Regulation Concerning Proxy Distributions for Unmatched Royalties Deposited During 2010-2018

• Published date: 29 May 2020
• Record Number: 2020-11131
• Section: Proposed rules
• Court: Copyright Royalty Board,Library Of Congress

32323

Federal Register / Vol. 85, No. 104 / Friday, May 29, 2020 / Proposed Rules

1

SoundExchange, Inc., has been the Collective

since the inception of the two licenses.

2

The Copyright Office approved a similar

proposal in 2004 covering the 1998 to 2004 period.

69 FR 58261 (Sept. 30, 2004).

3

SoundExchange submitted its letter further to

Docket No. 14–CRB–0005 RM, Notice and

Recordkeeping for Use of Sound Recordings Under

Statutory License, which is still pending with the

Judges. The 2014 petition included, among other

proposals, a provision that would authorize

SoundExchange to distribute royalties that did not

have a useable, matching report of use by a proxy

methodology that SoundExchange would develop

in its discretion, on an ongoing basis. Letter from

Steven R. Englund, Counsel for SoundExchange,

Inc. (SoundExchange Letter II) at 2.

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Mark Schultz,

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[FR Doc. 2020–11417 Filed 5–28–20; 8:45 am]

BILLING CODE 4000–01–P

LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 370

[Docket No. 20–CRB–0007–RM]

Regulation Concerning Proxy

Distributions for Unmatched Royalties

Deposited During 2010–2018

AGENCY

: Copyright Royalty Board,

Library of Congress.

ACTION

: Proposed rule.

SUMMARY

: The Copyright Royalty Judges

are proposing to amend their regulations

concerning proxy distributions for

unmatched royalties deposited pursuant

to statutory license for the period 2010

through 2018.

DATES

: Comments are due no later than

June 29, 2020.

ADDRESSES

: You may submit comments

and proposals, identified by docket

number 20–CRB–0007–RM, online via

eCRB, the Copyright Royalty Board’s

online electronic filing application, at

https://app.crb.gov/.

Instructions: All submissions must

include a reference to the CRB and this

docket number. All submissions will be

posted without change to eCRB at

https://app.crb.gov/ including any

personal information provided.

Docket: For access to the docket to

read submitted background documents

or comments, go to eCRB, the Copyright

Royalty Board’s electronic filing and

case management system, at https://

app.crb.gov/, and search for docket

number 20–CRB–0007–RM.

FOR FURTHER INFORMATION CONTACT

:

Anita Blaine, CRB Program Specialist,

by telephone at (202) 707–7658 or email

at crb@loc.gov.

SUPPLEMENTARY INFORMATION

:

Background

The Copyright Act grants copyright

owners of sound recordings the

exclusive right to perform their works

publicly by means of digital audio

transmissions subject to certain

limitations and exceptions. Among the

limitations placed on the performance

right for sound recordings is a statutory

license that permits certain eligible

subscription, nonsubscription, satellite

digital audio radio services, and

business establishment services to

perform those sound recordings

publicly by means of digital audio

transmissions. 17 U.S.C. 114.

Similarly, copyright owners of sound

recordings are granted the exclusive

right to make copies of their works

subject to certain limitations and

exceptions. Among the limitations

placed on the reproduction right for

sound recordings is a statutory license

that permits certain eligible

subscription, nonsubscription, satellite

digital audio radio services, and

business establishment services to make

ephemeral copies of those sound

recordings to facilitate their digital

transmission. 17 U.S.C. 112(e).

Both the section 114 and 112 licenses

require services to, among other things,

pay royalty fees and to report to

copyright owners of sound recordings

on the use of their works. Both licenses

direct the Copyright Royalty Judges

(‘‘Judges’’) to determine the royalty rates

to be paid, 17 U.S.C. 114(f)(1)(A),

(f)(2)(A) and 17 U.S.C. 112(e)(3), and to

establish regulations to give copyright

owners reasonable notice of the use of

their works and create and maintain

records of use for delivery to copyright

owners. 17 U.S.C. 114(f)(4)(A) and 17

U.S.C. 112(e)(4). The royalty fees

collected under the section 114 and 112

licenses, as determined by the Judges,

are paid to a central source known as a

Collective.

1

37 CFR 380.2(a). The

purpose of the notice and recordkeeping

requirement is to ensure that the

royalties collected under the statutory

licenses are distributed to the correct

recipients.

On March 24, 2011, SoundExchange

petitioned the Judges to commence a

rulemaking proceeding to consider

adopting regulations to authorize

SoundExchange, when a licensee fails to

provide usable reports of use, to use

reporting data from certain other

licensees (proxy reporting data) as a

basis for distributing sound recording

royalties deposited by that licensee

during the period prior to 2010 to

copyright owners and performers.

Petition of SoundExchange, Inc. for a

Rulemaking to Authorize Use of a Proxy

to Distribute Certain Pre-2010 Sound

Recording Royalties at 1–2 and n.1,

Docket No. RM 2011–5 (March 24,

2011). After notice and comment, the

Judges adopted SoundExchange’s

proposal to use proxy reporting data to

permit distribution of royalties collected

for the period April 1, 2004, through

December 31, 2009, for the public

performance of sound recordings by

means of digital audio transmissions

pursuant to statutory license for those

services for which no reports of use

were submitted or for which the reports

of use were unusable. 76 FR 45695

(Aug. 1, 2011).

2

On November 20, 2018,

SoundExchange requested that the

Judges amend the Judges’ regulations to

authorize SoundExchange to continue to

use proxy reporting data to distribute to

copyright owners and performers

certain sound recording royalties

collected by SoundExchange for periods

before January 1, 2019, that are

otherwise undistributable due to

licensees’ failure to provide reports of

use or their provision of reports of use

that are so deficient as to be unusable.

Letter from Steven R. Englund, Counsel

for SoundExchange, Inc., Docket No.

14–CRB–0005 (RM) (SoundExchange

Letter I).

3

SoundExchange stated that it

was holding $24 million in royalties for

the period 2010 through 2016 and

additional royalties for 2017 that are

undistributable due to missing or

unusable reports of use. SoundExchange

Letter I at 1 & n.1.

SoundExchange renewed its request

on April 23, 2020. SoundExchange

Letter II. In that letter, SoundExchange

stated it was holding approximately $32

million in statutory royalties for the

period 2010 through 2018 and requested

that the Judges authorize

SoundExchange to distribute these

royalties using the same ‘‘annual/license

type methodology’’ that the Judges

approved in 2011. SoundExchange

Letter II at 2, citing 37 CFR 370.3(i),

370.4(f). SoundExchange requested that

the Judges change the dates in the

current applicable regulations from

2010 to 2019, which would authorize

SoundExchange to distribute royalties

from the period 2010 through 2018 by

using proxy reports of use.

SoundExchange Letter II at 2–3.

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32324

Federal Register / Vol. 85, No. 104 / Friday, May 29, 2020 / Proposed Rules

In light of SoundExchange’s requests,

the Judges propose to authorize

SoundExchange to continue to use the

proxy distribution methodologies in 37

CFR 370.3(i), and 370.4(f) to distribute

royalties for the period 2010 through

2018. Although the current regulations

use the mandatory ‘‘shall,’’ the Judges

propose to use the permissive ‘‘may’’ to

authorize such distributions.

Solicitation of Comments on the

Proposed Regulations

The Judges seek comment from

interested parties on the Judges’

proposal to permit SoundExchange to

use a proxy for the distribution of

royalties collected under the section 114

and 112 licenses for the period 2010

through 2018. In addition to general

comments regarding the proposal, the

Judges seek comments on the following

areas:

1. SoundExchange has requested that

the Judges extend the current

regulations that require rather than

permit SoundExchange to use a proxy

distribution methodology for allocating

royalties that SoundExchange cannot

match with a report of use. The

regulations that the Judges propose

would permit but not require

SoundExchange to use such a proxy

methodology. The Judges seek comment

on the propriety of the proposed change

regarding SoundExchange’s ability to

distribute unmatched royalties.

2. Has SoundExchange exhausted all

reasonable means to ensure that all

undistributed royalties for the period

from 2010 through 2018, have been

distributed to the party that earned

those royalties? If not, what other means

could SoundExchange use to facilitate

further distributions without resorting

to proxy reports of use?

3. Assuming that SoundExchange has

exhausted all reasonable means of

distributing royalties to the parties who

earned them, is the proposed use of

proxy reports a fair and appropriate

means of distributing remaining

royalties for this period? If not, what

would be a better alternative?

List of Subjects in 37 CFR Part 370

Copyright, Sound recordings.

Proposed Regulations

For the reasons set forth in the

preamble, and under the authority of

chapter 8, title 17, United States Code,

the Copyright Royalty Judges propose to

amend part 370 of Title 37 of the Code

of Federal Regulations as follows:

PART 370—NOTICE AND

RECORDKEEPING REQUIREMENTS

FOR STATUTORY LICENSES

■1. The authority citation for part 370

is revised to read as follows:

Authority: 17 U.S.C. 112(e), 114(f),

803(b)(6)(A).

■2. Amend § 370.3 by revising

paragraph (i) to read as follows:

§ 370.3 Reports of use of sound

recordings under statutory license for

preexisting subscription services.

* * * * *

(i) In any case in which a preexisting

subscription service has not provided a

report of use required under this section

for use of sound recordings under

section 112(e) or section 114 of title 17

of the United States Code, or both, prior

to January 1, 2019, reports of use for the

corresponding calendar year filed by

other preexisting subscription services

may serve as the reports of use for the

non-reporting service, solely for

purposes of distribution of any

corresponding royalties by the

Collective.

■3. Amend § 370.4 by revising

paragraph (f) to read as follows:

§ 370.4 Reports of use of sound

recordings under statutory license for

nonsubscription transmission services,

preexisting satellite digital audio radio

services, new subscription services and

business establishment services.

* * * * *

(f) In any case in which a

nonsubscription transmission service,

preexisting satellite digital audio radio

service, new subscription service, or

business establishment service has not

provided a report of use required under

this section for use of sound recordings

under section 112(e) or section 114 of

title 17 of the United States Code, or

both, prior to January 1, 2019, reports of

use for the corresponding calendar year

filed by other services of the same type

may serve as the reports of use for the

non-reporting service, solely for

purposes of distribution of any

corresponding royalties by the

Collective.

Dated: May 18, 2020.

Jesse M. Feder,

Chief U.S. Copyright Royalty Judge.

[FR Doc. 2020–11131 Filed 5–28–20; 8:45 am]

BILLING CODE 1410–72–P

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ADDRESSES

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