[Code of Federal Regulations]
[Title 37, Volume 1]
[Revised as of July 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 37CFR201.28]

[Page 392-398]
 
             TITLE 37--PATENTS, TRADEMARKS, AND COPYRIGHTS
 
                                CONGRESS
 
PART 201--GENERAL PROVISIONS--Table of Contents
 
Sec. 201.28  Statements of Account for digital audio recording devices or media.

    (a) General. This section prescribes rules pertaining to the filing 
of Statements of Account and royalty fees in the Copyright Office as 
required by 17 U.S.C. 1003(c) and 1004, in order to import and 
distribute, or manufacture and distribute, in the United States any 
digital audio recording device or digital audio recording medium.
    (b) Definitions. For purposes of this section, the following 
definitions apply:
    (1) Annual statement of account is the statement required under 17 
U.S.C. 1003, to be filed no later than two months after the close of the 
accounting period covered by the annual statement.
    (2) Device and medium have the same meaning as digital audio 
recording device and digital audio recording medium, respectively, have 
in 17 U.S.C. 1001.
    (3) Digital audio recording product means digital audio recording 
devices and digital audio recording media.
    (4) Generally accepted auditing standards (GAAS), means the auditing 
standards promulgated by the American Institute of Certified Public 
Accountants.
    (5) Manufacturing or importing party refers to any person or entity 
that manufactures and distributes, and/or imports and distributes, any 
digital audio recording device or digital audio recording medium in the 
United States, and is required under 17 U.S.C. 1003 to file with the 
Copyright Office quarterly and annual Statements of Account.
    (6) Product category of a device or medium is a general class of 
products

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made up of functionally equivalent digital audio recording products with 
substantially the same use in substantially the same environment, 
including, for example, hand-held portable integrated combination units 
(``boomboxes''); portable personal recorders; stand-alone home recorders 
(``tape decks''); home combination systems (``rack systems''); 
automobile recorders; configurations of tape media (standard cassettes 
or microcassettes); and configurations of disc media, such as 2\1/2\ 
inch, 3 inch, or 5 inch discs.
    (7) Primary auditor is the certified public accountant retained by 
the manufacturing or importing party to audit the amounts reported in 
the annual Statement of Account submitted to the Copyright Office. The 
primary auditor may be the certified public accountant engaged by the 
manufacturing or importing party to perform the annual audit of the 
party's financial statement.
    (8) Quarterly statement of account is the statement accompanying 
royalty payments required under 17 U.S.C. 1003, to be filed for each of 
the first three quarters of the accounting year, and no later than 45 
days after the close of the quarterly period covered by the statement.
    (9) Technology of a device or medium is a digital audio recording 
product-type distinguished by different technical processes for 
digitally recording musical sounds, such as digital audio tape recorders 
(DAT), digital compact cassettes (DCC), or recordable compact discs, 
including minidiscs (MD).
    (10) Distribute, manufacture, transfer price, and serial copying 
have the meanings set forth in 17 U.S.C. 1001.
    (c) Accounting periods and filing deadlines--(1) Election of filing 
basis. Statements of Account may be filed on either a calendar or fiscal 
year basis at the election of the manufacturing party. The election of a 
calendar or fiscal year basis must be made when the manufacturing or 
importing party files its first quarterly Statement of Account by 
appropriate designation on the Form DART/Q submitted. Thereafter the 
specific calendar or fiscal-year accounting period must be designated on 
each quarterly Statement of Account. The filing basis may be changed at 
any time upon notification in writing to the Register of Copyrights, 
accompanied by a statement of reasons as to why the change is to be made 
and a statement that such change will not affect the aggregate royalties 
due under the earlier basis. The notification of change in filing basis 
must be made at least two months before the date the next quarterly 
Statement of Account is due to be filed.
    (2) Quarterly filings. Quarterly Statements of Account shall be 
filed on Form DART/Q and shall cover a three-month period corresponding 
to the calendar or fiscal year of the filing party. A quarterly 
statement shall be filed no later than 45 days after the close of the 
period it covers.
    (3) Annual filings. Annual Statements of Account shall be filed on 
Form DART/A and shall cover both the fourth quarter of an accounting 
year and the aggregate of the entire year corresponding to the calendar 
or fiscal accounting year elected. An annual statement shall be filed no 
later than two months after the close of the period it covers. As a 
transitional measure, however, the first annual Statement of Account 
filed after October 28, 1992, is not due until March 1, 1994, or two 
months after the end of the calendar or fiscal year in which the 
manufacturing or importing party first filed a quarterly Statement of 
Account, whichever is later. The first annual Statement of Account shall 
cover the entire period from October 28, 1992, to the end of the full 
accounting year. The appropriate royalty payment, calculated according 
to the instructions contained in Form DART/A, shall accompany the annual 
Statement of Account covering royalties due for the filing year: that 
is, royalties for the fourth quarter and any additional royalties that 
are due because of adjustments in the aggregate amounts of devices or 
media distributed.
    (4) Early or late filings. Statements of Account and royalty fees 
received before the end of the particular accounting period covered by 
the statement will not be processed by the Office. The statement must be 
filed after the close of the relevant accounting period. Statements of 
Account and royalty

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fees received after the 45-day deadline for quarterly statements or the 
two month deadline for annual statements will be accepted for whatever 
legal effect they may have and will be assessed the appropriate interest 
charge for the late filing.
    (d) Forms. (1) Each quarterly or annual Statement of Account shall 
be submitted on the appropriate form prescribed by the Copyright Office. 
Computation of the royalty fee shall be in accordance with the 
procedures set forth in the forms and this section. Statement of Account 
forms are available from the Licensing Division, Library of Congress. 
Forms and other information may be requested from the Licensing Division 
by facsimile transmission (FAX), but copies of Statement of Account 
forms transmitted to the Office by FAX will not be accepted.
    (2) Forms prescribed by the Copyright Office are designated 
Quarterly Statement of Account for Digital Audio Recording Products 
(Form DART/Q) and Annual Statement of Account for Digital Audio 
Recording Products (Form DART/A).
    (e) Contents of quarterly Statements of Account. (1) Quarterly 
period and filing. Any quarterly Statement of Account shall cover the 
full quarter of the calendar or fiscal accounting year for the 
particular quarter for which it is filed. A separate quarterly statement 
shall be filed for each quarter of the first three quarters of the 
accounting year during which there is any activity relevant to the 
payment of royalties under 17 U.S.C. 1004. The annual Statement of 
Account identified in paragraph (f) of this section incorporates the 
fourth quarter of the accounting year.
    (2) General content. Each quarterly Statement of Account shall be 
filed on Form DART/Q, the ``Quarterly Statement of Account for Digital 
Audio Recording Products,'' and shall include a clear statement of the 
following information:
    (i) A designation of the calendar or fiscal year of the annual 
reporting period;
    (ii) A designation of the period, including the beginning and ending 
day, month, and year of the period covered by the quarter;
    (iii) The full legal name of the manufacturing and/or importing 
party, together with any ``doing-business-as'' names used by such person 
or entity for the purpose of conducting the business of manufacturing, 
importing, or distributing digital audio recording products;
    (iv) The full mailing address of the manufacturing or importing 
party, including a specific number and street name, or rural route and 
box number, of the place of business of the person or 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;
    (v) A designation of the manufacturing or importing party status, 
i.e., ``Manufacturer,'' ``Importer,'' or ``Manufacturer and Importer;''
    (vi) The designation ``Product Categories'' together with the 
product categories of the digital audio recording products manufactured 
or imported and distributed during the quarter covered by the statement;
    (vii) The designation ``Technologies'' together with the 
technologies of the digital audio recording products manufactured or 
imported and distributed under the AHRA during the quarter covered by 
the statement;
    (viii) The designation ``Series or Model Number'' followed by the 
model or series numbers of the digital audio recording products 
manufactured or imported and distributed under the AHRA during the 
quarter covered by the statement;
    (ix) The ``fee code'' associated with the product;
    (x) The ``source code'' for the product category;
    (xi) The ``transfer price'' of the product;
    (xii) The ``number of units distributed'' for each product;
    (xiii) The ``minimum fee per unit'' for each product;
    (xiv) The statutory royalty ``rate'' for digital audio recording 
devices or media;
    (xv) The ``rate fee'' for each product;
    (xvi) The appropriate ``maximum fee per unit'' for each product;
    (xvii) The ``maximum fee'' for each product; and

[[Page 395]]

    (xviii) A computation of the total royalty payable for the quarter 
covered by the statement. Filing parties may not round off the figures 
they list in Space C, the computation section of the form, except for 
the figure representing the total royalty fee due; in that case, numbers 
ending in 50 to 99 cents may be rounded up to the next dollar, and 
numbers ending in one to 49 cents may be rounded down to the next 
dollar;
    (3) Royalty payments and accounting. (i) The royalty specified in 17 
U.S.C. 1004 shall accompany the quarterly and annual Statements of 
Account. No royalty is payable for redistribution of the same product 
item unless a credit has been taken for such items. Where royalties are 
payable for the period covered by the statement, the Statement of 
Account shall contain the following information for each unique 
combination of product category, technology, series or model number, fee 
code, source code, and transfer price:
    (A) The total number of digital audio recording media distributed, 
multiplied by the statutory royalty rate of three percent (3%) of the 
transfer price;
    (B) The total number of digital audio recording devices distributed 
for which the statutory royalty rate of two percent (2%) of the transfer 
price is payable, multiplied by such percentage rate of the transfer 
price;
    (C) The total number of digital audio recording devices distributed 
for which the statutory maximum royalty is limited to eight dollars 
($8.00), multiplied by such eight dollar amount;
    (D) The total number of digital audio recording devices distributed 
for which the statutory maximum royalty is limited to twelve dollars 
($12.00), multiplied by such twelve dollar amount; and
    (E) The total number of digital audio recording devices distributed 
for which the statutory minimum royalty is limited to one dollar 
($1.00), multiplied by such one dollar amount.
    (ii) The amount of the royalty payment shall be calculated in 
accordance with the instructions specified in the quarterly Statement of 
Account form. Payment of the royalty fee must be in the form of a 
certified check, cashier's check, money order, or electronic payment 
payable to the Register of Copyrights.
    (4) Reduction of royalty fee. (i) Section 1004(a)(2)(A) of title 17 
U.S. Code, provides an instance in which royalty payments may be reduced 
if the digital audio recording device and such other devices are part of 
a physically 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 recording device included within the unit that 
was not first distributed in combination with the unit.
    (ii) Notice of this provision together with directions for possible 
application to a product is contained in the DART/Q Form.
    (5) Contact party. Each Statement of Account shall include the name, 
address, and telephone and facsimile (FAX) numbers of an individual whom 
the Copyright Office can write or call about the Statement of Account.
    (6) Credits for returned or exported products. When digital audio 
recording products first distributed in the United States for ultimate 
transfer to United States consumers are returned to the manufacturer or 
importer as unsold or defective merchandise, or are exported, the 
manufacturing or importing party may take a credit to be deducted from 
the royalties payable for the period when the products were returned or 
exported. The credit may be taken only for returns or exports made 
within two years following the date royalties were paid for the 
products. This credit must be reflected in the manufacturing or 
importing party's quarterly or annual Statement of Account. If the 
manufacturer or importer later redistributes in the United States any 
products for which a credit has been taken, these products must be 
listed on the Statement of Account, and a new computation of the royalty 
fee must be made based on the transfer price of the products at the time 
of the new distribution.
    (7) Oath and signature. Each Statement of Account shall include the 
handwritten signature of an authorized officer, principal, or agent of 
the filing party. The signature shall be accompanied by:

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    (i) The printed or typewritten name of the person signing the 
quarterly Statement of Account;
    (ii) The date the document is signed;
    (iii) The following certification:

    I, the undersigned, hereby certify that I am an authorized officer, 
principal, or agent of the ``manufacturing or importing party'' 
identified in Space B.


Penalties for fraud and false statements are provided under 18 U.S.C. 
1001 et. seq.
    (f) Contents of annual Statements of Account--(1) General contents. 
Each annual Statement of Account shall be filed on form DART/A, ``Annual 
Statement of Account for Digital Audio Recording Products.'' It must be 
filed by any importer or manufacturer that distributed in the United 
States, during a given calendar or fiscal year, any digital audio 
recording device or digital audio recording medium. The annual statement 
shall cover the aggregate of the distribution of devices and media for 
the entire year corresponding to the calendar or fiscal year elected. 
The annual Statement of Account shall contain the information, oath, and 
certification prescribed in paragraphs (e)(2)(i) through (e)(7)(iii) of 
this section, and shall cover the entire accounting year, including the 
fourth quarter distribution, and shall also provide for the 
reconciliation of the aggregated accounting of digital audio recording 
devices and media for the reported accounting year.
    (2) Reconciliation. Any royalty payment due under sections 1003 and 
1004 of title 17 that was not previously paid with the filing party's 
first three quarterly Statements of Account, shall be reconciled in the 
annual statement. Reconciliation in the annual Statement of Account 
provides for adjustments for reductions, refunds, underpayments, 
overpayments, credits, and royalty payments paid in Quarters 1, 2, and 
3, and shall be computed in accordance with the instructions included in 
the annual Statement of Account. Errors that require reconciliation 
shall be corrected immediately upon discovery.
    (3) Accountant's opinion. Each annual Statement of Account or any 
amended annual Statement of Account shall be audited by the primary 
auditor as defined in paragraph (b)(7) of this section. An amendment may 
be submitted to the Office either as a result of responses to questions 
raised by a Licensing Division examiner or on the initiative of the 
manufacturing or importing party to correct an error in the original 
Statement of Account.
    (i) The audit shall be performed in accordance with generally 
accepted auditing standards (GAAS). The audit may be performed in 
conjunction with an annual audit of the manufacturing or importing 
party's financial statements.
    (ii) The CPA shall issue a report, the ``primary auditor's report,'' 
reflecting his or her opinion as to whether the annual statement 
presents fairly, in all material respects, the number of digital audio 
recording devices and media that were imported and distributed, or 
manufactured and distributed, by the manufacturing or importing party 
during the relevant year, and the amount of royalty payments applicable 
to them under 17 U.S.C. chapter 10, in accordance with that law and 
these regulations.
    (iii) The primary auditor's report shall be filed with the Copyright 
Office together with the annual Statement of Account, within two months 
after the end of the annual period for which the annual Statement of 
Account is prepared. The report may be qualified to the extent necessary 
and appropriate.
    (iv) The Copyright Office does not provide a specific form, or 
require a specific format, for the CPA's review; however, in addition to 
the above, certain items must be named as audited items. These include 
the variables necessary to complete Space C of the Statement of Account 
form. The CPA may place his or her opinion, which will serve as the 
``primary auditor's report,'' in the space provided on Form DART/A, or 
may attach a separate sheet or sheets containing the opinion.
    (v) The auditor's report shall be signed by an individual, or in the 
name of a partnership or a corporation, and shall include city and state 
of execution, certificate number, jurisdiction of certificate, and date 
of opinion. The certificate number and jurisdiction are not required if 
the report is signed in

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the name of a partnership or a corporation.
    (g) Documentation. All filing parties shall keep and retain in their 
possession, for at least three years from the date of filing, all 
records and documents necessary and appropriate to support fully the 
information set forth in quarterly and annual statements that they file.
    (h) Corrections, supplemental payments, and refunds--(1) General. 
Upon compliance with the procedures and within the time limits set forth 
in this paragraph (h), corrections to quarterly and annual Statements of 
Account will be placed on record, and supplemental royalty fee payments 
will be received for deposit, or refunds without interest will be 
issued, in the following cases:
    (i) Where, with respect to the accounting period covered by the 
quarterly or annual Statement of Account, any of the information given 
in the statement filed in the Copyright Office is incorrect or 
incomplete; or
    (ii) Where, for any reason except that mentioned in paragraph (h)(2) 
of this section, calculation of the royalty fee payable for a particular 
accounting period was incorrect, and the amount deposited in the 
Copyright Office for that period was either too high or too low.
    (2) Corrections to quarterly or annual Statements of Account will 
not be placed on file, supplemental royalty fee payments will not be 
received for deposit, and refunds will not be issued, where the 
information in the Statements of Account, the royalty fee calculations, 
or the payments were correct as of the date on which the accounting 
period ended, but changes (for example, cases where digital audio 
recording media were exported) took place later.
    (3) Requests that corrections to annual or quarterly Statements of 
Account be accepted, that fee payments be accepted, or that refunds be 
issued shall be addressed to the Licensing Division of the Copyright 
Office, and shall meet the following conditions:
    (i) The request shall be made in writing and must clearly identify 
the manufacturing or importing party making the request, the accounting 
period in question, and the purpose of the request. A request for a 
refund must be received in the Copyright Office before the expiration of 
two months from the last day of the applicable Statement of Account 
filing period. A request made by telephone or by telegraphic or similar 
unsigned communication will be considered to meet this requirement if it 
clearly identifies the basis of the request, is received in the 
Copyright Office within the two-month period, and a written request 
meeting all the conditions of this paragraph (h)(3) is also received in 
the Copyright Office within 14 days after the end of such two-month 
period.
    (ii) The request must clearly identify the incorrect or incomplete 
information formerly filed and must provide the correct or additional 
information.
    (iii) In the case where a royalty fee was miscalculated and the 
amount deposited with the Copyright Office was too large or too small, 
the request must be accompanied by an affidavit under the official seal 
of any officer authorized to administer oaths within the United States, 
or a statement in accordance with 28 U.S.C. 1746, made and signed in 
accordance with paragraph (e)(7) of this section. The affidavit or 
statement shall describe the reasons why the royalty fee was improperly 
calculated and include a detailed analysis of the proper royalty 
calculation.
    (iv) Following final processing, all requests will be filed with the 
original Statement of Account in the records of the Copyright Office. 
Nothing contained in this paragraph shall be considered to relieve 
manufacturing or importing parties of their full obligations under title 
17 of the United States Code, and the filing of a correction or 
supplemental payment shall have only such effect as may be attributed to 
it by a court of competent jurisdiction.
    (v)(A) The request must be accompanied by a filing fee in the amount 
of $20 for each Statement of Account involved. Payment of this fee may 
be in the form of a personal or company check, or a certified check, 
cashier's check, or money order, payable to the Register of Copyrights. 
No request will be processed until the appropriate filing fees are 
received.
    (B) Requests that a supplemental royalty fee payment be deposited 
must be accompanied by a remittance in the

[[Page 398]]

full amount of such fee. Payment of the supplemental royalty fee must be 
in the form of a certified check, cashier's check, money order, or 
electronic payment payable to the Register of Copyrights. No such 
request will be processed until an acceptable remittance in the full 
amount of the supplemental royalty fee has been received.
    (vi) All requests submitted under paragraph (h) of this section must 
be signed by the manufacturing or importing party named in the Statement 
of Account, or the duly authorized agent of that party in accordance 
with paragraph (e)(7) of this section.
    (vii) A request for a refund is not necessary where the Licensing 
Division, during its examination of a Statement of Account or related 
document, discovers an error that has resulted in a royalty overpayment. 
In this case, the Licensing Division will forward the royalty refund to 
the manufacturing or importing party named in the Statement of Account. 
The Copyright Office will not pay interest on any royalty refunds.
    (i) Examination of Statements of Account by the Copyright Office. 
(1) Upon receiving a Statement of Account and royalty fee, the Copyright 
Office will make an official record of the actual date when such 
statement and fee were physically received in the Copyright Office. 
Thereafter, the Licensing Division will examine the statement for 
obvious errors or omissions appearing on the face of the documents and 
will require that any such obvious errors or omissions be corrected 
before final processing of the document is completed. If, as the result 
of communications between the Copyright Office and the manufacturer or 
importer, an additional fee is deposited or changes or additions are 
made in the Statement of Account, the date that additional deposit or 
information was actually received in the Office will be added to the 
official record.
    (2) Completion by the Copyright Office of the final processing of a 
Statement of Account and royalty fee deposit shall establish only the 
fact of such completion and the date or dates of receipt shown in the 
official record. It shall not be considered a determination that the 
Statement of Account was, in fact, properly prepared and accurate, that 
the correct amount of the royalty was deposited, that the statutory time 
limits for filing had been met, or that any other requirements of 17 
U.S.C. 1001 et. seq. were fulfilled.
    (j) Interest on late payments or underpayments. (1) Royalty payments 
submitted as a result of late payments or underpayments shall include 
interest, which shall begin to accrue on the first day after the close 
of the period for filing Statements of Account for all late payments or 
underpayments of royalties occurring within that accounting period. The 
accrual period for interest shall end on the date appearing on the 
certified check, cashier's check, money order, or electronic payment 
submitted by the manufacturing or importing party, if the payment is 
received by the Copyright Office within five business days of that date. 
If the payment is not received by the Copyright Office within five 
business days of its date, the accrual period shall end on the date of 
actual receipt by the Copyright Office.
    (2) The interest rate applicable to a specific accounting period 
shall be the Current Value of Funds rate in accordance with the Treasury 
Financial Manual, at 1 TFM 6-8025.40, in effect on the first business 
day after the close of the filing deadline for the relevant accounting 
period. The interest rate for a particular accounting period may be 
obtained by consulting the Federal Register for the applicable Current 
Value of Funds Rate, or by contacting the Licensing Division of the 
Copyright Office.
    (3) Interest is not required to be paid on any royalty underpayment 
or late payment from a particular accounting period if the interest 
charge is five dollars ($5.00) or less.
    (k) Confidentiality of Statements of Account. Public access to the 
Copyright Office files of Statements of Account for digital audio 
recording products shall not be provided. Access will only be granted to 
interested copyright parties in accordance with regulations prescribed 
by the Register of Copyrights pursuant to 17 U.S.C. 1003(c).

[59 FR 4589, Feb. 1, 1994]

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