New Copyright Rules on Compulsory Digital Phonorecord Licenses

Starting July 22, 2004, the U.S. Copyright Office is amending its regulations governing the content and service of certain notices that are served or filed by persons who intend to use a musical work to make and distribute phonorecords under the compulsory license provisions of 17 USC 115.

In 1999, the Copyright Office was required to revise its regulations governing the content and service of so-called "Notices of Intention" to allow these compulsory licenses to include the making of a digital phonorecord delivery. In 2001, the Office published a second set of proposed regulations after considering the comments from the record industry, music publishers and potential new users of the license, that would allow, among other things, service on an agent, the listing of multiple works on a single notice, and use of an address other than the one listed in the Copyright Office records. In proposing these rules, however, the Office identified three issues that either had not been presented to the public for comment or that required further comment from the parties before the Office could issue a final rule.

Therefore, in March 2004, the Office published yet another set of proposed rules giving the public an opportunity to comment on these three issues:

(1) Whether licensees should be required to send statements of account and royalty payments to the agent to whom the notice of intention was sent until the agent or the copyright owner advises the licensee that the statements and payments should be sent elsewhere;
(2) whether it is advisable to simplify the requirement that a licensee provide information concerning its ownership, officers and directors; and
(3) the sufficiency of a Notice to cover all possible configurations, including those not listed specifically on the notice.

The Copyright Office received comments on the latest proposals from the National Music Publishers' Association, Inc. and The Harry Fox Agency, Inc., jointly; the Digital Media Association; Yemi Adegbonmire; the Recording Industry Association of America, Inc.; NMPA/HFA/RIAA, jointly; and Music Reports, Inc. All commenters who expressed an opinion supported the proposed rule which would require the authorized agent of a copyright owner, within two weeks of receiving a notice, to provide the licensee the name and address of the person to whom the licensee shall submit Statements of Account and royalty payments. The second proposal--to eliminate the requirement that a licensee provide certain information concerning its ownership, officers and directors, and substitute greatly simplified requirements--also generated no controversy.

The only issue over which the commenters disagreed was whether a single Notice of Intention to use a particular work is sufficient notice to cover all possible format configurations, including both those specifically identified on the notice and those which could be used although not listed on the notice. On this point, the Office concluded:

"In light of the fact that the purpose of the Notice of Intention is merely to give notice to the copyright owner of a licensee's intention to use the copyright owner's musical work to make and distribute phonorecords subject to the terms of the section 115 compulsory license, additional notices to update information that was correct at the time of service are not part of the statutory scheme. Once a notice is served, the copyright owner is on notice that the licensee will be using the identified musical work to make phonorecords. The licensee is then obligated to provide specific information about the types and numbers of phonorecords made and distributed as part of the monthly and annual statements of account, making it unnecessary to file follow-up notices for this purpose."