[Federal Register: March 11, 2004 (Volume 69, Number 48)]
[Proposed Rules]               
[Page 11566-11577]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11mr04-27]                         

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LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 201

[Docket No. RM 2001-6A]

 
Compulsory License for Making and Distributing Phonorecords, 
Including Digital Phonorecord Deliveries

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Copyright Office of the Library of Congress is proposing 
to amend its regulations governing the content and service of certain 
notices on the copyright owner of a musical work. The notice is served 
or filed by a person who intends to use a musical work to make and 
distribute phonorecords, including by means of digital phonorecord 
deliveries, under a compulsory license.

DATES: Comments should be received no later than April 12, 2004.

ADDRESSES: An original and ten copies of any comment shall be sent to 
the Copyright Office. If comments are mailed, the address is: Copyright 
Arbitration Royalty Panel, P.O. Box 70977, Southwest Station, 
Washington, DC 20024-0400. If comments are hand delivered by a 
commercial, non-government courier or messenger, comments must be 
delivered to: The Congressional Courier Acceptance Site, located at 
Second and D Streets, NE., between 8:30 a.m. and 4 p.m., and addressed 
to ``Office of the General Counsel, U.S. Copyright Office, James 
Madison Memorial Building, Room LM-401, First and Independence Avenue, 
SE., Washington, DC 20559-6000.'' If comments are hand delivered by a 
private party, they must be addressed to: ``Office of the General 
Counsel, U.S. Copyright Office, James Madison Memorial Building, Room 
LM-401, First and Independence Avenue, SE., Washington, DC 20559-
6000,'' and delivered to the Public Information Office, James Madison 
Memorial Building, Room 401, First and Independence Avenue, SE., 
Washington, DC between 8:30 a.m. and 5 p.m.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 
Tanya M. Sandros, Senior Attorney, Copyright Arbitration Royalty Panel, 
P.O. Box 70977, Southwest Station, Washington, DC 20024-0977. 
Telephone: (202) 707-8380; Telefax: (202) 252-3423.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 115 of the Copyright Act, 17 U.S.C., provides that ``[w]hen 
phonorecords of a nondramatic musical work have been distributed to the 
public in the United States under the authority of the copyright owner, 
any other person * * * may, by complying with the provisions of this 
section, obtain a compulsory license to make and distribute 
phonorecords of the work.'' 17 U.S.C. 115(a)(1). The compulsory license 
set forth in section 115 permits the use of a nondramatic musical work 
without the consent of the copyright owner if certain conditions are 
met and royalties are paid.
    One such condition precedent set forth in the law requires any 
person using the section 115 license to provide notice to the copyright 
owner of a musical work ``before or within thirty days after making, 
and before distributing any phonorecords' of his or her intent to use 
the copyright owner's work under the statutory license. 17 U.S.C. 
115(b). Pursuant to this section, the Register of Copyrights issued 
regulations prescribing the form, content, and manner of service of the 
Notice of Intention (``Notice'') to obtain the license. Final 
regulations governing the content and service of the Notice were 
adopted on November 28, 1980. 45 FR 79038 (November 28, 1980). These 
rules served the traditional needs of the statutory licensee who wished 
to use a copyrighted musical work to make their own sound recording 
under the traditional section 115 mechanical license.
    Section 115 was subsequently amended on November 1, 1995, with the 
enactment of the Digital Performance Right in Sound Recordings Act of 
1995 (``DPRA''), Public Law 104-39 (1995). Among other things, this law 
expanded the section 115 compulsory license for making and distributing 
phonorecords to include not only the traditional use of the musical 
work to make an original sound recording, but also the distribution of 
a phonorecord of a nondramatic musical work by means of a digital 
phonorecord delivery (``DPD''). See 17 U.S.C. 115(c)(3)(A). As defined

[[Page 11567]]

in the law, a digital phonorecord delivery is:

each individual delivery of a phonorecord by digital transmission of 
a sound recording which results in a specifically identifiable 
reproduction by or for any transmission recipient of a phonorecord 
of that sound recording, regardless of whether the digital 
transmission is also a public performance of the sound recording or 
any nondramatic musical work embodied therein.

17 U.S.C. 115(d).
    The right to make and distribute a DPD, however, does not include 
the exclusive rights to make and distribute the sound recording itself. 
These rights are held by the copyright owner of the sound recording and 
must be cleared through a separate transaction. In fact, to avoid any 
confusion on this point, the Digital Millennium Copyright Act of 1998 
(``DMCA''), Public Law 105-304, clarifies that the making of a DPD will 
constitute an act of infringement under section 501 unless: (1) The 
copyright owner of the sound recording authorizes the making of the 
DPD, and (2) the owner of the copyright of the sound recording or the 
entity making the DPD has obtained a compulsory license under section 
115 or has otherwise been authorized to distribute, by means of a DPD, 
each musical work embodied in the sound recording. See 17 U.S.C. 
115(c)(3)(H).
    What the DMCA did not do is change or alter the longstanding notice 
requirement set forth in section 115(b). However, the amendments did 
require the Copyright Office to amend its regulations governing the 
content and service of the required Notices of Intention to use the 
license to include the making of a digital phonorecord delivery, and 
the Office did so in 1999. See 64 FR 41286 (July 30, 1999). 
Unfortunately, these changes did not go far enough to address the needs 
of certain digital music services which anticipate using most, if not 
all, of the musical works embodied in the sound recordings readily 
available in today's marketplace under the section 115 license.
    Consequently, on August 28, 2001, the Copyright Office published a 
second notice of proposed rulemaking in which it suggested further 
amendments to those rules associated with service of a Notice to use 
the section 115 license and filing of such notice with the Office. 66 
FR 45241 (August 28, 2001). The purpose of these amendments is to 
streamline the notification process and make it easier for the licensee 
to serve the copyright owner with notice of the potential user's 
intention to use multiple musical works.

II. Comments

    In response to this notice, the Copyright Office received comments 
from Wixen Music Publishing, Inc. (``Wixen''), the Digital Media 
Association (``DiMA''), Napster, Inc. (``Napster''),\1\ and a joint 
comment from the Recording Industry Association of America, Inc., the 
National Music Publishers' Association, Inc., and The Harry Fox Agency, 
Inc. (collectively, ``RIAA/NMPA/HFA'').
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    \1\ Napster, Inc. subsequently went out of business. The Napster 
service mark is now used by Roxio, Inc. in connection with an online 
music service.
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    Wixen filed general comments which oppose the proposed amendments. 
It argues that the changes are designed to make it easier to use the 
statutory license and that increased use of the license is not a 
desirable result because use of the license erodes the rights of 
copyright owners. Wixen, however, fails to offer any support for its 
position or its observation, other than to assert that record clubs 
fail to adhere to the mechanical licensing process altogether. But 
failure on the part of some persons to use the license properly is not 
a reason to erect barriers for others to take advantage of the 
statutory license. In fact, the Office has a responsibility to 
promulgate regulations that implement Congress' express intent to allow 
the use of a musical work for the purpose of making and distributing 
phonorecords under the terms of the statutory license.
    The remaining three commenters, DiMA, Napster and RIAA/NMPA/HFA, 
all agree that the current regulations do not meet the needs of the new 
technologies and are in need of revision. In fact, these commenters do 
not think the proposed changes go far enough, and they encourage the 
Office to adopt further revisions to streamline and simplify the notice 
provisions. In addition to the revisions proposed in the initial 
notice, RIAA/NMPA/HFA propose regulatory language that addresses 
electronic licensing, eliminates the requirement that certain 
ownership, officer and director information be provided, and allows 
service of Notices by regular mail or courier.
    DiMA agrees with RIAA/NMPA/HFA in large part but maintains that the 
current system, even with the proposed changes, does not address the 
needs of the newly emerging business models. Both it and Napster 
support electronic filing, but their comments go much further than the 
changes proposed by the Office or RIAA/NMPA/HFA, in that they urge the 
Office, to the extent possible, to incorporate the changes set forth in 
the proposed Music Online Competition Act of 2001 (``MOCA''), proposed 
in the 107th Congress as H.R. 2724. Specifically, DiMA and Napster 
would like the Copyright Office to designate a single entity upon which 
to serve Notices and make royalty payments. In addition, DiMA proposes 
the creation of a ``safe harbor'' for those who fail to exercise 
properly the license during the period of uncertainty arising from the 
administration of the license for digital phonorecord deliveries 
(``DPDs''). It would also like to see the regulations amended to allow 
payment on a quarterly rather than a monthly basis and to establish a 
threshold below which payment would not be required.
    These suggestions, however, require statutory changes. For example, 
the Office has no authority to excuse a licensee's failure to serve a 
Notice within the statutory time frame, nor does it have the authority 
to alter the timetable for payment. Section 115(b) of the Copyright Act 
states that a licensee ``shall, before or within thirty days after 
making, and before distributing any phonorecords of the work, serve 
notice of intention to do so on the copyright owner.'' Likewise, 
section 115(c)(5) specifically requires that ``royalty payments shall 
be made on or before the twentieth day of each month and shall include 
all royalties for the month next preceding.'' Moreover, section 
115(c)(6) makes clear that upon failure to make payment within thirty 
days from the date of receipt of a written notice from the copyright 
owner indicating that payment has not been received, the license will 
be terminated and further making or distributions pursuant to the 
license are actionable as acts of infringement. 17 U.S.C. 115 (c)(6).
    Notwithstanding the requests to issue rules to modify the law, the 
Office has found the comments useful and has incorporated many of the 
commenters' proposals in the rules proposed herein, especially where 
the proposed changes would facilitate the process for filing Notices to 
the benefit of both the licensee and the copyright owner.
    The proposed rules published today reflect the Office's proposed 
resolution of the issues raised in this rulemaking proceeding and of 
the proposals made by the commenters. Because the Office proposes to 
address one issue raised by commenters but not raised in the earlier 
notice of proposed rulemaking, and because the Office seeks further 
comment on one issue addressed below, we are publishing a final notice 
of proposed rulemaking to seek comments on those two particular issues. 
Commenters may, of course, address other provisions of the proposed 
rules as well, but the Office does not

[[Page 11568]]

anticipate that its determinations on those provisions will change. It 
is the Office's goal to propound final regulations promptly after the 
expiration of the comment period.

III. Discussion

    1. Service on Authorized Agents. Under the proposed amendments, a 
potential licensee could choose to serve either the copyright owner of 
the musical work or a duly authorized agent of the copyright owner for 
purposes of complying with the notice requirements of the section 115 
license. In principle, RIAA/NMPA/HFA support such a change, but they 
contend that the proposed amendment is too restrictive. First, they 
object to the requirement that the agent must be specifically 
authorized to grant or administer the particular rights that are being 
licensed. They note that a compulsory license is conferred 
automatically, by operation of law, and consequently, a ``copyright 
owner * * * should have the flexibility to appoint agents that are 
authorized to receive Notices of Intention and transmit them to the 
copyright owner, even if such agents are not empowered with discretion 
to grant or administer rights on a voluntary basis,'' RIAA/NMPA/HFA 
comment at 5, and propose additional language to cover this 
contingency.
    Second, they contend that a licensee should not be penalized for 
not knowing the metes and bounds of the agent's authority. To deal with 
such a case, RIAA/NMPA/HFA seek a change in the proposed regulatory 
language that would protect the licensee in the event an agent who has 
no authority to receive the Notice is mistakenly served on behalf of 
the copyright owner. Specifically, their proposed rule would allow the 
agent to return the Notice to the licensee who would then serve the 
Notice on the copyright owner directly within thirty days after 
receiving the returned original Notice. The rule would further specify 
the date of the mailing of the original Notice as the date of service 
for purposes of the section 115 license.
    Third, RIAA/NMPA/HFA express concern that the emphasis on an agent 
being ``duly authorized'' may set a standard for establishing an agency 
relationship higher than that applied as a matter of agency law.
    The need for a more flexible system for notification of use of the 
section 115 statutory license is evident from the comments received by 
the Copyright Office. Consequently, the rules proposed today will 
provide greater flexibility to the copyright owner and to the licensee. 
They will allow a copyright owner to use an agent to accept the 
requisite Notices and/or royalty payments accompanied by statements of 
account, but the rules will not require that the copyright owner use a 
single agent to perform both functions. The decision to use an agent is 
left to the discretion of the copyright owner who may wish to use one 
agent to accept all filings under the section 115 license, including 
the Notice, the Statements of Account and royalty payments. 
Alternatively, a copyright owner may choose to use an agent only for 
the purpose of accepting Notices with the expectation that the licensee 
will thereafter send all statements of account and royalty payments 
directly to the copyright owner or to another agent designated by the 
copyright owner for that purpose.
    However, use of multiple agents can create traps for the unwary 
licensee in the case where an agent has been authorized only to accept 
Notices and the licensee is unaware of the limits of the agent's 
authority or assumes incorrectly that, as under the former regulatory 
scheme, Notices and Statements of Account are served on the same 
entity. Consequently, the new rules would impose a duty on the 
copyright owner to have its agent disclose the extent of its authority 
and to provide each licensee with the information they need to make 
payment to the proper party and to file the Statements of Account. This 
approach would allocate to the licensee the responsibility for serving 
Notices on the proper party, see discussion infra, section 4, Risk 
Assessment, and would place responsibility for supplying information 
for making proper payment on the copyright owner, who is in the best 
position to provide this information. Licensees who make payment in 
accordance with the information provided by an authorized agent would 
be deemed to have fully complied with the statutory requirements. A 
licensee who has served the Notice of Intention upon an agent will be 
under no obligation to send Statements of Account or royalty payments 
to the agent or the copyright owner until the agent notifies the 
licensee where to send the Statements of Account and payments. However, 
once the agent sends such notification, the licensee would be required 
to send Statements of Account and royalty payments covering the 
intervening period.
    Such an approach creates the risk that a licensee may be able 
temporarily to delay sending Statements of Account and royalty payments 
to a copyright owner when the agent has failed to advise the licensee 
where to send them, but this appears to be a necessary result of the 
system proposed by copyright owners that would permit them to limit the 
authority of the agent to receipt of Notices of Intention. The Office 
also seeks comment on an alternative approach that would require the 
licensee to send Statements of Account and royalty payments to the 
agent to whom the Notice of Intention was sent unless and until the 
agent or the copyright owner advises the licensee that the statements 
and payments should be sent elsewhere.
    In adopting the new approach, the Office also considered carefully 
the rule proposed by RIAA/NMPA/HFA that would protect a licensee in the 
event the Notice is incorrectly served on an agent with no authority to 
act on behalf of the copyright owner for purposes of the compulsory 
license. Under the proposed RIAA/NMPA/HFA rule, a licensee would incur 
no liability for a misdirected Notice provided that the licensee served 
the Notice properly on the copyright owner within thirty days after 
receiving the returned Notice. Moreover, the proposed rule would have 
specified the date of the mailing of the original Notice as the date of 
service for purposes of providing notice to the copyright owner.
    The rule change proposed by RIAA/NMPA/HFA, however, would be 
contrary to law in at least two ways. First, the proposed rule would 
not insure notice in all situations. It would only require a licensee 
to serve a Notice directly on the copyright owner in the case where a 
misdirected Notice has been returned to the licensee. It would not 
provide for any means to notify the copyright owner in the case where a 
Notice has been misdirected and not returned, thus, failing to meet the 
notice requirement.
    Second, the proposed rule would extend the period for serving a 
Notice beyond the period set forth in the law. The statute requires 
that notice be served on the copyright owner ``before or within thirty 
days after making, and before distributing any phonorecords of the 
work,'' 17 U.S.C. 115(b)(1). Yet, the RIAA/NMPA/HFA rule would expand 
the period for serving a Notice on the copyright owner, by resetting 
the clock for the thirty-day period for serving the Notice on the 
copyright owner to the date a misdirected Notice is returned to the 
licensee. RIAA/NMPA/HFA realize that this proposal could contravene the 
statutory time frame for serving notice and attempt to solve the 
problem by having the Office adopt a new rule, specifying the mailing 
date of the original Notice as the date of service.

[[Page 11569]]

But this approach is flawed because it ignores the fact that the law 
requires that a person wishing to use the compulsory license ``serve 
notice of intention to do so on the copyright owner.'' 17 U.S.C. 
115(b)(1). Service on someone other than the copyright owner or the 
owner's authorized agent, even when done in good faith, is not service 
on the copyright owner. For the foregoing reasons, the RIAA/NMPA/HFA 
proposed rule has not been adopted.
    We have also considered RIAA/NMPA/HFA's suggestion to eliminate the 
requirement that an agent be ``duly authorized'' to act on behalf of 
the copyright owner for the purpose of administering the reproduction 
and distribution rights of the copyright owner and agree that it is not 
necessary for an agent to be authorized to this extent, if the agent 
will only be accepting Notices to use the section 115 license, see 37 
CFR 201.18(a)(4), and/or accepting Statements of Account and royalty 
payments, see 37 CFR 201.19(a)(4) and (e)(7)(i). However, the agent 
must have the authority to accept the Notices and/or Statements of 
Account and royalty payments. RIAA/NMPA/HFA also express concern that 
the requirement that the agent be ``duly authorized'' might be 
interpreted as setting a standard of authority different from that 
which would apply as a matter of agency law. They propose that persons 
wishing to use the statutory license be permitted to serve Notices of 
Intention on agents ``with authority'' to receive the Notice of 
Intention. The Office agrees that service upon an agent who has 
authority to accept Notices of Intention on behalf of a copyright owner 
should be sufficient. For this reason, the rules will require that 
service be made on the copyright owner or on an agent with authority to 
receive the Notice, but will not include the original proposed 
requirement that the agent be fully authorized to administer the 
reproduction and distribution rights.
    Napster and DiMA, like RIAA/NMPA/HFA, support the adoption of a 
rule that would allow service on an agent, but they offer a different 
approach to the problem. They propose that service be made upon a 
single agent to be designated by the Office in a procedure similar to 
that used to designate SoundExchange as the receiving agent for all 
royalty fees for the performance of sound recordings under the 
statutory section 114 license. See 63 FR 25394 (May 8, 1998); 67 FR 
45239 (July 8, 2002).
    We recognize the potential benefit that such a rule would have for 
licensees, but we find no authority in the statute to promulgate such a 
rule. In fact, Napster's and DiMA's suggestion that the Copyright 
Office designate a single agent for purposes of receiving the Notices 
is contrary to the express language in the law. Section 115(b)(1) 
requires that a licensee serve a Notice to use the compulsory section 
115 on the copyright owner and allows filing of the Notice with the 
Office only in the event the ``registration or other public records of 
the Copyright Office do not identify the copyright owner and include an 
address at which notice can be served.'' Thus, there can be no serious 
dispute that the law allows service of the Notice with the Copyright 
Office only in very limited circumstances. Notice to either the 
Copyright Office or a single agent designated by the Copyright Office 
would alter the structure set forth in the law and, hence, it is 
clearly not permissible. Moreover, while the advantage of such an 
approach to licensees is apparent, copyright owners presumably would 
consider themselves disadvantaged by such an approach because they 
would no longer receive direct notification that their works are being 
used by particular licensees. However, there is no reason that a 
copyright owner cannot affirmatively designate an agent to act on his 
or her behalf for purposes of receiving the Notices and the monthly 
statements of account, and so the proposed rules have been amended 
accordingly.
    RIAA/NMPA/HFA also suggest a technical correction to make clear 
that service may be accomplished by either serving the copyright owner 
directly or an agent of the copyright owner. We agree that the final 
rules should be clear that service on either the copyright owner or its 
agent is sufficient, and we have revised the proposed amendment 
accordingly.
    2. Service by Regular Mail or Courier. RIAA/NMPA/HFA suggest that 
the Office amend its rules to allow service by means other than 
certified mail or registered mail, including first class mail, airmail, 
express mail, or by reputable courier. They maintain that service by 
certified mail or registered mail is both needlessly expensive and time 
consuming. They also note that service by regular mail is an accepted 
practice in other legal contexts and that service by a reputable 
courier, e.g., Federal Express, DHL and UPS, is a widely accepted 
practice in the commercial business community.
    The Office agrees with the proposed suggestion and proposes to 
amend its regulations to allow the licensee to choose the method of 
service. The advantage to using certified or registered mail, of 
course, is the creation of an evidentiary record to document the 
licensee's attempt to serve the Notice on the copyright owner in a 
timely manner. However, there is no reason to compel a licensee to use 
a particular method provided that the licensee assumes the burden of 
proving that the Notice was served in a timely manner. As before, where 
the licensee elects to serve the Notice by certified or registered mail 
on the copyright owner at the last address for the copyright owner 
shown in the records of the Copyright Office, the date the original 
Notice was sent, as documented by either a certified or registered mail 
receipt, shall be considered the date of service. Moreover, the Office 
will accept the date of attempted delivery by a reputable courier as 
the date of service, provided that documentation from the courier 
identifying the date of attempted delivery is provided. Alternatively, 
in the case where the licensee chooses to serve the Notice by means 
other than certified or registered mail or a reputable courier, e.g., 
first-class mail, the licensee should have the burden of demonstrating 
that service was timely. This change would not alter in any way the 
licensee's obligation to serve the Notice on the copyright owner or the 
copyright owner's agent in the prescribed manner.
    3. Service to Known Address. Section 115(b)(1) of the Copyright Act 
requires the compulsory licensee to serve the required Notice on the 
copyright owner. Under the current regulations, the Notice must be sent 
to the copyright owner identified in the registration records or other 
public records of the Copyright Office at the last address listed in 
these records in order to meet the notice requirements. Users have 
argued and the Office agrees that service on the copyright owner at the 
address listed in the Copyright Office records places a tremendous 
burden on a potential licensee who hopes to use the license to 
reproduce multiple works in those cases where the public records do not 
reflect the most current information and the licensee knows the current 
address for the copyright owner or the agent for the copyright owner 
who handles the reproduction and distribution rights. A licensee may 
have such information based upon a course of dealing with the copyright 
owner or because the copyright owner has publicized the information.
    For that reason, the Office proposed an amendment to its 
regulations that would give the potential licensee an option to serve 
the copyright owner or his or her agent at a current address instead of 
requiring that the Notice be served on the copyright owner at the

[[Page 11570]]

address listed for that copyright owner in the public records of the 
Copyright Office. RIAA/NMPA/HFA support this change, recognizing that 
many copyright owners and licensees have an ongoing business 
relationship and knowledge of current information not reflected in the 
public records of the Copyright Office. They offer no proposed changes 
to this provision.
    DiMA, on the other hand, proposes a more centralized approach 
whereby the user sends the Notices to a limited number of centralized 
entities such as the Copyright Office, or an agent or agents designated 
by the Copyright Office, instead of the copyright owner or his 
designated agent. DiMA comment at 4. This approach would, as DiMA 
points out, reduce expense and eliminate the problems that arise when a 
copyright owner refuses to accept certified mail filings.
    However, as explained earlier, the only time it is appropriate for 
a licensee to file a Notice with the Copyright Office is when ``the 
registration or other public records of the Copyright Office do not 
identify the copyright owner and include an address at which notice can 
be served.'' 17 U.S.C. 115(b)(1). Since the statute clearly sets forth 
the conditions under which a licensee can file its Notice with the 
Office, the proposed changes offered by DiMA to allow all Notices to 
come to the Copyright Office cannot be adopted. Such a rule would be an 
impermissible expansion of the duties and responsibilities delegated to 
the Copyright Office under the law. Therefore, the Copyright Office 
proposes to adopt a less expansive rule than the one proposed by DiMA 
which would allow a licensee to serve the copyright owner or his or her 
agent at an address other than the one listed in the Copyright Office 
records. If the licensee believes that he or she has more current or 
accurate information than the information in the Copyright Office 
records, he or she may serve the Notice using that information. 
However, as discussed below, the licensee bears the risk if his or her 
information proves to be inaccurate.
    4. Risk Assessment. In the event the person or entity seeking to 
obtain the license chooses not to serve the copyright owner at the 
address for the copyright owner noted in the public records in the 
Copyright Office and mistakenly sends the Notice to a person or entity 
who is not the actual copyright owner, or the agent with authority to 
accept the Notice, or to an incorrect address, the licensee bears all 
risk associated with the misdirected service, including the likelihood 
that the compulsory license will not cover any activity taken by the 
licensee under a mistaken assumption that the Notice was properly 
served.
    DiMA finds this approach too harsh and suggests that mistakes by a 
licensee's agent should not be imputed to the principal. It prefers a 
rule that would not bar a licensee from obtaining a statutory license 
for future use of the works in the case where the licensee reasonably 
relied on the integrity of the agent to effectuate proper notice. While 
the problem outlined is a serious concern, the Copyright Office has no 
authority to limit liability in the case where a Notice is improperly 
served. See 63 FR 25394 (May 8, 1998) (rejecting proposed term in rate 
setting proceeding that would have limited liability of a statutory 
licensee to acts which materially breach the statutory license terms).
    5. Service of Notice by Electronic Means. RIAA/NMPA/HFA, DiMA and 
Napster requested that the Office amend its rules to permit a licensee 
to serve a Notice electronically. RIAA/NMPA/HFA note that service of a 
Notice in a digital format will reduce the potential for loss of 
information, prove less burdensome for both the licensee and the 
copyright owner (at least in those cases where the licensee is filing a 
Notice for use of multiple works), and provide a convenient and easy 
way to manage the data. To this end, RIAA/NMPA/HFA propose that the 
rules be amended to require service by electronic means when the Notice 
lists titles of more than 50 works and that any licensee be allowed to 
do so in these circumstances.
    The Copyright Office fully supports the concept of service by 
electronic means and is cognizant of the many advantages it would 
provide to both licensees and copyright owners. Therefore, it is 
proposed that the rules be amended to provide an option for serving a 
Notice in a digital format. If a copyright owner/agent can accommodate 
a licensee who wishes to submit the Notice in a digital format and 
chooses to receive the Notice in this manner, then the Notice may be so 
served. Therefore, the Office proposes to adopt the RIAA/NMPA/HFA 
proposal to allow a licensee to submit a Notice to a copyright owner or 
its agent by means of an electronic transmission when the copyright 
owner or agent has determined that it can accommodate such submissions. 
The proposed rules would allow each copyright owner or agent acting on 
behalf of a copyright owner to establish written guidelines for making 
electronic submissions. All guidelines for making electronic 
submissions must be in writing and available to the public. An 
electronic submission made in this manner would be deemed to comply 
fully with the regulations for providing adequate notice to the 
copyright owner.
    However, the Office recognizes that in some cases, an option to 
serve Notices electronically may be insufficient, and copyright owners 
may have good reason to insist upon electronic filing. As RIAA/NMPA/HFA 
assert, a Notice of Intention that lists a large number of works may be 
difficult to process and handle if it is submitted only in hard copy, 
especially if it is served on an agent for a number of copyright owners 
and lists the works of a number of copyright owners. For that reason, 
the Office proposes a solution somewhat different than, but modeled 
upon, the RIAA/NMPA/HFA suggestion to require an electronic filing in 
every instance where the licensee intends to file a Notice to license 
50 works or more. Rather than require an electronic submission in every 
such case, the proposed rule would give a copyright owner or agent who 
receives a Notice of Intention that designates more than 50 works the 
right to demand that the person submitting the notice resubmit a list 
of the works identified in the notice in an electronic format. A list 
of the designated works would then have to be resubmitted in electronic 
format within 30 days of the licensee's receipt of the demand. As RIAA/
NMPA/HFA proposed, the notice could be in any electronic format in wide 
use, giving licensees wide flexibility whether to use, for example, a 
particular word processing or spreadsheet program to prepare the 
notice.
    The Office has also considered whether to allow a licensee to file 
a Notice in the Copyright Office in an electronic format. At this time, 
the Copyright Office is not prepared to accept electronic filings 
because it does not have in place the systems that would accommodate 
such filings. It is anticipated that such filings will be accepted in 
the future. For the time being, however, in the case where the licensee 
intends to license a high volume of musical works under section 115 and 
would endure significant hardships if required to submit the Notices 
under the standard practices, the licensee may contact the Licensing 
Division of the Copyright Office to inquire whether special 
arrangements can be made for submission of the Notice electronically.
    6. Multiple Works. Another way to increase the efficiencies 
associated with the filing of a Notice is to allow the listing of 
multiple works on a single

[[Page 11571]]

Notice in the case where the works are owned by the same copyright 
owner. For this reason, the Office proposed to amend its rules to 
eliminate the requirement that a separate Notice be served or filed for 
each nondramatic musical work embodied, or intended to be embodied, in 
phonorecords made under the compulsory license. See 37 CFR 
201.18(a)(2).
    RIAA/NMPA/HFA support the Office's proposal to allow the listing of 
multiple works on a single Notice in the case where a single copyright 
owner has an interest in each of the listed works. DiMA also supports 
the Office's proposal to allow a licensee to list multiple works on a 
single Notice, but then suggests that, in the case of an electronic 
submission, the Office allow a licensee ``to file a single database 
notice including multiple works by multiple owners.'' DiMA Comment at 
5. DiMA postulates that a single database Notice would make it 
demonstrably easier to manage the information. RIAA/NMPA/HFA agree with 
DiMA on this point.
    The Office recognizes the efficiencies for the licensee associated 
with DiMA's suggestion but it has chosen not to adopt this approach as 
a general rule at this time. Instead, the proposed rule requires that a 
Notice list only the works of the copyright owner being served but, in 
the case of a Notice served on an agent, the Notice may list the works 
of multiple copyright owners as long as all the works listed on the 
Notice are owned or co-owned by copyright owners who have authorized 
the agent to accept Notices on their behalf. The Office is taking this 
approach because section 115, which requires service of a Notice on the 
copyright owner, does not anticipate that the copyright owner should 
have to search a licensee's universal database Notice to determine 
which of the copyright owner's works a licensee intends to use pursuant 
to the compulsory license.
    However, in the case where the copyright owner or agent has the 
ability to sort the information and is willing to accept a database 
Notice submitted electronically, the Office sees no reason to prohibit 
the use of such Notice and require in its place the more particularized 
Notice outlined in the proposed regulations. Thus, the proposed rule 
leaves it to the discretion of the licensee and the copyright owner (or 
agent) to determine whether a database Notice listing multiple works by 
multiple owners is acceptable to both the licensee and the copyright 
owner/agent. In such situations, the licensee and the copyright owner/
agent should work out the details associated with formatting and 
transmittal of the information.
    The proposed amended regulations also would require that in the 
case where a licensee files a Notice listing multiple titles with the 
Copyright Office, the licensee shall pay the $12 filing fee for each 
title. The filing fee will cover the administrative costs associated 
with separately processing the information for each title in the 
Notice. There was no opposition to this provision.
    7. Content. The current regulations do not require that the 
licensee list the copyright owner's name on the Notice because a 
separate Notice for each work was served directly on the copyright 
owner, who has no need to be informed of his or her identity. Under the 
proposed amended rules, though, this would no longer be the case. A 
Notice listing multiple works could be served on an agent working on 
behalf of multiple copyright owners. Under these circumstances, the 
Notice would have to identify the copyright owner of each work, and so 
an amendment was proposed to add this information to the Notice.
    In response to this proposed change, RIAA/NMPA/HFA assert that the 
need to identify the copyright owner arises only when the Notice is not 
served directly on the copyright owner and suggest that the requirement 
apply only to Notices not served on a copyright owner directly. In 
theory we agree, and recognize that it may be redundant to include the 
name of the copyright owner on the Notice in those instances where the 
Notice is served directly on the copyright owner. Nevertheless, we 
recognize that all such Notices do not reach their intended 
destination. In these cases, the Notices may end up being filed with 
the Copyright Office and would have to include the name of the 
copyright owner. Such Notices should be complete on their face and not 
require any further work on the part of the staff or the public to 
identify the copyright owner. Moreover, requiring that the Notice 
contain the name of the copyright owner will eliminate the need to 
create multiple notice formats for service on different entities. 
Consequently, the proposed rules require the identification of the 
copyright owner on all Notices.
    The Office also proposed adding a requirement that, in the case 
where a person files the Notice with the Copyright Office pursuant to 
Sec.  201.18(e)(1),\2\ the Notice include an affirmative statement that 
the registration records or other public records of the Copyright 
Office have been searched and that the name and address of the 
copyright owner is not listed in these records.\3\ The purpose of this 
amendment is to provide sufficient information to the Copyright Office 
so that it can ascertain whether the Notice has been properly filed. 
Moreover, this requirement will serve as a reminder to the potential 
licensee that he or she has an obligation to search the public records 
of the Copyright Office before filing the required Notice with this 
Office. Napster, however, expressed a concern that the additional 
requirement may be used against a licensee as a means to oppose or 
restrict access to the compulsory license. We understand this concern, 
but the rules allow a licensee to file a Notice with the Office only 
when the registration records or other public records of the Copyright 
Office do not identify the copyright owner of the work and include an 
address, or when the Notice is returned to the sender because the 
copyright owner is no longer located at that address or refused to 
accept delivery. Consequently, the Office does not find a requirement 
to affirmatively state that the licensee has completed the obligatory 
search to be an onerous one and proposes to require the licensee to 
affirmatively state that the Office records have been searched and that 
the records do not include the name and address of the copyright owner.
---------------------------------------------------------------------------

    \2\ This rule has been redesignated as Sec.  201.18(f)(1) under 
the proposed rules announced in this document.
    \3\ Newly designated Sec.  201.18(f)(1) provides that if the 
registration records or other public records of the Copyright Office 
do not identify the name and address of the copyright owner of a 
particular work, a Notice of Intention with respect to that work may 
be filed with the Copyright Office.
---------------------------------------------------------------------------

    In addition, RIAA/NMPA/HFA has asked the Office to ``eliminate the 
requirement that a licensee provide certain information concerning its 
ownership, officers and directors, and substitute greatly simplified 
requirements that the licensee (1) provides the name and title of the 
licensee's CEO, managing partner or the like and (2) identify the 
entity expected to be actively engaged in the business of making and 
distributing, or authorizing the making and distribution of, 
phonorecords if the licensee is a holding company, trust or other 
passive entity not actively engaged in such business.'' While the 
current requirements presumably are intended to benefit copyright 
owners, see 37 CFR 201.18(c)(1)(iii) and 201.19(f)(3)(iii), the fact 
that NMPA and HFA propose that it be eliminated suggests that copyright 
owners would not be harmed by removing it. In fact, RIAA/NMPA/HFA

[[Page 11572]]

maintain that the current regulations are not tailored to provide 
meaningful information to the copyright owners and may well impose a 
needless burden on licensees. In light of these assertions by both 
copyright owners and users, the Office proposes to remove these 
requirements from the rules; but because the proposal was not included 
in the initial Notice of Proposed Rulemaking, the Office is seeking 
public comment on these issues for consideration in preparing the final 
rule.
    8. Signature. The Office proposes to further amend its rule to 
allow a duly authorized agent of the intended licensee to sign the 
Notice. An agent who signs on behalf of the licensee would have to be 
specifically authorized to execute the Notice on behalf of the 
licensee. A concise statement of authorization to that effect would 
have to be included in the Notice.
    RIAA/NMPA/HFA raise concerns that the proposed regulatory language 
may ``require specific resolution of a licensee's board of directors or 
a certificate evidencing the agent's authority,'' and has suggested 
alternative language to make clear that such procedures are not 
required. Specifically, they have asked the Office to remove the 
regulatory language that requires the agent to be specifically 
authorized to execute the Notice and a concise statement of 
authorization to that effect and in its place require that the Notice 
include only an affirmative statement that the agent is authorized to 
execute the Notice on behalf of the licensee. Since the purpose of the 
rule is to insure that the person signing the Notice is either the 
licensee or a duly authorized agent and the proposed changes accomplish 
this goal without using language that would impose unintended 
requirements on a licensee or its board of directors, the Office 
proposes to amend its regulation to incorporate the proposed changes 
offered by RIAA/NMPA/HFA.
    The Copyright Office also intends to amend its regulations 
regarding signature to address the issues and problems associated with 
making service electronically. Currently, there are no regulations 
pertaining to electronic service, but as explained earlier, the Office 
has considered the comments offered on this issue and proposes to adopt 
regulations that provide an option for electronic service. Since this 
option is voluntary and the Office has not requested comment on this 
issue--nor has any party who advocates and supports electronic service 
offered any suggestions as to the appropriate methodology to be 
employed to verify that an electronic submission will be made under the 
authority of the appropriate person--the regulations will not specify 
how a submission should be authenticated. However, the Office intends 
to require that, in the case where a submission is made electronically, 
a licensee and a copyright owner/agent develop mutually acceptable 
protocols to verify the authenticity of the person serving the Notice.
    9. Harmless errors. The statute requires that a person or entity 
who intends to use the compulsory license give notice to the copyright 
owner of the nondramatic musical work before or within thirty days 
after making, and before distributing any phonorecords of the work. The 
rules outline specific elements that are to be included in each Notice. 
This information helps the copyright owner identify which of his or her 
works are being used under the license. However, errors may occur in 
the preparation of these Notices, many of which do not affect the legal 
sufficiency of the Notice. For this reason, the Office proposes to 
adopt a new paragraph (g) to Sec.  201.18 to clarify that such errors 
will be considered harmless and will not affect the validity of the 
Notice.
    As stated in the initial notice of proposed rulemaking, the Office 
does not anticipate that it will have any role in resolving disputes 
about whether an error in a Notice is harmless.
    RIAA/NMPA/HFA support this change and offer no further changes. 
DiMA also agrees with the change, although it suggests that the rule 
does not adequately address the major problems with the current system 
concerning service and payment. The Office agrees with DiMA's 
observation, but notes that the proposed change is meant only to 
clarify that a Notice need not be perfect to give proper notice of use 
under the law. Nor is the rule to be construed as a ``safe harbor'' for 
a licensee who fails to serve adequate notice on the proper copyright 
owner in a timely manner.
    10. Fee for filing Notices of Intention.\4\ Section 201.18(e)(3) of 
37 CFR provides, in pertinent part, that when a Notice of Intention is 
filed with the Office because the copyright owner is no longer at the 
last address indicated in the Copyright Office's records or has refused 
to accept delivery, no filing fee will be required. The Office proposed 
to amend Sec.  201.18(e) to remove this provision. The fee charged for 
the filing of a Notice, like most other Copyright Office fees, is based 
upon the Office's costs in performing the service. See Fees and 
Registration of Claims to Copyright, 64 FR 29518 (June 1, 1999). Thus, 
the Office intends to amend its rules to require a filing fee in each 
instance where the Notice is filed with the Copyright Office without 
regard to the licensee's reason for filing the Notice with the Office.
---------------------------------------------------------------------------

    \4\ The citations to 37 CFR 201.18(e) in this section refer to 
the rule prior to its redesignation under the proposed rules 
announced in this document.
---------------------------------------------------------------------------

    While filing a Notice listing multiple titles simplifies the 
process for licensees, the Office still must index each title included 
on the Notice, thereby incurring costs for each title. The current cost 
for filing a Notice of Intention is $12. This fee may be changed only 
after the Register has studied the costs incurred by the Copyright 
Office in connection with the filing and has submitted the proposed 
change in the fee to Congress, which has 120 days to disapprove the 
change in fee. 17 U.S.C. 708(a)(5), (b). The Register will review the 
cost of processing multiple-title Notices and will present a proposal 
to modify this fee to Congress. Meanwhile, however, because the $12 fee 
would clearly be inadequate to cover the costs of processing Notices of 
Intention containing large numbers of titles, the proposed regulation 
will provide that for purposes of calculating fees, a Notice which 
lists multiple works shall be considered a composite filing of multiple 
Notices, and that fees shall be paid accordingly (i.e., a separate $12 
fee shall be paid for each work listed in the Notice). It is 
anticipated that this fee for the filing of multiple-title Notices will 
be decreased significantly when the Register makes her fee proposal to 
Congress.
    11. Certificate of Filing.\5\ Section 201.18(e)(1) of 37 CFR 
provided, in pertinent part, that ``[u]pon request and payment of the 
fee specified in Sec.  201.3(e), a Certificate of Filing [of a Notice 
of Intention] will be provided to the sender.'' This Certificate of 
Filing is in addition to a written acknowledgment of receipt and filing 
that the Office routinely provides to a person who files a Notice.
---------------------------------------------------------------------------

    \5\ The citations to 37 CFR 201.18(e)(1) in this section refer 
to the rule prior to its redesignation under the proposed rules 
announced in this document.
---------------------------------------------------------------------------

    The Office has reexamined this rule and has determined that the 
issuance of a Certificate of Filing serves no useful purpose, given 
that the Office routinely provides a written acknowledgment of receipt 
and filing. Moreover, a person who wishes to obtain official 
certification of the filing of a Notice of Intention may do so pursuant 
to the

[[Page 11573]]

existing regulations governing certified copies of Copyright Office 
records. See 37 CFR 201.2(d).
    Because there is no identifiable reason to incur the extra time and 
expense associated with the issuance of a Certificate of Filing for 
each Notice that is filed with the Copyright Office, the Office intends 
to delete that portion of Sec.  201.18(e)(1) that provides for a 
Certificate of Filing from the Licensing Division of the Copyright 
Office.
    12. Other issues. a. Safe harbor. Napster and DiMA advocate the 
creation of a safe harbor to avoid any copyright infringement liability 
which may occur during the time it takes to implement any desired 
electronic systems. In essence, these entities are asking for a rule 
that would hold harmless any past infringing activity in the case where 
an online service has not complied with the rules for obtaining a 
compulsory license because of the difficulties associated with filing 
multiple Notices or due to a dispute between the publishers and the 
services over the need for the license. Napster at 7; DiMA at 5 n.6. 
The Office has no authority to promulgate regulations that would 
effectively absolve a compulsory licensee from liability for past 
errors or inadvertent errors under the new procedures. See 63 FR 25394 
(May 8, 1998) (rejecting proposed term in rate setting proceeding that 
would have limited liability of a statutory licensee to acts which 
materially breach the statutory license terms).
    b. Database. DiMA asks the Office to establish a complete and up-
to-date electronic database of all musical works registered with the 
Copyright Office that are still under copyright protection, arguing 
that an electronic database will make it easier for all companies to 
search the registration files. Certainly, the creation of an all-
inclusive database is a laudable goal and deserves serious 
consideration, but it is not the subject of this proceeding nor a 
realistic goal at this time. Consequently, the Office has proposed 
modest changes to its regulations that can be implemented immediately 
to the benefit of those companies that wish to utilize the statutory 
license in the immediate future. If needed, further amendments may be 
considered at a future time.
    c. Extension of current mechanical licenses to cover DPDs. DiMA 
suggests that the Office promulgate ``a minimal set of regulations for 
the common situation in which online entities will be distributing 
digital phonorecord deliveries of sound recordings already covered by a 
mechanical license.'' DiMA offers little explanation for its 
suggestion, which may be intended to permit someone who intends to use 
the section 115 DPD license to rely upon a previously served Notice of 
Intention to use the section 115 mechanical license. The benefits of 
such a provision for licensees are apparent, but copyright owners, who 
have had no opportunity thus far to respond to DiMA's proposal, may 
well have compelling reasons to oppose it. The Office is unwilling to 
consider such a proposal, which was not included in the initial notice 
of proposed rulemaking, at this time without the benefit of further 
comment from both copyright owners and users of the compulsory license. 
The Office invites elaboration on this proposal by DiMA and comment on 
this proposal by copyright owners and other users of the compulsory 
license. In light of the intention to publish a final rule shortly 
after the close of the comment period, it is highly unlikely the final 
rule promulgated in this proceeding will include such an innovation, 
but comments received on this issue will be considered by the Office 
for possible future action.
    d. Royalty Payments and Statements of Account. DiMA seeks a 
regulation that would allow the Copyright Office or an agent designated 
by the Copyright Office to receive payments of royalty fees and 
statements of accounts. We recognize that DiMA's suggestion offers 
efficiencies for licensees, but the Copyright Office has no authority 
to adopt the proposed payment mechanism through a notice and comment 
proceeding. First, the Copyright Office collects royalty fees only in 
three instances and in each case Congress has expressly delegated the 
responsibility to the Office. See 17 U.S.C. 111(d)(2), 119(b)(1), and 
1005. Without similar statutory authority to collect royalty fees under 
section 115, the Copyright Office cannot promulgate regulations 
directing or permitting a compulsory licensee to make monthly royalty 
payments directly to the Copyright Office. Second, the Copyright Office 
cannot unilaterally designate an entity as an agent to receive these 
fees.
    In a past proceeding to set rates and terms for the section 114 
license, the parties to that proceeding proposed a term to the 
Copyright Arbitration Royalty Panel (``CARP''), the administrative 
entity with the authority and responsibility for adopting terms of 
payment for that license, designating a single collective for the 
purpose of receiving and distributing the royalty fees. Recognizing the 
administrative efficiencies for the interested parties and after 
finding that it was not contrary to law for the parties to the section 
114 rate setting proceeding to agree upon a collective to receive and 
distribute the royalty payments on behalf of all affected copyright 
owners, the Librarian adopted the stipulated term of payment. See 63 FR 
25394 (May 8, 1998). However, in that context the Librarian of Congress 
has the power to establish the terms of royalty payments. See 17 U.S.C. 
114(f). The Office has no such authority under section 115. Moreover, 
because this rulemaking is directed only toward amending the current 
regulations in order to streamline the procedures for serving Notices 
of Intention and Statements of Account, the Office finds DiMA's 
proposal to designate a collective for the purpose of collecting the 
section 115 royalties beyond the scope of this proceeding.
    DiMA has also asked the Copyright Office to adopt regulations to 
permit quarterly rather than monthly filing of the statements of 
account and to permit the withholding of fees below a certain threshold 
level. It cites the administrative costs associated with the 
distribution of de minimis fees and speculates that on-line music 
services may decide not to offer works of minor interest because the 
costs of administering the license for these works is 
disproportionately high compared to the royalties to be paid. The 
schedule of payment, however, is not an appropriate subject for a 
rulemaking proceeding. Section 115(c)(5) requires a licensee to make 
monthly payments. The only way to alter the schedule for payment is 
through an amendment to the law. No agency has the authority to 
promulgate regulations that alter requirements set forth in the law.
    e. Filings with the Copyright Office. DiMA suggests that the Office 
draft regulations that would allow licensees to offset costs associated 
with filing Notices with the Office in those situations where the 
copyright owner wrongly refuses service. It suggests that licensees 
might be allowed to deduct the administrative costs associated with 
such filings from the royalty fees. Again, this is a subject beyond the 
scope of the current rulemaking proceeding and, thus, it will not be 
considered at this time.

List of Subjects in 37 CFR Part 201

    Copyright.

Proposed Regulation

    In consideration of the foregoing, the Copyright Office proposes to 
amend part 201 of 37 CFR as follows:

PART 201--GENERAL PROVISIONS

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


[[Page 11574]]


    Authority: 17 U.S.C. 702.

    2. Section 201.18 is revised to read as follows:


Sec.  201.18  Notice of intention to obtain a compulsory license for 
making and distributing phonorecords of nondramatic musical works.

    (a) General. (1) A ``Notice of Intention'' is a Notice identified 
in section 115(b) of title 17 of the United States Code, and required 
by that section to be served on a copyright owner or, in certain cases, 
to be filed in the Copyright Office, before or within thirty days after 
making, and before distributing any phonorecords of the work, in order 
to obtain a compulsory license to make and distribute phonorecords of 
nondramatic musical works.
    (2) A Notice of Intention shall be served or filed for nondramatic 
musical works embodied, or intended to be embodied, in phonorecords 
made under the compulsory license. A Notice of Intention may designate 
any number of nondramatic musical works, provided that the copyright 
owner of each designated work or, in the case of any work having more 
than one copyright owner, any one of the copyright owners is the same 
and that the information required under paragraphs (d)(1)(i)-(iv) of 
this section does not vary. For purposes of this section, a Notice 
which lists multiple works shall be considered a composite filing of 
multiple Notices and fees shall be paid accordingly if filed in the 
Copyright Office under paragraph (f) of this section (i.e., a separate 
fee, in the amount set forth in Sec.  201.3(e)(1), shall be paid for 
each work listed in the Notice).
    (3) For the purposes of this section, the term copyright owner, in 
the case of any work having more than one copyright owner, means any 
one of the co-owners.
    (4) For the purposes of this section, service of a Notice of 
Intention on a copyright owner may be accomplished by means of service 
of the Notice on either the copyright owner or an agent of the 
copyright owner with authority to receive the Notice. In the case where 
the work has more than one copyright owner, the service of the Notice 
on any one of the co-owners of the nondramatic musical work or upon an 
authorized agent of one of the co-owners identified in the Notice of 
Intention shall be sufficient with respect to all co-owners. 
Notwithstanding paragraph (a)(2) of this section, a single Notice may 
designate works not owned by the same copyright owner in the case where 
the Notice is served on a common agent of multiple copyright owners, 
and where each of the works designated in the Notice is owned by any of 
the copyright owners who have authorized that agent to receive Notices.
    (5) For purposes of this section, a copyright owner or an agent of 
a copyright owner with authority to receive Notices of Intention may 
make public a written policy that it will accept Notices of Intention 
to make and distribute phonorecords pursuant to 17 U.S.C. 115 which 
include less than all of the information required by this section, in a 
form different than required by this section, or delivered by means 
(including electronic transmission) other than those required by this 
section. Any Notice provided in accordance with such policy shall not 
be rendered invalid for failing to comply with the specific 
requirements of this section.
    (6) For the purposes of this section, a digital phonorecord 
delivery shall be treated as a type of phonorecord configuration, and a 
digital phonorecord delivery shall be treated as a phonorecord 
manufactured, made, and distributed on the date the phonorecord is 
digitally transmitted.
    (b) Agent. An agent who has authority to accept Notices of 
Intention in accordance with paragraph (a)(4) of this section and who 
has received a Notice of Intention on behalf of a copyright owner shall 
provide within two weeks of the receipt of that Notice of Intention the 
name and address of the copyright owner or its agent upon whom the 
person or entity intending to obtain the compulsory license shall serve 
Statements of Account and the monthly royalty in accordance with Sec.  
201.19(a)(4).
    (c) Form. The Copyright Office does not provide printed forms for 
the use of persons serving or filing Notices of Intention.
    (d) Content. (1) A Notice of Intention shall be clearly and 
prominently designated, at the head of the notice, as a ``Notice of 
Intention to Obtain a Compulsory License for Making and Distributing 
Phonorecords,'' and shall include a clear statement of the following 
information:
    (i) The full legal name of the person or entity intending to obtain 
the compulsory license, together with all fictitious or assumed names 
used by such person or entity for the purpose of conducting the 
business of making and distributing phonorecords;
    (ii) The telephone number, the full address, including a specific 
number and street name or rural route of the place of business, and an 
e-mail address, if available, of the person or entity intending to 
obtain the compulsory license, and if a business organization intends 
to obtain the compulsory license, the name and title of the chief 
executive officer, managing partner, sole proprietor or other person 
similarly responsible for the management of such entity. A post office 
box or similar designation will not be sufficient for this purpose 
except where it is the only address that can be used in that geographic 
location.
    (iii) The information specified in paragraphs (d)(1)(i) and (ii) of 
this section for the primary entity expected to be engaged in the 
business of making and distributing phonorecords under the license or 
of authorizing such making and distribution (for example: a record 
company or digital music service), if an entity intending to obtain the 
compulsory license is a holding company, trust or other entity that is 
not expected to be actively engaged in the business of making and 
distributing phonorecords under the license or of authorizing such 
making and distribution;
    (iv) The fiscal year of the person or entity intending to obtain 
the compulsory license. If that fiscal year is a calendar year, the 
Notice shall state that this is the case;
    (v) For each nondramatic musical work embodied or intended to be 
embodied in phonorecords made under the compulsory license:
    (A) The title of the nondramatic musical work;
    (B) The name of the author or authors, if known;
    (C) A copyright owner of the work, if known;
    (D) The types of all phonorecord configurations already made (if 
any) and expected to be made under the compulsory license (for example: 
Single disk, long-playing disk, cassette, cartridge, reel-to-reel, a 
digital phonorecord delivery, or a combination of them);
    (E) The expected date of initial distribution of phonorecords 
already made (if any) or expected to be made under the compulsory 
license;
    (F) The name of the principal recording artist or group actually 
engaged or expected to be engaged in rendering the performances fixed 
on phonorecords already made (if any) or expected to be made under the 
compulsory license;
    (G) The catalog number or numbers, and label name or names, used or 
expected to be used on phonorecords already made (if any) or expected 
to be made under the compulsory license; and
    (H) In the case of phonorecords already made (if any) under the

[[Page 11575]]

compulsory license, the date or dates of such manufacture.
    (vi) In the case where the Notice will be filed with the Copyright 
Office pursuant to paragraph (f)(3) of this section, the Notice shall 
include an affirmative statement that with respect to the nondramatic 
musical work named in the Notice of Intention, the registration records 
or other public records of the Copyright Office have been searched and 
found not to identify the name and address of the copyright owner of 
such work.
    (2) A ``clear statement'' of the information listed in paragraph 
(d)(1) of this section requires a clearly intelligible, legible, and 
unambiguous statement in the Notice itself and without incorporation by 
reference of facts or information contained in other documents or 
records.
    (3) Where information is required to be given by paragraph (d)(1) 
of this section ``if known'' or as ``expected,'' such information shall 
be given in good faith and on the basis of the best knowledge, 
information, and belief of the person signing the Notice. If so given, 
later developments affecting the accuracy of such information shall not 
affect the validity of the Notice.
    (e) Signature. The Notice shall be signed by the person or entity 
intending to obtain the compulsory license or by a duly authorized 
agent of such person or entity.
    (1) If the person or entity intending to obtain the compulsory 
license is a corporation, the signature shall be that of a duly 
authorized officer or agent of the corporation.
    (2) If the person or entity intending to obtain the compulsory 
license is a partnership, the signature shall be that of a partner or 
of a duly authorized agent of the partnership.
    (3) If the Notice is signed by a duly authorized agent for the 
person or entity intending to obtain the compulsory license, the Notice 
shall include an affirmative statement that the agent is authorized to 
execute the Notice of Intention on behalf of the person or entity 
intending to obtain the compulsory license.
    (4) If the Notice is served electronically, the person or entity 
intending to obtain the compulsory license and the copyright owner 
shall establish a procedure to verify that the Notice is being 
submitted upon the authority of the person or entity intending to 
obtain the compulsory license.
    (f) Filing and service. (1) If the registration records or other 
public records of the Copyright Office identify the copyright owner of 
the nondramatic musical works named in the Notice of Intention and 
include an address for such owner, the Notice may be served on such 
owner by mail sent to, or by reputable courier service at, the last 
address for such owner shown by the records of the Office. It shall not 
be necessary to file a copy of the Notice in the Copyright Office in 
this case.
    (2) If the Notice is sent by mail or delivered by reputable courier 
service to the last address for the copyright owner shown by the 
records of the Copyright Office and the Notice is returned to the 
sender because the copyright owner is no longer located at the address 
or has refused to accept delivery, the original Notice as sent shall be 
filed in the Copyright Office. Notices of Intention submitted for 
filing under this paragraph (f)(2) shall be submitted to the Licensing 
Division of the Copyright Office, shall be accompanied by a brief 
statement that the Notice was sent to the last address for the 
copyright owner shown by the records of the Copyright Office but was 
returned, and may be accompanied by appropriate evidence that it was 
mailed to, or that delivery by reputable courier service was attempted 
at, that address. In these cases, the Copyright Office will specially 
mark its records to consider the date the original Notice was mailed, 
or the date delivery by courier service was attempted, if shown by the 
evidence mentioned above, as the date of filing. An acknowledgment of 
receipt and filing will be provided to the sender.
    (3) If, with respect to the nondramatic musical works named in the 
Notice of Intention, the registration records or other public records 
of the Copyright Office do not identify the copyright owner of such 
work and include an address for such owner, the Notice may be filed in 
the Copyright Office. Notices of Intention submitted for filing shall 
be accompanied by the fee specified in Sec.  201.3(e). A separate fee 
shall be assessed for each title listed in the Notice. Notices of 
Intention will be filed by being placed in the appropriate public 
records of the Licensing Division of the Copyright Office. The date of 
filing will be the date when the Notice and fee are both received in 
the Copyright Office. An acknowledgment of receipt and filing will be 
provided to the sender.
    (4) Alternatively, if the person or entity intending to obtain the 
compulsory license knows the name and address of the copyright owner of 
the nondramatic musical work, or the agent of the copyright owner as 
described in paragraph (a)(4) of this section, the Notice of Intention 
may be served on the copyright owner or the agent of the copyright 
owner by sending the Notice by mail or delivering it by reputable 
courier service to the address of the copyright owner or agent of the 
copyright owner. For purposes of section 115(b)(1) of title 17 of the 
United States Code, the Notice will not be considered properly served 
if the Notice is not sent to the copyright owner or the agent of the 
copyright owner as described in paragraph (a)(4) of this section, or if 
the Notice is sent to an incorrect address.
    (5) If a Notice is sent by certified mail or registered mail, a 
mailing receipt shall be sufficient to prove that service was timely. 
In the absence of a receipt of mailing by certified mail or registered 
mail, the person or entity intending to obtain the compulsory license 
shall bear the burden of proving that the Notice was served on the 
copyright owner or its authorized agent in a timely manner.
    (6) If a Notice served upon a copyright owner or an authorized 
agent of a copyright owner identifies more than 50 works that are 
embodied or intended to be embodied in phonorecords made under the 
compulsory license, the copyright owner or authorized agent may send 
the person who served the Notice a demand that a list of each of the 
works so identified be resubmitted in an electronic format, along with 
a copy of the original Notice. The person who served the Notice must 
submit such a list, which shall include all of the information required 
in paragraph (d)(1)(v) of this section, within 30 days after receipt of 
the demand from the copyright owner or authorized agent. The list shall 
be submitted on magnetic disk or another medium widely used at the time 
for the electronic storage of data, in the form of a flat file, word 
processing document or spreadsheet readable with computer software in 
wide use at such time, with the required information identified and/or 
delimited so as to be readily discernible. The list may be submitted by 
means of electronic transmission (such as e-mail) if the demand from 
the copyright owner or authorized agent states that such submission 
will be accepted.
    (g) Harmless errors. Harmless errors in a Notice that do not 
materially affect the adequacy of the information required to serve the 
purposes of section 115(b)(1) of title 17 of the United States Code, 
shall not render the Notice invalid.
    3. Section 201.19 is amended as follows:
    a. By revising paragraph (a)(3);
    b. By redesignating paragraphs (a)(4) through (a)(11) as paragraph 
(a)(5) through (a)(12), respectively;
    c. By adding a new paragraph (a)(4);

[[Page 11576]]

    d. By removing ``subparagraph (B) of this Sec.  201.19(a)(5)(iii)'' 
and adding ``paragraph (a)(7)(iii)(B) of this section'' in its place 
each place it appears;
    e. By removing ``paragraph (B) of this Sec.  201.19(a)(5)(iii)'' 
and adding ``paragraph (a)(7)(iii)(B) of this section'' in its place 
each place it appears;
    f. In newly designated paragraph (a)(7), by removing ``paragraph 
(a)(5)'' and adding ``paragraph (a)(6) of this section'' in its place;
    g. In paragraph (c)(2)(iii), by removing ``paragraph (a)(7)'' and 
adding ``paragraph (a)(10)'' in its place;
    h. In paragraph (d), by removing ``Sec.  201.19(a)(4)'' and adding 
``paragraph (a)(5) of this section'' in its place;
    i. By revising paragraph (e)(7)(i);
    j. By revising paragraph (e)(7)(ii)(A);
    k. In paragraph (e)(7)(ii)(B), by removing ``Sec.  
202.19(e)(7)(ii)'' and adding ``this paragraph (e)(7)(ii)'' in its 
place;
    l. In paragraph (e)(7)(ii)(D), by removing ``this Sec.  
201.19(e)(7)(ii)'' and adding ``this paragraph (e)(7)(ii)'' in its 
place;
    m. By adding a new paragraph (e)(7)(iv);
    n. By revising paragraph (f)(3)(iii);
    o. In paragraph (f)(4)(ii), by removing ``paragraphs (A) through 
(F) of this Sec.  201.19(f)(4)(i)'' and adding ``paragraphs 
(f)(4)(i)(A) through (F) of this section'' in its place;
    p. In paragraph (f)(5), by removing ``[subject to paragraph 
(f)(3)(iii)(A)]';
    q. By revising paragraph (f)(7)(i);
    r. By revising paragraph (f)(7)(iii)(A);
    s. In paragraph (f)(7)(iii)(B), by removing ``Sec.  
202.19(f)(7)(iii)'' and adding ``this paragraph (f)(7)(iii)'' in its 
place; and
    t. By adding a new paragraph (f)(7)(iv).
    The revisions and additions to Sec.  201.19 read as follows:


Sec.  201.19  Royalties and statements of account under compulsory 
license for making and distributing phonorecords of nondramatic musical 
works.

    (a) * * *
    (3) For the purposes of this section, the term copyright owner, in 
the case of any work having more than one copyright owner, means any 
one of the co-owners.
    (4) For the purposes of this section, the service of a Statement of 
Account on a copyright owner under paragraph (e)(7) or (f)(7) of this 
section may be accomplished by means of service on either the copyright 
owner or an agent of the copyright owner with authority to receive 
Statements of Account on behalf of the copyright owner. In the case 
where the work has more than one copyright owner, the service of the 
Statement of Account on one co-owner or upon an agent of one of the co-
owners shall be sufficient with respect to all co-owners.
* * * * *
    (e) * * *
    (7) Service. (i) Each monthly Statement of Account shall be served 
on the copyright owner or the agent with authority to receive 
Statements of Account on behalf of the copyright owner to whom or which 
it is directed, together with the total royalty for the month covered 
by the Monthly Statement, by mail or by reputable courier service on or 
before the 20th day of the immediately succeeding month. However, in 
the case where the licensee has served its Notice of Intention upon an 
agent of the copyright owner pursuant to Sec.  201.18, the licensee is 
not required to serve Statements of Account or make any royalty 
payments until the licensee receives from the agent with authority to 
receive the Notice of Intention notice of the name and address of the 
copyright owner or its agent upon whom the licensee shall serve 
Statements of Account and the monthly royalty fees. Upon receipt of 
this information, the licensee shall serve Statements of Account and 
all royalty fees covering the intervening period upon the person or 
entity identified by the agent with authority to receive the Notice of 
Intention by or before the 20th day of the month following receipt of 
the notification. It shall not be necessary to file a copy of the 
Monthly Statement in the Copyright Office.
    (ii)(A) In any case where a Monthly Statement of Account is sent by 
mail or reputable courier service and the Monthly Statement of Account 
is returned to the sender because the copyright owner or agent is no 
longer located at that address or has refused to accept delivery, or in 
any case where an address for the copyright owner is not known, the 
Monthly Statement of Account, together with any evidence of mailing or 
attempted delivery by courier service, may be filed in the Licensing 
Division of the Copyright Office. Any Monthly Statement of Account 
submitted for filing in the Copyright Office shall be accompanied by a 
brief statement of the reason why it was not served on the copyright 
owner. A written acknowledgment of receipt and filing will be provided 
to the sender.
* * * * *
    (iv) If a Monthly Statement of Account is sent by certified mail or 
registered mail, a mailing receipt shall be sufficient to prove that 
service was timely. In the absence of a receipt of mailing by certified 
mail or registered mail, the compulsory licensee shall bear the burden 
of proving that the Statement of Account was served on the copyright 
owner or its authorized agent in a timely manner.
    (f) * * *
    (3) * * *
    (iii) If the compulsory licensee is a business organization, the 
name and title of the chief executive officer, managing partner, sole 
proprietor or other person similarly responsible for the management of 
such entity.
* * * * *
    (7) Service. (i) Each Annual Statement of Account shall be served 
on the copyright owner or the agent with authority to receive 
Statements of Account on behalf of the copyright owner to whom or which 
it is directed by mail or by reputable courier service on or before the 
twentieth day of the third month following the end of the fiscal year 
covered by the Annual Statement. It shall not be necessary to file a 
copy of the Annual Statement in the Copyright Office. An Annual 
Statement of Account shall be served for each fiscal year during which 
at least one Monthly Statement of Account shall be served for each 
fiscal year during which at least one Monthly Statement of Account was 
required to have been served under paragraph (e)(7) of this section.
* * * * *
    (iii)(A) In any case where an Annual Statement of Account is sent 
by mail or by reputable courier service and is returned to the sender 
because the copyright owner or agent is not located at that address or 
has refused to accept delivery, or in any case where an address for the 
copyright owner is not known, the Annual Statement of Account, together 
with any evidence of mailing or attempted delivery by courier service, 
may be filed in the Licensing Division of the Copyright Office. Any 
Annual Statement of Account submitted for filing shall be accompanied 
by a brief statement of the reason why it was not served on the 
copyright owner. A written acknowledgment of receipt and filing will be 
provided to the sender.
* * * * *
    (iv) If an Annual Statement of Account is sent by certified mail or 
registered mail, a mailing receipt shall be sufficient to prove that 
service was timely. In the absence of a receipt of mailing by certified 
mail or registered mail, the licensee shall bear the burden of proving 
that the Annual Statement of Account was served properly in a timely 
manner.
* * * * *


[[Page 11577]]


    Dated: March 8, 2004.
Marybeth Peters,
Register of Copyrights.
[FR Doc. 04-5595 Filed 3-10-04; 8:45 am]
BILLING CODE 1410-33-P