[Federal Register: February 7, 2001 (Volume 66, Number 26)]
[Notices]
[Page 9360-9365]
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LIBRARY OF CONGRESS
Copyright Office
[Docket No. 99-3 CARP DD 95-98]
Distribution of 1995, 1996, 1997, and 1998 Digital Audio
Recording Technology Royalties
AGENCY: Copyright Office, Library of Congress.
ACTION: Distribution Order.
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SUMMARY: The Librarian of Congress, upon the recommendation of the
Register of Copyrights, is adopting the determination of the Copyright
Arbitration Royality Panel (``CARP'') and issuing an order announcing
the allocation of the royalty fees in the 1995, 1996, 1997, and 1998
Musical Works Funds. These fees are paid to the Copyright Office by
importers and manufacturers of Digital Audio Recording Devices and
Media (``DART'') who distribute these products in the United States.
EFFECTIVE DATE: The percentages announced in this Order are effective
as of February 7, 2001.
[[Page 9361]]
ADDRESSES: The full text of the CARP's report to the Librarian of
Congress is available for inspection and copying during normal business
hours in the Office of the General Counsel, James Madison Memorial
Building, Room LM-403, First and Independence Avenue, SE, Washington,
DC, 20559-6000.
FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or
Tanya M. Sandros, Senior Attorney, Copyright Arbitration Royalty Panel
(``CARP''), PO Box 70977, Southwest Station, Washington, DC 20024.
Telephone: (202) 707-8380. Telefax: (202) 252-3423.
SUPPLEMENTARY INFORMATION:
Background
The Audio Home Recording Act of 1992, Public Law No. 102-563,
requires manufacturers and importers of digital audio recording devices
and media which are distributed in the United States to pay royalty
fees to the Copyright Office. Upon receipt, the Copyright Office
deposits these fees with the Treasury of the United States. 17 U.S.C.
1005.
Interested copyright parties must file a claim to these fees each
year during January and February to establish their entitlement to a
portion of the funds. How these funds are distributed to the various
interested copyright parties is decided either by the parties or by
Order of the Librarian, following a distribution proceeding conducted
by a Copyright Arbitration Royalty Panel (``CARP''). 17 U.S.C. 1007.
On May 4, 1999, the Copyright Office requested comments from the
interested copyright parties as to the existence of controversy
concerning the distribution of the DART royalty fees in the 1995, 1996,
1997 and 1998 Musical Works Funds, and notices of intent to participate
in any proceeding to determine the distribution of these funds. In
addition, the Office announced that it was consolidating the
consideration of the distribution of the 1995-1998 Musical Works Funds
into a single proceeding in order to have sufficient funds to cover the
cost of an arbitration proceeding. 64 FR 23875 (May 4, 1999).
Ten parties filed comments on the existence of controversies and
notices of intent to participate in this proceeding: Broadcast Music,
Inc. (``BMI''); the American Society of Composers, Authors and
Publishers (``ASCAP''); SESAC, Inc. (``SESAC''); the Harry Fox Agency
(``HFA''); the Songwriters Guild of America (``SGA''); and Copyright
Management, Inc. (``CMI'') (collectively, the ``Settling Parties'');
Carl DeMonbrun/Polyphonic Music, Inc. (``DeMonbrun''); James Cannings/
Can Can Music (``Cannings''); Alicia Carolyn Evelyn (``Evelyn''); and
Eugene ``Lampchops'' Curry/TaJai Music, Inc. (``Curry'').
Prior to the commencement of the proceeding, Cannings and DeMonbrun
notified the Office that they had settled their claims with the
Settling Parties and that they were withdrawing from the proceeding.
See Notices of Settlement and Withdrawals of Claims in Docket No.99-3
DD 95-98 (dated November 10, 1999). This settlement resolved the
remaining controversy over the distribution of the 1996 Musical Works
Funds and left Evelyn's claim to a share of the royalty fees in the
1995, 1997 and 1998 Writer's Subfunds and Curry's claim to a share of
the royalty fees in both the 1995 and 1997 Writer's and Publisher's
Subfunds to be determined.
Each of the three participants filed his or her direct case with
the Office on November 15, 1999, commencing the 45-day precontroversy
discovery period. In addition, the Settling Parties filed a motion to
dispense with formal hearings and to conduct the proceeding on the
basis of written pleadings alone and a motion for full distribution of
those funds not in controversy and a partial distribution of all
remaining DART royalties.
The Copyright Office granted the motion for a full distribution of
those royalty fees that were no longer in controversy and granted in
part the request for a partial distribution of the remaining funds. See
Order in Docket No. 99-3 CARP DD 95-98 (December 22, 1999). However,
the Office did not rule on the motion to dispense with formal hearings,
choosing instead to designate the issue to the CARP. Id.
On April 10, 2000, the Copyright Office announced the names of the
three arbitrators chosen for this proceeding and the initiation of the
180-day arbitration period in a Federal Register notice. 65 FR 19025
(April 10, 2000). Shortly thereafter, the Chairperson of the panel
resigned due to a perceived conflict of interest. Consequently, the
Office suspended the 180-day period from May 16, 2000, until June 16,
2000, and a new chairperson was selected during this period in
accordance with 37 CFR 251.6(f).
The first meeting between the parties and the arbitrators took
place on June 19, 2000. The purpose of this initial encounter was to
set the schedule for the proceeding and to resolve the two remaining
procedural issues: whether to grant the Settling Parties' motion to
suspend formal hearings and proceed on the basis of the formal record
only and whether to allow the filing of a written rebuttal case. The
CARP heard oral argument from the parties on these issues that day; and
based upon these hearings, the Panel decided ``to waive the requirement
of oral evidentiary hearings, to proceed upon the written record alone,
and to permit the filing of written rebuttal cases.'' CARP Report,
para. 24. See Order in Docket No. 99-3 CARP DD 95-98 (June 19, 2000).
The Panel delivered its final report to the Copyright Office on
November 9, 2000.
The Panel's Report
Based upon the evidence offered in the written record, the Panel
determined that the royalties in the 1995, 1997, and 1998 Musical Works
Funds should be distributed as follows:
To Mr. Curry: 0.001966% of both the 1995 Writers and Publishers
Subfunds; and 0.001027% of both the 1997 Writers and Publishers
Subfunds.
To Ms. Evelyn: 0.000614% of the 1995 Writers Subfund; 0.000130% of
the 1997 Writers Subfund and 0.000144% of the 1998 Writers Subfund.
To the Settling Parties: 99.997420% of the 1995 Writers Subfund and
99.998034% of the 1995 Publishers Subfund; 99.998843% of the 1997
Writers Subfund and 99.998973% of the 1997 Publishers Subfund; and
99.999856% of the 1998 Writers Subfund.
As in the prior proceeding to determine the distribution of the
1992-1994 Musical Works Funds, the CARP adopted the Settling Parties'
methodology which gives Curry and Evelyn a share of the royalty fees
from a particular subfund based upon the percentage of their song
titles sold during the relevant time period. The Settling Parties
receive all remaining royalty fees because they represent the interests
of the remaining copyright owners entitled to receive a portion of
these funds.
Standard of Review
Section 802(f) of the Copyright Act directs that the Librarian
shall adopt the report of the CARP ``unless the Librarian finds that
the determination is arbitrary or contrary to the applicable provisions
of this title.'' The Librarian of Congress has discussed his narrow
scope of review in great detail in prior decisions and concluded that
the use of the term ``arbitrary'' in this provision is no different
than the ``arbitrary'' standard described in the Administrative
Procedures Act, 5 U.S.C. 706(2)(A). See 63 FR 49823 (September 18,
1998); 63 FR 25394 (May 8, 1998); 62 FR 55742
[[Page 9362]]
(October 28, 1997); 62 FR 6558 (February 12, 1997); 61 FR 55653
(October 28, 1996). Thus, the standard of review adopted by the
Librarian is narrow and provides that the Librarian will not reject the
determination of a CARP unless its decision falls outside the ``zone of
reasonableness'' that had been used by the courts to review decisions
of the Copyright Royalty Tribunal. See National Cable Television Ass'n
v. Copyright Royalty Tribunal, 724 F.2d 176, 182 (D.C. Cir. 1983).
Moreover, based on a determination by the Register and the Librarian
that the Panel's decision is neither arbitrary or contrary to law, the
Librarian will adopt the CARP's determination even if the Register and
the Librarian would have reached conclusion different from the
conclusions reached by the CARP.
The U.S. Court of Appeals for the District of Columbia has stated,
however, that the Librarian would act arbitrarily if ``without
explanation or adjustment, he adopted an award proposed by the Panel
that was not supported by any evidence or that was based on evidence
which could not reasonably be interpreted to support the award.'' See
National Ass'n of Broadcasters v. Librarian of Congress, 146 F.3d 907,
923 (D.C. Cir. 1998).
For this reason, the Panel must provide a detailed rational
analysis of its decision, setting forth specific findings of fact and
conclusions of law. See National Cable Television Ass'n v. Copyright
Royalty Tribunal, 689 F.2d 1077, 1091 (D.C. Cir. 1992), (requiring
Copyright Royalty Tribunal to weigh all relevant considerations and set
out its conclusions in a form that permits the court to determine
whether it has exercised its responsibilities lawfully).
It is then the task of the Register to review the Panel's report
and make her recommendation to the Librarian as to whether it is
arbitrary or contrary to the provisions of the Copyright Act and, if
so, whether and in what manner, the Librarian should substitute his own
determination.
Review of the CARP Report
a. Determination of the Panel
The Panel found that the Settling Parties are entitled to 100% of
the funds in the 1995, 1996, 1997, and 1998 Musical Works Funds minus
the amount owed to Curry and Evelyn. The methodology used to determine
Curry's and Evelyn's shares is identical to the method used to
determine the distribution of the 1992, 1993, and 1994 Musical Works
Funds in an earlier proceeding. See 62 FR 6558 (February 12, 1997). It
is a simple arithmetic calculation which determines each individual
claimant's share by calculating the number of song titles credited to
the claimant and sold in year X and dividing that figure by the total
number of song titles sold that year. This computation represents the
claimant's proportionate share of the total royalties in year X.
The Panel adopted the Settling Parties' formula, in part, because
Curry and Evelyn, while objecting to the use of this same formulation,
failed to offer any alternative systematic method or formula for
calculating each party's share of the royalties. CARP Report Paras. 38,
59. Instead, both Curry and Evelyn suggested that each of them is
entitled to 1% of the royalty fees collected for any year to which they
filed a claim. The Panel rejected this proposal because it fails to
explain why two individual claimants are entitled to 1% of the annual
funds when the total claimant pool numbers in the thousands. ``If each
of the thousands of claimants represented in this proceeding were to
receive 1% of the DART royalties available for distribution, the total
claimed would quickly exceed 100%.'' CARP Report para. 59.
Evelyn and Curry, however, do not accept the Settling Parties'
contention that they represent thousands of claimants, arguing in their
respective filings that the organizations and associations comprising
the Settling Parties cannot represent individual claimants and act as
their agent in these proceedings. See Curry's Direct Cast at 2;
Evelyn's Rebuttal Case at Paras. 1-9; Evelyn Petition at 1-2.
The Panel considered these allegations and found that the Settling
Parties are ``interested copyright parties,'' pursuant to 17 U.S.C.
1001(7) and may act as agents for their members. CARP Report para. 74.
The Panel noted that an agency relationship is established for the
purpose of a DART proceeding when an association or organizations files
a DART claim on behalf of its members in accordance with Sec. 259.2(c)
of the Copyright Office rules. This provision requires an organization
or association, which acts as a common agent on behalf of the members
of its organization, to obtain separate, specific and written
authorization from each of its members or affiliates in order to file a
DART claim; and it further requires that each claim list the name of
each individual songwriter and music publisher on whose behalf the
organization is filing its claim. CARP Report para. 75; see also, 37
CFR 259.2(c) and 259.3(d). Based on these written expressions of the
agency relationship, the CARP found that each of the Settling Parties
has the authority to act as an agent for the members listed in the
claims.
The CARP then examined the record evidence and the Settling
parties' formula for calculating Evelyn's and Curry's share. First, it
considered the Settling Parties' use of SoundScan data to establish the
universe of record sales for each year, including testimony from
Michael Fine, co-founder and chief executive of SoundScan. It weighted
Fine's testimony, which identified Sound Scan as a premier independent
online information system that tracks music sales throughout the United
States, against challenges from Evelyn and Curry, who argued that the
SoundScan data was incomplete because it did not include record club,
computer and foreign sales figures. CARP Report Paras. 32-33, 62. It
found that Evelyn and Curry were correct to conclude that inclusion of
such data would indeed increase their total record sales, but went on
to note that it would also increase the total record sales figures for
other claimants. It then accepted the Settling Parties' conclusion that
adding to the universe of sales would in all likelihood decrease the
amount of Evelyn's and Curry's awards. CARP Report para. 62. The Panel
also rejected Curry's and Evelyn's assertion that the total record
sales figures should be adjusted to include foreign record sales
because it determined that such sales are not compensable under the
Audio Home Recording Act. CARP Report para. 62. Furthermore, and more
importantly, the CARP found that neither Curry nor Evelyn offered an
alternative mechanism to use of the SoundScan data for figuring out how
many records sales occurred. CARP Report Paras. 50-53, 62, 68-69. Thus,
finding not other basis for determining the universe of total record
sales in the written record, the Panel accepted the testimony of
Michael Fine and his methodology for determining the total number of
record sales in any given year. CARP Report para. 33.
Next, the Panel scrutinized the evidence used to determine the
number of record sales of Curry's and Evelyn's works. First, it found
that Curry and Evelyn had submitted no evidence into the record of
either record sales or performances of their works. This meant that the
Settling Parties offered the only evidence on the number of record
sales garnered by these claimants. CARP Report Paras. 64-65, 70. To
make this determination, the Settling parties first identified the
names of the record titles to which Curry and Evelyn have a claim for
purposes of this proceeding by
[[Page 9363]]
reference to the list of titles identified for each claimant in the
prior DART distribution proceeding, see Panel's Report in Docket No.
95-1 CARP DD 92-94 at Paras. 34, 35, the songs listed on the DART
claims, and by conducting a search of the allmusic.com website.\1\
Next, the Settling Parties identified the albums and singles which
included these works by searching these titles in Phonolog, an industry
standard directory that lists all records, CDs, cassettes, albums and
singles issued in the United States. CARP Report Paras. 38-40. Once the
titles were identified, it was a simple matter to use the SoundScan
data to determine the number of unit sales per work for each year in
controversy. CARP Report Paras. 44-47.
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\1\ This website provides public access to a comprehensive
database of information regarding recording artists, albums, and
songs.
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The CARP found that the evidence introduced by the Settling Parties
identifying and quantifying the works of Evelyn and Curry was the only
credible evidence in the record upon which to make a determination.
CARP Report Paras. 63-72. In fact, the Panel found that the Settling
Parties credited Evelyn and Curry with more than their actual
percentage entitlement because no adjustment was made to reflect the
co-authorship or co-publication of certain works. CARP Report para. 63.
Thus, it adopted the evidence and conclusions offered by the Settling
Parties and based its determination of Evelyn's and Curry's shares of
the royalty fees on the Settling Parties' methodology. The CARP did so
with full knowledge that the methodology had been used in the previous
DART distribution proceeding and found to be ``logical and consistent''
by the Librarian of Congress and reviewed with approval by the United
States Court of Appeals for the District of Columbia. CARP Report
Paras. 78-79.
b. Petitions To Modify or Set Aside the Panel's Determination
1. Evelyn's Petition: Section 251.55(a) of the rules provides that
``[a]ny party to the proceeding may file with the Librarian of Congress
a petition to modify or set aside the determination of a Copyright
Arbitration Royalty Panel within 14 days of the Librarian's receipt of
the panel's report of its determination.'' 37 CFR 251.55(a). Replies to
petitions to modify are due 14 days after the filing of the petitions.
37 CFR 251.55(b).
Section 251.55 of the rules assists the Register of Copyrights in
making her recommendation to the Librarian, and the Librarian in
conducting his review of the CARP's decision by allowing the parties to
the proceeding to raise specific objections to a CARP's determination.
As required by section 802(f) of the copyright Act, if the Librarian
determines that the Panel in this proceeding has acted arbitrarily or
contrary to the provisions of the Copyright Act, he must ``after full
examination of the record created in the arbitration proceeding, issue
an order setting the * * * distribution of fees.'' 17 U.S.C. 802(f).
Evelyn, who appeared pro se in this proceeding on behalf of
herself, filed a petition to modify. Her petition attacks the Panel's
report on three basic points. First, as a threshold issue, she claims
that the entities comprising the Settling Parties, particularly the
performing rights organizations and Gospel Music Coalition, have not
properly filed claims to the DART royalties on behalf of their members.
Evelyn Petition at 1-3. Second, she argues that the Panel disregarded
statements and evidence offered by herself and Curry which contested
and disproved the Settling Parties' findings of fact and conclusions of
law. Id. at 4-5, 8. And third, she lists a number of perceived
procedural irregularities that she claims led to disparate treatment of
the individual claimants: (1) Acceptance by the Office of the Settling
Parties' direct case which she asserts was not filed in accordance with
the governing regulations; (2) return of her rebuttal case which was
submitted during the 45-day precontroversy discovery period; and (3)
failure of the CARP to request additional information from her to
substantiate her claim. Id. at 5-6, 8.
Curry, the other individual claimant participating in this
proceeding, did not file a petition to modify.
2. Settling Parties' Reply to Evelyn Petition to Modify: Settling
Parties oppose the Evelyn petition on both procedural and substantive
grounds. They contend that the petition is substantively deficient
because it does not demonstrate in what way the CARP report is either
arbitrary or contrary to law--the standard of review to be used by the
Librarian in his review of the Panel's report. See 17 U.S.C. 802(f). In
making this point, the Settling Parties addresses each of the legal
issues raised by Evelyn.
The Settling Parties also argue that the Librarian should reject
Evelyn's petition because it fails to reference applicable sections of
her proposed findings of fact and conclusions of law, as required under
Sec. 251.55(a) of title 37 of the Code of Federal Regulations. They
argue that failure to correctly reference her filings shows an apparent
willful disregard for the requirements of the rule and warrants
dismissal of the Petition. Settling Parties' Reply at 11-12.
3. Sufficiency of Evelyn's Petition: Before the Register can
address the issues raised by Evelyn's petition to modify the
determination of the Panel, the Register must first address the
Settling Parties' argument that the petition warrants dismissal for
failure to comply with Sec. 251.55(a) of the CARP regulations. That
section provides that each petition must ``state the reasons for
modification or reversal of the panel's determination, and shall
include applicable sections of the party's proposed findings of fact
and conclusions of law.'' 37 CFR 251.55(a).
The purpose of this requirement is to enable the Register and the
Librarian to locate those portions of the testimony and filings that
support a party's petition. Absent a showing of bad faith, the remedy
for failure to comply with the regulation is an order from the
Register, directing the offending party to amend his or her petition
and include the proper citations to the relevant sections of the
party's proposed findings of fact and conclusions of law. See 62 FR
6560 (February 12, 1997).
The Settling Parties point out that Evelyn had encountered the rule
in the previous proceeding to determine the distribution of the 1992-
1994 DART royalty fees and argue that her ``apparent willful disregard
for the requirements imposed by Rule 251.55 warrants dismissal of the
Petition.'' Settling Parties' Reply at 12.
While it is clear that Evelyn does not provide all relevant
references to her proposed findings of fact and conclusions of law, she
did make a good faith effort to comply with the regulation and supplied
citations to the Settling Parties' Direct Case, the CARP Report and her
own proposed findings of fact and conclusions of law. See e.g., Evelyn
Petition at pp. 2, 5, 7. Moreover, the Library will accept a less than
perfectly executed petition without amendment where the record is
small, and it is reasonably easy to locate the cited information in the
record. See 62 FR 6561 (February 12, 1997). Thus, Evelyn's petition has
received full consideration.
c. The Register's Review and Recommendation
The statutory criteria to be considered when deciding how to
distribute the DART royalties are set forth in section 1006(c)(2) of
the Copyright Act, title 17 of the United States Code. It states that a
CARP may only consider ``the extent to which, during the relevant
period * * * each musical work was
[[Page 9364]]
distributed in the form of digital musical recordings * * * or
disseminated to the public in transmissions.'' In the first proceeding
to determine the distribution of DART royalties, the Panel found, and
the Library agreed, that the statute does not require the application
of both criteria when evidence as to only one of the criteria has been
presented by the parties to the proceeding. 62 FR 6561 (February 12,
1997). This determination established a precedent for the presentation
of and reliance on sales data alone for the purpose of determining each
claimant's share of the royalty fees.
Evelyn argues in her petition to modify that the first proceeding
did not establish a binding precedent for all future distribution
proceedings, but fails to offer an alternative approach or explain why
the Panel should deviate from the methodology used in the first
proceeding when the record evidence parallels the prior record in its
approach. Every Petition at 7. Her assertion about the precedential
effect of the first proceeding is not correct. Section 802(c) requires
the Panel to ``act on the basis of a fully documented written record,
prior decisions of the Copyright Royalty Tribunal, prior copyright
arbitration Panel determinations, and rulings by the Librarian of
Congress under section 801(c).''
Had Evelyn offered evidence of public performances or evidence for
ascertaining the scope of record sales in a different manner, the CARP
could have adopted a different methodology for making the
determinations. However, an assertion that she is entitled to 1% of the
royalty fees in the funds to which she filed a claim is not evidence.
See Proposed Distribution Order, Evelyn Proposed Findings of Fact and
Conclusions of Law. It is merely a statement of opinion.
Evelyn party has an opportunity to present evidence to the Panel
when it files the direct case. The written direct case is the very
foundation of a party's case and as such must include testimony and
exhibits which, when taken together, support and prove a party's claim.
See Order in Docket No. 95-1 CARP DD 92-94 (dated May 9, 1996). In
Evelyn's case, she supplied only a list of her works. See Evelyn Direct
Case, exhibit 1a-1d; CARP Report para.69. Evidently, she had thought
the CARP would request additional information and evidence from her at
a later date. Evelyn Petition at 8; Settling Parties' Reply at 8. While
a CARP member may, in accordance with the regulations, request
additional information from a party, he or she does so at his or her
own discretion. See 37 CFR 251.46(d). It is not the function of the
Panel to search for new evidence that favors a party's case. This is
and remains each party's prime responsibility throughout the
proceeding.
In the current proceeding, the arbitrators chose not to request any
additional information, evidently finding the evidence in the record
sufficient upon which to make an informed decision. Because the
Settling Parties offered the same type of evidence as that adopted in
the prior DART distribution proceeding and neither Evelyn or Curry made
a showing of changed circumstances or presented material evidence \2\
that would justify a rejection of the Settling Parties' evidence, the
Panel's decision to follow the precedent is neither arbitrary nor
contrary to law.
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\2\ Evelyn claims that an increase in the number of songs for
which she is making a claim constitutes changed circumstances and
should alter the outcome of the CARP's decision. Evelyn Petition at
8. However, there is no evidence in the record documenting sales of
these works during the relevant period. CARP Report para.69.
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Evelyn also asserts, as a threshold matter, that the performing
rights organizations had no authority to file a claim on behalf of
their members. The Panel discussed this issue fully in its report and
found that each of the organizations and associations that comprise the
Settling Parties meet the definition of ``interested copyright party''
and are entitled to file a claim on behalf of its members and
represents their interests in a CARP proceeding. See, supra, discussion
in Determination of the Panel. This reasoning fully complies with the
Copyright Act, and therefore, the participation of the members of the
Settling Parties, including the performing rights organizations, is not
arbitrary.
Evelyn also asserts that Gospel Music Coalition (``GMC'') failed to
file a claim and therefore, cannot be represented by the Settling
Parties. This assertion is clearly erroneous. A review of the Copyright
Office records shows that GMC filed claims to the 1995, 1996, 1997 and
1998 Musical Works Funds and did so in both subfunds. See, claim no. 7,
1995 Publishers Subfund and claim no. 8, 1995 Writers Subfund; claim
no. 9, 1996 Publishers Subfund and claim no. 7, 1996 Writers Subfund;
claim no. 8, 1997 Publishers Subfund and claim no. 9, 1997 Writers
Subfund; claim no. 8, 1998 Publishers Subfund and claim no. 8, 1998
Writers Subfund.
Based upon the proper filing of these claims, GMC was then free to
negotiate a settlement agreement with the other parties who filed a
claim to the same funds. 17 U.S.C. 1007(a)(2). This it did. On July 2,
1999, the Copyright Office received official notification that Gospel
Music Coalition had reached an agreement to settle its claims to the
1995, 1996, 1997, and 1998 Musical Works Funds with respect to the
Writers and Publishers Subfunds. See, Comments on the existence of
controversies and notice of intent to participate of Broadcast Music,
Inc., the American Society of Composers, Authors & Publishers, SESAC,
Inc., The Harry Fox Agency, Inc., The Songwriters Guild of America and
Copyright Management, Inc. as Settling Parties, Docket No. 99-3 CARP DD
95-98, at 3. Consequently, Evelyn's suggestion that GMC improperly
reached an agreement with the Settling Parties is incorrect.
Another point Evelyn makes in her petition is that she received
disparate treatment in this proceeding because of procedural
irregularities. First, she argues that the Settling parties failed to
submit their direct case in accordance with the CARP regulations.
Section 251.45(b)(1)(i) of the rules requires that ``each party to the
proceeding must effect actual delivery of a complete copy of its
written direct case on each of the other parties to the proceeding no
later than the first day of the 45-day period.'' In this proceeding,
parties were directed to deliver copies of their direct cases to all
parties on November 15, 1999. Evelyn, however, received her copy of the
Settling Parties' direct case by special messenger at 3:30 a.m. on
November 16, 1999, along with three additional motions.\3\ Evelyn
Petition at 5.
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\3\ Meanwhile, the Settling Parties had filed its direct case
with the Copyright Office on November 15, 1999, in accordance with
the Office's scheduling order.
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The Panel's response to this issue was incorrect as a matter of
law. It stated that the CARP rules do not require that each party
receive pleadings simultaneously, citing Sec. 251.44(f). See CARP
Report para. 19 n.5. The Panel failed to recognize that Sec. 251.45(b)
of the CARP rules governs the filing of a direct case and specifically
requires filing of direct cases to all parties on the same day. This
misinterpretation, however, does not require that the Librarian set
aside the entire decision or strike the Settling Parties' case because
Evelyn never requested relief from the Copyright Office. Had Evelyn
wished to contest the filing of the Settling Parties' direct case, she
had only to file a motion with the Office seeking dismissal of the
[[Page 9365]]
Settling Parties' case or requesting an adjustment to the discovery
schedule to make up for the lost time. She chose not to file such a
motion, however, because she believed that ``the Copyright Office would
(not) strike the case of the Settling Parties and leave only the two
individual claimants in the case.'' Evelyn's Proposed Findings of Fact
and Conclusions of Law at 3. Consequently, the Office had no reason to
address the issue because Evelyn did not request any relief from the
Office at the appropriate time. Furthermore, her continued involvement
in the proceeding supports the Panel's conclusion that she did not
suffer any undue harm because of the delay in the delivery of the
direct case.
Another procedural irregularity raised by Evelyn concerns the
return of her rebuttal case. She filed it with the Copyright Office on
November 24,1999, during the 45-day precontroversy discovery period. By
Order, dated November 24, 1999, the Office rejected the pleading except
for a single sentence which addressed a motion for a partial
distribution then under consideration. The Order stated that ``[n]o
provision is made in the rules or the Library's scheduling order for
the filing of rebuttal cases at this stage of the proceeding. Rebuttal
cases, if required at all, are filed with the CARP after consideration
of the written direct cases.'' Evelyn refiled her rebuttal case on July
28, 2000, and it was considered by the CARP at that time. Consequently,
Evelyn suffered no prejudice from the Office's decision to strike her
rebuttal case when it was first filed prematurely.
Evelyn makes one additional procedural challenge in her petition.
She contends that the Settling parties did not provide sworn testimony
to establish a universe of sales. Evelyn Petition at 8. Specifically,
she objects to the inclusion of Michael Fine's prior testimony from the
1992-1994 DART distribution proceedings on the SoundScan data. This
testimony established the basis for determining total record sales and
record sales for Curry and Evelyn. CARP Report para. 32. She states
that there were problems with his testimony in the 1992-1994 DART
distribution proceedings but does not discuss what these problems were
or why they have a bearing on the current proceeding. In any event, no
problem was identified in the last proceeding concerning this
testimony; thus, under the CARP rules, the Settling Parties were free
to designate a portion of past records to be included in their direct
case. 37 CFR 251.43. Had the Panel not allowed the incorporation of
Fine's past testimony, it would have acted contrary to the law, unless
it had reason to strike the testimony for good cause shown.
Evelyn's final challenge focuses on the Settling Parties'
methodology. She, like Curry before her in the 1992-1994 DART
distribution proceeding, objects to the use of a methodology that only
requires a showing of the number of record sales for the individual
claimants. She contends that no claim can be termed a ``de minimus
claim'' until it is measured against the entitlement of others. Evelyn
Petition at 3. In response, the Panel noted that the courts have
repudiated as wasteful a requirement that all claimants in a given
distribution proceeding prove their entitlement through the
presentation of detailed data for every individual work. CARP Report
para. 76. In National Association of Broadcaster v. Copyright Royalty
Tribunal, 772 F.2d 922, 939 (D.C. Cir. 1985), the case cited by the
Panel in its report, the court wisely noted that to do otherwise would
effectively eliminate the likelihood of settlements because a single
claimant--no matter how modest that claimant's likely share under even
the most sanguine review--could choose not to settle with the other
claimants and require a full hearing on all claims, even those not in
controversy.
For all the reasons set forth in the prior discussion, the Register
concludes that the Panel did not act arbitrarily or contrary to the
provisions of the Copyright Act in determining the value of Curry's and
Evelyn's DART claims and recommends that the Librarian adopt without
amendment the Panel's Report and recommendation for the allocation of
the 1995, 1997 and 1998 Musical Works Funds.
Order of the Librarian of Congress
Having duly considered the recommendation of the Register of
Copyrights regarding the report of the Copyright Arbitration Royalty
panel concerning the distribution of the 1995, 1997 and 1998 Musical
Works Funds, the Librarian of Congress fully endorses and adopts her
recommendation to accept the Panel's decision. For the reasons stated
in the Register's recommendation, the Librarian is exercising his
authority under 17 U.S.C. 802(f) and is issuing an order announcing the
allocation of the royalty fees in the 1995, 1997 and 1998 Musical Works
Funds.
Wherefore, it is ordered that the royalty fees in the 1995, 1997
and 1998 Musical Works Funds shall be distributed according to the
following percentages:
------------------------------------------------------------------------
1995
---------------------------
Publishers
Writers (%) (%)
------------------------------------------------------------------------
Curry....................................... 0.001966 0.001966
Evelyn...................................... 0.000614 N/A
Settling parties............................ 99.997420 99.998034
n,sTotal............................... 100.00 100.00
------------------------------------------------------------------------
------------------------------------------------------------------------
1997
---------------------------
Publishers
Writers (%) (%)
------------------------------------------------------------------------
Curry....................................... 0.001027 0.001027
Evelyn...................................... 0.000130 N/A
Settling parties............................ 99.998843 99.998973
n,sTotal............................... 100.00 100.00
------------------------------------------------------------------------
------------------------------------------------------------------------
1998
---------------------------
Publishers
Writers (%) (%)
------------------------------------------------------------------------
Curry....................................... N/A N/A
Evelyn...................................... 0.000144 N/A
Settling parties............................ 99.999856 100.00
n,sTotal............................... 100.00 100.00
------------------------------------------------------------------------
As provided in 17 U.S.C. 802(g), the period for appealing this
Order to the United States Court of Appeals for the District of
Columbia is thirty (30) days from the effective date of this Order.
Dated: January 30, 2001.
Marybeth Peters,
Register of Copyrights.
Approved by:
James H. Billington,
The Librarian of Congress.
[FR Doc. 01-3142 Filed 2-6-01; 8:45 am]
BILLING CODE 1410-33-P