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,t-"e,c ? ' ANNOUNCEMENT Ir 2 ( I A 6 (.a ' 4 8 ~ OF5'+ from the Copyright Office, Library of Congress, washington, D.C. 20559 o P NOTICE O F POLICY D E C I S I O N COMPULSORY LICENSE FOR CABLE SYSTEMS; POLICY D E C I S I O N ANNOUNCING TEMPORARY WAIVER O F TIME L I M I T FOR REFUNDS WHERE CABLE OPERATORS P A I D BOTH THE MINIMUM F E E AND 3 . 7 5 % F E E T h e f o l l o w i n g e x c e r p t i s taken f r o m V o l u m e 51, N u m b e r 4 o f 1986 (pp.599-600) t h e Federal R e g i s t e r f o r T u e s d a y , January 7 , LIBRARY OF CONGRESS Copyright Office 37 CFR Part 201 C o m v u l w Lkmw tor Cable ~ y s t h s~ b l i c y ; Dechlon Announctng Temporary Waivu o flnn Umlt for f Refunds when C a b Operaton Pald Both the Mlnlmum Faa end th.3.75% Fm A ~ E N C Y :Copyright Office. Librtlry of Congress. ACTION: PO~ICY Decision. suuwrm: The Copyright Office has determined that Space L of Form CS/ SA-3 for accounting periods 1983-1, 1W3-2, and 1884-1misinstructed cable ~ystem operators to add the minimum fee to the 3.75% fee in the calculation of the total royalty fee when, in fact, the minimum fee should be applied against the 3.75% fee in that calculation. This misinetmction may have caused a small number of system operators to overpay cable compulsory license royalty fees pursuant to 17 U.S.C. lll(d]. The Office, in thin special case temporarily will waive the &day refund limitation in 37 CFR 201.17(j)(3) of the Office's regulations and will consider claims for refunds for any accounting period from period 1983-1 through period lge5-1 if a system operator has overpaid royalties becau~e or she failed to apply the he minimum fee against the 3.7596 fee in ML-344 January 1986-10.000 Space L of Form CS/SA-3 or SA3 (Long Fonn). DATES: System operators murt file a request for refund bawd upon this policy decision no later than March 3, 1988. FOR F U m n E R lwoaNATIOI(COWTACT: Dorothv Schrader. General Counrel. copyright Office, Library of & G e e , Washington, DC 20559. Tele~hone: 12021 SUPPLEMENTARY INCORYITIOII: 1 Background . Section l l l ( c ) of the Copyright Act of 1976, title 17 of the United States Code, establishes a compulsory licensing syetern under which cable systems may make secondary transmission of copyrighted works. The compuleory license is subject to various conditions, including the kquirement under section 111(d)(2)that cable systems deposit statutory royalties and statements of account with the Copyright Office. On June 27.1978, the Copyright Office announced in the Federal Register the ~doplion Statement of Account forms of to be filed hy cable systems in fulfillment of that condition. Cable systems whose semiannual gross receipts for secondary transmiaaione totaled 5160,000 or more were to file Form CS/SA-3. Since 1978, the Copyright Office has issued amended forms several times, including amendments of CS/SA-3. Of relevance to this Notice, the Copyright Office issued an amended version of Form CS/SA-3,l in 1884-1a to be filed with royalty payments due beginning with the firat accounting period in 1983, to implement the CRTr October 20.1982 rate adjustment.' The 1884-2 version contained technical and clarifying amendmentr in light of the Copyright Office's experience under the 1084 regulation conaerning the T h b m i o n of CSlSA-3 wa1 printed in dark h and 8ppb.d to u b l e ayatcau w h a e ink amhnnual ncaipta far reconday h n o m l u l o n r ware L ~ ~ . O Lor O ~ mom.The form w a l uled in accountiw perioda 1-1.1-2 and 11. a The d m g a t i o n '-" 11 mean. that the form wan flnt h u e d in the Spring o I f. 'Ihi. rota adluatment waa publiabed in the F d r d Wtr I47 FR 673481on Novamber 19. 1932 and upheld on appeal by the Court of Appeal. for the D.C. Circuit in NCTA v. CRT. 724 F.rd 178 1D.C. Ctr. 1-1 The adJun(mcnt -me effehve March 15.1003 by virtue of h a Connreaalonal appropriationn to implement the adrwttnent. Continuing appmprlationa for P i a d Y w 1803. Pub. L. No. P7-377.143. BB Stat. 1830.181817 1 T h h particular action nude two type. of rate adiwtmenta: a lurchage on certain-&atant rignaln lo compensate copyright o r m e n for the carriage of ayndiwted prqp.mmm.g fonnerly prohibtted by the FCC's myndluted exclwivity ruln 1"wndiuted exclusivity aunhnac.") a n d a n adiu&,ent railing the royalty rate to 3.75%of g u recelpt. per m additional diabnt aipnal aquivalent renulting from cnrriccge of dintant a k a i s not generally permitted to be carried unde: tho FCC'. distant signal rules (the "3.75%rate"]. n.is version of CS/SA-3 was printed in red ink and applied to cable nyatems whune aemi-annuel u a receipts w e n S214.m0 or more. The form was m u d only for accounliw period 19134-2,i . ~ . .the xccond half of 16%. (lw. 'o; &r :ins should read: "L. No. 41-37? 5143 ; Stat. 6 1830, 1916-17 11982j. Implementation of the CRT's 1982 rate adjustment. (49 FR 26722). In the most recent amendment of the forms, the Office redesignated the amended Form C S / S A J an SA3 (Long F ~ r m ) . ~ b c h of the abovedescribed Statement of Account fonns includes a space designated a s Space L and entitled "Copyright Royalty Fee." In this space the cable operator calculates the "minimum fee" which cable systems filing a Fonn C S / S A J or SA3 must pay pumuant to rection lll(d)(2)(B)(i)of the Copyright Act regardless of whether they carried any distant stations. The operator also calculates in this space the fee payable pumuant to section lll(d)(2)(B)[ii)(iv]for camage of distant signals. In the earliest Forms CSjSA-3 this fee was referred to a s the "DSE fee." However, in the 1984-1 version of Form CSISA-3, which was issued in response to the CRT's 1982 rate adjustment, this fee was redesignated a s the "base rate fee." This version of Form CSjSA-3 also included in Space L lines to reflect the calculation of the "3.75% fee" and the "syndicated exclusivity surcharge" payable pursuant to the 1982 rate adjustment. In the earliest versions of Form CS/ SA-3. the cable operator w a s instructed to enter a s the total royalty fee payable for the accounting period either the minimum fee or the DSE fee, whichever is larger. This is in accordance with section lll(d)(2)[B](i)of the Copyright Act, which trllows the minimum fee to be "applied against" or offset by any DSE fee owed by a cable system. In the 1984-1 vemion of Form CS/SA-3, the cable operator war instructed to calculate the total royalty fee by adding the syndicated exclusivity rurcharge. the 3.75% fee and the larger of the base rate or the minimum fee. Subsequent to the issuance of the 1984-1version of Form CSISA-3. the Copyright Office considered the issue of whether, in the unusual case where a cable system incurs no base mte fre b u t does incur a 3.75%e e , the minimum fee f should be applied against the 3.75% fee under section lll(d)(21(B](i] of the Copyright Act. The Office determined that the minimum fee should be applied 3 . 4 3 is printed in blue 1nL and appl~ea cahlr to systewq whose semiannual gross receipts for secondary trnnsm,us~onsare SZII:.(UO or more OLE-307 ssa~6uo3 h e ~ q l l 10 pled sea j pue a6eisod against the 3.75% fee in such a case. Thc: Office finds that the legislative history behind the minimum fee maker clear that Congress intended that the minimum fee be applied against a fee payable for any distant signal equiva1ent.O Accordingly, when Form CS/SA-? was amended in the second half of 1984, tho Office rpec~fiedin Block L that if a cable operator listed the minimum fee as being larger than the base rate fee, the minimum fee should n o t be added to the total royalty fee if the 3.75% fec exceeds the minimum fee. 2. Policy Decision To Waive Temporarily the Refund Time Limit The Copyright Office received a request for a refund of royalty fees paid by a cable system for accounting ueriods 1983-1.1983-2 and ISM-1. The cable syst~m's'representative noted that the svstem ovemaid rovalties in those accobnting periods because it exactly followed the instructions on Form CSI SA-3 and paid both the minimum fee and the 3.75% He argues that fee. elthounh the 80-dav refund ueriod provid;d for in 37 EFR 20l.i7[j)[3) of the Couvrinht Office renulations had elapsed, the Office ihould issue refunds where operators paid both the minimum and the 3.75% fee for the 1983 and 1984 accounting periods because the Copyright Office Form CSlSA-3 incorrectly instructed cable system operators to pay both fees, and procedural due process and basic fairness require that the refund requests be honored. The Copyrbht Office has now determined that in view of the fact that Space L of the 1984-1 version of Form CSISA-3 misinetructed cable operators to add both the minimum fee and the 3.755 fee in determining the total royalty fee, the Office in this special case will temporarily waive its &day refund Imitation. The Office will consider claims for refunds of royalties overpaid for accounting periods 1983-1.1983-2 and 1 1 where the minimum fee was not applied against the 3.75% fee in Space L of Form CSISA-3. if the request for refund is made by March 3,1988. Furthermore, the Office acknowledges that cable operators routinely filing Statement of Account fonns In accounting periods subsequent to the 1984-1 period might have failed to note the correction in Space L and might have continued to miscalculate the royalty fee. Accordingly, the Office will waive its refund period limitation in this case also and consider claims for refunds where system operators overpaid royalties by falling to apply the minimum fee against the 3.75% fee for accounting penods 1984-2 and 1985-1. even thougin the Office's forms for those periods were not misleading. Any cable system that is entitled to a refund based upon the foregoing decision should file its request for refund with the Copyright Office no later thtrn March 3,1986. A deadline for refund requests is appropriate for reasons of administrative efficiency and because the Copyright Royalty Tribunal has begun a proceeding to distribute the 1983 cable royalty pool. Lint of Subjects in 37 CFR Part 201 Cable television, Copyright. Copyright Office. Dated: December 23,1985. Rnlph-, Regfster of Copyrights. Daniel 1. BoM(in, The Libmrian of Congress. [FR Doc. 86-149 Filed 1-8-W 8:45 an11 ULUNO 'The Iiouse repod uccompany;ng t h Copyrighl Act of 1978 explain8 Congress' intent in creating thr minin~umfee. "Every cable system pays ,675 o l 1 wrcent of ~ t nmsn receipts for the pri\vilegr of s ;etransmittlni dlstant non-nrtwork pmgrnmlnp. such unounl l o b e o ~ ~ b e d o ~ o lthe l if on) n s fee. poyoble under fhe &mpuloion for 'cirslonf s ~ g ~ r o l equivalents.'. . . The purpose ol this initial rntr. applicable to all cable systems in.this c l n s ~is trn , estahl~aha basic payment, whether or not a part~cularcable system elects to tiansmlt distanl non-network programin#. It le not a payment lor tht. rrtrnnnm~ss~on purely "local" signals, a? is of ev,dent front the provision that i! applies 10 or!d ,s dphcribb from the fee pcyonie lor ony distorrl .r!gxol rqnlr.o!mts.' [Emphas~s added ) H.R. Rep w-1476, 94th Con%2d Seus. W i " 1410014 ' The cable ayrtern s repmentatlve aQues that 2 lhe~e should be a refund of fees overpnid in accounting period 1%4-2, eben though the Form CS1 SA-3 for that accounting period was corrected. because there was no independent notifica:~onof the form chucge, and eomt operato1.a who had r3u:inely compieted Form CSISA-3 failed lo lot ice thr printed excepthon r,otict. an the form. and u\qq?.b~d rny:~it~rs the 1984-2 prriod ;la wcll for %or1 l i n e should read: "'/The cable systems r e p r e s e n t a t i v e argues that" LSSOZ '3.a uoi6uIqSe~