (name of the compulsory licensee) during the 
fiscal year ending (date), and the amount of royalties applicable 
thereto under such compulsory license, on a consistent basis and in 
accordance with the above cited law and applicable regulations published 
thereunder.

________________________________________________________________________

                      (City and State of Execution)

________________________________________________________________________

         (Signature of Certified Public Accountant or CPA Firm)

________________________________________________________________________

                           Certificate Number

________________________________________________________________________

                       Jurisdiction of Certificate

________________________________________________________________________

                            (Date of Opinion)

    (B) The certificate shall be signed by an individual, or in the name 
of a partnership or a professional corporation with two or more 
shareholders. The certificate number and jurisdiction are not required 
if the certificate is signed in the name of a partnership or a 
professional corporation with two or more shareholders.
    (7) Service. (i) Each Annual Statement of Account shall be served on 
the copyright owner to whom or which it is directed by certified mail or 
by registered mail on or before the twentieth day of the third month 
following the end of the fiscal year covered by the Annual Statement. It 
shall not be necessary to file a copy of the Annual Statement in the 
Copyright Office. An Annual Statement of Account shall be served for 
each fiscal year during which at least one Monthly Statement of Account 
was required to have been served under paragraph (e)(7) of this section.
    (ii) In any case where the amount required to be stated in the 
Annual

[[Page 459]]

Statement of Account under paragraph (f)(3)(viii) of this section is 
greater than the amount stated in that Annual Statement under paragraph 
(f)(3)(ix) of this section, the difference between such amounts shall be 
delivered to the copyright owner together with the service of the Annual 
Statement. The delivery of such sum does not require the copyright owner 
to accept such sum, or to forego any right, relief, or remedy which may 
be available under law.
    (iii)(A) In any case where an Annual Statement of Account is sent by 
certified mail or registered mail and is returned to the sender because 
the copyright owner is not located at that address or has refused to 
accept delivery, or in any case where an address for the copyright owner 
is not known, the Annual Statement of Account, together with any 
evidence of mailing, may be filed in the Licensing Division of the 
Copyright Office. Any Annual Statement of Account submitted for filing 
shall be accompanied by a brief statement of the reason why it was not 
served on the copyright owner. A written acknowledgment of receipt and 
filing will be provided to the sender.
    (B) The Copyright Office will not accept any royalty fees submitted 
with Annual Statements of Account under Sec. 202.19(f)(7)(iii).
    (C) Neither the filing of an Annual Statement of Account in the 
Copyright Office, nor the failure to file such Annual Statement, shall 
have any effect other than that which may be attributed to it by a court 
of competent jurisdiction.
    (D) No filing fee will be required in the case of Annual Statements 
of Account submitted to the Copyright Office under this 
Sec. 201.19(f)(7)(iii). Upon request and payment of the fee specified in 
Sec. 201.3(e), a Certificate of Filing will be provided to the sender.
    (g) Documentation. All compulsory licensees shall, for a period of 
at least three years from the date of service of an Annual Statement of 
Account, keep and retain in their possession all records and documents 
necessary and appropriate to support fully the information set forth in 
such Annual Statement and in Monthly Statements served during the fiscal 
year covered by such Annual Statement.

(17 U.S.C. 115, 702, 708)

[45 FR 79046, Nov. 28, 1980, as amended at 56 FR 7813, Feb. 26, 1991; 56 
FR 59885, Nov. 26, 1991; 63 FR 30635, June 5, 1998; 64 FR 29521, June 1, 
1999; 64 FR 36574, 36575, July 7, 1999; 64 FR 41289, July 30, 1999; 66 
FR 34373, June 28, 2001]