Small Claims Procedures for Library and Archives Opt-Outs and Class Actions

Published date09 March 2022
Citation87 FR 13171
Record Number2022-04747
SectionRules and Regulations
CourtLibrary Of Congress,U.s. Copyright Office
Federal Register, Volume 87 Issue 46 (Wednesday, March 9, 2022)
[Federal Register Volume 87, Number 46 (Wednesday, March 9, 2022)]
                [Rules and Regulations]
                [Pages 13171-13177]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2022-04747]
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                LIBRARY OF CONGRESS
                U.S. Copyright Office
                37 CFR Part 223
                [Docket No. 2021-4]
                Small Claims Procedures for Library and Archives Opt-Outs and
                Class Actions
                AGENCY: U.S. Copyright Office, Library of Congress.
                ACTION: Final rule.
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                SUMMARY: The U.S. Copyright Office is issuing a final rule regarding
                the procedures for libraries and archives to preemptively opt out of
                proceedings before the Copyright Claims Board (``CCB'') and the
                procedures for a party before the CCB with respect to a class action
                proceeding, under the Copyright Alternative in Small-Claims Enforcement
                Act of 2020.
                DATES: Effective April 8, 2022.
                FOR FURTHER INFORMATION CONTACT: Megan Efthimiadis, Assistant to the
                General Counsel, by email at [email protected], or by telephone at
                202-707-8350.
                SUPPLEMENTARY INFORMATION:
                I. Background
                 The Copyright Alternative in Small-Claims Enforcement (``CASE'')
                Act of 2020 \1\ directs the Copyright Office to establish the Copyright
                Claims Board (``CCB'' or ``Board''), a voluntary tribunal within the
                Office comprised of three Copyright Claims Officers who have the
                authority to render determinations on certain copyright claims for
                economic recoveries under the statutory threshold. The Office issued a
                notification of inquiry (``NOI'') to describe the CASE Act's
                legislative background and regulatory scope and to ask for public input
                on various topics, including procedures addressing a preemptive opt-out
                from CASE Act proceedings (sometimes referred to as a ``blanket'' opt-
                out) for libraries and archives and procedures associated with class
                actions.\2\
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                 \1\ Public Law 116-260, sec. 212, 134 Stat. 1182, 2176 (2020).
                 \2\ 86 FR 16156, 16161 (Mar. 26, 2021).
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                 The CASE Act directs the Register of Copyrights to ``establish
                regulations allowing for a library or archives that does not wish to
                participate in proceedings before the Copyright Claims Board to
                preemptively opt out of such proceedings.'' \3\ The Office must also
                ``compile and maintain a publicly available list of the libraries and
                archives that have successfully opted out of proceedings.'' \4\ For a
                library or archives to qualify for the opt-out election, it must
                ``qualif[y] for the limitations on exclusive rights under section 108
                [of title 17].'' \5\
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                 \3\ 17 U.S.C. 1506(aa)(1).
                 \4\ Id. at 1506(aa)(2)(B).
                 \5\ Id. at 1506(aa)(4). The CASE Act's legislative history does
                not discuss the library and archives opt-out provision. See
                generally S. Rep. No. 116-105 (2019); H.R. Rep. No. 116-252 (2019)
                (Note, the CASE Act's legislative history cited is for the CASE Act
                of 2019, S. 1273, 116th Cong. (2019) and H.R. 2426, 116th Cong.
                (2019), bills largely identical to the CASE Act of 2020, with the
                notable exception that these earlier bills did not contain the
                libraries and archives opt-out provision.).
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                 The CASE Act also provides that the Register will establish
                procedures for a claimant ``who receives notice of a pending class
                action, arising out of the same transaction or occurrence as the
                proceeding before the [CCB],'' including the ability to ``opt out of
                the class action.'' \6\
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                 \6\ Id. at 1507(b)(2).
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                 In September 2021, the Office published a notice of proposed
                rulemaking (``NPRM'') addressing these two topics in depth and
                proposing regulatory language.\7\ In both the NOI and the NPRM, the
                Office requested input on issues related to the library and archives
                opt-out provision, including whether the Office should require proof or
                a certification that a library or archives qualifies for the opt-out
                provision; which entities, principals, or agents should be allowed to
                opt out on behalf of a library or archives; how the opt-out provision
                would apply to library or archives employees; and various transparency
                and functionality considerations related to publication of the opt-out
                list.\8\ Commenters were generally supportive of the proposed library
                and archives opt-out regulations, with the exception of the matters
                addressed below. No parties submitted comments addressing the proposed
                class action regulations. The Office is adopting the proposed class
                action regulations with one clarification, as addressed below.
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                 \7\ 86 FR 49273 (Sept. 2, 2021). Comments received in response
                to the March 26, 2021 NOI and September 2, 2021 NPRM are available
                at https://www.regulations.gov/document/COLC-2021-0001-0001/comment
                and https://www.regulations.gov/document/COLC-2021-0003-0001/comment, respectively. References to these comments are by party
                name (abbreviated where appropriate), followed by ``Initial NOI
                Comments,'' ``Reply NOI Comments,'' or ``NPRM Comments,'' as
                appropriate.
                 \8\ 86 FR at 16161; 86 FR at 49274-77.
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                II. Discussion of Final Rule
                A. Proof or Certification Requirement
                 The Office's NPRM proposed ``that any library or archives that
                wishes to take advantage of the statutory preemptive opt-out option
                must submit a self-certification that it `qualifies for the limitations
                on exclusive rights under section 108.' '' \9\ The Office explained
                that this requirement could ``balance the statutory goals of ensuring
                that only libraries and archives are eligible for a preemptive opt-out,
                but also that any such entities are not overly burdened in effecting
                that election.'' \10\ The proposed rule also stated that any library or
                archives that had preemptively opted out, but that was later found by a
                federal court not to qualify for the section 108 exemptions, must
                report this finding to the CCB.
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                 \9\ 86 FR at 49275 (quoting 17 U.S.C. 1506(aa)(4)).
                 \10\ Id.
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                 The Office proposed to ``accept the facts stated in the opt-out
                submission unless they are implausible or conflict with sources of
                information that are known to the Office or the general public.'' \11\
                Where the CCB believes that an entity does not qualify under section
                108, that entity would be not be added to, or would be removed from,
                the preemptive opt-out list. The Office would communicate its
                conclusion and
                [[Page 13172]]
                its intent to either not add the entity to the preemptive opt-out list
                or remove the entity from that list, as appropriate, and would allow
                the entity to provide evidence supporting its qualification for the
                exemption within 30 days of the Office's notice. If the Register
                subsequently determined that the evidence submitted by the entity
                demonstrates that it qualifies under section 108, the entity would be
                added to, or remain on, the preemptive opt-out list. The Office did not
                believe it was necessary to establish a separate adversarial procedure
                for parties to raise objections that an entity does not qualify for the
                opt-out list. Instead, the Office proposed that claimants who attempt
                to bring claims against entities on the opt-out list can assert that
                the subject library or archives does not qualify for inclusion on the
                list as part of their claim.\12\
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                 \11\ Id. The Office takes a similar approach regarding
                registration materials. See U.S. Copyright Office, Compendium of
                U.S. Copyright Office Practices sec. 309.2 (3d ed. 2021).
                 \12\ 86 FR at 49275.
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                 The American Association of Law Libraries (``AALL'') supported the
                self-certification provision, calling it ``[e]specially important'' and
                one of several provisions that would allow easy and efficient opt-out
                elections.\13\ The Niskanen Center also favored the self-certification
                approach, but suggested that any misrepresentation penalty ``should not
                necessarily be perjury,'' and that ``any sanctions applied (other than
                the loss [of] the ability to opt out as defined in the Act) should only
                be applied if the party which made the misrepresentations did so with
                intent.'' \14\ Those representing libraries generally favored self-
                certification.\15\
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                 \13\ Am. Ass'n of L. Libraries (``AALL'') NPRM Comments at 1;
                see also AALL Initial NOI Comments at 1-2 (noting that a self-
                certification approach ``would meet the intent of Congress, which
                created the preemptive opt out for libraries and archives to provide
                an efficient and streamlined system for these organizations and to
                help them avoid the burdensome administrative requirements of
                repeated opt outs'').
                 \14\ Niskanen Ctr. NPRM Comments at 2.
                 \15\ See Library Copyright All. (``LCA'') Initial NOI Comments
                at 1; Univ. of Mich. Library Initial NOI Comments at 4-5; Univ.
                Infor. Pol'y Officers Reply NOI Comments at 1.
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                 Other commenters suggested that a self-certification process could
                lead to fraudulent opt-outs \16\ and would lead to delays or
                inefficiencies in CCB proceedings.\17\ Some supported a requirement
                that any certifications be made under penalty of perjury.\18\ Commenter
                Terisa Shoremount suggested that the Office should require ``a short
                statement about the entity's basis for qualifying to opt-out,'' which
                would ``not overly burden libraries and archives'' and ``could promote
                efficiency,'' and that publishing this statement on the library and
                archives opt-out list would increase transparency by ``allow[ing]
                potential adversaries to view why the library or archive[s] qualifies
                which may reduce opt-out status challenges.'' \19\
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                 \16\ Sci. Fiction & Fantasy Writers of Am. (``SFWA'') NPRM
                Comments at 2 (noting the potential for ``internet pirates'' who
                ``describe themselves as `libraries' or `archives' to mislead
                others'' who would try to use the blanket opt-out option); Am.
                Intell. Prop. L. Ass'n (``AIPLA'') Initial NOI Comments at 4;
                Copyright Alliance, Am. Photographic Artists, Am. Soc'y for
                Collective Rights Licensing, Am. Soc'y of Media Photographers, The
                Authors Guild, CreativeFuture, Digital Media Licensing Ass'n,
                Graphic Artists Guild, Indep. Book Pubs. Ass'n, Music Creators N.
                Am., Nat'l Music Council of the U.S., Nat'l Press Photographers
                Ass'n, N. Am. Nature Photography Ass'n, Prof. Photographers of Am.,
                Recording Academy, Screen Actors Guild-Am. Fed. of Television and
                Radio Artists, Soc'y of Composers & Lyricists, Songwriters Guild of
                Am. & Songwriters of N. Am. (``Copyright Alliance et al.'') Reply
                NOI Comments at 12-13 (``To allow entities to `self-certify' would
                be to open the blanket opt out to any entity claiming to be a
                `library' or `archive' regardless of whether the entity rightfully
                qualifies under the law.'').
                 \17\ SFWA NPRM Comments at 2-3 (noting concerns that a library
                or archives would remain on the opt-out list until the CCB makes a
                final determination on its status and suggesting that the CCB should
                thus ``refrain from granting the entity status as a library or
                archives until such time as it has conducted an adequate review'').
                 \18\ Copyright Alliance et al. NPRM Comments at 6; SFWA Reply
                NOI Comments at 2 (agreeing that a ``library or archive[s] should
                make its declaration under penalty of perjury''); see also Copyright
                Alliance et al. Initial NOI Comments at 20 (supporting that opt-out
                elections should be made under ``penalty of perjury'' and voicing
                concerns related to courts relying on an Office or CCB section 108
                qualification determination).
                 \19\ Terisa Shoremount NPRM Comments at 1.
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                 Regarding the effect of a library or archives opt-out election, the
                Copyright Alliance et al. reiterated their position that these
                regulations ``should clearly state that a determination by the CCB
                regarding an entity's status as qualifying for the blanket opt-out
                should not be relied upon or cited by any other tribunal in determining
                whether an entity qualifies for the exceptions under section 108 of the
                Copyright Act.'' \20\ Relatedly, the Science Fiction and Fantasy
                Writers of America ``strongly advise[d] the [Office] to refrain from
                placing entities on its list of libraries and archives that have opted
                out if those entities are parties in ongoing, related litigation,''
                believing that the Office's ``official acceptance of a self-serving
                declaration could well affect the course of the judicial proceeding and
                its ultimate outcome.'' \21\ They also suggested that the CCB hold its
                determination in abeyance pending ongoing litigation.\22\ The Niskanen
                Center also argued that the Copyright Office should make a
                determination whether a library or archives qualifies for the opt-out,
                ``only if there are no appeals pending in superior courts.'' \23\
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                 \20\ Copyright Alliance et al. NPRM Comments at 6; see also MPA,
                RIAA & SIIA Reply NOI Comments at 10; LCA Reply NOI Comments at 1-2.
                 \21\ SFWA NPRM Comments at 3.
                 \22\ Id.
                 \23\ Niskanen Ctr. NPRM Comments at 2.
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                 The Office believes that the proposed rule addresses commenters'
                concerns, but will include additional language in the final rule
                confirming that the CCB's acceptance of an entity's representation
                regarding its qualifying status for the preemptive opt-out does not
                constitute a legal conclusion by the Board or the Register of
                Copyrights for any other purpose. To help identify the entity that is
                seeking to preemptively opt out of CCB proceedings, the final rule will
                require those libraries and archives that have a website to supply its
                address. Further, the requirement that any certification must be made
                under the penalty of perjury will deter fraudulent submissions and, as
                the federal law prohibiting fraudulent statements made to legislative
                agencies already requires an intent element,\24\ the rule does not need
                to include a separate intent element.
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                 \24\ See 18 U.S.C. 1001(a)(3) (requiring that any document
                submitted to a Federal agency must be ``materially false,
                fictitious, or fraudulent statement or entry'' and made ``knowingly
                and willfully'' to be a violation).
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                 Finally, the Office does not believe the CCB should be required to
                hold its determination in abeyance pending appeals or ongoing
                litigation where an entity's qualification for section 108 is at issue.
                As federal litigation can take years to resolve, waiting for a court's
                final determination regarding a purported library's or archives' status
                could undercut the CCB's value in resolving claims expeditiously.
                Further, if the court ultimately determines that the entity qualifies
                under section 108, the claimant could unwittingly exhaust the statute
                of limitations. Importantly, the preemptive opt-out option only offers
                a jurisdictional privilege--respondents can always opt out of
                individual CCB proceedings, even if the preemptive opt-out is
                unavailable.
                B. Opt-Out Election Timing and Disqualification
                 The NPRM stated that ``[t]he Office will accept the facts stated in
                the opt-out submission unless they are implausible or conflict with
                sources of information that are known to the Office or the general
                public.'' \25\ The proposed rule also required that ``any library or
                archives that has been found by a federal court not to qualify for the
                [[Page 13173]]
                section 108 exemptions report this information to the CCB.'' \26\ In
                either circumstance, the entity would not be added to, or would be
                removed from, the opt-out list. Third parties would not be allowed to
                challenge an entity's preemptive opt-out eligibility, separate from the
                CCB's adjudication of individual cases.\27\ The proposed rule did not
                address the review criteria and standards by which a library or
                archives would not be added to, or be removed from, the opt-out list;
                the effect of such a removal; and the timing of an opt-out election
                with respect to active claims.
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                 \25\ 86 FR at 49275 (citing U.S. Copyright Office, Compendium of
                U.S. Copyright Office Practices sec. 309.2 (3d ed. 2021)).
                 \26\ Id.
                 \27\ Id.
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                 Commenters asked the Office to clarify rules related to these
                issues. With respect to the CCB's review criteria and standards, the
                Science Fiction and Fantasy Writers of America and Copyright Alliance
                et al. each noted that the proposed regulations do not identify either
                a review scope or timeline for when the CCB must evaluate whether a
                library or archives qualifies for the preemptive opt-out list.\28\ The
                Copyright Alliance et al. suggested that ``[t]he scope of the review in
                the library and archives opt-out context would require, at minimum, a
                simple web search to determine if in fact the facts stated within the
                opt-out submission are in conflict with information known to the
                public'' and, further, that ``it is unclear whether the Office intends
                to take a ministerial approach, whereby it places entities on the list
                with little or no initial review, with the ability to later remove
                those entities, or if it will take a more proactive and discretionary
                approach, whereby it reviews each submission before placing the entity
                on the list, while maintaining the ability to remove the entity later
                if appropriate,'' concluding that it preferred the ``proactive and
                discretionary'' approach.\29\ The Science Fiction and Fantasy Writers
                of America stated that the CCB should have ``the affirmative obligation
                to look beyond a mere declaration in determining whether an entity is
                actually a library or archive[s] in accordance with case law when there
                is strong reason to do so.'' \30\ Taking an opposing view, the Niskanen
                Center stated that it would be preferable for an Article III court to
                handle disputes over whether an entity qualifies as a library or
                archives under section 108, elaborating that ``[t]his would reduce the
                burden on the Copyright Office and the Copyright Claims Board and keep
                implementation within the spirit of the CASE Act as an efficient-low
                cost tool to apply legal questions which have already been answered by
                a traditional Article III Court.'' \31\
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                 \28\ Copyright Alliance et al. NPRM Comments at 7-8; SFWA NPRM
                Comments at 2-3.
                 \29\ Copyright Alliance et al. NPRM Comments at 7-8.
                 \30\ SFWA NPRM Comments at 2.
                 \31\ Niskanen Ctr. NPRM Comments at 2 (citing 17 U.S.C.
                1506(a)(1)).
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                 The Office concludes that the NPRM approach, which neither requires
                nor prohibits the CCB from inquiring into whether an entity qualifies
                for the library and archives preemptive opt-out election, appropriately
                balances efficiency and the need to exclude ineligible entities. The
                aforementioned additional requirement to supply a website address in
                the opt-out request should help flag whether the entity qualifies for
                the opt-out election. The Office also believes that a modification to
                the procedure when a claim is filed against a library or archives that
                is included on the opt-out list will result in greater efficiency. As
                provided in the proposed rule, a claim filed against a library or
                archives on the opt-out list must assert material factual allegations
                supporting the claimant's challenge to the subject library's or
                archives' eligibility for the opt-out. The Office concludes that an
                initial determination of the viability of the challenge will be made
                prior to approving service of the claim. If the claim's allegations are
                colorable, the CCB will notify the subject library or archives of the
                challenge to its qualifications and the library or archives will have
                an opportunity to provide evidence supporting its qualifications before
                a decision is made either to dismiss the claim against it or to remove
                the entity from the opt-out list and allow the claim to proceed to
                compliance review. As mentioned above, if the claim is permitted to
                proceed, the respondent entity would retain the ability to opt out of
                the individual claim.
                 The Copyright Alliance et al. also suggested that an entity that
                fails to notify the Office of changes in relevant contact information
                or of a determination by a court that it does not qualify for the
                section 108 exceptions should lose the ability to preemptively opt out
                of CCB proceedings.\32\ The Office believes that the CCB should be able
                to take any reasonable corrective action against a library or archives
                that violates these regulations. While a court determination that a
                library or archives does not qualify for section 108 will automatically
                result in the entity losing the ability to preemptively opt out of CCB
                proceedings, the CCB may determine that willful conduct or a pattern of
                noncompliance should have the same result, although the Office
                anticipates that such corrective action would be necessary on only rare
                occasions.
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                 \32\ Copyright Alliance et al. NPRM Comments at 7 (``In both
                instances, we believe that the ability of a library or archives to
                take advantage of the privilege of a blanket opt-out should be
                contingent on it properly notifying the Office of these changes.'').
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                 With respect to the effective date of a preemptive opt-out
                election, the Copyright Alliance et al. argued that such an election
                should be ``forward reaching only'' and not apply to any claims that
                were filed against the libraries or archives before they were added to
                the publicly available list, even if their opt-out request had been
                filed and was under review prior to the filing date of the claim.\33\
                Alternatively, they asked that ``any fees paid by the claimant [be]
                refundable if a claimant is prevented from moving forward with a case
                because the library or archives had filed to preemptively opt-out
                before the case was filed.'' \34\
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                 \33\ Copyright Alliance et al. NPRM Comments at 6.
                 \34\ Id.
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                 The Office agrees that the statute clearly provides that the opt-
                out election for library and archives should be prospective, because it
                is a preemptive election. Accordingly, once a claimant has been
                instructed by the CCB to serve its claim on an entity, a subsequently-
                approved preemptive opt-out election would not apply to that claim. In
                that situation, the library or archives would be in the same position
                as other respondents and may file an opt-out election to the specific
                claim.
                 The Office acknowledges that there could be a situation where an
                entity has submitted its application for the preemptive opt-out, but
                its application is filed or still under review at a point in time when
                the CCB has already found a claim against the entity to be compliant
                and has instructed the claimant to serve the claim. To provide for this
                limited situation, the Office concludes that the effective date of a
                preemptive opt-out request is the date the library or archives is added
                to the public opt-out list.\35\ Practically, this should not pose a
                significant problem for entities seeking to opt out preemptively, as
                the opt-out election will become available to libraries and
                [[Page 13174]]
                archives in advance of the CCB beginning operations, and new opt-out
                elections should be available on the opt-out list as soon as feasible
                after receipt. Where a prospective claimant is concerned that a library
                or archives may have submitted an opt-out election that has not yet
                posted on the CCB's website, that claimant is encouraged to contact the
                CCB before submitting its claim to inquire whether the entity has
                submitted a form that has not yet been processed.
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                 \35\ The one exception to this rule is for library and archives
                opt-out elections that are filed before this rule's effective date.
                These filings will become effective on the rule's effective date.
                This provision will allow more time for libraries and archives to
                make an opt-out election far in advance of the date that the CCB
                commences operations, and addresses the circumstance that the
                libraries and archives opt-out form will be posted before this
                rule's effective date.
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                 If a library or archives intends to opt out of a pending claim and
                also submit a preemptive opt-out for future claims, it should file both
                a proceeding-specific opt-out election and a preemptive opt-out
                election.
                C. Transparency and Public Content
                 The NPRM reflected the Office's agreement with commenters who
                suggested that ``the list of libraries and archives that have
                preemptively opted out of participating in CCB proceedings should be
                made publicly available online.'' \36\ Responding to the NPRM, parties
                commented that this information should be made available as soon as
                possible after being received.\37\ The Niskanen Center further
                suggested allowing users to view the entire opt-out list or to allow
                users to search the list ``by state, locality, type of institution
                (e.g. library or archive), and name.'' \38\ AALL suggested that the
                Office include more information ``geared toward potential
                respondents,'' which would help law librarians and legal information
                professionals learn about the opt-out provision and their rights and
                responsibilities with the CCB.\39\ AALL also offered ``to collaborate
                with the Copyright Office on a webinar or other educational programs
                and resources about the CCB geared toward law librarians and legal
                information professionals.'' \40\
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                 \36\ 86 FR at 49276 (citing AIPLA Initial NOI Comments at 5;
                Copyright Alliance et al. Initial NOI Comments at 21; LCA Initial
                NOI Comments at 2.).
                 \37\ See Copyright Alliance et al. NPRM Comments at 8
                (``Ideally, the list will be updated immediately upon any changes .
                . . but, at minimum, the list should be updated biweekly.'');
                Niskanen Ctr. NPRM Comments at 3 (``The Copyright Office and the
                Copyright Claims Board should make as available as possible the
                opportunity to look up which institutions have chosen the blanket
                opt-out option.'').
                 \38\ Niskanen Ctr. NPRM Comments at 3.
                 \39\ AALL NPRM Comments at 1-2.
                 \40\ Id. at 2.
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                 Although these comments do not require amendments to the proposed
                rule, the Office can confirm that the initial opt-out list will be
                posted in Portable Document Format (``PDF''), and will be updated as
                soon as feasible after receipt and approval of preemptive opt-out
                requests. While the PDF will be generally searchable, the Office hopes
                to add additional search functionality in any future technology
                updates. The Office also confirms that there will be information
                provided on its website and on the CCB website, when it launches,
                directed at libraries and archives regarding the availability and
                impact of the preemptive opt-out. Finally, the Office and CCB welcome
                collaboration on CCB-related outreach from all interested parties.
                D. Application of the Opt-Out Provision to Persons Acting in the Course
                of Their Employment
                 The CASE Act is silent on whether a library's or archives'
                preemptive opt-out election would apply to those entities' employees
                acting within the scope of their employment. In its NOI, the Office
                asked whether it ``should include a regulatory provision that specifies
                that this opt out extends to employees operating in the course of their
                employment.'' \41\ Those representing libraries and archives supported
                such a rule, while other commenters were opposed. The NPRM as issued
                did not include a provision to extend a preemptive opt-out election to
                libraries' or archives' employees.
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                 \41\ 86 FR at 16161.
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                 In initially declining to include such a provision, the Office made
                two observations. The first was that under agency law, ``[u]nless an
                applicable statute provides otherwise, an actor remains subject to
                liability although the actor acts as an agent or an employee, with
                actual or apparent authority, or within the scope of employment.'' \42\
                The second observation was that ``the CASE Act expressly offers the
                preemptive opt-out option to `a library or archives,' but does not
                mention employees.'' \43\
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                 \42\ 86 FR at 49276.
                 \43\ Id.
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                 Numerous commenters representing libraries or archives responded
                that the final rule should extend a library's or archives' preemptive
                opt-out election to cover those entities' employees.\44\ The Office
                received many similar comments from employees of libraries or archives
                stating that these employees ``would be unable to perform [their]
                regular daily work for fear of liability if the preemptive opt out does
                not cover employees.'' \45\
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                 \44\ See, e.g., Ass'n of Am. Univs. NPRM Comments at 1; Ass'n of
                Southeastern Research Libraries, Greater Western Library All., &
                Triangle Research Libraries Network (``ASERL, GWLA & TRLN'') NPRM
                Comments at 1; Univ. Infor. Pol'y Officers NPRM Comments at 2-4; LCA
                NPRM Comments at 1-3; Univ. of Cal., Berkeley NPRM Comments at 1-3;
                Harvard Library NPRM Comments at 1-3; Software Preservation Network
                NPRM Comments at 2; Univ. of Mich. Library NPRM Comments at 1-2;
                Univ. of N. Tex. Libraries NPRM Comments at 1; Niskanen Ctr. NPRM
                Comments at 3-4; Cornell Univ. Library NPRM Comments at 1-2; Univ.
                of N.C., Chapel Hill Univ. Libraries NPRM Comments at 1; Kent State
                Univ. Libraries NPRM Comments at 1; Duke Univ. Libraries NPRM
                Comments at 1-2; SPARC NPRM Comments at 1; Univ. of Nebraska NPRM
                Comments at 1; AALL NPRM Comments at 1; Va. Commonwealth Univ.
                Libraries NPRM Comments at 1-2; Columbia Univ. Libraries NPRM
                Comments at 1; UCLA Library NPRM Comments at 1-2; SAA NPRM Comments
                at 1-2; Univ. of Fla. Smathers Libraries NPRM Comments at 1; see
                also Fight for the Future NPRM Comments. While one commenter voiced
                their opposition ``to permitting pre-emptive opt-outs by individuals
                who claim to be employees of websites responsible for uploading
                infringing material,'' SFWA NPRM Comments at 3-4, it is unclear
                whether this party is addressing a specific circumstance related to
                libraries or archives who provide materials online or to libraries'
                and archives' employees, generally.
                 \45\ See, e.g., Abby Nafziger NPRM Comments at 1. But see, e.g.,
                Abby Adams NPRM Comments at 1 (omitting this claim from an otherwise
                substantially similar comment).
                ---------------------------------------------------------------------------
                 Other comments in support of including a regulatory provision
                addressing employees broadly made three legal arguments. The first
                argument responded to the Office's observations regarding agency law
                and generally asserted that including employees with a library's or
                archives' opt out is consistent with other principles of agency law or
                is not inconsistent with agency law.\46\ In particular, commenters
                noted that under agency law, a principal (the library or archives) may
                delegate a privilege (the preemptive opt-out election) to an agent
                (their employees).\47\ University Information Policy Officers reasoned
                that, ``[i]f participation in the CASE Act adjudication process is akin
                to liability, then the opt[-]out provision in the statute is akin to a
                privilege, and `[m]ost privileges held by a principal may be delegated
                to an agent.' '' \48\ University Information Policy Officers further
                argued that an agent whom the principal directed to perform an act
                cannot be held liable if a principal cannot be held liable for
                performing the act, even if the
                [[Page 13175]]
                agent would have been liable absent this privilege.\49\
                ---------------------------------------------------------------------------
                 \46\ See id. at 1-2 (stating that agency law does not prohibit a
                principal from taking action on behalf of an agent, so extending the
                preemptive opt out to employees is not inconsistent with agency
                law); Ass'n of Am. Univs. NPRM Comments at 1 (stating that the
                inclusion of employees would be consistent with agency law
                principles ``[i]n accordance with current law''); Univ. Infor. Pol'y
                Officers NPRM Comments at 3.
                 \47\ See Univ. Infor. Pol'y Officers NPRM Comments at 3; LCA
                NPRM Comments at 1-2; Univ. of Cal. Libraries NPRM Comments at 2-3;
                Software Preservation Network NPRM Comments at 2.
                 \48\ Univ. Infor. Pol'y Officers NPRM Comments at 3 (citing 2
                Restatement (Third) of Agency at 122).
                 \49\ See id. (citing PYCA Indus., Inc. v. Harrison Cty. Waste
                Water Mgmt. Dist., 177 F.3d 351, 378-79 (5th Cir. 1999)).
                ---------------------------------------------------------------------------
                 It is not clear, however, the extent to which the cited agency law
                principles are applicable here. The preemptive opt-out is not a
                liability privilege, but rather a privilege to preemptively elect to
                decline using an optional tribunal to determine a copyright claim, or a
                ``jurisdictional privilege.'' \50\ As the University of California
                correctly observes, the CASE Act does not ``create[ ] or waive[ ] tort
                liability by principals or agents.'' \51\ Considering the differences
                between liability privileges and jurisdictional privileges, principles
                governing the former may not be determinative for the latter.
                ---------------------------------------------------------------------------
                 \50\ Univ. of Cal., Berkeley NPRM Comments at 3 (emphasis
                omitted).
                 \51\ Id.
                ---------------------------------------------------------------------------
                 The second argument made by commenters supporting extending a
                library's or archives' opt-out election to its employees related to the
                texts of both the CASE Act and the Copyright Act. Commenters recognized
                that the libraries' and archives' preemptive opt-out provision does not
                have any associated legislative history,\52\ including in the Office's
                Copyright Small Claims policy report, as it was a late amendment in the
                legislative process.\53\ Therefore, they made legislative intent
                arguments based on the statutory language itself.
                ---------------------------------------------------------------------------
                 \52\ UCLA Library NPRM Comments at 1; Univ. Infor. Pol'y
                Officers NPRM Comments at 2; Software Preservation Network NPRM
                Comments at 2.
                 \53\ No earlier copyright small claims bill contained this
                provision. See S. 1273, 116th Cong.; H.R. 2426, 116th Cong.; H.R.
                3945, 115th Cong. (2017); H.R. 6496, 114th Cong. (2016).
                ---------------------------------------------------------------------------
                 The CASE Act does not define a ``library'' or ``archives'' as
                including or excluding employees, but applies the preemptive opt-out
                election to ``any library or archives, respectively, that qualifies for
                the limitations on exclusive rights under section 108.'' \54\
                Commenters argued that since section 108's limitations include
                employees,\55\ the CASE Act's libraries and archives opt-out election
                should also apply to them.\56\ It is true that some of section 108's
                provisions, namely 108(a), (f)(1), and (g), explicitly extend statutory
                exemptions to a library's or archives' employees, but section 108(h),
                which exempts enforcement of certain display or performance rights,
                does not do so.\57\ At the same time, the exempted actions described in
                this subsection cannot occur without the employees of libraries or
                archives engaging in the described conduct at the direction of their
                employers. While not conclusive, in light of the above, the treatment
                of employees in section 108 overall weighs in favor of extending the
                preemptive opt-out to employees in the CASE Act.
                ---------------------------------------------------------------------------
                 \54\ 17 U.S.C. 1506(aa)(4).
                 \55\ Id. at 108(a), (f)(1).
                 \56\ Niskanen Ctr. NPRM Comments at 3-4; Univ. of Cal. Libraries
                NPRM Comments at 2 n.8.
                 \57\ 17 U.S.C. 108(h).
                ---------------------------------------------------------------------------
                 Finally, commenters made related policy arguments that Congress
                must have intended to include employees, even though the statutory text
                is not explicit.\58\ Many noted that libraries and archives must act
                through their employees,\59\ with the University of Michigan Library
                suggesting that ``there is no alleged infringement claim against a
                library that cannot also be brought against a corresponding library
                employee.'' \60\ Other commenters suggested that excluding employees
                from a library's or archives' preemptive opt-out election would result
                in those libraries and archives becoming involved in CCB proceedings on
                behalf of those employees and would effectively ``hollow out the
                important intentional protections'' for libraries and archives in both
                the Copyright Act and CASE Act.\61\ As the University of North Texas
                Libraries observed, ``[e]ven in cases where [a claim before the CCB]
                does not move forward or where an individual chooses to opt out, the
                employing library will not truly be able to opt out of CCB proceedings
                when considerable education and support for individual employees is
                necessary to navigate this process.'' \62\ The Niskanen Center argued
                that it would be ``inconsistent'' with the CASE Act's intent ``to
                create a situation where an employee's failure to opt-out might result
                in the library becoming enmeshed in the CCB proceeding on behalf of the
                employee'' \63\ and that this would result in libraries needing to
                ``monitor [their] employees' receipt of any claims or rely on employees
                to report claims themselves, a burdensome process with a high risk of
                potential error.'' \64\
                ---------------------------------------------------------------------------
                 \58\ See, e.g., Univ. Infor. Pol'y Officers NPRM Comments at 2-
                3; LCA NPRM Comments at 2-3; Univ. of Cal., Berkeley NPRM Comments
                at 1; Harvard Library NPRM Comments at 2; Software Preservation
                Network NPRM Comments at 2; Univ. of Minn. Libraries NPRM Comments
                at 1; Univ. of N. Tex. Libraries NPRM Comments at 1; ASERL, GWLA &
                TRLN NPRM Comments at 1; Niskanen Ctr. NPRM Comments at 3-4; Cornell
                Univ. Library NPRM Comments at 1-2; Univ. of N.C., Chapel Hill Univ.
                Libraries NPRM Comments at 1.
                 \59\ See, e.g., Harvard Library NPRM Comments at 2; Univ. of N.
                Tex. Libraries NPRM Comments at 1; Univ. of Minn. Libraries NPRM
                Comments at 2; Kent State Univ. Libraries NPRM Comments at 1; Univ.
                of Mich. Library NPRM Comments at 1.
                 \60\ Univ. of Mich. Library NPRM Comments at 1.
                 \61\ SPARC NPRM Comments at 1; see also Ass'n of Am. Univs. NPRM
                Comments at 1; Univ. of Mich. Library NPRM Comments at 1; Univ. of
                Minn. Libraries NPRM Comments at 1; ASERL, GWLA & TRLN NPRM Comments
                at 1; Univ. of Cal. Libraries NPRM Comments at 1-2.
                 \62\ Univ. of N. Tex. Libraries NPRM Comments at 1.
                 \63\ Niskanen Ctr. NPRM Comments at 4 (quoting LCA Reply NOI
                Comments at 1).
                 \64\ Id.
                ---------------------------------------------------------------------------
                 Upon careful evaluation of the statute and the submitted comments,
                the Office is amending the proposed rule to include a regulatory
                provision addressing libraries' and archives' employees. The final rule
                will apply a library's or archives' opt-out election to both the
                qualifying entity and its employees for activities within the
                employee's scope of employment. As discussed above, neither the
                statutory language nor agency law conclusively resolves this issue. The
                Office therefore looks to the underlying intent and purpose of the CASE
                Act as a whole for guidance.
                 As the Office noted in its March 2021 NOI, ``the statute and
                legislative history make clear that Congress intended for the Office to
                implement regulations in a manner that `furthers the goals of the
                Copyright Claims Board' and establishes an `efficient, effective, and
                voluntary' forum for parties to resolve their disputes.'' \65\ While
                excluding employees of a library or archives from the preemptive opt-
                out would allow employee respondents to make their own independent
                decisions about participating in a CCB proceeding, commenters have made
                a persuasive argument that a rule that excluded employees acting within
                the scope of their employment would be generally inconsistent with the
                section 108 provisions extending statutory exemptions to a library or
                archive's employees, and that the absence of a rule extending the
                library's or archives' opt-out to its employees could create
                unnecessary complexity, uncertainty, and inefficiency, frustrating
                Congress's goals in passing the CASE Act. Pursuant to its authority
                under 17 U.S.C. 702 and 1510(a)(1) and to best reflect the statute's
                goals in light of the rulemaking record, the Office is adopting final
                regulations to address the statutory ambiguity with respect to whether
                the library and archives preemptive opt-out election applies to
                employees acting within the course of their employment. In doing so,
                the Office is exercising its plenary regulatory authority to ``develop
                clear regulations and practices to fairly balance the competing
                interests of
                [[Page 13176]]
                claimants and respondents,'' as Congress directed.\66\
                ---------------------------------------------------------------------------
                 \65\ 86 FR at 16157 (quoting 17 U.S.C. 1510(a)(2)(A) and H.R.
                Rep. No. 116-252, at 23 (footnotes omitted)).
                 \66\ See Nat'l Cable & Telecomms. Ass'n v. Brand X internet
                Servs., 545 U.S. 967, 980 (2005) (``[A]mbiguities in the statutes
                within an agency's jurisdiction to administer are delegations of
                authority to the agency to fill the statutory gap in reasonable
                fashion.'') (citing Chevron, U.S.A., Inc. v. Nat. Res. Def. Council,
                Inc., 467 U.S. 837 (1984)).
                ---------------------------------------------------------------------------
                 Without such a rule, a library or archives that decided to
                preemptively opt-out of CCB proceedings could, by law or practice,\67\
                be compelled to participate in such a proceeding to defend an employee
                who did not timely opt out individually. Employees could also be placed
                in a position where they had to defend employer-directed actions on
                their own. Further, the practical effect of not including employees in
                the opt-out election of the library or archives could result in
                unnecessary costs for copyright owners; for example, infringement
                claims that would normally be jointly brought against the library or
                archives and its employee could end up being brought in two venues--
                federal court and the CCB. The Office concludes that it is more
                consistent with Congressional intent behind the CASE Act to allow
                libraries and archives to opt out of CCB proceedings without their
                employees who acted within the scope of their employment being required
                to file their own proceeding-specific opt-out elections.
                ---------------------------------------------------------------------------
                 \67\ Kent State University Libraries stated that ``many state
                institutions, including in the State of Ohio, are legally obligated
                to represent state employees acting in the scope of their
                employment.'' Kent State Univ. Libraries NPRM Comments at 1.
                ---------------------------------------------------------------------------
                E. Class Action Opt-Out Elections
                 Finally, the rule clarifies the CCB's ability to resolve conflicts
                between CCB proceedings and class action cases arising from the same
                transaction or occurrence in which a party before the CCB is a class
                member. If a party in an active proceeding ``receives notice of a
                pending or putative class action, arising out of the same transaction
                or occurrence'' as the claim at issue before the CCB, the CASE Act
                requires that party to make an affirmative choice between two
                options.\68\ The party must either ``opt out of the class action, in
                accordance with regulations established by the Register'' or ``seek
                dismissal'' of the CCB proceeding in writing.\69\ The NPRM proposed a
                14-day period for a party to either opt out of the class action and
                provide notice to the CCB or to seek dismissal of the CCB
                proceeding.\70\ The Office received no comments on this portion of the
                proposed rule and promulgates it without amendment. The Office realizes
                that the statute does not state what will happen if the party fails to
                adhere to its obligation to make a timely election. The Office has
                therefore added a provision clarifying that the CCB may take necessary
                corrective action to resolve the conflicting proceedings, which may
                include dismissal of the proceeding without prejudice or, in
                circumstances where the class action has reached a determination on the
                merits, vacating any CCB determination. This provision is consistent
                with the goal of the statute to ensure the timely resolution of a
                conflicting proceeding by requiring a party to choose to continue with
                either the CCB proceeding or the class action. It is also consistent
                with the CCB's power to control its own proceedings, but not federal
                court class action proceedings.
                ---------------------------------------------------------------------------
                 \68\ 17 U.S.C. 1506(q)(3).
                 \69\ Id. at 1507(b)(2), 1506(q)(3).
                 \70\ 86 FR at 49277.
                ---------------------------------------------------------------------------
                List of Subjects in 37 CFR Part 223
                 Copyright, Claims.
                Final Regulations
                 For the reasons set forth in the preamble, the Copyright Office
                amends chapter II, subchapter B, of title 37 Code of Federal
                Regulations to read as follows:
                CHAPTER II--U.S. COPYRIGHT OFFICE, LIBRARY OF CONGRES
                SUBCHAPTER B--COPYRIGHT CLAIMS BOARD, LIBRARY OF CONGRESS
                0
                1. Under the authority of 17 U.S.C. 702, 1510, the heading for
                subchapter B is revised to read as set forth above.
                0
                2. Part 223 is added to read as follows:
                PART 223--OPT-OUT PROVISIONS
                Sec.
                223.1 [Reserved]
                223.2 Libraries and archives opt-out procedures.
                223.3 Class action opt-out procedures.
                 Authority: 17 U.S.C. 702, 1510.
                Sec. 223.1 [Reserved]
                Sec. 223.2 Libraries and archives opt-out procedures.
                 (a) Opt-out notification. (1) A library or archives that wishes to
                preemptively opt out of participating in Copyright Claims Board
                (``Board'') proceedings under 17 U.S.C. 1506(aa) may do so by
                submitting written notification to the Board. The notification shall
                include a signed certification under penalty of perjury that the
                library or archives qualifies for the limitations on exclusive rights
                under 17 U.S.C. 108 and the signatory is authorized to submit the form
                on the library's or archives' behalf.
                 (2) The submission described in paragraph (a)(1) of this section
                shall list the name and physical address of each library or archives to
                which the preemptive opt out applies and shall be signed by a person
                with the authority described in paragraph (c) of this section. The
                library or archives must also provide a point of contact for future
                correspondence, including phone number, mailing address, email address,
                and the website for the library or archives, if available, and shall
                notify the Board if this information changes.
                 (3) The Board will accept the facts stated in the submission
                described in paragraphs (a)(1) and (2) of this section, unless they are
                implausible or conflict with sources of information that are known to
                the Board or the general public.
                 (4) If a Federal court determines that an entity described in
                paragraph (a)(1) of this section does not qualify for the limitations
                on exclusive rights under 17 U.S.C. 108, that entity must inform the
                Board of that determination and submit a copy of the relevant order or
                opinion, if any, within 14 days after the determination is issued.
                 (5) An opt-out under this section extends to a library's or
                archives' employee acting within the scope of their employment, but
                does not apply to employees acting outside the scope of their
                employment.
                 (6) For the purposes of this section, the date that the Board posts
                the opt-out information on its website as described in paragraph (b) in
                this section, after receipt, review, and processing of the notification
                described in paragraph (a)(1) of this section, will be the effective
                date of a preemptive opt-out election, except as noted in paragraph
                (a)(9) of this section. A preemptive opt-out election would not compel
                dismissal of a claim that the Board has found compliant and has
                instructed the claimant to serve prior to the preemptive opt-out
                election's effective date. A respondent who wishes to opt out of such a
                claim should follow the directions provided in the served notice of
                proceeding.
                 (7) A library or archives may rescind its preemptive opt-out
                election under this section, such that it may participate in Board
                proceedings, by providing written notification to the Board in
                accordance with such instructions as are provided on the Board's
                website. A library or archives may submit no more than one such
                rescission notification per calendar year.
                 (8) The notification described in paragraph (a)(1) of this section
                shall be submitted to the Board in accordance
                [[Page 13177]]
                with such instructions as are provided on the Board's website.
                 (9) A blanket opt-out filed by a library or archives in accordance
                with this section before April 8, 2022 will become effective on that
                date.
                 (b) Review of eligibility. (1) The Board will maintain on its
                website a public list of libraries and archives that have preemptively
                opted out of Board proceedings pursuant to paragraph (a) of this
                section. If the Register determines pursuant to paragraph (a)(3) of
                this section that an entity does not qualify for the preemptive opt-out
                provision, the Office will communicate to the point of contact
                described in paragraph (a)(2) of this section that it does not intend
                to add the entity to the public list, or that it intends to remove the
                entity from that list, and will allow the entity to provide evidence
                supporting its qualification for the exemption within 30 days. If the
                entity fails to respond, or if, after reviewing the entity's response,
                the Register determines that the entity does not qualify for the
                limitations on exclusive rights under section 108 of title 17, the
                entity will not be added to, or will be removed from, the public list.
                If the Register determines that the entity qualifies for the
                limitations on exclusive rights under 17 U.S.C. 108, the entity will be
                added to, or remain on, the libraries and archives preemptive opt-out
                list. This provision does not limit the Office's ability to request
                additional information from the point of contact listed pursuant to
                paragraph (a)(2) of this section. Any determination by the Register
                regarding an entity's qualifying status for the limitations on
                exclusive rights under 17 U.S.C. 108 is solely for the purpose of
                determining whether the entity qualifies for the preemptive opt out
                under 17 U.S.C. 1506(aa) and does not constitute a legal conclusion for
                any other purpose.
                 (2) A claimant seeking to assert a claim under this section against
                a library or archives, or an employee thereof acting within the scope
                of their employment, that it believes is improperly included on the
                public list described in paragraph (b)(1) of this section may file the
                claim with the Board pursuant to 17 U.S.C. 1506(e) and applicable
                regulations. The claimant must include in its statement of material
                facts allegations sufficient to support that belief. If the Board
                concludes, as part of its review of the claim pursuant to 17 U.S.C.
                1506(f), that the claimant has alleged facts sufficient to support the
                conclusion that the library or archives is ineligible for the
                preemptive opt-out, and the Register agrees, the library or archives
                will be given an opportunity to provide evidence supporting its
                qualification for the exemption pursuant to paragraph (a)(1) of this
                section. If the Register concludes that evidence submitted by the
                library or archives supports its qualification for the exemption, the
                library or archives will remain on the list and the associated
                allegations by the claimant will be stricken. After these allegations
                are stricken, if the claim includes other respondents and is otherwise
                complaint, the claimant will be instructed to proceed with service of
                the claim against the remaining respondents. Alternatively, if the
                Register concludes that the library or archives has not provided
                evidence to support its qualification for the exemption, the library or
                archives will be removed from the blanket opt-out list. The claim will
                then be reviewed for compliance and, if found to be compliant, the
                claimant will be instructed to proceed with service of the claim.
                 (3) Any determination made under paragraph (b)(1) of this section
                shall constitute final agency action under 5 U.S.C. 704.
                 (c) Authority. Any person with the authority to take legally
                binding actions on behalf of a library or archives in connection with
                litigation may submit a notification under paragraph (a) of this
                section.
                 (d) Multiple libraries and archives in a single submission. A
                notification under paragraph (a) of this section may include multiple
                libraries or archives in the same submission if each library or
                archives is listed separately in the submission and the submitter has
                the authority described under paragraph (c) of this section to submit
                the notification on behalf of all libraries and archives included in
                the submission.
                Sec. 223.3 Class action opt-out procedures.
                 (a) Opt-out or dismissal procedures. Any party to an active
                proceeding before the Copyright Claims Board (``Board'') who receives
                notice of a pending or putative class action, arising out of the same
                transaction or occurrence as the proceeding before the Board, in which
                the party is a class member, shall either opt out of the class action
                or seek written dismissal of the proceeding before Board within 14 days
                of receiving notice of the pending class action. If a party seeks
                written dismissal of the proceeding before the Board, upon notice to
                all claimants and counterclaimants, the Board shall dismiss the
                proceeding without prejudice.
                 (b) Filing requirement. A copy of the notice indicating a party's
                intent to opt out of a class action proceeding must be filed with the
                Board within 14 days after the filing of the notice with the court.
                 (c) Timing. The time periods provided in paragraphs (a) and (b) of
                this section may be extended by the Board for good cause shown.
                 (d) Failure to notify Board. If a party fails to make a timely
                election under paragraph (a) of this section, the Board is authorized
                to take corrective action as it deems necessary, which may include
                dismissal of a pending claim before the Board with or without
                prejudice, notifying the class action court of any final determination
                by the Board, or vacating a final determination of the Board. The Board
                may, in its discretion, direct a party to show cause why action under
                paragraph (a) of this section was not taken.
                 Dated: February 28, 2022.
                Shira Perlmutter,
                Register of Copyrights and Director of the U.S. Copyright Office.
                 Approved by:
                Carla D. Hayden,
                Librarian of Congress.
                [FR Doc. 2022-04747 Filed 3-8-22; 8:45 am]
                BILLING CODE 1410-30-P
                

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