[Code of Federal Regulations]
[Title 37, Volume 1]
[Revised as of July 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 37CFR262.4]

[Page 666-669]
 
              TITLE 37--PATENTS, TRADEMARKS, AND COPYRIGHTS
 
                                CONGRESS
 
PART 262_RATES AND TERMS FOR CERTAIN ELIGIBLE NONSUBSCRIPTION TRANSMISSIONS, NEW SUBSCRIPTION SERVICES AND THE MAKING OF EPHEMERAL REPRODUCTIONS--Table of Contents
 
Sec. 262.4  Terms for making payment of royalty fees and statements of account.

    (a) Payment to designated agent. A Licensee shall make the royalty 
payments due under Sec. 262.3 to the Designated Agent.
    (b) Designation of agent and potential successor designated agents. 
(1) Until such time as a new designation is made, SoundExchange, 
presently an unincorporated division of the Recording Industry 
Association of America, Inc. (``RIAA''), is designated as the Designated 
Agent to receive statements of account and royalty payments from 
Licensees due under Sec. 262.3 and to distribute such royalty payments 
to each Copyright Owner and Performer entitled to receive royalties 
under 17 U.S.C. 112(e) or 114(g). SoundExchange shall continue to be 
designated after its separate incorporation.
    (2) If SoundExchange should fail to incorporate by July 1, 2003, 
dissolve or cease to be governed by a board consisting of equal numbers 
of representatives of Copyright Owners and Performers, then it shall be 
replaced by successor entities upon the fulfillment of the requirements 
set forth in paragraphs (b)(2)(i) and (ii) of this section.
    (i) By a majority vote of the nine copyright owner representatives 
on the SoundExchange Board as of the last day preceding the condition 
precedent in paragraph (b)(2) of this section, such representatives 
shall file a petition with the Copyright Office designating a successor 
Designated Agent to distribute royalty payments to Copyright Owners and 
Performers entitled to receive royalties under 17 U.S.C. 112(e) or 
114(g) that have themselves authorized such Designated Agent.
    (ii) By a majority vote of the nine performer representatives on the 
SoundExchange Board as of the last day preceding the condition precedent 
in paragraph (b)(2) of this section, such

[[Page 667]]

representatives shall file a petition with the Copyright Office 
designating a successor Designated Agent to distribute royalty payments 
to Copyright Owners and Performers entitled to receive royalties under 
17 U.S.C. 112(e) or 114(g) that have themselves authorized such 
Designated Agent.
    (iii) The Copyright Office shall publish in the Federal Register 
within 30 days of receipt of a petition filed under paragraph (b)(2)(i) 
or (ii) of this section an order designating the Designated Agents named 
in such petitions. Nothing contained in this section shall prohibit the 
petitions filed under paragraphs (b)(2)(i) and (ii) of this section from 
naming the same successor Designated Agent.
    (3) If petitions are filed under paragraphs (b)(2)(i) and (ii) of 
this section, then, following the actions of the Copyright Office in 
accordance with paragraph (b)(2)(iii) of this section:
    (i) Each of the successor entities shall have all the rights and 
responsibilities of a Designated Agent under this part 262, except as 
specifically set forth in this paragraph (b)(3).
    (ii) Licensees shall make their royalty payments to the successor 
entity named by the copyright owner representatives under paragraph 
(b)(2)(i) of this section (the ``Receiving Agent'') and shall provide 
statements of account on a form prepared by the Receiving Agent. 
Licensees shall submit a copy of each statement of account to the 
collective named by the performer representatives under paragraph 
(b)(2)(ii) of this section at the same time such statement of account is 
delivered to the Receiving Agent.
    (iii) The Designated Agents shall agree between themselves 
concerning responsibility for distributing royalty payments to Copyright 
Owners and Performers that have not themselves authorized either 
Designated Agent. The Designated Agents also shall agree to a 
corresponding methodology for allocating royalty payments between them 
using the information provided by the Licensee pursuant to the 
regulations governing records of use of performances for the period for 
which the royalty payment was made. Such methodology shall value all 
performances equally. Within 30 days after their agreement concerning 
such responsibility and methodology, the Designated Agents shall inform 
the Register of Copyrights thereof.
    (iv) With respect to any royalty payment received by the Receiving 
Agent from a Licensee, a designation by a Copyright Owner or Performer 
of a Designated Agent must be made no later than 30 days prior to the 
receipt by the Receiving Agent of that royalty payment.
    (v) The Receiving Agent shall promptly allocate the royalty payments 
it receives between the two Designated Agents in accordance with the 
agreed methodology. A final adjustment, if necessary, shall be agreed 
and paid or refunded, as the case may be, between the Receiving Agent 
and the collectives named under paragraph (b)(2) of this section for 
each calendar year no later than 180 days following the end of each 
calendar year. The Designated Agents shall agree on a reasonable basis 
for the sharing on a pro-rata basis of any costs associated with the 
allocations set forth in paragraph (b)(3)(iii) of this section.
    (vi) If a Designated Agent is unable to locate a Copyright Owner or 
Performer that the Designated Agent otherwise would be required to pay 
under this paragraph (b) within 3 years from the date of payment by 
Licensee, such Copyright Owner's or Performer's share of the payments 
made by Licensees may first be applied to the costs directly 
attributable to the administration of the royalty payments due such 
Copyright Owners and Performers by that Designated Agent and shall 
thereafter be allocated between the Designated Agents on a pro rata 
basis (based on distributions to entitled parties) to offset any costs 
permitted to be deducted by a designated agent under 17 U.S.C. 
114(g)(3). The foregoing shall apply notwithstanding the common law or 
statutes of any State.
    (c) Monthly payments. A Licensee shall make any payments due under 
Sec. 262.3(a) by the 45th day after the end of each month for that 
month, except that payments due under Sec. 262.3(a) for the period from 
the beginning of the License Period through the last day of the month in 
which these rates and terms are adopted by the Librarian of

[[Page 668]]

Congress and published in the Federal Register shall be due 45 days 
after the end of such period. All monthly payments shall be rounded to 
the nearest cent.
    (d) Minimum payments. A Licensee shall make any payment due under 
Sec. 262.3(d) by January 31 of the applicable calendar year, except 
that:
    (1) Payment due under Sec. 262.3(d) for 2003, and in the case of a 
Subscription Service any earlier year, shall be due 45 days after the 
last day of the month in which these rates and terms are adopted by the 
Librarian of Congress and published in the Federal Register; and
    (2) Payment for a Licensee that has not previously made eligible 
nonsubscription transmissions, noninteractive digital audio 
transmissions as part of a new subscription service or Ephemeral 
Recordings pursuant to licenses under 17 U.S.C. 114(f) and/or 17 U.S.C. 
112(e) shall be due by the 45th day after the end of the month in which 
the Licensee commences to do so.
    (e) Late payments. A Licensee shall pay a late fee of 0.75% per 
month, or the highest lawful rate, whichever is lower, for any payment 
received by the Designated Agent after the due date. Late fees shall 
accrue from the due date until payment is received by the Designated 
Agent.
    (f) Statements of account. For any part of the period beginning on 
the date these rates and terms are adopted by the Librarian of Congress 
and published in the Federal Register and ending on December 31, 2004, 
during which a Licensee operates a service, by 45 days after the end of 
each month during the period, the Licensee shall deliver to the 
Designated Agent a statement of account containing the information set 
forth in this paragraph (f) on a form prepared, and made available to 
Licensees, by the Designated Agent. If a payment is owed for such month, 
the statement of account shall accompany the payment. A statement of 
account shall include only the following information:
    (1) Such information as is necessary to calculate the accompanying 
royalty payment, or if no payment is owed for the month, to calculate 
any portion of the minimum fee recouped during the month, including, as 
applicable, the Performances, Aggregate Tuning Hours (to the nearest 
minute) or Subscription Service Revenues for the month;
    (2) The name, address, business title, telephone number, facsimile 
number, electronic mail address and other contact information of the 
individual or individuals to be contacted for information or questions 
concerning the content of the statement of account;
    (3) The handwritten signature of:
    (i) The owner of the Licensee or a duly authorized agent of the 
owner, if the Licensee is not a partnership or a corporation;
    (ii) A partner or delegee, if the Licensee is a partnership; or
    (iii) An officer of the corporation, if the Licensee is a 
corporation;
    (4) The printed or typewritten name of the person signing the 
statement of account;
    (5) The date of signature;
    (6) If the Licensee is a partnership or a corporation, the title or 
official position held in the partnership or corporation by the person 
signing the statement of account;
    (7) A certification of the capacity of the person signing; and
    (8) A statement to the following effect:

    I, the undersigned owner or agent of the Licensee, or officer or 
partner, if the Licensee is a corporation or partnership, have examined 
this statement of account and hereby state that it is true, accurate and 
complete to my knowledge after reasonable due diligence.

    (g) Distribution of payments.--(1) The Designated Agent shall 
distribute royalty payments directly to Copyright Owners and Performers, 
according to 17 U.S.C. 114(g)(2); Provided that the Designated Agent 
shall only be responsible for making distributions to those Copyright 
Owners and Performers who provide the Designated Agent with such 
information as is necessary to identify and pay the correct recipient of 
such payments. The agent shall distribute royalty payments on a basis 
that values all performances by a Licensee equally based upon the 
information provided by the Licensee pursuant to the regulations 
governing records of use of sound recordings by Licensees;

[[Page 669]]

Provided, however, Performers and Copyright Owners that authorize the 
Designated Agent may agree with the Designated Agent to allocate their 
shares of the royalty payments made by any Licensee among themselves on 
an alternative basis. Parties entitled to receive payments under 17 
U.S.C. 114(g)(2) may agree with the Designated Agent upon payment 
protocols to be used by the Designated Agent that provide for 
alternative arrangements for the payment of royalties consistent with 
the percentages in 17 U.S.C. 114(g)(2).
    (2) The Designated Agent shall inform the Register of Copyrights of:
    (i) Its methodology for distributing royalty payments to Copyright 
Owners and Performers who have not themselves authorized the Designated 
Agent (hereinafter ``nonmembers''), and any amendments thereto, within 
60 days of adoption and no later than 30 days prior to the first 
distribution to Copyright Owners and Performers of any royalties 
distributed pursuant to that methodology;
    (ii) Any written complaint that the Designated Agent receives from a 
nonmember concerning the distribution of royalty payments, within 60 
days of receiving such written complaint; and
    (iii) The final disposition by the Designated Agent of any complaint 
specified by paragraph (g)(2)(ii) of this section, within 60 days of 
such disposition.
    (3) A Designated Agent may request that the Register of Copyrights 
provide a written opinion stating whether the Designated Agent's 
methodology for distributing royalty payments to nonmembers meets the 
requirements of this section.
    (h) Permitted deductions. The Designated Agent may deduct from the 
payments made by Licensees under Sec. 262.3, prior to the distribution 
of such payments to any person or entity entitled thereto, all incurred 
costs permitted to be deducted under 17 U.S.C. 114(g)(3); Provided, 
however, that any party entitled to receive royalty payments under 17 
U.S.C. 112(e) or 114(g) may agree to permit the Designated Agent to make 
any other deductions.
    (i) Retention of records. Books and records of a Licensee and of the 
Designated Agent relating to the payment, collection, and distribution 
of royalty payments shall be kept for a period of not less than 3 years.