[Federal Register: December 7, 1994]
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LIBRARY OF CONGRESS
37 CFR Part 259
[Docket No. 94-3 CARP]
Representation for Claiming DART Royalties in Musical Works
AGENCY: Copyright Office, Library of Congress.
ACTION: Waiver of interim rule; and request for comments.
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SUMMARY: The Copyright Office of the Library of Congress is waiving the
rule that requires a performing rights organization to have written
authorization in order to represent its members and affiliates for 1993
and 1994 DART royalties in the Musical Works Fund. At the same time we
waive the rule, we seek comment on whether a performing rights society
should have separate, specific, written authorization from its members
to collect DART royalties for its members or affiliates.
DATES: The waiver of Sec. 259.2 is effective December 7, 1994. Written
comments should be received on or before February 6, 1995.
ADDRESSES: Fifteen copies of written comments should be addressed, if
sent by mail, to: Copyright Arbitration Royalty Panel (CARP), P.O. Box
70977, Southwest Station, Washington, D.C. 20024. If delivered by hand,
copies should be brought to: Office of the General Counsel, Copyright
Office, Room LM-407, James Madison Memorial Building, 101 Independence
Avenue, S.E., Washington, D.C.
FOR FURTHER INFORMATION CONTACT: Marilyn J. Kretsinger, Acting General
Counsel, Copyright Arbitration Royalty Panel (CARP), P.O. Box 70977,
Southwest Station, Washington, D.C. 20024. Telephone: (202) 707-8380.
Telefax: (202) 707-8366.
SUPPLEMENTARY INFORMATION:
I. Background
Parties that import and distribute in the United States or
manufacture and distribute in the United States any digital audio
recording technology (DART), either a device or audio recording medium,
must deposit royalties with the Copyright Office under the Audio Home
Recording Act (AHRA) for ultimate distribution to interested copyright
parties. The AHRA defines ``interested copyright parties'' as copyright
owners and any association or other organization representing them. 17
U.S.C. 1001(7). If the parties do not reach distribution agreements
among themselves, copyright arbitration royalty panels (CARPs),
administered by the Library of Congress and the Copyright Office,
determine what joint or individual claimants receive.
In order to qualify, copyright owners must file a claim in January
or February of each calendar year for royalties collected during the
preceding year. 17 U.S.C. 1006(a)(2), 1007(a)(1). The DART Funds are
divided into the Sound Recordings Fund and the Musical Works Fund. This
interim rule deals only with the Musical Works Fund.
II. Representation by Performing Rights Organizations
Until it was abolished on December 17, 1993, the Copyright Royalty
Tribunal (CRT) prescribed the ``form and manner'' for filing DART
claims. Copyright Royalty Tribunal Reform Act of 1993, Public Law No.
103-198, 107 Stat. 2304 (eliminating former Chapter 8 of 17 U.S.C.).
Shortly after the October 28, 1992, enactment of the AHRA, an issue
arose concerning the filing of claims to royalties. That issue was the
extent of proof that performing rights organizations were required to
present in order to demonstrate proper representation of their members
and affiliates. The CRT invited public comment in an Advance Notice of
Rulemaking. 57 FR 54542 (Nov. 19, 1992). On January 29, 1993, the CRT
adopted a rebuttable inference that performing rights organizations
represented their respective members and affiliates (hereafter
``members'') in royalty proceedings. 58 FR 6441, 6444 (Jan. 29, 1993).
The interim regulations also directed the parties to file a report, by
June 1, 1993, on the issue. Subsequently, on October 18, 1993, the CRT
published final regulations requiring such organizations to submit
separate, specific, and written authorization to represent their
members. Notice Adopting Final Regulations to Implement the Audio Home
Recording Act of 1992, 58 FR 53822 (Oct. 18, 1993).
On November 3, 1993, the performing rights organizations--the
American Society of Composers, Authors and Publishers (ASCAP),
Broadcast Music, Inc. (BMI) and SESAC, Inc. (SESAC) (hereafter
Performing Rights Organizations) filed with the CRT a petition to
reopen for reconsideration the rulemaking proceeding that resulted in
the CRT's final rule. On December 3, 1993, the CRT officially held the
petition in abeyance. Order, dated Dec. 3, 1993, In the Matter of
Digital Recording Technology Act; Implementation, CRT Docket No. 92-3-
DART.
On December 17, 1993, the President signed into law the Copyright
Royalty Tribunal Reform Act of 1993 (CRT `Reform Act'). Effective
immediately upon enactment, the CRT Reform Act eliminated the CRT and
transferred its responsibilities to ad hoc CARPs. The new act directed
the Librarian of Congress to convene CARPs to adjust rates and
distribute royalties. See 17 U.S.C. 111, 115, 116, 118, 119, and
chapter 10.
Following Congress' direction in the CRT Reform Act, the Copyright
Office issued a notice adopting the full text of the former CRT's rules
and regulations on an interim basis. 58 FR 67690 (Dec. 22, 1993). We
made only slight technical changes to those rules, stating that we
intended to review and revise them during the course of a future
rulemaking. Id. We then published proposed regulations that revised the
adopted CRT rules to adapt them to the requirements of the new CARP
system. 59 FR 2550 (Jan. 18, 1994). We concluded that we were not a
successor agency of the CRT, and that Congress intended to establish an
entirely new system. Therefore, the proceedings the CRT had begun but
not concluded by the effective date of the CRT Reform Act would not be
taken up where they had been left, but would rather be begun anew under
the new CARP regime. Id. at 2551.<SUP>1 The Copyright Royalty
Tribunal's final rule requiring Performing Rights Organizations to
submit separate, specific, and written authorization to represent their
members is stated in section 259.2.
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\1\Copyright Office revised and renumbered rules that had been
found in 37 CFR part 311 of the CRT's regulations as 37 CFR Part
257.
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On February 15, 1994, the Performing Rights Organizations filed a
comment with the Copyright Office seeking to reconsider the rule, now
adopted by the Copyright Office, that required separate, specific,
written authorization from Performing Rights Organization members. (In
the Matter of Copyright Arbitration Royalty Panels: Rules and
Regulations, Copyright Office Docket No. RM 94-1). Essentially in
response to our Notice of Proposed Rulemaking Comment 4, the Performing
Rights Organizations asked that their comments either serve to reopen
the CRT's former rulemaking proceeding or that the Office consider the
matter anew.
On February 23, 1994, the Gospel Music Coalition and Copyright
Management, Inc., jointly replied to the Performing Rights
Organizations' comment and opposed reconsideration of the issue. Id.
Reply comment 10.
III. Petition for Inference of Agency
In commenting on our adoption of the CRT rule, the Performing
Rights Organizations assert that the rule disenfranchises the many
writers and publishers who would otherwise be qualified to receive DART
royalties. Following the CRT's interim rule, the performing rights
societies contacted their members. One wrote to each of its members
that unless the members notified the organization to the contrary, the
organization would represent its member writers and publishers.
Subsequently, when the CRT later required separate, specific, written
authorization, the Performing Rights Organizations again attempted to
contact more than two hundred thousand writer and publisher members in
less than four months. Performing Rights Organizations states that they
have agreements with the major foreign performing rights organizations
to represent foreign writers and publishers whose works are exploited
in the United States. They also assert that since not all eligible
claimants responded to the writing, a significant number of members may
still have the impression that the Performing Rights Organizations are
representing their claims and that the CRT's final rule effectively
leaves these members without an avenue to present their claims. Id.
Comment 4 at 4-8.
The Performing Rights Organizations also urge that even if the
Copyright Office rejects the concept of a permanent rebuttable
inference, the rebuttable inference should extend through the 1993 DART
distribution proceeding. Claims for 1993 royalties were required to be
filed during the months of January and February 1994. The Performing
Rights Organizations claim that even with the mass mailings following
the Tribunal's final ruling, there was no practical way to obtain all
of the required signed written authorizations before the filing period
expired. They also suggest that the abolition of the CRT effectively
disenfranchised the Performing Rights Organizations' members and
affiliates, since it eliminated their only forum for being reheard on
this issue. The Performing Rights Organizations also contend that
further prejudice will result to their members and affiliates because
of a private settlement, entered into by all joint claimant groups and
all but one of the individual claimants to the Musical Works Fund, that
links distribution of 1992 DART royalties, to which the rebuttable
inference of agency applies, to the outcome of the 1993 proceedings, to
which the rebuttable presumption would not apply. Id., at 12-15.
IV. Opposition for Reconsideration
The Gospel Music Coalition and Copyright Management, Inc., oppose
reconsideration of the issue. They believe the matter has been amply
briefed and settled by the CRT, and no new issues of fact or law have
been raised. They oppose the rebuttable presumption of agency and urge
the Copyright Office not to disturb the final regulation. Reply Comment
10, Notice of Proposed Rulemaking (94-1).
The Gospel Music Coalition and Copyright Management, Inc., note
that the CRT's rationale for granting a temporary inference of agency
is no longer applicable, since the time pressures have been greatly
eased. Moreover, they state that since the CRT specifically ruled in
January 1993 that the AHRA did not grant Performing Rights
Organizations special entitlement to make claims on behalf of their
members more than a year remained until the end of the filing period.
They contend this was ample time to obtain the required authorizations
from members. Furthermore, they argue that all organizations had the
same opportunity to obtain written authorizations from their members.
They state that if the Copyright Office adopts the rebuttable inference
in favor of the Performing Rights Organizations, it will give these
organizations a benefit over other group claimants. Moreover, the
Gospel Music Coalition and Copyright Management, Inc., claim that the
silence of members should not be considered as implied consent to
representation by a performing rights society, and that excusing the
performing rights societies from obtaining separate, specific, written
authorizations to file claims grants these organizations preferential
treatment. Id.
V. Policy Decision and Request for Comments
The Copyright Office has not considered this issue. Less than 30
days before the CRT Reform Act was enacted, the CRT expressly ordered
the Performing Rights Organizations' petition to reconsider to be held
in abeyance. In our December 22 rule, we noted that we did not consider
the Office to be a successor agency to the CRT. Therefore, matters
pending before the CRT would have to begin anew.
On May 9, 1994, we issued interim CARP regulations. At that time we
noted that the Performing Rights Organizations' comment serving as a
petition to reopen was actually a petition for reconsideration of a
pending CRT matter and that we would consider it in a separate
rulemaking proceeding. 59 FR 23964, 23966 (May 9, 1994). We are now
addressing that matter, and the Copyright Office requests comments on
the issue of whether Performing Rights Organizations need separate,
specific, and written authorization to represent members and affiliates
in collecting DART musical works royalties. Any party who has already
filed comments on this issue with the former CRT may simply incorporate
those comments by reference.
Because we are reconsidering the rule, we are waiving the rule
adopted at 37 CFR 259.2, and inferring an agency relationship between
the Performing Rights Organizations and their members for the 1993 and
1994 DART royalty distribution. This rebuttable inference will be
utilized solely for the purpose of filing claims for, and distribution
of, 1993 and 1994 DART royalties payments. We include 1994 in the
waiver of our rules because the parties have already sought and been
granted consolidation of 1993 and 1994 DART royalties. Therefore, it
would be cumbersome to have different rules for the consolidated
proceeding. If a member files an individual claim or grants express
authority to another agent, such action will rebut the implied agency
relationship. This action is without precedential value and shall not
prejudice the Copyright Office's ultimate determination of the issue.
List of Subjects in 37 CFR Part 259
Claims, Copyright, Digital audio reading devices, Media.
Dated: December 1, 1994.
Marybeth Peters,
Register of Copyrights.
James H. Billington,
The Librarian of Congress.
Accordingly, 37 CFR part 259 is amended as follows:
PART 259
1. The authority citation for part 259 continues to read as
follows:
Authority: 17 U.S.C. 1007 (a)(1).
Sec. 259.2 [Suspended]
2. Section 259.2 is suspended effective December 7, 1994, through
February 28, 1995.
[FR Doc. 94-30046 Filed 12-6-94; 8:45 am]
BILLING CODE 1410-33-P