[Federal Register: March 1, 1994]
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LIBRARY OF CONGRESS
Copyright Office
[Docket No. 94-2 CARP-DD]
Ascertainment of Controversy for 1992 and 1993 Digital Audio
Recording Royalty Funds
AGENCY: Copyright Office, Library of Congress.
ACTION: Notice with request for comments.
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SUMMARY: The Copyright Office directs all claimants to royalty fees
collected for Digital Audio Recording Devices and Media (DART) for 1992
and 1993 to submit comments as to whether a controversy exists as to
the distribution of either of these funds. The Office announces the
suspension of certain deadlines for distribution of these royalties.
The Office also seeks comment as to whether it should consolidate the
1992 and 1993 royalty funds into one proceeding.
DATES: Written comments are due by June 10, 1994.
ADDRESSES: If sent by mail, ten copies of written comments should be
addressed to: Copyright Office, Library of Congress, Department 17,
Washington, DC 20540. If hand delivered, ten copies should be brought
to: Office of the Copyright General Counsel, James Madison Memorial
Building, room 407, First and Independence Avenue SE., Washington DC
20540. In order to ensure prompt receipt of these time sensitive
documents, the Office recommends that the comments be delivered by
private messenger service.
FOR FURTHER INFORMATION CONTACT: Marybeth Peters, Acting General
Counsel, U.S. Copyright Office, Department 17, Library of Congress,
Washington, DC 20540. Telephone (202) 707-8380.
SUPPLEMENTARY INFORMATION:
I. Background
On October 28, 1992, Congress enacted the Audio Home Recording Act
(AHRA), which required manufacturers and importers to pay royalties on
digital audio recording devices or media that are distributed in the
United States. The royalties are deposited with the Copyright Office
and distributed by the Copyright Royalty Tribunal to interested
copyright parties that file claims with the Tribunal each year during
January and February.
The Act provides that the royalties are to be divided into two
funds--the Sound Recordings Fund which gets 66\2/3\% of the royalties,
and the Musical Works Fund which gets 33\1/3\%.
Within each fund, the Act establishes subfunds. The Sound
Recordings Fund consists of four subfunds: The first of these--the
Nonfeatured Musicians' Subfund--is allocated 2\5/8\% of the Sound
Recordings Fund, and the second subfund--the Nonfeatured Vocalists'
Subfund--gets a 1\3/8\% share; after the shares of these two subfunds
are subtracted, two other subfunds--the Featured Recording Artist
Subfund and the Sound Recording Owners Subfund--receive 40% and 60% of
the remainder respectively. In the Musical Works Fund, there are two
subfunds--the Publishers' Subfund and the Writers' Subfund--which each
get 50% of that Fund. The Act thus establishes the percentages for each
fund and subfund, but left it to the Copyright Royalty Tribunal to
decide what each claimant within a subfund would get.
Accordingly, the Act required the Tribunal to ascertain within 30
days after the last day for filing claims--March 30--whether there were
any controversies among the claimants as to the proper distribution of
the royalties in their fund and/or subfund. If there were any
controversies, the Tribunal was to initiate a proceeding immediately
and make a final determination concerning distribution within one year.
II. Tribunal Actions in 1993
Last year the Tribunal asked the claimants if there were any
controversies in distributing the 1992 DART royalties, and made an
initial funding that there were controversies in both the Sound
Recording and the Musical Works Funds. 58 FR 17576 (1993).
By the end of 1993 all the claimants to the Musical Works Fund had
reached settlements, except for one individual, who asserted that there
were controversies in both the Publishers' and the Writers' Subfunds.
Concerning the Sound Recordings Fund, there were settlements in three
of the four subfunds; however, for the Featured Recording Artists'
Subfund, the Gospel Music Coalition, the Alliance of Artists and
Recording Companies, Reachout Records International, Inc. and Copyright
Management, Inc. had not reached settlements with one corporation and
one individual by the end of the last year.
The Tribunal had established December 1, 1993 as the date by which
the parties in controversy would be required to file their written
direct cases. However, effective December 17, 1993, Congress passed the
Copyright Royalty Tribunal Reform Act of 1993: This legislation
dissolved the Tribunal and established a new system of copyright
arbitration royalty panels (CARPs) to be supported by the Library of
Congress and the Copyright Office.
Before the Act was passed, but in anticipation of it, two requests
were made of the Tribunal. The parties to the Musical Works Fund asked
the Tribunal to consolidate the 1992 DART distribution proceeding with
the 1993 DART distribution proceeding (scheduled to begin in 1994),
insofar as it applied to that particular fund. The parties to the Sound
Recordings Fund did not join with the request for consolidation, but
instead asked the Tribunal for a suspension of the procedural date
requiring them to file a written direct case by December 1, 1993.
On November 29, 1993, the Tribunal granted both requests, thus
consolidating the 1992 and 1993 Musical Works Fund proceedings and
suspending the procedural dates for the 1992 Sound Recording Fund
proceeding.
III. The New CARP System
As we said, Congress dissolved the Copyright Royalty Tribunal and,
effective December 17, 1993, established the CARP system in the Library
of Congress. As instructed by the Reform Act, the Copyright Office
immediately issued a notice adopting the full text of the former
Tribunal's rules and regulations on an interim basis. 58 FR 67690
(1993). Then, on January 18, 1994, the Office published proposed
regulations revising the adopted Tribunal rules to adapt them to the
requirements of the new CARP system. 59 FR 2550 (1994).
In the January 18, 1994 notice, we stated that we did not consider
the Copyright Office to be the successor agency of the Copyright
Royalty Tribunal, and that it was Congress' intent to establish an
entirely new system. Therefore, the proceedings that the Tribunal had
started but not concluded by December 17, 1993 would not be taken up
where they had left off, but would be begun anew under the new CARP
regime. Id. at 2551.
IV. Purposes of This Notice
The first purpose of this notice is to begin anew the 1992 DART
royalty distribution proceeding. We are asking the claimants to provide
the Copyright Office, by June 10, 1994, with the following information:
(a) Whether any controversies exist concerning distribution of 1992
DART royalties; (b) if controversies do exist, the particular subfunds
for which they exist; and (c) if settlements have been made, the
identity of the parties who have settled and of those who have not.
The second purpose of this notice is to comply with the statutory
obligation to begin the 1993 DART distribution proceeding. We are
asking the same questions about 1993 DART as we are asking about 1992
DART: whether any controversies exist, for which subfunds, and who are
the settled and non-settled parties.
After the existence of any controversies are determined, AHRA gives
the Copyright Office 30 days to distribute those royalties not in
controversy. In order to make that determination for both the 1992 and
1993 proceedings, we are asking the claimants who report that they are
in controversy to state how much is in controversy in each subfund. The
information to be provided should include each claimant's asserted
percentage or dollar claim to the subfund, and a brief narrative
justifying that asserted claim. In addition, we are asking each
claimant who expects to be participating in a CARP proceeding to file a
Notice of Intent to Participate, as required by 37 CFR 251.43(a).
Third, we are seeking comment as to the advisability of
consolidating the 1992 DART and the 1993 DART distribution proceedings.
We are aware that the Tribunal granted a request for consolidation
filed by the Musical Works Fund claimants. The reasons the claimants
cited at the time was that the 1992 fund, which only included royalties
collected between October 28 and December 31 of that year, was
relatively small, that the amounts in controversy were necessarily even
smaller, that the cost of litigating each fund separately would be high
in comparison with the size of the funds, and that the 1992 proceeding,
being the first of its kind, would be setting important precedent and
would benefit from consolidation with the 1993 proceeding. We should
like to learn two things: (1) Whether the claimants who requested
consolidation of the 1992 and 1993 DART Musical Works Fund
distributions are adhering to their request; and (2) whether the
claimants of the Sound Recordings Fund believe that similar
consolidations should be made for that fund.
Fourth, as explained below, we are using this notice to announce
three-month delays in meeting two DART deadlines this year: the
determination of the existence of controversies and the distribution of
DART royalties not in controversy.
V. DART Deadlines
The AHRA establishes several statutory deadlines to assure the
speedy distribution of DART royalties. Claims are to be filed by the
last day of February, each year. The existence of any controversies is
to be ascertained by March 30. Distribution of royalties not in
controversy are to be authorized to be distributed within 30 days of
the finding that they were not in controversy--that is, no later than
April 29. Under the earlier law, the Tribunal was to conclude all
proceedings to resolve any controversies within one year of declaring
the existence of those controversies. The abolition of the Tribunal and
the establishment of an entirely new CARP system in the Library of
Congress has made the meeting of certain statutory deadlines
exceedingly difficult and, in at least three cases, virtually
impossible.
The Administrative Conference of the United States has considered
the issue of how agencies should respond to circumstances that affect
their ability to adhere to schedule, and has issued a series of
recommendations concerning statutory time limits. 43 FR 27509 (1978), 1
CFR 305.78-3. The Administrative Conference said:
It should be recognized that special circumstances, such as a
sudden substantial increase in caseload, or complexity of the issues
raised in a particular proceeding, or the presence of compelling
public interest considerations, may justify an agency's failure to
act within a predetermined time. An agency's departure from the
legislative timetable should be explained in current status reports
to affected persons or in a report to Congress.
Id., at para. 4. The Copyright Office finds that good cause exists for
not meeting one earlier, and two current statutory deadlines for the
distribution of 1992 and 1993 DART royalties.
Under the law in effect before December 17, 1993, the Tribunal was
obliged to conclude the 1992 DART distribution proceeding by April,
1994. However, because the Tribunal no longer exists and because the
Copyright Office is not the successor agency to the Tribunal, we cannot
be bound by the Tribunal's deadlines. We believe that all proceedings
started by the Copyright Office are governed by the new provisions of
the Copyright Royalty Tribunal Reform Act of 1993, which sets its own
statutory time limits on the Library of Congress and the Copyright
Office for conducting CARP proceedings.
Our authority to begin DART distribution proceedings is dependent
on having the new CARP system in place. That means adopting extensive
new rules after full opportunity for the public to comment has been
given. It also involves the time-consuming and important process of
identifying a pool of potential arbitrators and evaluating their
qualifications, ethical eligibility, and availability in consultation
with various arbitration associations. We are acting with the utmost
speed in all these areas, but it is obvious that these goals cannot be
accomplished in time to begin DART distribution proceedings in April,
1994.
We therefore find that a delay of three months is necessary with
respect to two DART deadlines. Instead of declaring the existence of
any controversies in 1992 and/or 1993 DART distribution by March 30,
1994, we will make such declaration no later than June 30, 1994.
Distribution of royalties not in controversy will be authorized on or
before August 1, 1994.
Dated: February 22, 1994.
Barbara Ringer,
Acting Register of Copyrights.
Approved by:
James H. Billington,
The Librarian of Congress.
[FR Doc. 94-4456 Filed 2-28-94; 8:45 am]
BILLING CODE 1410-03-P