17 U.S.C. § 1004 — Royalty payments

Page 212 TITLE 17—COPYRIGHTS § 1003 (b) DEVELOPMENT OF VERIFICATION PROCE- DURE.—The Secretary of Commerce shall estab- lish a procedure to verify, upon the petition of an interested party, that a system meets the standards set forth in subsection (a)(2). (c) PROHIBITION ON CIRCUMVENTION OF THE SYS- TEM.—No person shall import, manufacture, or distribute any device, or offer or perform any service, the primary purpose or effect of which is to avoid, bypass, remove, deactivate, or other- wise circumvent any program or circuit which implements, in whole or in part, a system de- scribed in subsection (a). (d) ENCODING OF INFORMATION ON DIGITAL MUSI- CAL RECORDINGS.— (1) PROHIBITION ON ENCODING INACCURATE IN- FORMATION.—No person shall encode a digital musical recording of a sound recording with inaccurate information relating to the cat- egory code, copyright status, or generation status of the source material for the record- ing. (2) ENCODING OF COPYRIGHT STATUS NOT RE- QUIRED.—Nothing in this chapter requires any person engaged in the importation or manu- facture of digital musical recordings to encode any such digital musical recording with re- spect to its copyright status. (e) INFORMATION ACCOMPANYING TRANSMISSIONS IN DIGITAL FORMAT.—Any person who transmits or otherwise communicates to the public any sound recording in digital format is not required under this chapter to transmit or otherwise communicate the information relating to the copyright status of the sound recording. Any such person who does transmit or otherwise communicate such copyright status information shall transmit or communicate such informa- tion accurately. (Added Pub. L. 102–563, § 2, Oct. 28, 1992, 106 Stat. 4240.) SUBCHAPTER C—ROYALTY PAYMENTS § 1003. Obligation to make royalty payments (a) PROHIBITION ON IMPORTATION AND MANUFAC- TURE.—No person shall import into and dis- tribute, or manufacture and distribute, any dig- ital audio recording device or digital audio re- cording medium unless such person records the notice specified by this section and subsequently deposits the statements of account and applica- ble royalty payments for such device or medium specified in section 1004. (b) FILING OF NOTICE.—The importer or manu- facturer of any digital audio recording device or digital audio recording medium, within a prod- uct category or utilizing a technology with re- spect to which such manufacturer or importer has not previously filed a notice under this sub- section, shall file with the Register of Copy- rights a notice with respect to such device or medium, in such form and content as the Reg- ister shall prescribe by regulation. (c) FILING OF QUARTERLY AND ANNUAL STATE- MENTS OF ACCOUNT.— (1) GENERALLY.—Any importer or manufac- turer that distributes any digital audio re- cording device or digital audio recording me- dium that it manufactured or imported shall file with the Register of Copyrights, in such form and content as the Register shall pre- scribe by regulation, such quarterly and an- nual statements of account with respect to such distribution as the Register shall pre- scribe by regulation. (2) CERTIFICATION, VERIFICATION, AND CON- FIDENTIALITY.—Each such statement shall be certified as accurate by an authorized officer or principal of the importer or manufacturer. The Register shall issue regulations to provide for the verification and audit of such state- ments and to protect the confidentiality of the information contained in such statements. Such regulations shall provide for the disclo- sure, in confidence, of such statements to in- terested copyright parties. (3) ROYALTY PAYMENTS.—Each such state- ment shall be accompanied by the royalty payments specified in section 1004. (Added Pub. L. 102–563, § 2, Oct. 28, 1992, 106 Stat. 4240.) § 1004. Royalty payments (a) DIGITAL AUDIO RECORDING DEVICES.— (1) AMOUNT OF PAYMENT.—The royalty pay- ment due under section 1003 for each digital audio recording device imported into and dis- tributed in the United States, or manufac- tured and distributed in the United States, shall be 2 percent of the transfer price. Only the first person to manufacture and distribute or import and distribute such device shall be required to pay the royalty with respect to such device. (2) CALCULATION FOR DEVICES DISTRIBUTED WITH OTHER DEVICES.—With respect to a digital audio recording device first distributed in combination with one or more devices, either as a physically integrated unit or as separate components, the royalty payment shall be cal- culated as follows: (A) If the digital audio recording device and such other devices are part of a phys- ically integrated unit, the royalty payment shall be based on the transfer price of the unit, but shall be reduced by any royalty payment made on any digital audio record- ing device included within the unit that was not first distributed in combination with the unit. (B) If the digital audio recording device is not part of a physically integrated unit and substantially similar devices have been dis- tributed separately at any time during the preceding 4 calendar quarters, the royalty payment shall be based on the average trans- fer price of such devices during those 4 quar- ters. (C) If the digital audio recording device is not part of a physically integrated unit and substantially similar devices have not been distributed separately at any time during the preceding 4 calendar quarters, the roy- alty payment shall be based on a con- structed price reflecting the proportional value of such device to the combination as a whole. (3) LIMITS ON ROYALTIES.—Notwithstanding paragraph (1) or (2), the amount of the royalty Page 213 TITLE 17—COPYRIGHTS § 1006 payment for each digital audio recording de- vice shall not be less than $1 nor more than the royalty maximum. The royalty maximum shall be $8 per device, except that in the case of a physically integrated unit containing more than 1 digital audio recording device, the royalty maximum for such unit shall be $12. During the 6th year after the effective date of this chapter, and not more than once each year thereafter, any interested copyright party may petition the Copyright Royalty Judges to increase the royalty maximum and, if more than 20 percent of the royalty pay- ments are at the relevant royalty maximum, the Copyright Royalty Judges shall prospec- tively increase such royalty maximum with the goal of having no more than 10 percent of such payments at the new royalty maximum; however the amount of any such increase as a percentage of the royalty maximum shall in no event exceed the percentage increase in the Consumer Price Index during the period under review. (b) DIGITAL AUDIO RECORDING MEDIA.—The roy- alty payment due under section 1003 for each digital audio recording medium imported into and distributed in the United States, or manu- factured and distributed in the United States, shall be 3 percent of the transfer price. Only the first person to manufacture and distribute or import and distribute such medium shall be re- quired to pay the royalty with respect to such medium. (Added Pub. L. 102–563, § 2, Oct. 28, 1992, 106 Stat. 4241; amended Pub. L. 103–198, § 6(b)(1), Dec. 17, 1993, 107 Stat. 2312; Pub. L. 108–419, § 5(i)(1), Nov. 30, 2004, 118 Stat. 2368.) Editorial Notes REFERENCES IN TEXT The effective date of this chapter, referred to in sub- sec. (a)(3), is Oct. 28, 1992. See Effective Date note set out under section 1001 of this title. AMENDMENTS 2004—Subsec. (a)(3). Pub. L. 108–419 substituted ‘‘Copyright Royalty Judges’’ for ‘‘Librarian of Con- gress’’ in two places. 1993—Subsec. (a)(3). Pub. L. 103–198 substituted ‘‘Li- brarian of Congress’’ for ‘‘Copyright Royalty Tribunal’’ after ‘‘may petition the’’ and for ‘‘Tribunal’’ before ‘‘shall prospectively’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108–419 effective 6 months after Nov. 30, 2004, subject to transition provisions, see section 6 of Pub. L. 108–419, set out as an Effective Date; Transition Provisions note under section 801 of this title. § 1005. Deposit of royalty payments and deduc- tion of expenses The Register of Copyrights shall receive all royalty payments deposited under this chapter and, after deducting the reasonable costs in- curred by the Copyright Office under this chap- ter, shall deposit the balance in the Treasury of the United States as offsetting receipts, in such manner as the Secretary of the Treasury di- rects. All funds held by the Secretary of the Treasury shall be invested in interest-bearing United States securities for later distribution with interest under section 1007. The Register may, in the Register’s discretion, 4 years after the close of any calendar year, close out the roy- alty payments account for that calendar year, and may treat any funds remaining in such ac- count and any subsequent deposits that would otherwise be attributable to that calendar year as attributable to the succeeding calendar year. (Added Pub. L. 102–563, § 2, Oct. 28, 1992, 106 Stat. 4242; amended Pub. L. 103–198, § 6(b)(2), Dec. 17, 1993, 107 Stat. 2312.) Editorial Notes AMENDMENTS 1993—Pub. L. 103–198 struck out at end ‘‘The Register shall submit to the Copyright Royalty Tribunal, on a monthly basis, a financial statement reporting the amount of royalties under this chapter that are avail- able for distribution.’’ § 1006. Entitlement to royalty payments (a) INTERESTED COPYRIGHT PARTIES.—The roy- alty payments deposited pursuant to section 1005 shall, in accordance with the procedures specified in section 1007, be distributed to any interested copyright party— (1) whose musical work or sound recording has been— (A) embodied in a digital musical record- ing or an analog musical recording lawfully made under this title that has been distrib- uted, and (B) distributed in the form of digital musi- cal recordings or analog musical recordings or disseminated to the public in trans- missions, during the period to which such payments pertain; and (2) who has filed a claim under section 1007. (b) ALLOCATION OF ROYALTY PAYMENTS TO GROUPS.—The royalty payments shall be divided into 2 funds as follows: (1) THE SOUND RECORDINGS FUND.—662⁄3 per- cent of the royalty payments shall be allo- cated to the Sound Recordings Fund. 25⁄8 per- cent of the royalty payments allocated to the Sound Recordings Fund shall be placed in an escrow account managed by an independent administrator jointly appointed by the inter- ested copyright parties described in section 1001(7)(A) and the American Federation of Mu- sicians (or any successor entity) to be distrib- uted to nonfeatured musicians (whether or not members of the American Federation of Musi- cians or any successor entity) who have per- formed on sound recordings distributed in the United States. 13⁄8 percent of the royalty pay- ments allocated to the Sound Recordings Fund shall be placed in an escrow account managed by an independent administrator jointly ap- pointed by the interested copyright parties de- scribed in section 1001(7)(A) and the American Federation of Television and Radio Artists (or any successor entity) to be distributed to non- featured vocalists (whether or not members of the American Federation of Television and