[Code of Federal Regulations]
[Title 37, Volume 1]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 37CFR260.6]

[Page 603-604]
 
              TITLE 37--PATENTS, TRADEMARKS, AND COPYRIGHTS
 
                                CONGRESS
 
PART 260--USE OF SOUND RECORDINGS IN A DIGITAL PERFORMANCE--Table of 
Contents
 
Sec. 260.6  Verification of royalty payments.

    (a) General. This section prescribes general rules pertaining to the 
verification of the payment of royalty fees to those parties entitled to 
receive such fees, according to terms promulgated by a duly appointed 
copyright arbitration royalty panel, under its authority to set 
reasonable terms and rates pursuant to 17 U.S.C. 114 and 801(b)(1), and 
the Librarian of Congress under his authority pursuant to 17 U.S.C. 
802(f).
    (b) Frequency of verification. Interested parties may conduct a 
single audit of the entity making the royalty payment during any given 
calendar year.
    (c) Notice of intent to audit. Interested parties must submit a 
notice of intent to audit the entity making the royalty payment with the 
Copyright Office, which shall publish in the Federal Register a notice 
announcing the receipt of the notice of intent to audit within 30 days 
of the filing of the interested parties' notice. Such notification of 
interest shall also be served at the same time on the party to be 
audited.
    (d) Retention of records. The party requesting the verification 
procedure shall retain the report of the verification for a period of 
three years.
    (e) Acceptable verification procedure. An audit, including 
underlying paperwork, which was performed in the ordinary course of 
business according to generally accepted auditing standards by an 
independent auditor, shall serve as an acceptable verification procedure 
for all parties.
    (f) Costs of the verification procedure. The interested parties 
requesting the verification procedure shall pay for the cost of the 
verification procedure, unless an independent auditor concludes that 
there was an underpayment of five (5) percent or more; in which case, 
the entity which made the underpayment shall bear the costs of the 
verification procedure.
    (g) Interested parties. For purposes of this section, interested 
parties are those copyright owners who are entitled to receive royalty 
fees pursuant to 17 U.S.C. 114(g), or their designated agents.

    Effective Date Note: At 68 FR 36470, June 18, 2003, Sec. 260.6 was 
revised, effective July 18, 2003. For the convenience of the user, the 
revised text is set forth as follows:

Sec. 260.6  Verification of royalty payments.

    (a) General. This section prescribes general rules pertaining to the 
method of verification of the payment of royalty fees by the designated 
agent to interested parties; Provided, however, that the designated 
agent and any interested person may agree as to an alternative method of 
verification.
    (b) Frequency of verification. Interested parties may conduct a 
single audit of the designated agent during any given calendar year and 
no calendar year shall be subject to audit more than once.

[[Page 604]]

    (c) Notice of intent to audit. Interested parties must file with the 
Copyright Office a notice of intent to audit the designated agent. Such 
notice of intent shall also be served at the same time on the designated 
agent to be audited. Within 30 days of the filing of the notice of 
intent, the Copyright Office shall publish in the Federal Register a 
notice announcing such filing.
    (d) Retention of records. The interested party requesting the 
verification procedure shall retain the report of the verification for a 
period of three years.
    (e) Acceptable verification procedure. An audit, including 
underlying paperwork, which was performed in the ordinary course of 
business according to generally accepted auditing standards by an 
independent auditor, shall serve as an acceptable verification procedure 
for all interested parties.
    (f) Costs of the verification procedure. The interested parties 
requesting the verification procedure shall pay for the cost of the 
verification procedure, unless an independent auditor concludes that 
there was an underpayment of five (5) percent or more, in which case, 
the designated agent shall bear the costs of the verification procedure.
    (g) Interested parties. For purposes of this section, interested 
parties are those individuals or entities who are entitled to receive 
royalty payments pursuant to 17 U.S.C. 114(g)(2), or their designated 
agents.