[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: 37CFR262.7]

[Page 671]
 
              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. 262.7  Verification of royalty payments.

    (a) General. This section prescribes procedures by which any 
Copyright Owner or Performer may verify the royalty payments made by the 
Designated Agent; Provided, however, that nothing contained in this 
section shall apply to situations where a Copyright Owner or a Performer 
and the Designated Agent have agreed as to proper verification methods.
    (b) Frequency of verification. A Copyright Owner or a Performer may 
conduct a single audit of the Designated Agent upon reasonable notice 
and during reasonable business hours, during any given calendar year, 
for any or all of the prior 3 calendar years, but no calendar year shall 
be subject to audit more than once.
    (c) Notice of intent to audit. A Copyright Owner or Performer must 
file with the Copyright Office a notice of intent to audit the 
Designated Agent, which shall, within 30 days of the filing of the 
notice, publish in the Federal Register a notice announcing such filing. 
The notification of intent to audit shall be served at the same time on 
the Designated Agent. Any such audit shall be conducted by an 
independent and qualified auditor identified in the notice, and shall be 
binding on all Copyright Owners and Performers.
    (d) Acquisition and retention of records. The Designated Agent shall 
use commercially reasonable efforts to obtain or to provide access to 
any relevant books and records maintained by third parties for the 
purpose of the audit and retain such records for a period of not less 
than 3 years. The Copyright Owner or Performer requesting the 
verification procedure shall retain the report of the verification for a 
period of not less than 3 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 and qualified auditor, shall serve as an acceptable 
verification procedure for all parties with respect to the information 
that is within the scope of the audit.
    (f) Consultation. Before rendering a written report to a Copyright 
Owner or Performer, except where the auditor has a reasonable basis to 
suspect fraud and disclosure would, in the reasonable opinion of the 
auditor, prejudice the investigation of such suspected fraud, the 
auditor shall review the tentative written findings of the audit with 
the appropriate agent or employee of the Designated Agent in order to 
remedy any factual errors and clarify any issues relating to the audit; 
Provided that the appropriate agent or employee of the Designated Agent 
reasonably cooperates with the auditor to remedy promptly any factual 
errors or clarify any issues raised by the audit.
    (g) Costs of the verification procedure. The Copyright Owner or 
Performer requesting the verification procedure shall pay the cost of 
the procedure, unless it is finally determined that there was an 
underpayment of 10% or more, in which case the Designated Agent shall, 
in addition to paying the amount of any underpayment, bear the 
reasonable costs of the verification procedure.