Division of Authority Between the Copyright Royalty Judges and the Register of Copyrights under the Section 115 Statutory License, 48396-48399 [E8-19198]
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48396
Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices
DEPARTMENT OF LABOR
Employment and Training
Administration
[TA–W–63,817]
JHP Transport LLC, Myerstown,
Pennsylvania; Notice of Termination of
Investigation
Pursuant to Section 221 of the Trade
Act of 1974, as amended, an
investigation was initiated on August 5,
2008, in response to a worker petition
filed by a company official on behalf of
workers at JHP Transport LLC,
Myerstown, Pennsylvania.
The petitioner has requested that the
petition be withdrawn. Consequently,
the investigation has been terminated.
Signed at Washington, DC this 8th day of
August 2008.
Linda G. Poole,
Certifying Officer, Division of Trade
Adjustment Assistance.
[FR Doc. E8–19183 Filed 8–18–08; 8:45 am]
BILLING CODE 4510–FN–P
LIBRARY OF CONGRESS
Copyright Office
[Docket No. RF 2008–1]
Division of Authority Between the
Copyright Royalty Judges and the
Register of Copyrights under the
Section 115 Statutory License
Copyright Office, Library of
Congress.
ACTION: Final Order.
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AGENCY:
SUMMARY: The Copyright Royalty
Judges, acting pursuant to statute,
referred material questions of
substantive law to the Register of
Copyrights concerning the division of
authority between the Judges and the
Register of Copyrights under the section
115 statutory license. Specifically, the
Copyright Royalty Board requested a
decision by the Register of Copyrights
regarding whether the Judges’ authority
to adopt terms under the section 115
license is solely limited to late payment,
notice of use and recordkeeping
regulations; and if the answer is no,
what other categories or types of terms
may the Judges prescribe by regulation.
The Register of Copyrights responded in
a timely fashion by delivering a
Memorandum Opinion to the Copyright
Royalty Board on August 8, 2008.
DATES: Effective Date: August 8, 2008.
FOR FURTHER INFORMATION CONTACT:
Stephen Ruwe, Attorney Advisor, and
Tanya M. Sandros, General Counsel,
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Copyright GC/I&R, P.O. Box 70400,
Washington, DC 20024. Telephone:
(202) 707–8380. Telefax: (202) 707–
8366.
SUPPLEMENTARY INFORMATION: In the
Copyright Royalty and Distribution
Reform Act of 2004, Congress amended
Title 17 to replace the copyright
arbitration royalty panel with the
Copyright Royalty Judges (‘‘CRJs’’). One
of the functions of the CRJs is to make
determinations and adjustments of
reasonable terms and rates of royalty
payments as provided in sections
112(e), 114, 115, 116, 118, 119 and 1004
of the Copyright Act. The CRJs have the
authority to request from the Register of
Copyrights (‘‘Register’’) an
interpretation of any material question
of substantive law that relates to the
construction of provisions of Title 17
and arises out of the course of the
proceeding before the CRJs. See 17
U.S.C. 802(f)(1)(A)(ii).
On July 25, 2008, the CRJs delivered
to the Register: (1) an Order referring
material questions of substantive law;
and (2) the Briefs filed with the CRJs by
the Recording Industry Association of
America; the Digital Media Association;
and National Music Publishers’
Association, Inc., the Songwriters Guild
of America, and the Nashville
Songwriters Association International.
The CRJs’ delivery of the request for an
interpretation triggered the 14–day
response period prescribed in Section
802 of the Copyright Act. This statutory
provision states that the Register ‘‘shall
deliver to the Copyright Royalty Judges
a written response within 14 days after
the receipt of all briefs and comments
from the participants.’’ See 17 U.S.C.
802(f)(1)(A)(ii). The statute also requires
that ‘‘[t]he Copyright Royalty Judges
shall apply the legal interpretation
embodied in the response of the Register
of Copyrights if it is timely delivered,
and [that] the response shall be
included in the record that accompanies
the final determination.’’ Id. On August
8, 2008, the Register responded in a
Memorandum Opinion to the CRJs that
addressed the material questions of law.
To provide the public with notice of the
decision rendered by the Register, the
Memorandum Opinion is reproduced in
its entirety, below.
Dated: August 12, 2008
David O. Carson,
Associate Register for Policy and
International Affairs
Before the
U.S. Copyright Office
Library of Congress
Washington, D.C. 20559
In the Matter of
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Mechanical and Digital Phonorecord
Delivery Rate Adjustment Proceeding
Docket No. RF 2008–1
—————————————————
MEMORANDUM OPINION
ON MATERIAL QUESTIONS OF
SUBSTANTIVE LAW
I. Procedural Background
On July 25, 2008, under the terms of
17 U.S.C. § 802(f)(1)(A)(ii), the
Copyright Royalty Judges (‘‘CRJs’’)
referred to the Register of Copyrights
material questions of substantive law
which have arisen in this proceeding.
The Copyright Royalty Judges included
briefs from the parties to the proceeding
that had been submitted in February,
2008 relating to the authority of the CRJs
to set terms governing the section 115
compulsory license.
After recounting the relevant statutory
provisions of section 115 and Chapter 8
of Title 17, the CRJs posed the following
questions:
Is the Judges’ authority to adopt terms
under the section 115 license solely
limited to late payment, notice of use
and recordkeeping regulations? If the
answer is no, what other categories or
types of terms may the Judges’ prescribe
by regulation?
In addition, a footnote to the referral
indicates that the CRJs are particularly
interested in knowing whether it is the CRJs
or the Register that have authority to
prescribe regulations governing categories or
types of terms where those categories or
types of terms are not specifically identified
or delineated in the statute.
As required by 17 U.S.C.
§ 802(f)(1)(A)(ii), the Register hereby
responds to the CRJs.
II. Statutory Authority in Section 115
and Chapter 8 of Title 17.
Prior to 1995, the copyright law
empowered the Copyright Royalty
Tribunal and, subsequently, the
Copyright Arbitration Royalty Panels
(‘‘CARPs’’) and the Librarian of
Congress, to set only the rates applicable
to the section 115 license. This
authority was modified in 1995 by the
Digital Performance Right in Sound
Recording Act of 1995 in which
Congress added provisions to section
115 for ‘‘digital phonorecord
deliveries.’’ The CARPs became
authorized to set ‘‘reasonable terms and
rates of royalty payments’’ for digital
phonorecord deliveries (‘‘DPDs’’), and
these rates and terms were subject to
modification by the Librarian on
recommendation by the Register of
Copyrights. The same legislation
authorized the Librarian to ‘‘establish
requirements by which copyright
owners may receive reasonable notice of
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the use of their works..., and under
which records of such use shall be kept
and made available by persons making
digital phonorecord deliveries.’’ 17
U.S.C. § 115(c)(3)(D) (1996). With
respect to physical phonorecords, the
CARPs’ authority was limited to setting
rates; there was no statutory
authorization to set ‘‘terms.’’ See 17
U.S.C. § 801(b)(1) (1996). However, the
Register of Copyrights had the authority
to issue regulations concerning
payment. Section 115(c)(5) provided
(and continues to provide), in pertinent
part:
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Each monthly payment shall be made
under oath and shall comply with
requirements that the Register of
Copyrights shall prescribe by regulation.
The Register shall also prescribe
regulations under which detailed
cumulative annual statements of
account, certified by a certified public
accountant, shall be filed for every
compulsory license under this section.
The regulations covering both the
monthly and the annual statements of
account shall prescribe the form,
content, and manner of certification with
respect to the number of records made
and the number of records distributed.
This provision applies to both digital
phonorecord deliveries and physical
phonorecords.
Since 1978, section 115 has also
provided that persons wishing to use
the section 115 compulsory license
must serve a Notice of Intention to
Obtain Compulsory License on the
copyright owner, and that the ‘‘notice
shall comply, in form, content, and
manner of service, with requirements
that the Register of Copyrights shall
prescribe by regulation.’’ 17 U.S.C.
§ 115(b)(1).
In 2004, Congress passed the
Copyright Royalty and Distribution
Reform Act (‘‘CRDRA’’). This legislation
created the CRJs and empowered them
to set ‘‘terms and rates of royalty
payments’’ under section 115. See 17
U.S.C. § 801(b)(1). It also amended
section 115 to provide that the CRJs had
authority to set ‘‘reasonable rates and
terms of royalty payments’’ for use of
works under the license as well as
‘‘requirements by which records of such
use shall be kept and made available.’’
17 U.S.C. § 115(c)(3)(D). However, the
statutory provisions authorizing the
Register to regulate notice of intention
to obtain the section 115 license and
requirements regarding monthly
payment and monthly and annual
statements of account remained in
place.
III. Summary of Parties’ Arguments
The brief of the Digital Media
Association (‘‘DiMA’’) in response to the
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CRJs’ inquiry on its authority to set
certain terms asserts that to the extent
that the authority of the Register and the
CRJs overlap, their jurisdiction is
concurrent. Given this concurrent
jurisdiction, DiMA maintains that both
the Register and the CRJs may
administer the license in a way that
gives effect to the statute and avoids
inconsistency. In keeping with this
assertion, DiMA argues that the CRJs are
authorized to identify the revenue
against which the license rate should be
applied, define the work, and set forth
the scope of the activities covered by the
license.
The brief of the National Music
Publishers’ Association, the Songwriters
Guild of America, and the Nashville
Songwriters Association International
(collectively, ‘‘NMPA’’) in response to
the CRJs’ inquiry on its authority to set
certain terms asserts that CRJs have
broad authority to determine rates and
terms for the section 115 license.
Further, it notes that the CRJs have
express power to establish terms with
respect to late fees and that they may
specify notice and recordkeeping
requirements that apply in lieu of
existing regulations. In NMPA‘s
determination, the CRJs have the
authority to issue fees for payments that
are either late or are the result of a pass–
through arrangement. NMPA argues that
the CRJs are empowered to require
licensees to issue reports indicating the
specific configuration used, and in the
case of pass–through licenses, identify
the retailer through which delivery
occurred. NMPA then contends that the
CRJs are able to clarify whether the
license fee is to be calculated on
manufacture or distribution. It also
asserts that the Register is explicitly
granted authority over signing and
certification of statements of account
and that therefore the CRJs are not able
to modify existing regulations in these
areas, which are not properly
considered recordkeeping.
The brief of the Recording Industry of
America (‘‘RIAA’’) in response to the
CRJs’ inquiry on its authority to set
certain terms asserts that Congress split
the administration of the section 115
license between the CRJs and the
Register of Copyrights. In its
determination, the CRJs enjoy broad
authority to set rates as well as a more
limited authority to set terms of royalty
payments. Additionally, RIAA
maintains that the CRJs are empowered
to set rules regarding notice to copyright
owners of the use of their works and
recordkeeping of such use. However,
RIAA argues that the Copyright Office
has a broad authority to establish
detailed provisions that govern the
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48397
operation of the license. In RIAA‘s view,
section 803(c)(3) resolved any tension
between these competing authorities by
resolving that the CRJs’ final
determination in the areas of notice and
recordkeeping may supplant applicable
regulations by the Register. Under this
statutory interpretation, RIAA argues
that the CRJs are unable to issue
payment terms such as pass–through
fees or attorney‘s fees that conflict with
existing payment regulations. RIAA also
posits that the CRJs are unable to alter
the regulations regarding reserves or
notices of intention that have been
issued by the Register. On the other
hand, RIAA maintains that the CRJs are
able to clarify that the section 115
license extends to all reproductions
necessary to engage in activities covered
by the license. It asserts that the CRJs
are able to modify the current
provisions regarding when DPDs shall
be treated as distributed, as well as
those addressing audit and signature of
signature of statements of account.
IV. Register‘s Determination
Congress intentionally split the
administration of section 115 between
the CRJs and the Register of Copyrights.
The result of this division of authority
is that the CRJs may issue regulations
that supplant currently applicable
regulations, including those heretofore
issued by the Librarian of Congress,
solely in the areas of notice and
recordkeeping. 17 U.S.C. § 803(c)(3).
However, the scope of the CRJs’
authority in the areas of notice and
recordkeeping for the section 115
license must be construed in light of
Congress’s more specific delegation of
responsibility to the Register of
Copyrights, which includes the
authority to issue regulations regarding
notice of intention to obtain the section
115 license as well as those regarding
monthly payment and monthly and
annual statements of account. 17 U.S.C.
§ § 115(b)(1) and 115(c)(5). Moreover,
accepted principles of statutory
construction dictate that the CRJs’
authority to set ‘‘terms’’ must be
construed in light of the more specific
delegations of authority to the Register.
See Simpson v. United States, 435 U.S.
6, 15 (1978) (‘‘Precedence [is given] to
the terms of the more specific statute
where a general statute and a specific
statute speak to the same concern, even
if the general provision was enacted
later.’’).
In the CRDRA, Congress amended
section 115(c)(3)(D) to authorize the
CRJs to ‘‘establish requirements by
which copyright owners may receive
reasonable notice of the use of their
works under this section, and under
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Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices
which records of such use shall be kept
and made available by persons making
digital phonorecord deliveries.’’
Previously this power had been held by
the Librarian of Congress, who issued
such recommendations on the
recommendation of the Register of
Copyrights.. The CRDRA also added a
new section 803(c)(3), which allowed
the CRJs to ‘‘specify notice and
recordkeeping requirements of users of
the copyrights at issue that apply in lieu
of those that would otherwise apply
under regulations.’’ On its face it may
appear as if the CRJs are empowered to
supplant all current regulations in the
area of notice and recordkeeping.
However, the CRJs’ authority to issue
regulations in the areas of notice and
recordkeeping must be construed in
light of the specific grants of
responsibility over the section 115
license to the Register of Copyrights.
Simpson v. United States, 435 U.S. at
15.
With regard to the CRJs’ authority to
issue requirements by which copyright
owners may receive notice of the use of
their works under 17 U.S.C.
§ 115(c)(3)(D), the Register first notes
that the authority granted to the CRJs is
limited to notice of use that has already
taken place under the license. Notice of
a use that has already taken place under
the license is to be distinguished from
notice of intention to obtain the section
115 license, which must be served on
copyright owners prior to actual use
under the license. Regulations
governing notice of intention to obtain
the section 115 license remain within
the Register‘s authority. The CRJs’
authority over notice and recordkeeping
does not include the ability to supplant
the Register‘s regulations governing
notice of intention to obtain the section
115 license.
Notice of use requirements are also
limited by the Register‘s specific grant
of authority to issue regulations
regarding statements of account. These
regulations set forth information that is
required to be served on the copyright
owner in statements of account. While
the level of detail, which includes
requirements regarding oath, signature,
and indication of each phonorecord
configuration involved, is quite
extensive, the Register understands that
it may be conceivable that the CRJs may
determine that licensees should be
required to provide some information
related to notice of use that is not
addressed in either the notice of
intention to obtain the section 115
license or the statements of account. If
the CRJs are able to identify such
information that is not addressed in
either the notice of intention to obtain
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the section 115 license or the statements
of account, then the CRJs may require
that a licensee include that type of
information in a notice of use (but not
in the statement of account) to be served
on the copyright owner. Alternatively, a
recommendation by the CRJs to the
Register to amend the regulations
governing statements of account to
include additional information
presumably would meet with a
favorable response.
The CRJs’ authority to issue
requirements for recordkeeping is
similarly limited by specific grants of
authority to the Register. As previously
indicated, the Register has set forth
detailed requirements addressing the
type of information, including
phonorecord configuration, that is to be
served on the copyright owner in the
statements of account. Authority to
issue regulations regarding these
statements of account is the exclusive
domain of the Register. Of course, if the
CRJs set rates for new types of
configurations, the Register can amend
the regulations governing statements of
account accordingly.
In addition to the authority to issue
regulations in the areas of notice and
recordkeeping, the CRJs enjoy authority
to determine reasonable ‘‘rates and
terms’’ of the license. The power to
issue ‘‘terms’’ of the license was
established in the DPRSA and the scope
of this authority is addressed in the
legislative history of that Act. The
legislative history indicates that ‘‘terms’’
means such details as ‘‘how payments
are made, when and other accounting
matters,’’ as well as ‘‘related details.’’ S.
Rep. No. 104–128, at 40 (1995). As with
the CRJs’ authority over the areas of
notice and recordkeeping, the authority
to issue ‘‘terms’’ is limited by specific
statutory grants of authority to the
Register. If and to the extent that an
express statutory grant of authority to
the Register conflicts with an
interpretation of language in the
legislative history relating to the CRJs’
power to set terms on how payments are
made and other accounting matters, the
statutory text controls and the Register‘s
express authority is paramount.
However, to the extent that the
Register‘s authority does not extend to
particular matters relating to terms of
payment and related details which the
CRJs determine should be addressed,
the CRJs have the authority to
supplement the Register‘s regulations in
this area. The legislative history of the
DPSRA indicates that the CRJs’
authority to determine ‘‘terms’’ includes
additional terms ‘‘necessary to
effectively implement the statutory
license.’’ Id. at 30. Consistent with the
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legislative history, the Librarian of
Congress, in a previous determination
regarding the scope of ‘‘terms’’ in the
course of a 1998 proceeding addressing
the 114 license, concluded that the
authority to set reasonable terms
extends ‘‘only so far as those terms
insured the smooth administration of
the license.’’ Determination of
Reasonable Rates and Terms for the
Digital Performance of Sound
Recordings, 63 FR 25394, 25411 (May 8,
1998). See also Recording Industry
Association of America v. Librarian of
Congress, 176 F.3d 528, 531 (D.C. Cir.
1999) (Librarian of Congress’s authority
to set ‘‘terms’’ for the section 114
statutory license includes authority to
set terms relating to allocation of
royalties, to audits and to deductions
from royalties, but such determination
must be based on record evidence).
While the Register is not able to
exhaustively address all of the types of
terms that insure the ‘‘smooth
administration of the license’’ or are
‘‘necessary to effectively implement the
statutory license,’’ the Register does
conclude that the CRJs do have the
authority to issue requirements
regarding audit of statements of account
and records that are required to be kept.
See RIAA v. Librarian of Congress, 176
F.3d at 531. However, the Register
concludes that a provision entitling
copyright owners to recover attorney‘s
fees expended to collect past due
royalties is not among the types of
‘‘terms’’ that insure the ‘‘smooth
administration of the license’’ or are
‘‘necessary to effectively implement the
statutory license.’’ Moreover, the
statutory method for enforcement of the
section 115 license is found in section
115(c)(6), which provides that the
owner may issue a notice of default,
which unless remedied within 30 days
terminates the license and provides for
infringement action. Section 505
governs awards of attorney‘s fees in
infringement actions, and it is not
within the CRJs’ scope of authority to
provide for awards of attorney‘s fees
other than as provided in section 505.
The statutory method for enforcement
found in section 115(c)(6) appears to
foreclose other legal avenues by which
a copyright owner may seek remedy for
past due royalties and late fees.
However, even if other remedies are
available to recover past due royalties,
the well established ‘‘American Rule’’
that attorney‘s fees are available only
when explicitly established by statute or
through negotiated contract would
foreclose any conclusion that the CRJs
have the authority to impose an
attorney‘s fee regime on compulsory
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licensees. See Alyeska Pipeline Serv. Co.
v. Wilderness Soc‘y, 421 U.S. 240, 257
(U.S. 1975) (absent statute or
enforceable contract, litigants pay their
own attorneys’ fees). As section 115
does not contain an explicit provision
for attorney‘s fees, the CRJs are unable
to provide for awards of attorney‘s fees
in actions to collect past due royalties.
The CRJs do not have the authority to
issue rules setting forth the scope of
activities covered by the license.
However, the CRJs certainly have the
authority to set rates for different types
of DPDs. In so doing, they may have to
make determinations to identify
particular types of DPDs. Such
determinations may implicate the
question of what activity falls within the
scope of the license. In instances where
particular rates are being requested for
the creation of particular types of DPDs
and there is some question whether
these DPDs fall within the scope of the
license, those questions must be
resolved in the proceeding. When such
a question has not been determined
before, it is a novel question of law
which should be referred to the Register
under section 802(f)(1)(B). In any event,
any such determination by the CRJs will
be subject to review for legal error by
the Register under section 802(f)(1)(D).
NMPA has proposed that the CRJs
determine that the license fee is to be
calculated on the date of distribution,
not the date of manufacture. The CRJs’
authority to set rates and terms does
appear to be sufficiently broad to
include the authority to determine the
date on which the mechanical license
fee is to be calculated. However, we
caution that the legislative history of
section 115 suggests that the applicable
rate should be the date the phonorecord
is made. When the House Judiciary
Committee considered the language that
was to become section 115 of the 1976
Copyright Act in 1966 and 1967, it
stated that ‘‘the committee believes that,
unless a negotiated agreement provides
otherwise, the liability for royalties
should be fixed at the time
phonorecords are made under a
compulsory license.’’ Second
Supplementary Register‘s Report on the
General Revision of the U.S. Copyright
Law (1975) at 251. Moreover, it would
most likely be beyond the power of the
CRJs to provide that with respect to
phonorecords that have already (i.e.,
prior to the effective date of the current
rate determination) been manufactured,
the royalty fee is to be calculated as of
the date of distribution rather than the
date of manufacture. Such retroactive
rulemaking is in most cases beyond the
power of an agency. See Bowen v.
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Georgetown University Hospital, 488 U.
S. 204 (1988).
Finally, the CRJs request clarity
regarding their authority over terms of
late payments. Under section 803(c)(7),
the CRJs have a clear authority to
include terms with respect to late
payments. However, the Register notes
that this authority applies solely to
payments that are in fact past due.
August 8, 2008
David O. Carson
Acting Register of Copyrights
[FR Doc. E8–19198 Filed 8–18–08; 8:45 am]
BILLING CODE 1410–30–S
NATIONAL CREDIT UNION
ADMINISTRATION
Guidance Regarding Prohibitions
Imposed by Section 205(d) of the
Federal Credit Union Act
National Credit Union
Administration (NCUA).
AGENCY:
Final Interpretive Ruling and
Policy Statement 08–1.
ACTION:
SUMMARY: The NCUA is issuing an
Interpretive Ruling and Policy
Statement (IRPS) regarding prohibitions
imposed by Section 205(d) of the
Federal Credit Union Act (FCU Act) (12
U.S.C. 1785(d)(1)). Section 205(d) of the
FCU Act prohibits a person who has
been convicted of any criminal offense
involving dishonesty or breach of trust,
or who has entered into a pretrial
diversion or similar program in
connection with a prosecution for such
offense, from participating in the affairs
of an insured credit union except with
the prior written consent of the NCUA
Board. This IRPS provides direction and
guidance to federally-insured credit
unions and those persons who may be
affected by Section 205(d) because of a
prior criminal conviction or pretrial
diversion program participation by
describing the actions that are
prohibited under the statute and
establishing the procedures for applying
for NCUA Board consent on a case-bycase basis.
This IRPS is effective September
18, 2008.
DATES:
Jon
Canerday, Trial Attorney, Office of
General Counsel, at the National Credit
Union Administration, 1775 Duke
Street, Alexandria, Virginia 22314–
3428, by e-mail at canerday@ncua.gov
or by telephone at (703) 518–6548.
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
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A. Background
In April 2008, the NCUA Board
published a proposed IRPS regarding
the prohibition imposed by Section
205(d) of the FCU Act. 73 FR 18576
(April 4, 2008). Section 205(d) of the
FCU Act prohibits, without the prior
written consent of the NCUA Board, a
person convicted of any criminal
offense involving dishonesty or breach
of trust, or who has entered into a
pretrial diversion or similar program in
connection with a prosecution for such
offense, from becoming or continuing as
an institution-affiliated party, or
otherwise participating, directly or
indirectly, in the conduct of the affairs
of an insured credit union. The
comment period closed on June 3, 2008.
NCUA received seven comments on the
proposal. After consideration of the
comments, NCUA is finalizing the IRPS,
which generally adopts the guidance as
proposed.
B. Public Comments
NCUA welcomed general comments
on the proposed IRPS. In addition, the
Board specifically sought comments as
to whether the format of this guidance
as an IRPS was appropriate or whether
a regulation would be more suitable.
The Board invited comments as to
whether a specific form, similar to the
form required by the FDIC in connection
with a similar statute, should be used to
request consent pursuant to Section
205(d).
NCUA received seven comment
letters in response to the proposed IRPS:
two from federal credit unions, two
from national credit union trade
organizations, and three from credit
union leagues. The commenters
generally supported the need for the
guidance as contained in the proposed
IRPS and offered several suggestions
intended to assist the Board in
improving the proposed IRPS.
Two commenters believed that a
regulation was the more appropriate
format for the guidance. One of the
commenters who favored a regulation
thought a regulation provided greater
protection to a credit union that might
be challenged by a prospective
employee. Another commenter believed
a regulation was preferable because it
would help reinforce a credit union’s
right to appeal an adverse decision and
subject future changes to public notice
and comment. A third commenter
suggested the guidance should take the
form of a Letter to Credit Unions,
believing that format was more familiar
to credit union officials.
The Board appreciates the need to
provide protection for credit unions that
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[Federal Register Volume 73, Number 161 (Tuesday, August 19, 2008)]
[Notices]
[Pages 48396-48399]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-19198]
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LIBRARY OF CONGRESS
Copyright Office
[Docket No. RF 2008-1]
Division of Authority Between the Copyright Royalty Judges and
the Register of Copyrights under the Section 115 Statutory License
AGENCY: Copyright Office, Library of Congress.
ACTION: Final Order.
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SUMMARY: The Copyright Royalty Judges, acting pursuant to statute,
referred material questions of substantive law to the Register of
Copyrights concerning the division of authority between the Judges and
the Register of Copyrights under the section 115 statutory license.
Specifically, the Copyright Royalty Board requested a decision by the
Register of Copyrights regarding whether the Judges' authority to adopt
terms under the section 115 license is solely limited to late payment,
notice of use and recordkeeping regulations; and if the answer is no,
what other categories or types of terms may the Judges prescribe by
regulation. The Register of Copyrights responded in a timely fashion by
delivering a Memorandum Opinion to the Copyright Royalty Board on
August 8, 2008.
DATES: Effective Date: August 8, 2008.
FOR FURTHER INFORMATION CONTACT: Stephen Ruwe, Attorney Advisor, and
Tanya M. Sandros, General Counsel, Copyright GC/I&R, P.O. Box 70400,
Washington, DC 20024. Telephone: (202) 707-8380. Telefax: (202) 707-
8366.
SUPPLEMENTARY INFORMATION: In the Copyright Royalty and Distribution
Reform Act of 2004, Congress amended Title 17 to replace the copyright
arbitration royalty panel with the Copyright Royalty Judges (``CRJs'').
One of the functions of the CRJs is to make determinations and
adjustments of reasonable terms and rates of royalty payments as
provided in sections 112(e), 114, 115, 116, 118, 119 and 1004 of the
Copyright Act. The CRJs have the authority to request from the Register
of Copyrights (``Register'') an interpretation of any material question
of substantive law that relates to the construction of provisions of
Title 17 and arises out of the course of the proceeding before the
CRJs. See 17 U.S.C. 802(f)(1)(A)(ii).
On July 25, 2008, the CRJs delivered to the Register: (1) an Order
referring material questions of substantive law; and (2) the Briefs
filed with the CRJs by the Recording Industry Association of America;
the Digital Media Association; and National Music Publishers'
Association, Inc., the Songwriters Guild of America, and the Nashville
Songwriters Association International. The CRJs' delivery of the
request for an interpretation triggered the 14-day response period
prescribed in Section 802 of the Copyright Act. This statutory
provision states that the Register ``shall deliver to the Copyright
Royalty Judges a written response within 14 days after the receipt of
all briefs and comments from the participants.'' See 17 U.S.C.
802(f)(1)(A)(ii). The statute also requires that ``[t]he Copyright
Royalty Judges shall apply the legal interpretation embodied in the
response of the Register of Copyrights if it is timely delivered, and
[that] the response shall be included in the record that accompanies
the final determination.'' Id. On August 8, 2008, the Register
responded in a Memorandum Opinion to the CRJs that addressed the
material questions of law. To provide the public with notice of the
decision rendered by the Register, the Memorandum Opinion is reproduced
in its entirety, below.
Dated: August 12, 2008
David O. Carson,
Associate Register for Policy and International Affairs
Before the
U.S. Copyright Office
Library of Congress
Washington, D.C. 20559
In the Matter of
Mechanical and Digital Phonorecord
Delivery Rate Adjustment Proceeding
Docket No. RF 2008-1
----------------------------------
MEMORANDUM OPINION
ON MATERIAL QUESTIONS OF SUBSTANTIVE LAW
I. Procedural Background
On July 25, 2008, under the terms of 17 U.S.C. Sec.
802(f)(1)(A)(ii), the Copyright Royalty Judges (``CRJs'') referred to
the Register of Copyrights material questions of substantive law which
have arisen in this proceeding. The Copyright Royalty Judges included
briefs from the parties to the proceeding that had been submitted in
February, 2008 relating to the authority of the CRJs to set terms
governing the section 115 compulsory license.
After recounting the relevant statutory provisions of section 115
and Chapter 8 of Title 17, the CRJs posed the following questions:
Is the Judges' authority to adopt terms under the section 115
license solely limited to late payment, notice of use and
recordkeeping regulations? If the answer is no, what other
categories or types of terms may the Judges' prescribe by
regulation?
In addition, a footnote to the referral indicates that the CRJs are
particularly interested in knowing whether it is the CRJs or the
Register that have authority to prescribe regulations governing
categories or types of terms where those categories or types of
terms are not specifically identified or delineated in the statute.
As required by 17 U.S.C. Sec. 802(f)(1)(A)(ii), the Register
hereby responds to the CRJs.
II. Statutory Authority in Section 115 and Chapter 8 of Title 17.
Prior to 1995, the copyright law empowered the Copyright Royalty
Tribunal and, subsequently, the Copyright Arbitration Royalty Panels
(``CARPs'') and the Librarian of Congress, to set only the rates
applicable to the section 115 license. This authority was modified in
1995 by the Digital Performance Right in Sound Recording Act of 1995 in
which Congress added provisions to section 115 for ``digital
phonorecord deliveries.'' The CARPs became authorized to set
``reasonable terms and rates of royalty payments'' for digital
phonorecord deliveries (``DPDs''), and these rates and terms were
subject to modification by the Librarian on recommendation by the
Register of Copyrights. The same legislation authorized the Librarian
to ``establish requirements by which copyright owners may receive
reasonable notice of
[[Page 48397]]
the use of their works..., and under which records of such use shall be
kept and made available by persons making digital phonorecord
deliveries.'' 17 U.S.C. Sec. 115(c)(3)(D) (1996). With respect to
physical phonorecords, the CARPs' authority was limited to setting
rates; there was no statutory authorization to set ``terms.'' See 17
U.S.C. Sec. 801(b)(1) (1996). However, the Register of Copyrights had
the authority to issue regulations concerning payment. Section
115(c)(5) provided (and continues to provide), in pertinent part:
Each monthly payment shall be made under oath and shall comply
with requirements that the Register of Copyrights shall prescribe by
regulation. The Register shall also prescribe regulations under
which detailed cumulative annual statements of account, certified by
a certified public accountant, shall be filed for every compulsory
license under this section. The regulations covering both the
monthly and the annual statements of account shall prescribe the
form, content, and manner of certification with respect to the
number of records made and the number of records distributed.
This provision applies to both digital phonorecord deliveries and
physical phonorecords.
Since 1978, section 115 has also provided that persons wishing to
use the section 115 compulsory license must serve a Notice of Intention
to Obtain Compulsory License on the copyright owner, and that the
``notice shall comply, in form, content, and manner of service, with
requirements that the Register of Copyrights shall prescribe by
regulation.'' 17 U.S.C. Sec. 115(b)(1).
In 2004, Congress passed the Copyright Royalty and Distribution
Reform Act (``CRDRA''). This legislation created the CRJs and empowered
them to set ``terms and rates of royalty payments'' under section 115.
See 17 U.S.C. Sec. 801(b)(1). It also amended section 115 to provide
that the CRJs had authority to set ``reasonable rates and terms of
royalty payments'' for use of works under the license as well as
``requirements by which records of such use shall be kept and made
available.'' 17 U.S.C. Sec. 115(c)(3)(D). However, the statutory
provisions authorizing the Register to regulate notice of intention to
obtain the section 115 license and requirements regarding monthly
payment and monthly and annual statements of account remained in place.
III. Summary of Parties' Arguments
The brief of the Digital Media Association (``DiMA'') in response
to the CRJs' inquiry on its authority to set certain terms asserts that
to the extent that the authority of the Register and the CRJs overlap,
their jurisdiction is concurrent. Given this concurrent jurisdiction,
DiMA maintains that both the Register and the CRJs may administer the
license in a way that gives effect to the statute and avoids
inconsistency. In keeping with this assertion, DiMA argues that the
CRJs are authorized to identify the revenue against which the license
rate should be applied, define the work, and set forth the scope of the
activities covered by the license.
The brief of the National Music Publishers' Association, the
Songwriters Guild of America, and the Nashville Songwriters Association
International (collectively, ``NMPA'') in response to the CRJs' inquiry
on its authority to set certain terms asserts that CRJs have broad
authority to determine rates and terms for the section 115 license.
Further, it notes that the CRJs have express power to establish terms
with respect to late fees and that they may specify notice and
recordkeeping requirements that apply in lieu of existing regulations.
In NMPA`s determination, the CRJs have the authority to issue fees for
payments that are either late or are the result of a pass-through
arrangement. NMPA argues that the CRJs are empowered to require
licensees to issue reports indicating the specific configuration used,
and in the case of pass-through licenses, identify the retailer through
which delivery occurred. NMPA then contends that the CRJs are able to
clarify whether the license fee is to be calculated on manufacture or
distribution. It also asserts that the Register is explicitly granted
authority over signing and certification of statements of account and
that therefore the CRJs are not able to modify existing regulations in
these areas, which are not properly considered recordkeeping.
The brief of the Recording Industry of America (``RIAA'') in
response to the CRJs' inquiry on its authority to set certain terms
asserts that Congress split the administration of the section 115
license between the CRJs and the Register of Copyrights. In its
determination, the CRJs enjoy broad authority to set rates as well as a
more limited authority to set terms of royalty payments. Additionally,
RIAA maintains that the CRJs are empowered to set rules regarding
notice to copyright owners of the use of their works and recordkeeping
of such use. However, RIAA argues that the Copyright Office has a broad
authority to establish detailed provisions that govern the operation of
the license. In RIAA`s view, section 803(c)(3) resolved any tension
between these competing authorities by resolving that the CRJs' final
determination in the areas of notice and recordkeeping may supplant
applicable regulations by the Register. Under this statutory
interpretation, RIAA argues that the CRJs are unable to issue payment
terms such as pass-through fees or attorney`s fees that conflict with
existing payment regulations. RIAA also posits that the CRJs are unable
to alter the regulations regarding reserves or notices of intention
that have been issued by the Register. On the other hand, RIAA
maintains that the CRJs are able to clarify that the section 115
license extends to all reproductions necessary to engage in activities
covered by the license. It asserts that the CRJs are able to modify the
current provisions regarding when DPDs shall be treated as distributed,
as well as those addressing audit and signature of signature of
statements of account.
IV. Register`s Determination
Congress intentionally split the administration of section 115
between the CRJs and the Register of Copyrights. The result of this
division of authority is that the CRJs may issue regulations that
supplant currently applicable regulations, including those heretofore
issued by the Librarian of Congress, solely in the areas of notice and
recordkeeping. 17 U.S.C. Sec. 803(c)(3). However, the scope of the
CRJs' authority in the areas of notice and recordkeeping for the
section 115 license must be construed in light of Congress's more
specific delegation of responsibility to the Register of Copyrights,
which includes the authority to issue regulations regarding notice of
intention to obtain the section 115 license as well as those regarding
monthly payment and monthly and annual statements of account. 17 U.S.C.
Sec. Sec. 115(b)(1) and 115(c)(5). Moreover, accepted principles of
statutory construction dictate that the CRJs' authority to set
``terms'' must be construed in light of the more specific delegations
of authority to the Register. See Simpson v. United States, 435 U.S. 6,
15 (1978) (``Precedence [is given] to the terms of the more specific
statute where a general statute and a specific statute speak to the
same concern, even if the general provision was enacted later.'').
In the CRDRA, Congress amended section 115(c)(3)(D) to authorize
the CRJs to ``establish requirements by which copyright owners may
receive reasonable notice of the use of their works under this section,
and under
[[Page 48398]]
which records of such use shall be kept and made available by persons
making digital phonorecord deliveries.'' Previously this power had been
held by the Librarian of Congress, who issued such recommendations on
the recommendation of the Register of Copyrights.. The CRDRA also added
a new section 803(c)(3), which allowed the CRJs to ``specify notice and
recordkeeping requirements of users of the copyrights at issue that
apply in lieu of those that would otherwise apply under regulations.''
On its face it may appear as if the CRJs are empowered to supplant all
current regulations in the area of notice and recordkeeping. However,
the CRJs' authority to issue regulations in the areas of notice and
recordkeeping must be construed in light of the specific grants of
responsibility over the section 115 license to the Register of
Copyrights. Simpson v. United States, 435 U.S. at 15.
With regard to the CRJs' authority to issue requirements by which
copyright owners may receive notice of the use of their works under 17
U.S.C. Sec. 115(c)(3)(D), the Register first notes that the authority
granted to the CRJs is limited to notice of use that has already taken
place under the license. Notice of a use that has already taken place
under the license is to be distinguished from notice of intention to
obtain the section 115 license, which must be served on copyright
owners prior to actual use under the license. Regulations governing
notice of intention to obtain the section 115 license remain within the
Register`s authority. The CRJs' authority over notice and recordkeeping
does not include the ability to supplant the Register`s regulations
governing notice of intention to obtain the section 115 license.
Notice of use requirements are also limited by the Register`s
specific grant of authority to issue regulations regarding statements
of account. These regulations set forth information that is required to
be served on the copyright owner in statements of account. While the
level of detail, which includes requirements regarding oath, signature,
and indication of each phonorecord configuration involved, is quite
extensive, the Register understands that it may be conceivable that the
CRJs may determine that licensees should be required to provide some
information related to notice of use that is not addressed in either
the notice of intention to obtain the section 115 license or the
statements of account. If the CRJs are able to identify such
information that is not addressed in either the notice of intention to
obtain the section 115 license or the statements of account, then the
CRJs may require that a licensee include that type of information in a
notice of use (but not in the statement of account) to be served on the
copyright owner. Alternatively, a recommendation by the CRJs to the
Register to amend the regulations governing statements of account to
include additional information presumably would meet with a favorable
response.
The CRJs' authority to issue requirements for recordkeeping is
similarly limited by specific grants of authority to the Register. As
previously indicated, the Register has set forth detailed requirements
addressing the type of information, including phonorecord
configuration, that is to be served on the copyright owner in the
statements of account. Authority to issue regulations regarding these
statements of account is the exclusive domain of the Register. Of
course, if the CRJs set rates for new types of configurations, the
Register can amend the regulations governing statements of account
accordingly.
In addition to the authority to issue regulations in the areas of
notice and recordkeeping, the CRJs enjoy authority to determine
reasonable ``rates and terms'' of the license. The power to issue
``terms'' of the license was established in the DPRSA and the scope of
this authority is addressed in the legislative history of that Act. The
legislative history indicates that ``terms'' means such details as
``how payments are made, when and other accounting matters,'' as well
as ``related details.'' S. Rep. No. 104-128, at 40 (1995). As with the
CRJs' authority over the areas of notice and recordkeeping, the
authority to issue ``terms'' is limited by specific statutory grants of
authority to the Register. If and to the extent that an express
statutory grant of authority to the Register conflicts with an
interpretation of language in the legislative history relating to the
CRJs' power to set terms on how payments are made and other accounting
matters, the statutory text controls and the Register`s express
authority is paramount. However, to the extent that the Register`s
authority does not extend to particular matters relating to terms of
payment and related details which the CRJs determine should be
addressed, the CRJs have the authority to supplement the Register`s
regulations in this area. The legislative history of the DPSRA
indicates that the CRJs' authority to determine ``terms'' includes
additional terms ``necessary to effectively implement the statutory
license.'' Id. at 30. Consistent with the legislative history, the
Librarian of Congress, in a previous determination regarding the scope
of ``terms'' in the course of a 1998 proceeding addressing the 114
license, concluded that the authority to set reasonable terms extends
``only so far as those terms insured the smooth administration of the
license.'' Determination of Reasonable Rates and Terms for the Digital
Performance of Sound Recordings, 63 FR 25394, 25411 (May 8, 1998). See
also Recording Industry Association of America v. Librarian of
Congress, 176 F.3d 528, 531 (D.C. Cir. 1999) (Librarian of Congress's
authority to set ``terms'' for the section 114 statutory license
includes authority to set terms relating to allocation of royalties, to
audits and to deductions from royalties, but such determination must be
based on record evidence).
While the Register is not able to exhaustively address all of the
types of terms that insure the ``smooth administration of the license''
or are ``necessary to effectively implement the statutory license,''
the Register does conclude that the CRJs do have the authority to issue
requirements regarding audit of statements of account and records that
are required to be kept. See RIAA v. Librarian of Congress, 176 F.3d at
531. However, the Register concludes that a provision entitling
copyright owners to recover attorney`s fees expended to collect past
due royalties is not among the types of ``terms'' that insure the
``smooth administration of the license'' or are ``necessary to
effectively implement the statutory license.'' Moreover, the statutory
method for enforcement of the section 115 license is found in section
115(c)(6), which provides that the owner may issue a notice of default,
which unless remedied within 30 days terminates the license and
provides for infringement action. Section 505 governs awards of
attorney`s fees in infringement actions, and it is not within the CRJs'
scope of authority to provide for awards of attorney`s fees other than
as provided in section 505. The statutory method for enforcement found
in section 115(c)(6) appears to foreclose other legal avenues by which
a copyright owner may seek remedy for past due royalties and late fees.
However, even if other remedies are available to recover past due
royalties, the well established ``American Rule'' that attorney`s fees
are available only when explicitly established by statute or through
negotiated contract would foreclose any conclusion that the CRJs have
the authority to impose an attorney`s fee regime on compulsory
[[Page 48399]]
licensees. See Alyeska Pipeline Serv. Co. v. Wilderness Soc`y, 421 U.S.
240, 257 (U.S. 1975) (absent statute or enforceable contract, litigants
pay their own attorneys' fees). As section 115 does not contain an
explicit provision for attorney`s fees, the CRJs are unable to provide
for awards of attorney`s fees in actions to collect past due royalties.
The CRJs do not have the authority to issue rules setting forth the
scope of activities covered by the license. However, the CRJs certainly
have the authority to set rates for different types of DPDs. In so
doing, they may have to make determinations to identify particular
types of DPDs. Such determinations may implicate the question of what
activity falls within the scope of the license. In instances where
particular rates are being requested for the creation of particular
types of DPDs and there is some question whether these DPDs fall within
the scope of the license, those questions must be resolved in the
proceeding. When such a question has not been determined before, it is
a novel question of law which should be referred to the Register under
section 802(f)(1)(B). In any event, any such determination by the CRJs
will be subject to review for legal error by the Register under section
802(f)(1)(D).
NMPA has proposed that the CRJs determine that the license fee is
to be calculated on the date of distribution, not the date of
manufacture. The CRJs' authority to set rates and terms does appear to
be sufficiently broad to include the authority to determine the date on
which the mechanical license fee is to be calculated. However, we
caution that the legislative history of section 115 suggests that the
applicable rate should be the date the phonorecord is made. When the
House Judiciary Committee considered the language that was to become
section 115 of the 1976 Copyright Act in 1966 and 1967, it stated that
``the committee believes that, unless a negotiated agreement provides
otherwise, the liability for royalties should be fixed at the time
phonorecords are made under a compulsory license.'' Second
Supplementary Register`s Report on the General Revision of the U.S.
Copyright Law (1975) at 251. Moreover, it would most likely be beyond
the power of the CRJs to provide that with respect to phonorecords that
have already (i.e., prior to the effective date of the current rate
determination) been manufactured, the royalty fee is to be calculated
as of the date of distribution rather than the date of manufacture.
Such retroactive rulemaking is in most cases beyond the power of an
agency. See Bowen v. Georgetown University Hospital, 488 U. S. 204
(1988).
Finally, the CRJs request clarity regarding their authority over
terms of late payments. Under section 803(c)(7), the CRJs have a clear
authority to include terms with respect to late payments. However, the
Register notes that this authority applies solely to payments that are
in fact past due.
August 8, 2008
David O. Carson
Acting Register of Copyrights
[FR Doc. E8-19198 Filed 8-18-08; 8:45 am]
BILLING CODE 1410-30-S
