Authentication of Electronic Signatures on Electronically Filed Statements of Account, 22884-22886 [2017-10219]

Agencies

• Library of Congress
• Copyright Office

[Federal Register Volume 82, Number 96 (Friday, May 19, 2017)]
[Rules and Regulations]
[Pages 22884-22886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-10219]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 201

[Docket No. 2013-5]


Authentication of Electronic Signatures on Electronically Filed 
Statements of Account

AGENCY: U.S. Copyright Office, Library of Congress.

ACTION: Final rule.

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SUMMARY: The United States Copyright Office is amending its regulation 
prescribing requirements related to the submission of Statements of 
Account under the section 111 license for secondary transmissions of 
broadcast programming by cable systems. The amendments will allow cable 
systems operating under the statutory license to electronically sign 
Statements of Account, and to submit them to the Office electronically.

DATES: Effective June 19, 2017.

FOR FURTHER INFORMATION CONTACT: Sarang V. Damle, General Counsel and 
Associate Register of Copyrights, by email at sdam@loc.gov, or Regan A. 
Smith, Deputy General Counsel, by email at resm@loc.gov. Each can be 
contacted by telephone by calling (202) 707-8350.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 111 of the Copyright Act, title 17 of the United States 
Code, provides cable operators with a statutory license to retransmit a 
performance or display of a work embodied in a primary transmission 
made by a television station licensed by the Federal Communications 
Commission (``FCC''). As section 111 directs, the Copyright Office has 
issued a regulation prescribing deposit requirements for cable 
operators to make use of this license. 37 CFR 201.17; see 17 U.S.C. 
111(d). Cable system statutory licensees are required to file 
Statements of Account (``SOAs'') and pay royalty and filing fees to the 
Copyright Office, which are received by its Licensing Division. SOAs 
contain information on a cable operator's channel line-ups and gross 
receipts for the sale of cable service to the public. Cable systems are 
directed to file either a short- or long-form SOA (called the ``SA1/2'' 
and ``SA3'' forms, respectively), depending upon whether the system has 
reported semiannual gross receipts of more or less than $527,600. 37 
CFR 201.17(d). Payments made under the cable statutory license are 
remitted semi-annually to the Office, which invests the royalties in 
United States Treasury securities pending distribution of the funds to 
those copyright owners who are entitled to receive a share of the fees.
    Currently, the process for submission of SOAs is paper-based, and 
each cable system filer (or ``remitter'') is required to include ``the 
handwritten signature'' of a person of authority (e.g., a corporate 
officer if the system is owned by a corporation) accompanying a 
``declaration of the veracity of the statements of fact contained in 
the [SOA] and the good faith of the person signing in making such 
statement of fact.'' 37 CFR 201.17(e)(14). On June 26, 2013, the 
Copyright Office issued a notice of proposed rulemaking (``NPRM'') 
proposing amendments to its regulations to allow remitters to use 
electronic signatures and file Statements of Account electronically. 78 
FR 38240 (June 26, 2013). At that time, as part of a broader 
reengineering of the workflow of the Licensing Division, the Office was 
in the process of configuring and deploying a software package to serve 
as an electronic filing system. 78 FR at 38241. The NPRM presumed that 
electronic signatures and submission of SOAs, and, eventually, royalty 
payments, would occur through deployment of this new system. The Office 
received two comments in response to the NPRM: One from National Cable 
& Telecommunications Association (``NCTA''), which is addressed below, 
and another from Hooks Management Group, LLC, which expressed overall 
support for electronic filing.
    Since the issuance of the NPRM, the Office discovered a number of 
issues with the development of the new system, which caused 
reassessment of the project in its original form.\1\ Accordingly, the 
Office shifted efforts to identify a more cost-effective and efficient 
solution, and requested that the Library of Congress terminate the 
contract.
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    \1\ For example, the vendor hired to develop this software 
indicated that it would be unable to fulfill the deliverables under 
the current development contract and that basic operation and 
maintenance would rise in 2017 to a costly annual overhead expense. 
Further, the Office learned that after June 2018, the vendor would 
no longer be supporting the software version that had been licensed, 
and that a significant additional expenditure of funds would be 
necessary to move the project to a new software version.
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    At that same time, the Office made plans to develop an alternate, 
spreadsheet-based form to allow the electronic submission of SOAs. In 
addition to the PDF forms already available on the Office's Web site, 
the

[[Page 22885]]

Office will now post fillable electronic short- and long-form SOAs 
(``SA1/2E'' and ``SA3E'' forms) on its Web site at https://www.copyright.gov/licensing/ and https://www.copyright.gov/forms/. 
These forms employ a format similar to a preparatory tool already used 
by many stakeholders to file SOAs with the Office, while making the 
forms and option of electronic submission available to all remitters. 
Informal feedback from stakeholders regarding the Office's decision to 
terminate the original project and implement a more cost-effective 
solution has been positive.

II. Discussion

    The Office now amends its regulations to permit the electronic 
signature and submission of SOAs. These regulatory amendments are 
expected to allow the Office to immediately receive SOAs submitted by 
remitters via email. Permitting electronic submission and signatures 
will provide a more efficient and convenient method for remitters over 
the current paper-based system. In addition, electronic submission of 
documents will provide the data included in SOAs in a more useable 
format to the Office and to copyright owners interested in viewing and 
extracting this information.
    The comments focused principally on the electronic authentication 
and signature requirement of the proposed rule. As discussed below, the 
Office has simplified its approach to electronic signature and 
submission of SOAs from that set forth in the NPRM. This new approach 
has allowed the Office to streamline the regulatory language of the 
proposed rule.
    Signatures. The NPRM had presumed it was necessary to establish ``a 
robust identity authentication system for the preparation and 
electronic filing of SOAs.'' 78 FR at 38241. In part, this was because 
the electronic system as originally conceived would eventually be 
expanded to handle royalty payments. Under this assumption, the NPRM 
tentatively concluded that it was necessary to implement a Level 3-
qualifying method of identity assurance used for electronic 
transactions filed with the federal government under the Office of 
Management and Budget (``OMB'')'s manual, E-Authentication Guidance for 
Federal Agencies, [OMB 04-04]. Id. at 38242. Among other things, this 
authentication would establish ``the identity of the individual(s) 
preparing the form'' and ``the individual(s) charged with the 
responsibility of certifying and signing the SOA during a secure online 
session.'' Id.
    In its comment, NCTA urged the Office ``to modify its rules to 
expressly permit the use of facsimile or `s-signatures' on paper 
statements of account.'' NCTA Comments at 1. NCTA suggested that 
allowing cable operators to use ``s-signatures'' (e.g.,/s/John Smith) 
would provide greater flexibility in preparing submissions, without 
posing a risk to copyright owners. NCTA also suggested that the 
``robust identity authentication system,'' with ``complex'' 
accompanying rules envisioned by the NPRM was overly complex, and 
pointed out that the FCC has not adopted an authentication or 
verification process when accepting routine filings by NCTA members. 
NCTA Comments at 4-5.
    In light of NCTA's comment, and the decision to move to a different 
solution for electronic completion and submission of SOAs, the Office 
has reassessed its requirements with respect to electronic submission 
and use of electronic signatures. Under the reconceived procedure, 
electronic SOAs would come in on their own, and royalty payments would 
continue to separately be sent to the Office using an electronic funds 
transfer. This diminishes the need for a robust authentication system. 
Indeed, the OMB's guidance for authentication and verification is not 
intended to apply to electronically signed documents.\2\ The Office 
also recently assessed the requirements for electronic signatures in a 
recently published notice of proposed rulemaking concerning the 
modernization of copyright recordation (``Recordation NPRM''), which 
tentatively concluded that documents bearing electronic signatures 
should be recordable under section 205. As the Recordation NPRM also 
noted, the Electronic Signatures in Global and National Commerce Act 
(``E-Sign Act''), enacted in 2000, provides that ``with respect to any 
transaction in or affecting interstate or foreign commerce . . . a 
signature, contract, or other record relating to such transaction may 
not be denied legal effect, validity, or enforceability solely because 
it is in electronic form.'' 15 U.S.C. 7001(a)(1). The E-Sign Act 
defines ``electronic signature'' broadly as ``an electronic sound, 
symbol, or process, attached to or logically associated with a contract 
or other record and executed or adopted by a person with the intent to 
sign the record.'' Id. at 7006(5). Although the E-Sign Act does not 
restrict the Office's authority to issue regulations related to section 
111, the Office views the E-Sign Act as persuasive guidance.
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    \2\ E-Authentication Guidance for Federal Agencies, [OMB 04-04], 
Sec.  1.2 (Dec. 16, 2003).
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    The Government Paperwork Elimination Act is also persuasive, in 
that it directs executive agencies to provide ``for the option of 
electronic maintenance, submission, or disclosure of information, when 
practicable as a substitute for paper'' and ``for the use and 
acceptance of electronic signatures, when practicable.'' See Public Law 
105-277, tit. xvii, sec. 1704, 112 Stat. 2681, 2681-750 (1998). And, as 
NCTA pointed out, other agencies, including the FCC and the United 
States Patent and Trademark Office, already consider electronic or s-
signatures to be valid original signatures on virtually all documents. 
NCTA Comments at 3.
    Based on this reassessment, the final rule amends the signature 
requirements in section 201.17(e)(14) to expressly permit the 
submission of any legally valid signature, including electronic 
signatures, and does not include some of the more complex definitions 
and requirements proposed by the NPRM as a new section 201.17(e)(15). 
In addition, the Office is removing the current handwritten signature 
requirement, and will now allow the use of electronic or s-signatures 
on all forms--e.g, the paper SA1/2 and SA3 forms, and their electronic 
counterparts designated as SA1/2E, and SA3E--although the Office will 
continue to accept handwritten signatures on the paper-based SA1/2 and 
SA3 forms.
    Accounting Periods and Deposits. To account for electronic 
submission, and as set out in the proposed rule, the Office is removing 
the term ``physically'' from Section 201.17(c)(2), which presently 
includes a reference to SOAs being ``physically received.''
    Forms; Electronic Submission. The Office is amending section 
201.17(d) to account for its provision of the electronic forms, as 
described above. In addition, the amendment makes explicit that SOAs 
should be submitted to the Licensing Division in accordance with 
instructions provided on the form itself or otherwise made available on 
the Office's Web site at https://www.copyright.gov/licensing/. In 
practice, as it has done with other electronically submitted forms, 
such as notices submitted under section 115, the Office plans to 
require the electronic forms (e.g., the SA1/2E and SA3E forms) to be 
submitted electronically, and to allow paper-based forms (e.g., the 
SA1/2 and SA3 forms) to be submitted either via physical mail or 
electronically.\3\
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    \3\ See Requirements and Instructions for Electronically 
Submitting a Section 115 Notice of Intention to the Copyright 
Office, https://www.copyright.gov/licensing/115/noi-instructions.html (``The NOI must be emailed as an Excel file, and 
must not be converted to PDF or any other file format.'').

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[[Page 22886]]

    Copies of Statements of Account. In light of the changes to section 
201.17(d), which clarify that instructions for submitting forms will be 
provided by the Office on its Web site or the form itself, the Office 
is removing section 201.17(l), which currently proscribes the number of 
physical copies that must be filed by licensees.
    Corrections, Supplemental Payments, and Refunds. As raised in the 
NPRM, and following the same rationale allowing for the electronic 
signature and submission of SOAs, the Office is updating its rule to 
allow for electronic signatures and submission in connection with 
corrections, supplemental payments, and refunds. In addition, as 
proposed in the NPRM, the Office is now codifying its practice of 
accepting a signed and certified amended SOA in lieu of a sworn 
affidavit or statement under 28 U.S.C. 1746 currently required by the 
regulation. In practice, the Office receives few sworn affidavits or 
statements that are not part of an amended SOA, and so to facilitate 
efficiency and clarity, the final rule removes references to separate 
affidavits or statements and simply requires remitters to submit an 
amended SOA.
    Batch Submissions. The proposed rule also included language 
permitting the submission of multiple SOAs by the same cable operator 
in one group or ``batch'' filing. NCTA's comment raised a concern that 
this change would be ``unnecessarily burdensome'' by imposing overly 
rigid requirements for the review, signature, and submission of SOAs 
upon remitters. NCTA Comments at 4. In light of the Office's redirected 
efforts described above and NCTA's comment, the final rule does not 
include this originally-proposed amendment.

List of Subjects in 37 CFR Part 201

    Copyright.

Regulations

    For the reasons set forth in the preamble, the Copyright Office 
amends 37 CFR part 201 as follows:

PART 201--GENERAL PROVISIONS

0
1. The authority citation for part 201 continues to read as follows:

    Authority: 17 U.S.C. 702.

0
2. Amend Sec.  201.17 by:
0
a. Revising the first sentence of paragraph (c)(2);
0
b. Revising paragraph (d);
0
c. Revising paragraphs (e)(14) introductory text and (e)(14)(iii)(A);
0
d. Removing paragraph (l);
0
e. Redesignating paragraphs (m) and (n) as paragraphs (l) and (m), 
respectively; and
0
f. Revising newly redesignated paragraph (l)(4)(iii)(B).
    The revisions read as follows:


Sec.  201.17  Statements of account covering compulsory licenses for 
secondary transmissions by cable systems.

* * * * *
    (c) * * *
    (2) Upon receiving a Statement of Account and royalty fee, the 
Copyright Office will make an official record of the actual date when 
such Statement and fee were received in the Copyright Office. * * *
* * * * *
    (d) Statement of Account forms and submission. Cable systems should 
submit each Statement of Account using an appropriate form provided by 
the Copyright Office on its Web site and following the instructions for 
completion and submission provided on the Office's Web site or the form 
itself.
    (e) * * *
    (14) A legally binding signature, including an electronic signature 
as defined in 15 U.S.C. 7006, of:
    (iii) * * *
    (A) The printed name of the person signing the Statement of 
Account;
* * * * *
    (l) * * *
    (4) * * *
    (iii) * * *
    (B) In the case of a request filed under paragraph (m)(2)(ii) of 
this section, where the royalty fee was miscalculated and the amount 
deposited in the Copyright Office was either too high or too low, the 
request must be accompanied by an amended Statement of Account. The 
amended Statement shall include an explanation of why the royalty fee 
was improperly calculated and a detailed analysis of the proper royalty 
calculations.
* * * * *

    Dated: May 12, 2017.
Karyn Temple Claggett,
Acting Register of Copyrights and Director of the U.S. Copyright 
Office.
    Approved by:
Carla D. Hayden,
Librarian of Congress.
[FR Doc. 2017-10219 Filed 5-18-17; 8:45 am]
 BILLING CODE 1410-30-P