Copyright

Serv
law
administration

The dome of the United States

Capitol rises behind the Library’s
Madison Building kiosk dome.

8 | u n i t e d s tat e s c o p y r i g h t o f f i c e
 Ti m e l i n e s s o f S e r v i c e s

vice is central
Service is central to an effective national copyright system. Effective delivery of
copyright services requires that they be timely. Through focused effort and the energy
created by the Office’s Reengineering Program, the Office has achieved significantly
better delivery times for its services and products.
The Office on the whole met its improved timeliness targets despite some delayed
mail shipments to the Office and an increased number of pieces of mail damaged
during security irradiation and screening processes.
This achievement took place during a period marked by a significant investment
of staff resources to reengineer Copyright Office processes and move online copyright
records from legacy systems to a database in Endeavor Information Systems’ Voyager
integrated library management system. These are described more fully in the
Management section of this report.

R e gis t r at i o n
Year-End Average Registration Processing Time
Copyrighted Works (in days; 2001– 2003 estimated)

During Fiscal Year 2005, the

200
Copyright Office received 600,535 165
130
claims to copyright covering more
80 82
than a million works and registered
53,720 claims. The Office examines 2001 2002 2003 2004 2005

the materials received to determine

whether the deposited work
contains copyrightable content,
whether the claimant is entitled to claim copyright, and whether there has been
compliance with U. S. copyright law and Office regulations. The Office continued to
complete registrations in half the time that it took in 200. At the end of Fiscal Year

fiscal year 2005 annual report | 9

 2005, the average time to issue a certificate was just over 80 days, and the average time
to complete registration records was 55 days after issuance of the registration certificate.

Preregistration

The President signed the Family Entertainment and Copyright Act (FECA), Pub. L. No.
09-9, on April 27, 2005. This legislation amended the U. S. copyright law by the addition
of a new §408(f) establishing preregistration; it is discussed more fully in the Reports
and Legislation section. Preregistration, as distinct from registration, is available only
for unpublished copyrighted works in categories that the Register of Copyrights finds
to have a history of infringement prior to commercial distribution. Unlike registration,
preregistration requires only an application with a description of the work and fee.
The Office determined that preregistration would be offered as an online service
only, as part of its new information technology system called eCO (Electronic
Copyright Office), with no paper application forms. From April 2005 through the
end of the fiscal year, the Office completed intensive work to prepare the electronic
preregistration application form and help text, and to do the related IT development,
process analysis, and training preparation required to implement preregistration on
November 5, 2005. Much of the technical work done on preregistration will be applied
directly to the upcoming electronic registration pilot.

Creation of the Registration Record

The copyright law requires the Register of Copyrights to create, maintain, and index
records of all deposits, registrations, recordations, and other copyright-related matters
and to make these records available to the public. The Cataloging Division records
essential information about the deposited copies for all works registered in the
Copyright Office. The Division also creates a record for recorded documents.
Records of copyright registrations provide important information about
ownership of copyrighted works, helping users to make lawful use of such works
and providing information for researchers about the history of American creativity.
The Cataloging Division created records for 643,735 registrations in Fiscal Year 2005,
including 9,245 registrations submitted electronically.

10 | u n i t e d s tat e s c o p y r i g h t o f f i c e
Reconsiderations of Denial of Registration

During Fiscal Year 2005, the Examining Division handled 24 first requests for
reconsideration (formerly called “appeals”) covering 589 claims. Of the initial refusals
to register, 93 claims (33 percent) were reversed upon first request.
During Fiscal Year 2005, the Copyright Office Review Board continued to review
and make final administrative determinations on
the Examining Division’s refusals to register works.
The Board met ten times and considered 28 requests
for second reconsideration involving 63 works. By Reconsideration Process

increasing the frequency with which the Board Under title 17, the Register of
Copyrights may determine
met, it was able to review most of the older requests.
that the material deposited for
The Board issued 22 decisional letters involving 63 copyright registration does not
constitute copyrightable subject
works. Some of these letters related to requests which
matter or that the claim is invalid
the Board had considered in Fiscal Year 2004 but for other reasons. In such cases,
the Register refuses registration
responded to in Fiscal Year 2005. The Board agreed
and notifies the applicant in
to register two of the contested works, and upheld the writing of the reason(s) for such
refusal. Applicants whose claims
Examining Division’s refusal to register the other 6
for registration are rejected can
works. The Office also began a practice, with respect seek reconsideration of such
decisions in a two-stage process.
to works of the visual arts, of including images of the
The claimant first requests
works whenever possible in the decisional letters in reconsideration by the Examining
Division. If the Division upholds
order to assist the claimant’s understanding of the
the refusal, the claimant may
Board’s rulings. make a second request to the
Copyright Office Review Board
(formerly known as the Appeals
Board). The Register of Copyrights,
Copies of Deposits and Certifications the General Counsel, and the Chief
of the Examining Division, or their
Upon request, the Copyright Office makes certified designees, constitute the Review
Board.
copies of its records, including registration
certificates and deposited works, usually when the
owner is engaged in infringement-related litigation.
The requesting party must meet one of three conditions to obtain a certified copy:
() the Office receives a written authorization from the copyright claimant of record
or his or her designated agent, or from the owner of any of the exclusive rights in the
copyright, as long as this ownership can be demonstrated by written documentation of
the transfer of ownership; (2) an attorney or authorized representative completes and

fiscal year 2005 annual report | 11

 submits the Copyright Office Litigation Statement Form in connection with litigation
involving the copyrighted work; or (3) the Office receives a court-issued order for a
reproduction of a deposited article, facsimile, or identifying portion of a work that is
the subject of litigation in its jurisdiction.
The Information and Reference Division’s Certifications and Documents Section
produced 5,054 copies of certificates of registration, a 0 percent increase over the
previous year. During the fiscal year, the section made 2,453 copies of copyright
deposits and ,99 certifications of deposits or records.

Contributions to Library of Congress Collections

The Library of Congress may select for its collections copies of works submitted for
registration or to fulfill the mandatory deposit provision of the law. Copyright deposits
form the core of the Library’s “Americana” collections and serve as the primary record
of American creativity.
During the fiscal year, the
Office transferred ,098,420 copies
Estimated Value of Items Transferred of registered and nonregistered
to the Library of Congress (in millions)
works valued at 39,649,83 to
the Library of Congress for its
39.4
36.5 collections.
31.9 33.7
31.3

Mask Works
2001 2002 2003 2004 2005

The Semiconductor Chip

Protection Act of 984 created
protection for mask works. Mask
works are a series of related images having or representing the predetermined three-
dimensional pattern on the layers of a semiconductor chip product. In Fiscal Year 2005,
the Office received 548 mask works and registered 506.

12 | u n i t e d s tat e s c o p y r i g h t o f f i c e
Vessel Hull Designs

The Vessel Hull Design Protection Act was signed into law on October 28, 998, as part
of the Digital Millennium Copyright Act (DMCA). The vessel hull law grants an owner
of an original vessel hull design certain exclusive rights, provided that application for
registration of the design with the Copyright Office is made within two years of the
design being made public.
The Office received 74 applications for registration of vessel hull designs this fiscal
year. The Office registered 52 and either rejected or corresponded on the others.

R e c o rdat i o n
Year-End Average Document Recordation
Processing Time (in days, 2001–2003 estimated)
The Copyright Office creates
records of documents relating
210 200
to a copyrighted work, a mask
work, or a vessel hull design that 125

have been recorded in the Office. 59

33
These documents frequently 2001 2002 2003 2004 2005

reflect popular and economically

significant works.
Documents may involve
transfers of rights from one copyright owner to another, security interests, contracts
between authors and publishers, and notices of termination of grants of rights.
During Fiscal Year 2005, the Documents Recordation Section recorded ,874
documents covering more than 350,000 titles of works. During Fiscal Year 2005, the
average year-end processing time rose from 33 days to 59 days, primarily due to major
staffing and hiring considerations. Nevertheless, the processing time is almost four
times faster than the average of 200 days three years earlier.

Policy Decisions Regarding Recordation

In a notice of policy decision (70 fr 44049, August , 2005), the Copyright Office
announced a policy clarifying practices regarding recordation of documents
pertaining to copyrights. First, the notice clarified that a document will be indexed

fiscal year 2005 annual report | 13

 only under the titles appearing in the executed document and that the informal
practice that allowed a party to attach a list of titles to documents lacking titles for the
purpose of indexing has been discontinued. Second, the notice established an interim
practice governing the redaction of documents. The interim practice continues to
permit some redaction of documents, but the notice cautioned against use of excessive
redaction since constructive notice is limited to that which appears in the document as
recorded. Moreover, the Copyright Office indicated its intent to seek public comment
on its current regulations and practices regarding redactions and the possibility that,
after a formal notice of inquiry, it may decide to eliminate entirely the possibility
of redaction, or limit its application. Third, the notice announced the issuance of
a revised Document Cover Sheet which, by design, eliminated requests for certain
information that proved unreliable for indexing purposes.

Online Service Provider

D e si gn at i o ns o f A gen t

The Office also processed online service providers’ designations of agent. The Digital
Millennium Copyright Act amended the law in 998 to limit potential liability for
monetary and injunctive relief for infringing uses of online service provider services.
To take advantage of this limitation on liability, the service provider must designate an
agent for notification of claims of infringement and provide contact information to the
Copyright Office. These designations of agent are then made available to the public.
The Office maintains a directory of agents on its website, one of the website’s most-
visited areas with more than 3.5 million hits in Fiscal Year 2005. During the year, the
Office posted an additional 655 designations of agent to the website, for a total of 5,945.

M a ndat o r y D ep o si t

The mandatory deposit provision in §407 of the copyright law requires, with certain
exceptions, that publishers deposit two copies of every copyrightable work published
in the United States within three months of publication.

14 | u n i t e d s tat e s c o p y r i g h t o f f i c e
 These copies are deposited with the Copyright Office for the use of the Library of
Congress in its collections or for exchange or transfer to other libraries. The Copyright
Acquisitions Division (CAD) acquires from publishers works needed for Library of
Congress collections when those works have not been obtained as registration deposits
or voluntary deposits sent in
compliance with the mandatory
deposit requirement. The
Copyright Acquisitions Division Mandatory Deposits Received
(in thousands)
encourages copyright owners to
deposit or register works regularly
538 563
and voluntarily immediately after 491
390
publication; however, the copyright 278
law authorizes the Register to issue
demands for the required copies 2001 2002 2003 2004 2005

any time after publication.

CAD completed twenty-one
publisher reviews and fifteen
followup reviews, and made demands for 6,470 titles based on recommendations
by CAD librarians and Library of Congress recommending officers and in response
to Congressional requests. The Office referred two noncompliant publishers to the
Department of Justice for legal action.
More than half of the copies of works the Office transferred to the Library of
Congress for its use arrived under the mandatory deposit provisions of the copyright
law. The value of these mandatory deposits was 3,585,0 or 34 percent of the
estimated value of all materials transferred to the Library.

St a t u t o r y L i c e n s e s a n d O b l i g a t i o n s
a nd t he C A R P Sy s t em

The Copyright Office oversees the statutory licenses and obligations in the copyright
law. Congress created statutory copyright licenses to remove the burden of negotiating
individual licenses from certain users and owners of copyrighted works.

fiscal year 2005 annual report | 15

 Some of these statutory licenses require the users of the works to deposit royalty
funds with the Copyright Office. Statutory licenses were included in the Copyright Act
of 976, Pub. L. No. 94-553, 90 Stat. 254 (title 7 USC) and later laws amending it. The
Licensing Division dates from 978 when the Copyright Act of 976 was implemented.
Royalty rates and distribution determinations
have been made by three different bodies that
Licensing Division Congress created at different times: first, by
Responsibilities
the Copyright Royalty Tribunal, 978–993, an
To collect royalty fees from cable independent agency outside the Library of
operators, satellite carriers, and
Congress; second, by Copyright Arbitration Royalty
importers and manufacturers of
digital audio recording devices Panels (CARPs), 993–2005, under the aegis of the
and media (DART);
Librarian of Congress; and third, by Copyright
To invest the royalty fees, minus
Royalty Judges, beginning in 2005, also under the
operating costs, in interest-
bearing securities with the U.S. aegis of the Librarian of Congress. A description
Treasury for later distribution to
of the Copyright Royalty Distribution and Reform
copyright owners;
Act of 2004 appears in the Reports and Legislation
To record voluntary licensing
agreements between copyright section of this report.
owners and specified users of
These licenses deal with secondary
their works; and
transmissions of radio and television programs by
To examine licensing documents
submitted for these statutory cable television systems; the making of ephemeral
licenses to determine whether
recordings; the noninteractive digital transmission
they meet the requirements of
the law. of performances of sound recordings; the making
and distributing of phonorecords of nondramatic
musical works; the use of published nondramatic
musical, pictorial, graphic, and sculptural works and nondramatic literary works
in connection with noncommercial broadcasting; secondary transmissions of
superstations and network stations by satellite carriers for private home viewing;
secondary transmissions by satellite carriers for local retransmissions; and the
importation, manufacture, and distribution of digital audio recording devices and
media.
The Licensing Division collected more than 24 million in royalty payments
during the fiscal year, almost entirely via electronic funds transfer (EFT). The division
worked on developing options for electronic filing for cable Statements of Account
(SA) to be tested in a pilot e-filing program, scheduled for Fiscal Year 2007. The

16 | u n i t e d s tat e s c o p y r i g h t o f f i c e
division also pursued several internal measures to create processing efficiencies in
workflow and quicker public availability of completed SA documents.

Royalty Fee Distributions

The Copyright Office distributes royalties collected under §, §9, and chapter 0
of the copyright law. These distributions are made as determined by agreements
among claimants or by proceedings of the Copyright Arbitration Royalty Panels or the
Copyright Royalty Judges.
In Fiscal Year 2005, the Office distributed royalties totaling 39,843,260.50 in the
following distributions:

• On June 23, 2005: a distribution totaling 38,842,452.98 comprising distribution of

the 2000 satellite royalties and the 2003 DART Copyright Owners Subfund.
• On August 4, 2005: a distribution totaling 64,82.29 from the 2004 DART
Nonfeatured Musicians
and Nonfeatured Vocalists
Subfunds.
Royalty Receipts & Distributions
• On September , 2005: a (in
in millions; figures by calendar year
year)
distribution of 935,986.23
from the 2004 DART 199 191 192 205

Copyright Owners Subfund.

130

71 83 72
Financial statements for royalty
fees available for distribution in the 2001 2002 2003 2004

cable and satellite statutory licenses ó Receipts ó Distributions

and in the digital audio recording
technology statutory obligation are
compiled and audited on a calendar
year basis as required by law. The total royalty receipts and disbursements shown in
calendar year statements are therefore not the same as the fiscal year total. Calendar
year 2004 financial statements are included in the appendices.

fiscal year 2005 annual report | 17

 Compulsory License Administration

Up to 2005, when the Copyright Royalty Distribution and Reform Act took effect,
CARPs determined distribution of royalties collected by the Licensing Division for the
cable and satellite licenses and for DART when copyright owners could not resolve
controversies among themselves. CARPs also set and adjust royalty rates and set terms
and conditions of payment. A CARP panel consists of three arbitrators.
During fiscal year 2005, the Copyright Office administered five CARP proceedings:
three rate adjustment proceedings and two distribution proceedings. Of the three rate
adjustment proceedings, two involved adjusting the rates paid by satellite carriers for
the retransmission of over-the-air television broadcast stations under the §9 license,
and the other involved the adjustment of rates paid by cable television systems for
the retransmission of over-the-air broadcast stations under the § license. The two
distribution proceedings dealt with the distribution of royalty fees paid by importers
and manufacturers of digital audio recording devices and media who distributed those
products in the United States during the period beginning January , 2002, and ending
on December 3, 2003, in accordance with chapter 0 of the Copyright Act.
A summary of the proceedings conducted this fiscal year and updates on prior year
distribution proceedings not yet concluded appears below.

Rate Adjustments

Adjustment of Cable Statutory License Royalty Rates: Docket No. 2005-2 CARP

The 2005 fiscal year was a window year for adjustment of the rates cable systems pay
for the retransmission to their subscribers of over-the-air broadcast signals under §.
These rates are calculated as percentages of a cable system’s individual gross receipts
received from subscribers for receipt of broadcast signals. A cable system’s individual
gross receipts determine the applicable percentages.
The proceeding was initiated by the Copyright Office’s receipt of two petitions
from parties with a significant interest in the royalty rates. The copyright owners of
sports programming (the Joint Sports Claimants) and the copyright owners of motion
pictures and syndicated television series (the Program Suppliers) filed one petition,
and the National Cable & Telecommunications Association (NCTA) filed the second.
In response to the Joint Sports Claimants / Program Suppliers’ petition and before
receipt of the NCTA petition, the Library of Congress published a Federal Register

18 | u n i t e d s tat e s c o p y r i g h t o f f i c e
notice seeking comment on the former petition and directing interested parties to
file a Notice of Intent to Participate in a Copyright Arbitration Royalty Panel (CARP)
rate adjustment proceeding. The notice also designated a thirty-day period to enable
the parties to negotiate a new rate schedule. At the end of the negotiation period, the
Office received one agreement submitted jointly by representatives of all of the parties
who filed notices of intent to participate in this proceeding. The agreement proposed
amending the basic royalty rates and the gross receipt limitations, reflecting these
changes in the regulations governing the filing of the statements of account, and
making the changes effective beginning with the second semiannual accounting period
of 2005. The agreement also noted that the syndex rates were not being adjusted for
the new license period. In addition, the parties stated that they were unable to agree
on whether or how to adjust the 3.75 percent rate but would continue their discussions
and notify the Office at a later date as to whether they would seek such an adjustment.
Pursuant to the CARP rules, the Library published in the Federal Register the
proposed adjustments to the percentages of gross receipts paid by the cable systems
and the gross receipts limitations on July 20, 2005. The Copyright Office received no
comments objecting to the proposed adjustments or Notices of Intent to Participate
in a CARP proceeding. The parties to this proceeding also notified the Office that
they would not seek an adjustment of the 3.75 percent rate. The Library was thus in
a position to adopt the proposed agreement as final. The final regulations became
effective as of July , 2005, which means that the new cable rates and the gross receipts
limitations apply to the second accounting period of 2005 and thereafter. The notice
adopting the final regulations will be published in the Federal Register in early Fiscal
Year 2006.

Rate Adjustment for the Satellite Carrier Compulsory License:

Docket Nos. 2004-9 CARP SRA (Analog) and 2005-4 CARP SRA (Digital)

On December 8, 2004, the President signed into law the Satellite Home Viewer
Extension and Reauthorization Act of 2004 (SHVERA) (as part of the Consolidated
Appropriations Act, 2005), Pub. L. No. 08-447, 8 Stat. 3394. SHVERA extends for
an additional five years the statutory license for satellite carriers retransmitting over-
the-air television broadcast stations to their subscribers, 7 USC §9, and makes a
number of amendments to the license. One of the amendments to §9 sets forth a
process for adjusting the royalty fees paid by satellite carriers for retransmitting analog

fiscal year 2005 annual report | 19

 transmissions of television network stations and superstations, as well as a similar but
separate process for setting royalty fee rates for retransmitting digital transmissions of
television network stations and superstations. 7 USC §9(c)() and (2).
With regard to the rates for analog signals, the law directed the Librarian of
Congress to publish a notice in the Federal Register requesting satellite carriers,
distributors, and copyright owners to submit to the Copyright Office any voluntary
agreements they had negotiated as to the adjustment of the rates for analog stations.
The Library published this notice on December 30, 2004, and, pursuant to the
statute, requested that any agreements be submitted no later than January 0, 2005.
In response to that notice, the Office received one agreement, submitted jointly by the
satellite carriers DirecTV, Inc. and EchoStar Satellite L.L.C., the copyright owners of
motion pictures and syndicated television series represented by the Motion Picture
Association of America, and the copyright owners of sports programming represented
by the Office of the Commissioner of Baseball. SHVERA required the Library to
publish the rates set forth in the voluntary agreement in order to afford parties
an opportunity to object to the proposed rates. The Library published a notice of
proposed rulemaking on January 26, 2005, to fulfill this requirement. No objections
were received; consequently, the rates were adopted as final on April 6, 2005. These
rates are for the license period January , 2005, through December 3, 2009.
With regard to the rates for digital signals, SHVERA adopted as the initial rates
the rates set by the Librarian of Congress in 997 for the retransmission of analog
broadcast signals, reduced by 22.5 percent. The statute called for these rates to be
adjusted in accordance with the procedure used to adjust the rates for analog signals
outlined above. On March 8, 2005, the Copyright Office received a letter from
EchoStar Satellite, L.L.C., DirecTV, Inc., Program Suppliers, and the Joint Sports
Claimants requesting that the Office begin the process of setting the rates for the
retransmission of digital broadcast stations signals so that rates for both digital and
analog signals would be in place before the July 30, 2005, deadline for satellite carriers
to pay royalties for the first accounting period of 2005. The Office granted the request,
and, pursuant to the statute, published a notice in the Federal Register initiating
a voluntary negotiation period and requesting the submission of any agreements
reached during that period to be submitted no later than April 25, 2005.
As with the rates for analog signals, the Office received a single agreement,
submitted jointly by the same satellite carriers and copyright owners who submitted

20 | u n i t e d s tat e s c o p y r i g h t o f f i c e
the agreement adjusting the rates for analog signals. The agreement proposed rates
for the private home viewing of distant superstations and distant network stations
for the 2005–2009 period, as well as the viewing of those signals for commercial
establishments. The agreement specifies that distant superstations and network
stations that are significantly viewed do not require a royalty payment, which is
consistent with 7 USC §9(a)(3), as amended. In addition, the agreement proposed
that, in the case of multicasting of digital superstations and network stations, each
digital stream that is retransmitted by a satellite carrier must be paid for at the
prescribed rate but no royalty payment is due for any program-related material
contained on the stream within the meaning of WGN v. United Video, Inc., 693 F.2d 622,
626 (7th Cir. 982) and Second Report and Order and First Order on Reconsideration in
CS Doc. No. 98-20, FCC 05-27 at ¶ 44 & n.58 (February 23, 2005).
In accordance with the statute, the Library published a notice of proposed
rulemaking implementing the agreement on May 7, 2005. No objections were
received; consequently, the rates were adopted as final on July 7, 2005. These rates are
for the license period January , 2005, through December 3, 2009.

Distribution Proceedings

Distribution of 2002 and 2003 Digital Audio Recording Royalty Funds:

Docket Nos. 2003-3 CARP DD 2002 and 2004-4 CARP DD 2003

On November 30, 2004, the President signed into law the Copyright Royalty and
Distribution Reform Act of 2004 (CRDRA) (Public Law 08-49, 8 Stat. 234), which
became effective on May 3, 2005. CRDRA phases out the Copyright Arbitration
Royalty Panel (CARP) system and replaces it with three permanent Copyright
Royalty Judges. Section 6(b)() of CRDRA allows the Library to terminate any CARP
proceeding commenced before the date of its enactment. Any such proceeding may
then be initiated with the Copyright Royalty Judges.
Before enactment of the CRDRA, the Copyright Office made a number of
distributions of the 2002 and 2003 digital audio recording technology (DART)
royalties under the CARP system. With regard to the 2002 DART distribution
proceeding, the Office made a distribution of the 2002 royalties in the Sound
Recordings Fund based on settlement agreements among the claimants to the
Copyright Owners and Featured Recording Artists subfunds. The Office also

fiscal year 2005 annual report | 21

 distributed to an Independent Administrator four percent of the 2002 Sound
Recordings Fund, the amount allocated by law to the Nonfeatured Musicians and
Nonfeatured Vocalists subfunds.
Similar distributions were made in the 2003 DART proceeding. The Office made
two distributions of royalties of the 2003 Sound Recordings funds based on settlement
agreements among the interested copyright parties, one for the royalties allocated
to the Featured Recording Artists subfund and the other for fees allocated to the
Copyright Owners subfund. As it did in the 2002 DART distribution proceeding, the
Office made an administrative distribution of the funds in the Nonfeatured Musicians
and Nonfeatured Vocalists subfunds.
However, the Office took no action to distribute the 2002 and 2003 Musical Works
Funds and decided not to initiate any further proceedings to consider the distribution
of these funds. Consequently, the Office elected to terminate these proceedings
pursuant to §6(b)() of the CRDRA. On August , 2005, the Office published a notice
in the Federal Register announcing the termination of these proceedings. The notice
also announced that since the Office did not commence a proceeding to distribute the
2004 DART royalty funds, the Copyright Royalty Judges would assume jurisdiction of
all proceedings regarding distribution of these funds on May 3, 2005.

Termination of proceeding, Docket No. 2004-1 CARP DTRA, and current rates under
the Digital Performance Right in Sound Recordings and Ephemeral Recordings
Compulsory Licenses

The Copyright Act requires that rates and payment terms for the statutory licenses
governing the reproduction and public performance of sound recordings by means of
digital audio transmissions be reconsidered every two years. As reported in FY 2004,
on January 6, 2004, the Copyright Office announced the voluntary negotiation period
to set rates and terms for the license period beginning January , 2005, and ending
December 3, 2006. Interested parties proposed to the Office settlements concerning
rates and terms applicable to eligible nonsubscription services, small commercial
webcasters, and noncommercial webcasters for the new license period. However,
before the Office could publish the proposed settlements for notice and comments, on
November 30, 2004, the CRDRA was enacted.
In accordance with the Act, the Office published a notice in the Federal Register
on February 8, 2005, terminating the proceeding initiated in January 2004 to set rates

22 | u n i t e d s tat e s c o p y r i g h t o f f i c e
and terms under §4(f)(2) and §2(e) for the 2005–2006 license period (70 fr 6736).
The notice also announced that pursuant to the Act the rates and terms in effect
on December 3, 2004, under §4(f)(2) and §2(e) for new subscription services,
eligible nonsubscription services, and services exempt under §4(d)()(C)(iv) of the
Copyright Act, and the rates and terms published in the Federal Register under the
authority of the Small Webcaster Settlement Act of 2002, would remain in effect at
least for 2005, or until they have been set under new procedures.

Notices of Intent to Audit

DMX Music, Inc., Muzak LLC, and Music Choice are known as “preexisting
subscription services,” meaning that they were in existence and were performing
sound recordings by means of noninteractive audio-only subscription digital audio
transmissions to the public for a fee on or before July 3, 998. Pursuant to §260.5 of
title 37 of the Code of Federal Regulations, any interested party may initiate an audit
of any one of the three preexisting services by filing a notice of intent to audit a
preexisting service with the Copyright Office and serving the notice of intent on the
service to be audited. The Copyright Office is then required to publish in the Federal
Register a notice announcing the interested party’s intent to conduct an audit within
thirty days of receipt of the notice of intent to audit.
On December 2, 2004, SoundExchange, a collecting rights entity that the
Librarian designated to collect and distribute royalty fee payments made under
§4(d)(2) by the three preexisting services and, thus, an interested party, filed with
the Copyright Office three notices of intent to audit the three preexisting subscription
services for the purposes of verifying their statements of account for the years
200-2002. SoundExchange later filed with the Office on February 6, 2005, a notice
of intent to audit DMX Music, Inc., for the purpose of verifying its royalty payments
for the years 2002–2004. The Office published these announcements in the Federal
Register on January 9, 2005 (70 fr 3069) and March , 2005 (70 fr 2242).

fiscal year 2005 annual report | 23

 Claims Filed for Royalty Fees

The Copyright Office received and processed claims from copyright owners who are
entitled to receive royalty fees generated from the use of their copyrighted works
during calendar year 2004 under the terms of the DART compulsory license. In
January and February of 2005, the Office received 29 claims for DART royalty fees.
With the passage of the Copyright Royalty and Distribution Reform Act of 2004, the
Copyright Royalty Judges assumed jurisdiction over cable, satellite and DART claims
on May 3, 2005. As a result, cable and satellite claims for calendar year 2004 were filed
with the Copyright Royalty Judges and not the Copyright Office.

[Regulations related to statutory licenses are listed in the Regulatory Activities portion
of this report.]

24 | u n i t e d s tat e s c o p y r i g h t o f f i c e