05-15924. Distribution of 2002 and 2003 Digital Audio Recording Royalty Funds

AGENCY:

Copyright Office, Library of Congress.

ACTION:

Notice of termination of proceedings.

SUMMARY:

The Copyright Office of the Library of Congress is announcing the termination of two proceedings under the Copyright Arbitration Royalty Panel system to distribute royalty fees paid by importers and manufacturers of digital audio recording devices and media who distributed these products in the United States during the period beginning January 1, 2002, and ending on December 31, 2003. The Office is also providing notice that the authority to make determinations regarding the distribution of the 2004 Digital Audio Recording Royalty Funds passed to the Copyright Royalty Board on May 31, 2005.

DATES:

Effective August 11, 2005.

FOR FURTHER INFORMATION CONTACT:

Tanya M. Sandros, Associate General Counsel, or Abioye E. Oyewole, CRB Specialist. Telephone: [phone]. Telefax: [phone].

SUPPLEMENTARY INFORMATION:

The Audio Home Recording Act of 1992 (the “Act”), Public Law 102-563, requires manufacturers and importers to pay royalties on digital audio recording devices and media (“DART”) that are distributed in the United States. 17 U.S.C. 1003. These royalties are deposited with the Copyright Office for further distribution among interested copyright parties (“ICPs”), provided the copyright owners file a claim with the Office during January and February of each year. 17 U.S.C. 1005, 1007. The Act provides that the royalties are divided between two funds: the Sound Recordings Fund and the Musical Works Fund. These fees are allocated further to specific subfunds. The Sound Recordings Fund consists of four subfunds: the Featured Recording Artists Subfund, the Copyright Owners Subfund, the Nonfeatured Musicians Subfund, and the Nonfeatured Vocalists Subfund. The royalty fees allocated to the Musical Works Fund are equally divided between two subfunds, the Publishers Subfund and the Writers Subfund. 17 U.S.C. 1006(b).

Under the Copyright Arbitration Royalty Panel (“CARP”) system, proceedings to distribute funds in the Sound Recordings and Musical Works Funds occurred in one of two ways. If the claimants within each subfund agreed among themselves how to distribute the royalty fees, the Librarian of Congress distributed the royalties to the claimants in accordance with their negotiated agreement. 17 U.S.C. 1007(b). In the absence of an agreement, the Librarian of Congress convened a CARP, an ad-hoc panel of arbitrators, to determine the distribution of royalty payments. 17 U.S.C. 1007(c). On November 30, 2004, the President signed into law the Copyright Royalty and Distribution Reform Act of 2004 (the “CRDRA”), Public Law 108-419, 118 Stat. 2341. This Act, which became effective on May 31, 2005, phases out the CARP system and replaces it with three permanent Copyright Royalty Judges (“CRJs”). Additionally, CRDRA allows for the termination of “any [CARP] proceeding commenced by the date of the enactment of this Act...and any proceeding so terminated shall become null and void. In such cases, the Copyright Royalty Judges may initiate a new proceeding in accordance with regulations adopted pursuant to section 803(b)(6) of title 17, United States Code.” Section 6(b)(1) of the Copyright Royalty and Distribution Reform Act of 2004, Public Law 108-419. The Copyright Office is announcing the termination of two DART distribution proceedings under this provision.

Prior to the enactment of this Act, the Copyright Office made a number of distributions of the 2002 and 2003 DART royalty funds under the CARP system. In the 2002 DART distribution proceeding, the Copyright Office ordered a distribution of the 2002 royalties in the Sound Recordings Fund on October 1, 2003, based on settlement agreements among the claimants to the Copyright Owners and Featured Recording Artists subfunds. A second distribution to an Independent Administrator followed on November 19, 2003, of 4% of the 2002 Sound Recordings Fund, the amount allocated by law to the Nonfeatured Musicians and Nonfeatured Vocalists royalty subfunds.

Similar distributions were made in the 2003 DART distribution proceeding. On May 27, 2005, the Office made two distributions of royalties in the 2003 Sound Recordings Fund based upon settlement agreements among the interested copyright parties, one for the royalties allocated to the Featured Recording Artists subfund and the other for the funds allocated to the Copyright Owners subfund. The final distribution of the 2003 Sound Recordings Fund royalty fees was an administrative distribution of the funds in the Nonfeatured Musicians and Nonfeatured Vocalists royalty subfunds made on June 28, 2004. However, no action has been taken to distribute the 2002 and 2003 Musical Works Funds nor will the Copyright Office initiate any further proceedings to consider the distribution of these Funds. Rather, the Library elects to terminate these proceedings immediately pursuant to Section 6(b)(1) of the CRDRA. As a result, subsequent proceedings regarding the distribution of the 2002 and 2003 Musical Works Funds shall be initiated under the new CRJ system.

The Office is also providing notice that all proceedings regarding the distribution of the 2004 DART royalty funds came under the jurisdiction of the Copyright Royalty Board on May 31, 2005, the effective date of the CRDRA. Prior to this date, the Office took no action to commence a proceeding to consider the distribution of these funds. It merely accepted the claims filed and made an administrative distribution of the Nonfeatured Musicians and Nonfeatured Vocalists subfunds, actions which do not constitute commencement of a proceeding. Consequently, in accordance with Section 6(b)(1) of the CRDRA, the Library of Congress did not acquire jurisdiction over this proceeding.

Dated: August 5, 2005

Tanya M. Sandros,

Associate General Counsel.