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1 87 FR 64405 (Oct. 25, 2022). 

2 Id. 

3The NPRM stemmed from a previous 

rulemaking proceeding, discussed in detail in the 

NPRM, that involved multiple rounds of public 

comments through a notification of inquiry, 84 FR 

49966 (Sept. 24, 2019), a notice of proposed 

rulemaking, 85 FR 22518 (Apr. 22, 2020), and an 

ex parte communications process. Guidelines for ex 

parte communications, along with records of such 

communications, including those referenced herein, 

are available at https://www.copyright.gov/ 

rulemaking/mma-implementation/ex-partecommunications.html. All rulemaking activity, 

including public comments, as well as educational 

material regarding the MMA, can currently be 

accessed via navigation from https://

www.copyright.gov/music-modernization. 

Comments received in response to the NPRM are 

available at https://copyright.gov/rulemaking/mmatermination/. References to those public comments 

are by party name (abbreviated where appropriate), 

followed by ‘‘Initial Comments,’’ ‘‘Reply 

Comments,’’ or ‘‘Ex Parte Letter,’’ as appropriate. 

4 87 FR 64405, 64407. The Office disagrees with 

the MLC’s suggestions to the contrary. See, e.g., 

MLC Initial Comments at 2–3; MLC Reply 

Comments at 1–2. As explained more fully in the 

NPRM, the Office’s ultimate conclusion in the prior 

proceeding was that ‘‘it seems reasonable for the 

MLC to act in accordance with letters of direction 

received from the relevant parties, or else hold 

applicable royalties pending direction or resolution 

of any dispute by the parties.’’ 87 FR 64405, 64407 

(quoting 85 FR 58114, 58132 (Sept. 17, 2020)). 

5 87 FR 64405, 64407. 

6 Id. (‘‘Moreover, without the uniformity in 

application that a regulatory approach brings, the 

Office is concerned that the MLC’s ability to 

distribute post-termination royalties efficiently 

would be negatively impacted.’’). 7 Id. at 64406–07. 8 Id. at 64407–08. 9 Id. at 64408–10. 10 Id. at 64410–11. 11 Id. at 64411. 12 Id. 13 Id. at 64411–12. 14 Id. at 64412. 

15 Id. 

LIBRARY OF CONGRESS 

Copyright Office 

37 CFR Part 210 

[Docket No. 2022–5] 

Termination Rights, Royalty 

Distributions, Ownership Transfers, 

Disputes, and the Music Modernization 

Act 

AGENCY: U.S. Copyright Office, Library 

of Congress. 

ACTION: Supplemental notice of 

proposed rulemaking. 

SUMMARY: The U.S. Copyright Office is 

issuing a supplemental notice of 

proposed rulemaking to update its 

October 25, 2022 proposed rule 

regarding the applicability of the 

derivative works exception to 

termination rights under the Copyright 

Act to the new statutory mechanical 

blanket license established by the Music 

Modernization Act. This supplemental 

notice modifies the proposed rule and 

expands its scope in light of comments 

received in response to the previous 

notice. In addition to addressing the 

applicability of the derivative works 

exception, the supplemental proposed 

rule addresses other matters relevant to 

identifying the proper payee to whom 

the mechanical licensing collective 

must distribute royalties. Among other 

things, the Office proposes adopting 

regulations addressing the mechanical 

licensing collective’s distribution of 

matched historical royalties and 

administration of ownership transfers, 

requests to designate alternative royalty 

payees, and related disputes. The Office 

invites public comments on the 

supplemental proposed rule. 

DATES: Written comments must be 

received no later than 11:59 p.m. 

Eastern Time on October 26, 2023. 

Written reply comments must be 

received no later than 11:59 p.m. 

Eastern Time on November 13, 2023. 

ADDRESSES: For reasons of governmental 

efficiency, the Copyright Office is using 

the regulations.gov system for the 

submission and posting of public 

comments in this proceeding. All 

comments are therefore to be submitted 

electronically through regulations.gov. 

Specific instructions for submitting 

comments are available on the 

Copyright Office’s website at https://

copyright.gov/rulemaking/mmatermination. If electronic submission of 

comments is not feasible due to lack of 

access to a computer or the internet, 

please contact the Copyright Office 

using the contact information below for 

special instructions. 

FOR FURTHER INFORMATION CONTACT: 

Rhea Efthimiadis, Assistant to the 

General Counsel, by email at meft@

copyright.gov or telephone at 202–707– 

8350. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Copyright Office (‘‘Office’’) issues 

this supplemental notice of proposed 

rulemaking (‘‘SNPRM’’) subsequent to a 

notice of proposed rulemaking 

(‘‘NPRM’’) published in the Federal 

Register on October 25, 2022, pursuant 

to the Orrin G. Hatch-Bob Goodlatte 

Music Modernization Act (‘‘MMA’’).1 In 

the NPRM, the Office proposed 

regulations regarding the applicability 

of the derivative works exception 

(‘‘Exception’’) to termination rights 

under the Copyright Act to the statutory 

mechanical blanket license established 

by the MMA (‘‘blanket license’’).2 This 

SNPRM assumes familiarity with the 

prior NPRM and the public comments 

received in response to the NPRM.3

A. The Notice of Proposed Rulemaking 

The Office commenced this 

proceeding in response to the adoption 

by he Mechanical Licensing Collective 

(‘‘MLC’’) of a termination dispute policy 

that conflicted with prior guidance 

given by the Office and that embodied 

an erroneous application of the 

Exception.4 As a result of the MLC’s 

adoption of this policy, the Office 

concluded it was necessary to revisit the 

termination issue more directly and to 

squarely resolve the question of how 

termination law intersects with the 

blanket license.5 The NPRM explained 

that the Office ‘‘seeks to provide clarity 

concerning the application of the 

Exception to the blanket license,’’ as 

‘‘[d]oing so would provide much needed 

business certainty to music publishers 

and songwriters’’ and ‘‘would enable the 

MLC to appropriately operationalize the 

distribution of post-termination 

royalties in accordance with existing 

law.’’ 6 The NPRM contained a detailed 

discussion of the procedural 

background leading to this rulemaking,7

the Office’s regulatory authority,8 and 

legal background about the Copyright 

Act’s termination provisions and the 

Exception.9

The Office then analyzed the 

application of the Exception in the 

context of the blanket license and 

preliminarily concluded ‘‘that the 

MLC’s termination dispute policy is 

inconsistent with the law.’’ 10 It 

explained that ‘‘[w]hether or not the 

Exception applies to a [digital music 

provider’s (‘‘DMP’s’’)] blanket license 

(and the Office concludes that the 

Exception does not), the statute entitles 

the current copyright owner to the 

royalties under the blanket license, 

whether pre- or post-termination.’’ 11

This means that ‘‘the post-termination 

copyright owner (i.e., the author, the 

author’s heirs, or their successors, such 

as a subsequent publisher grantee) is 

due the post-termination royalties paid 

by the DMP to the MLC.’’ 12

Consequently, the Office proposed a 

rule to clarify the appropriate payee 

under the blanket license to whom the 

MLC must distribute royalties following 

a statutory termination.13 Because the 

Office concluded that the MLC’s 

termination dispute policy is contrary to 

law, it also proposed to require the MLC 

to immediately repeal its policy in 

full.14 The Office further proposed to 

require the MLC to adjust any royalties 

distributed under the policy within 90 

days to make copyright owners whole 

for any distributions the MLC made 

based on ‘‘an erroneous understanding 

and application of current law.’’ 15


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16The MLC, Policies, https://www.themlc.com/ 

dispute-policy (last visited Sept. 20, 2023). 

17See, e.g., Authors All. et al. Initial Comments 

at 1–3; BMG Rights Mgmt. Initial Comments at 1– 

2; BMG Rights Mgmt. Reply Comments at 1; 

ClearBox Rights Initial Comments at 2, 6–8; 

Fishman & Garcia Initial Comments at 1–4; Gates 

Reply Comments at 1; Howard Initial Comments at 

1–2; Howard Reply Comments at 2–3; King, 

Holmes, Paterno & Soriano LLP Initial Comments at 

1; Landmann Initial Comments at 1; Miller Initial 

Comments at 1; North Music Grp. Reply Comments 

at 2–3; NSAI Initial Comments at 3; Promopub 

Initial Comments at 1–2; Promopub Reply 

Comments at 1–2; Recording Academy Reply 

Comments at 2–3; Rights Recapture Initial 

Comments at 1; SGA et al. Initial Comments at 1– 

2, 5; SONA et al. Initial Comments at 2–3; SONA 

et al. Reply Comments at 3; Songwriters Reply 

Comments at 1; Wixen Music Publ’g Initial 

Comments at 1–2. 

18See, e.g., CMPA Initial Comments at 1–2 

(requesting that the rule not affect previously 

distributed royalties); A2IM & RIAA Reply 

Comments at 1–2 (agreeing with parts of the Office’s 

termination analysis, but requesting that the Office 

limit its analysis to those parts to ensure that the 

analysis and rule are strictly limited to the context 

of the blanket license); MPA Reply Comments at 2– 

5 (taking no position on the proposed rule, but 

expressing ‘‘significant concerns with portions of 

the NPRM supporting the proposed rule to the 

extent they could be read to limit the application 

of the [Exception] beyond the Section 115 blanket 

license’’). 

19See generally NMPA Initial Comments; NMPA 

Ex Parte Letter (Feb. 6, 2023). 

20NMPA Initial Comments at 2; see also NMPA 

Ex Parte Letter at 2 (Feb. 6, 2023). 

21NMPA Initial Comments at 1; see also NMPA 

Ex Parte Letter at 2 (Feb. 6, 2023); CMPA Initial 

Comments at 1 (‘‘CMPA concurs with what it 

believes the USCO’s intent is, under the Proposed 

Rule.’’). 

22See, e.g., MLC Initial Comments at 6; MLC 

Reply Comments at 2; ClearBox Rights Initial 

Comments at 6; ClearBox Rights Reply Comments 

at 2; Howard Initial Comments at 5; King, Holmes, 

Paterno & Soriano LLP Initial Comments. 

23See, e.g., MLC Initial Comments at 4–6; MLC 

Reply Comments at 2; ClearBox Rights Initial 

Comments at 6; ClearBox Rights Reply Comments 

at 2; Howard Initial Comments at 5; Rights 

Recapture Initial Comments. 

24See, e.g., MLC Initial Comments at 6–8; 

ClearBox Rights Reply Comments at 3–4; ClearBox 

Rights Ex Parte Letter at 2–4 (June 28, 2023); 

Howard Initial Comments at 6; Promopub Initial 

Comments at 2; Promopub Reply Comments at 3; 

North Music Grp. Reply Comments at 2. 

25See, e.g., MLC Initial Comments at 10–11; 

ClearBox Rights Initial Comments at 8; ClearBox 

Rights Reply Comments at 5–6; Howard Initial 

Comments at 3–5; Howard Reply Comments at 2– 

3; SGA et al. Initial Comments at 2, 6–8. 

26See, e.g., MLC Initial Comments at 11–14; 

ClearBox Rights Reply Comments at 6. 

27MLC Initial Comments at 9–10; see also MLC 

Reply Comments at 2. 

28See 87 FR 64405, 64408. 

29 17 U.S.C. 115(d)(3)(H)(i). 

30 Id. at 115(e)(35). 

After publication of the NPRM, the 

MLC said that it voluntarily ‘‘suspended 

its [termination dispute policy] pending 

the outcome of the [Office’s] rulemaking 

proceeding’’ and ‘‘will hold all royalties 

for uses of musical works that are 

subject to statutory termination claims 

beginning with the October [2022] usage 

period, which would have been 

distributed in January 2023.’’ 16 To the 

Office’s knowledge, the MLC continues 

to hold such royalties at present. 

B. The NPRM Comments 

The Office received over 40 public 

comments in response to the NPRM. 

These comments reflect the views of 

hundreds of interested parties, 

including songwriters, music publishers 

and administrators, record labels, public 

interest groups, academics, and 

practitioners. Most commenters, 

including multiple music publishers 

and administrators, generally supported 

the proposed rule.17 While some 

commenters raised concerns with 

certain aspects of the NPRM,18 the 

National Music Publishers’ Association 

(‘‘NMPA’’) was the only commenter to 

oppose the proposed rule more 

broadly.19

NMPA explained that it ‘‘has serious 

concerns regarding (i) the impermissible 

retroactive effect of the NPRM, (ii) the 

statutory authority underlying the broad 

legal analysis contained in the NPRM 

that would appear to have effect beyond 

the limited issue of whether the 

Exception applies to the Blanket 

License, and (iii) whether the Proposed 

Rule may constitute an unconstitutional 

taking in violation of the Fifth 

Amendment.’’ 20 Notwithstanding these 

concerns, NMPA stated that it ‘‘supports 

what it believes to be the ultimate goal 

of the Proposed Rule: to provide that the 

post-termination copyright owner of a 

musical composition shall receive posttermination royalties under the Blanket 

License for any sound recordings 

created pre- or post-termination.’’ 21

Several commenters, including the 

MLC, sought additional guidance from 

the Office on various related issues not 

directly addressed by the NPRM. 

Examples include the following: 

• Application of the Exception to 

other types of statutory mechanical 

licenses; 22

• Application of the Exception to 

voluntary licenses; 23

• Procedures for carrying out the 

proposed corrective royalty adjustment 

to remedy prior distributions by the 

MLC based on an erroneous 

understanding and application of the 

Exception.24

• Procedures concerning notice, 

documentation, timing, and other 

matters relating to the MLC’s 

implementation of a termination 

notification; 25 and 

• Procedures concerning termination 

disputes and related confidential 

information.26

The MLC emphasized the importance 

of the Office providing guidance on 

these topics, explaining that it is 

‘‘essential to processing royalties in 

connection with statutory termination 

claims’’ and ‘‘would provide important 

guidance to parties involved in 

termination claims.’’ 27

II. Supplemental Proposed Rule 

While the Office is still considering 

the comments submitted in response to 

the NPRM, in light of the requests for 

further guidance and other comments 

received, the Office is issuing this 

SNPRM modifying the proposed rule, 

providing additional detail, and 

expanding its scope. The Office seeks 

public comments on the revised 

proposal and will consider all 

comments received in response to both 

the NPRM and SNPRM when issuing its 

final rule. 

As discussed below, in addition to the 

Exception, the supplemental proposed 

rule addresses other matters germane to 

identifying the proper payee to whom 

the MLC must distribute royalties. 

These matters include issues related to 

the distribution of matched historical 

royalties, the MLC’s administration of 

terminations and related disputes, other 

types of ownership transfers, and 

requests to designate alternative royalty 

payees. While commenters’ requests for 

additional guidance largely pertain to 

termination-related issues, the requests 

and other comments lead the Office to 

believe that a more comprehensive set 

of regulations would be beneficial to the 

MLC, publishers, songwriters, and the 

wider music industry. The accurate 

distribution of royalties is a core 

objective of the MLC. Adopting the 

supplemental proposed rule would 

establish standards and settle 

expectations for all parties with respect 

to such distributions. This SNPRM is, 

thus, a natural extension of the NPRM 

and continues to ‘‘ultimately reflect[] 

the Office’s oversight and governance of 

the MLC’s reporting and payment 

obligations to copyright owners.’’ 28

The Office begins with two 

introductory notes about some of the 

terminology used below. First, under 

the MMA, the MLC must hold, for a 

designated minimum time period, 

royalties associated with reported uses 

of sound recordings embodying musical 

works for which the copyright owners of 

such musical works (or shares of such 

works) have not been identified or 

located.29 Such works (or shares) are 

‘‘unmatched.’’ 30 At the end of the 

statutory minimum holding period, 

accrued royalties for musical works (and 

shares) that remain unmatched become 

eligible for distribution by relative 


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31 Id. at 115(d)(3)(J)(i), (e)(34). The MLC has 

publicly confirmed that it does not have ‘‘any such 

[market-share] distribution planned in the coming 

year,’’ as it ‘‘is focused on matching uses and 

identified rightsholders, and . . . has not yet turned 

to the evaluation of what remaining royalties might 

be appropriate for a market share distribution, let 

alone begun the process to effectuate such a 

distribution, which will occur with significant 

public notice and transparency as Congress 

intended.’’ Five Years Later—The Music 

Modernization Act: Hearing Before the Subcomm. 

on Courts, Intellectual Property, and the internet of 

the H. Comm. on the Judiciary, Responses to 

Questions for the Record, 118 Cong. 2–3 (2023) 

(statement of Kris Ahrend, CEO, Mechanical 

Licensing Collective), https://docs.house.gov/ 

meetings/JU/JU03/20230627/116155/HHRG-118- 

JU03-20230627-SD013.pdf. 

32 17 U.S.C. 115(d)(10)(A). 

33 Id. at 115(d)(10)(B). 

34 Id. 

35 87 FR 64405, 64407–08. 

36See NMPA Initial Comments at 4–10, 12–13; 

NMPA Ex Parte Letter at 2–4 (Feb. 6, 2023). 

37See, e.g., A2IM & RIAA Reply Comments at 2; 

Authors All. et al. Initial Comments at 2–3; BMG 

Rights Mgmt. Initial Comments at 2; ClearBox 

Rights Initial Comments at 6–7; Fishman & Garcia 

Initial Comments at 1–4; King, Holmes, Paterno & 

Soriano LLP Initial Comments at 1; North Music 

Grp. Reply Comments at 2; Recording Academy 

Reply Comments at 2; SGA et al. Initial Comments 

at 2, 5; SONA et al. Initial Comments at 2–3. 

38See NMPA Initial Comments at 2–3; NMPA Ex 

Parte Letter at 2–3 (Feb. 6, 2023); MPA Reply 

Comments at 2–5; see also A2IM & RIAA Reply 

Comments at 2; Fishman & Garcia Initial Comments 

at 4. 

39The Office does not mean to suggest that 

someone could theoretically be construed as the 

copyright owner based on the Exception. See 

Howard Initial Comments at 5. Rather, the point of 

the proposed language is to make that impossibility 

clear. 

40The Office makes this proposal based on Linda 

Edell Howard’s suggestion to change the proposed 

rule to refer to ‘‘any claim to any rights or revenue.’’ 

Id. 

41Termination causes copyright ownership to 

revert to the author (or heirs). After termination, the 

Exception only permits a pre-termination derivative 

work to ‘‘continue to be utilized under the terms of 

the [terminated] grant.’’ 17 U.S.C. 203(b)(1), 

304(c)(6)(A); see H.R. Rep. No. 94–1476, at 127 

(1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5742– 

43 (explaining that ‘‘termination means that 

ownership of the rights covered by the terminated 

grant reverts’’ to the author or heirs, and describing 

the Exception as a ‘‘limitation on the rights of a 

copyright owner under a terminated grant’’) 

(emphasis added); Mills Music, Inc. v. Snyder, 469 

U.S. 153, 173 (1985) (stating that ‘‘[t]he purpose of 

the Exception was to preserve the right of the owner 

of a derivative work to exploit it, notwithstanding 

the reversion’’) (emphasis added) (internal citations 

and quotation marks omitted). 

42See, e.g., MLC Initial Comments at 4–6; MLC 

Reply Comments at 2; ClearBox Rights Initial 

Comments at 6; ClearBox Rights Reply Comments 

at 2; Howard Initial Comments at 5; Rights 

Recapture Initial Comments at 1. 

43See, e.g., MLC Initial Comments at 6; MLC 

Reply Comments at 2; ClearBox Rights Initial 

Comments at 6; ClearBox Rights Reply Comments 

at 2; Howard Initial Comments at 5; King, Holmes, 

Paterno & Soriano LLP Initial Comments at 1. 

44MLC Initial Comments at 6. 

45 Id. at 4–6 (citing 17 U.S.C. 115(d)(3)(G)). 

46 17 U.S.C. 115(d)(3)(G)(i)(I)(bb). An ‘‘individual 

download license’’ is ‘‘a compulsory license 

obtained by a record company to make and 

distribute, or authorize the making and distribution 

of, permanent downloads embodying a specific 

individual musical work.’’ Id. at 115(e)(12). 

47See A2IM & RIAA Reply Comments at 2; MPA 

Reply Comments at 2–5; NMPA Ex Parte Letter at 

2–3 (Feb. 6, 2023). 

48As discussed below in Parts II.D and E, the 

MLC’s market-share-based distributions of 

unclaimed royalties, including historical 

unmatched royalties that may become unclaimed 

royalties, are beyond the scope of this rulemaking. 

49 17 U.S.C. 115(d)(10); 37 CFR 210.10; see 

generally 86 FR 2176 (Jan. 11, 2021). 

50 17 U.S.C. 115(d)(10)(B)(iv); see 37 CFR 210.10. 

market share to copyright owners 

identified in the MLC’s records, at 

which point they become ‘‘unclaimed 

royalties.’’ 31

Second, the MMA contains an 

optional limitation on liability for 

unlicensed uses of musical works made 

by DMPs prior to January 1, 2021 (the 

‘‘license availability date’’).32 To be 

eligible for this limitation on liability, 

DMPs had to engage in good-faith, 

commercially reasonable efforts to 

identify, locate, and pay musical work 

copyright owners for covered uses of 

their works and had to accrue and hold 

royalties for uses of any unmatched 

musical works.33 If a musical work 

remained unmatched as of January 1, 

2021, the DMP had to transfer all 

accrued royalties to the MLC along with 

a cumulative statement of account.34

Such royalties are ‘‘historical 

unmatched royalties.’’ When the MLC 

matches the musical work (or share) to 

which historical unmatched royalties 

are attributable, they become ‘‘matched 

historical royalties.’’ 

A. Rulemaking Authority 

The Office relies on the same 

authority for the supplemental proposed 

rule as it did for the original proposed 

rule, which is discussed in detail in the 

NPRM.35 The Office is continuing to 

evaluate comments submitted on this 

topic 36 and welcomes further comments 

on its authority to adopt the 

supplemental proposed rule, including 

with respect to the proposed corrective 

royalty adjustment discussed in Part 

II.H below. 

B. Termination and the Exception 

1. Analysis Regarding Blanket Licenses 

While many commenters agree with 

the Office’s legal analysis in the NPRM 

regarding the application of the 

Exception to blanket licenses,37 other 

commenters raise some concerns.38 The 

Office is continuing to evaluate these 

comments, but for purposes of this 

SNPRM, the Office continues to propose 

a rule that relies on the preliminary 

analysis and conclusions regarding the 

Exception, as detailed in the NPRM. 

Therefore, the Office does not propose 

to revise the portion of the proposed 

rule that would make clear (1) that the 

Exception is inapplicable to blanket 

licenses, and (2) that the Exception does 

not affect copyright ownership.39 The 

Office, however, proposes to further 

clarify that because the Exception is 

inapplicable to blanket licenses, the 

Exception does not affect the identity of 

the applicable royalty payee either.40

The Office proposes this clarification in 

light of the distinction that can exist 

between the copyright owner and the 

royalty payee.41

2. Requests for Additional Guidance 

Various commenters, including the 

MLC, request guidance from the Office 

regarding the application of the 

Exception to voluntary licenses 42 and 

other types of statutory mechanical 

licenses beyond the blanket license,43

which the Office did not directly 

address in the NPRM. With respect to 

non-blanket statutory mechanical 

licenses, the MLC says that guidance is 

necessary to enable it to accurately 

match works (and shares) associated 

with historical unmatched royalties.44

Regarding voluntary licenses, the MLC 

explains that guidance is necessary 

because it must match and identify 

ownership for works used under 

voluntary licenses so that royalties for 

uses of such works can be deducted 

from DMP blanket license royalties.45

The Office notes that the MLC must also 

do the same for uses under individual 

download licenses.46

The Office agrees that further official 

guidance on these issues is required. 

While some commenters express 

concern with the Office opining on 

issues beyond the blanket license,47 the 

Office is persuaded that doing so is 

necessary to enable the MLC to 

accurately carry out its core statutory 

function to match and distribute 

royalties to copyright owners. 

i. Matched Historical Royalties 48

The Office is inclined to conclude 

that the Exception does not apply to any 

matched historical royalties. Historical 

unmatched royalties were paid to the 

MLC by DMPs as one of the 

requirements for the statutory limitation 

on liability for pre-2021 unlicensed uses 

and not pursuant to the terms of any 

pre-2021 voluntary or statutory 

license.49 Instead, where a DMP could 

not identify and locate an applicable 

copyright owner, the statute directed the 

DMP to accrue and hold royalties at the 

statutory license rate and ultimately 

transfer such accrued royalties to the 

MLC if they remained unmatched as of 

January 1, 2021.50 Likewise, the MLC’s 

distribution of historical unmatched 


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51 17 U.S.C. 115(d)(3)(J). 

52 Id. at 115(d)(3)(I)(ii). 

53To be clear, as the Office previously explained, 

a pre-2021 agreement can, however, affect the 

calculation of the accrued royalties required to be 

transferred to the MLC to be eligible for the 

limitation on liability. See 86 FR 2176, 2195 (‘‘Only 

‘accrued royalties’ for uses of unmatched works 

must be transferred to the MLC, and these may not 

necessarily be the same as the royalties that would 

otherwise be attributable to such usage under the 

statutory rate in the absence of any voluntary 

agreements that may extinguish or alter such 

royalty obligations for certain uses of certain 

works.’’); see also 37 CFR 210.10(c)(5)(i). The Office 

further notes that it expresses no opinion at this 

time as to whether the Exception may have any 

bearing on the calculation of relative market share 

for distributions of historical unmatched royalties 

that become unclaimed royalties. The distribution 

of unclaimed royalties is beyond the scope of this 

proceeding. 

54 17 U.S.C. 115(d)(3)(I)(ii); see id. at 203(b)(1), 

304(c)(6)(A). This result would not necessarily bar 

a party from seeking to recover unpaid royalties, at 

the statutory rate, for pre-2021 unlicensed uses from 

a relevant DMP, even if the DMP is shielded by the 

limitation on liability. Id. at 115(d)(10)(A). 

55 Id. at 115(d)(9)(A)–(B). 

56 Id. at 115(d)(9)(A). 

57 Id. 

58 Id. at 115(d)(9)(B). ‘‘Covered activity’’ means 

‘‘the activity of making a digital phonorecord 

delivery of a musical work, including in the form 

of a permanent download, limited download, or 

interactive stream, where such activity qualifies for 

a compulsory license under [section 115].’’ Id. at 

115(e)(7). 

59See H.R. Rep. No. 115–651, at 10 (2018) 

(‘‘Because the new blanket license replaces the 

previous work-by-work compulsory license, the 

compulsory licenses obtained under notices of 

intent served on musical work copyright owners 

prior to the availability of the blanket license will 

no longer be valid.’’); S. Rep. No. 115–339, at 10 

(2018) (same); Report and Section-by-Section 

Analysis of H.R. 1551 by the Chairmen and Ranking 

Members of Senate and House Judiciary 

Committees 8 (2018) (‘‘Conf. Rep.’’), https://

www.copyright.gov/legislation/mma_conference_

report.pdf (same). 

60See 17 U.S.C. 203(b)(1), 304(c)(6)(A). 

61See 87 FR 64405, 64410–11. 

62See id. 63See id. 64See id. 

65See id. 

66See id. at 64411. 

67Under the statute, a notice must be served on 

the ‘‘copyright owner’’ to obtain an individual 

download license and payments must be made in 

accordance with section 115(c)(2)(I). 17 U.S.C. 

115(b)(2)(A), (3). Under section 115(c)(2)(I), 

royalties must be paid in accordance with the 

Office’s regulations. Id. at 115(c)(2)(I). Under the 

Office’s regulations, individual download licenses 

are subject to the same payment regulations as other 

non-blanket statutory mechanical licenses. 37 CFR 

210.11. Under those regulations, payment is to be 

made to the ‘‘copyright owner.’’ Id. at 210.6(g). 

68See 87 FR 64405, 64410–11. 

royalties is governed by the statute. 

Historical unmatched royalties that 

remain unmatched long enough to 

become unclaimed royalties are eligible 

to be distributed by relative market 

share,51 and historical unmatched 

royalties that become matched historical 

royalties are to be distributed to the 

‘‘copyright owner.’’ 52

Terms of any pre-2021 license, 

including as those terms might 

otherwise apply through the Exception, 

appear to have no bearing on how the 

MLC must distribute matched historical 

royalties.53 This is because the accrual 

and transfer of historical unmatched 

royalties to the MLC and distribution of 

any such royalties by the MLC are 

governed by statute and the Office’s 

regulations. Even if the Exception 

applied to a pre-2021 license, it would 

not affect the statutory directive that the 

MLC must distribute matched historical 

royalties to the ‘‘copyright owner.’’ 54

The Office tentatively believes that, 

based on these facts, the Exception does 

not apply to matched historical 

royalties. 

ii. Pre-2021 Statutory Mechanical 

Licenses 

Under the MMA’s provisions 

governing the transition to the new 

blanket licensing regime, most pre-2021 

statutory mechanical licenses do not 

appear to have continued in effect after 

the license availability date.55 Section 

115(d)(9)(A) provides that ‘‘[o]n the 

license availability date, a blanket 

license shall, without any interruption 

in license authority enjoyed by such 

[DMP], be automatically substituted for 

and supersede any existing compulsory 

license previously obtained under 

[section 115] by the [DMP].’’ 56 That 

provision then has an exception, where 

the substitution does not apply ‘‘to any 

authority obtained from a record 

company pursuant to a compulsory 

license to make and distribute 

permanent downloads.’’ 57 Section 

115(d)(9)(B) adds that, except as 

provided in section 115(d)(9)(A), ‘‘on 

and after the license availability date, 

licenses other than individual download 

licenses obtained under [section 115] for 

covered activities prior to the license 

availability date shall no longer 

continue in effect.’’ 58 Read together, 

with respect to covered activities, it 

appears that only record companies’ 

pre-2021 individual download licenses 

and the authority obtained from them by 

DMPs survived the license availability 

date.59 Because all other pre-2021 

statutory mechanical licenses to engage 

in covered activities are no longer in 

effect pursuant to their own terms (i.e., 

the statutory text), any application the 

Exception may or may not have had 

while they were in force seems to have 

no bearing on the MLC’s distribution of 

royalties for post-2021 usage.60 The 

application of the Exception to both preand post-2021 individual download 

licenses is discussed in the next section. 

iii. Individual Download Licenses 

The Office tentatively believes that its 

legal analysis in the NPRM for blanket 

licenses applies similarly to individual 

download licenses. First, as a type of 

statutory mechanical license, the 

analysis contained in Parts V.A.1 

(discussing that the blanket license 

cannot be terminated) and V.A.3 

(discussing that applying the Exception 

to the blanket license would lead to an 

extreme result) of the NPRM fully 

applies to individual download licenses 

for the same reasons as for blanket 

licenses.61 Second, the analysis under 

Part V.A.2 of the NPRM (discussing that 

derivative works generally are not 

prepared pursuant to the blanket 

license) also applies to the extent no 

sound recording derivative is actually 

prepared pursuant to the individual 

download license.62 In such cases, for 

the same reasons discussed in Part 

V.A.2 of the NPRM, the individual 

download license ‘‘is not part of any 

preserved grants that make the 

Exception applicable.’’ 63 If sound 

recording derivatives are prepared 

pursuant to an individual download 

license, then the Exception still would 

not apply.64 As explained in Part V.A.1 

of the NPRM, a self-executing statutory 

license, like an individual download 

license, cannot be terminated in the first 

place.65 Third, the analysis contained in 

Part V.B of the NPRM is essentially the 

same for individual download licenses 

as for blanket licenses.66 The only 

difference is that the relevant terms of 

the individual download license 

providing for payment to the ‘‘copyright 

owner’’ is in a different location from 

the relevant provisions about blanket 

licenses.67

Based on the foregoing, the 

supplemental proposed rule provides 

that the Exception would not apply to 

individual download licenses for 

purposes of the MLC’s efforts under 

section 115(d)(3)(G)(i)(I)(bb) and 37 CFR 

210.27(g)(2)(ii). 

iv. Voluntary Licenses 

The application of the Exception to 

voluntary licenses requires 

consideration of additional questions in 

light of the variety of licenses that may 

exist. Because DMP voluntary licenses 

are not statutory mechanical licenses, 

parts of the Office’s analysis in the 

NPRM specific to the nature of the 

blanket license as self-executing and to 

the particular text of section 115 (i.e., 

Parts V.A.1, V.A.3, and V.B) do not 

apply to them.68 The analysis contained 

in Part V.A.2 of the NPRM, however, 

would generally apply ‘‘where no sound 

recording derivative is prepared 


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69See id. The Office emphasizes that, as noted 

above, even though it is relying on the preliminary 

analysis and conclusions detailed in the NPRM for 

purposes of this SNPRM, it is continuing to 

evaluate the comments concerning its legal analysis 

of the Exception. The Office welcomes further 

comments and legal discussion and, in particular, 

invites comments on the jurisprudence of the 

Second Circuit, including the decisions in Woods 

v. Bourne Co., 60 F.3d 978 (2d Cir. 1995) and Fred 

Ahlert Music Corp. v. Warner/Chappell Music, Inc., 

155 F.3d 17 (2d Cir. 1998). 

70See id. (referring generically to any DMP 

‘‘musical work licenses’’ throughout the analysis). 

71When the copyright owner of a musical work 

authorizes a record company (or someone else) to 

prepare a sound recording derivative of the musical 

work, the musical work copyright owner can also 

provide the record company with authority to 

engage in what is often referred to as ‘‘passthrough’’ licensing. See U.S. Copyright Office, 

Copyright and the Music Marketplace 131–32 

(2015), https://copyright.gov/policy/ 

musiclicensingstudy/copyright-and-the-musicmarketplace.pdf (discussing pass-through licensing 

and describing it as ‘‘mimic[king] the traditional 

physical model, where record labels ship product 

to stores and report sales back to publishers’’); 86 

FR 12822 (Mar. 5, 2021) (discussing prior 

rulemaking activity involving pass-through 

licenses). Such authority would allow the record 

company, to the extent permitted by its license with 

the musical work copyright owner, to license the 

rights it possesses in the underlying musical work 

to a third party, e.g., a DMP, as a part of utilizing 

the sound recording embodying that musical work. 

Thus, a DMP could potentially enter into a 

voluntary license with the record company instead 

of the musical work copyright owner for uses of the 

musical work. This is similar to how individual 

download licenses operate, whereby ‘‘record labels 

[can] obtain and pass through [section 115] 

mechanical license rights [to DMPs] for individual 

permanent downloads.’’ H.R. Rep. No. 115–651 at 

4; S. Rep. No. 115–339 at 4; Conf. Rep. at 3; see 17 

U.S.C. 115(b)(3). 

72See 17 U.S.C. 203(b)(1), 304(c)(6)(A); Mills 

Music, Inc., 469 U.S. at 163–69. 

73See 17 U.S.C. 203(b)(1), 304(c)(6)(A). 

74See The MLC, Dispute Policy: Musical Work 

Ownership, sec. 1.2 (Feb. 2021) (‘‘The Collective 

does not judge or resolve Conflicts or Disputes, or 

participate in the substantive resolution of Conflicts 

or Disputes.’’). 

75Woods, 60 F.3d at 993–94; see Mills Music, Inc. 

v. Snyder, 469 U.S. at 188 & n.20 (White, J., 

dissenting) (‘‘In attempting to claim for itself the 

benefits of the [Exception], [the pre-termination 

copyright owner] bears the burden of proof.’’); see 

also Norman J. Singer & Shambie Singer, 

Sutherland Statutes & Statutory Construction sec. 

47.11 (7th ed. 2014 & Supp. 2022) (explaining that 

‘‘all courts do agree that those who claim the benefit 

of an exception have the burden of proving that 

they come within the limited class for whose 

benefit the exception was established,’’ and 

collecting cases). 

76 87 FR 64405, 64411–12. The Office further 

explained that by ‘‘uses,’’ the Office means the 

covered activities engaged in by DMPs under 

blanket licenses as reported to the MLC. Id. at 

64412. 

77 Id. at 64412 (citing to sections 115(c)(1)(C) and 

501(b)). 

pursuant to a DMP’s [voluntary] 

license.’’ 69 In many cases, for the 

reasons discussed in the NPRM, ‘‘that 

[voluntary] license is not part of any 

preserved grants that make the 

Exception applicable.’’ 70

There may, however, be some 

situations where the result is different, 

such as where a DMP’s voluntary 

license is a ‘‘pass-through’’ license.71 In 

such cases, even if no sound recording 

derivative is prepared pursuant to the 

DMP’s voluntary license, the pretermination copyright owner may still 

be entitled to post-termination royalties 

for uses made pursuant to such a 

license. The contractual payment terms 

between a DMP and a record company 

pursuant to a voluntary pass-through 

license could be preserved by the 

Exception along with other terms that 

are part of the same direct chain of 

successive grants providing authority to 

utilize the relevant sound recording 

derivatives (e.g., those among the 

songwriter, music publisher, and record 

company).72

Additionally, and in contrast to 

blanket and other statutory mechanical 

licenses that cannot be terminated, if 

sound recording derivatives are in fact 

prepared by a DMP pursuant to a 

voluntary license before its termination, 

the Exception might apply to the extent 

of the voluntary license’s terms. The 

Exception could allow the DMP’s sound 

recording derivatives to ‘‘continue to be 

utilized under the terms of the 

[voluntary license] after its 

termination.’’ 73

In sum, unlike statutory mechanical 

licenses, there are an innumerable 

variety of voluntary licenses and related 

underlying agreements that either 

currently exist or that could exist in the 

future. Consequently, the Office is 

inclined to conclude that it would not 

be prudent to attempt to craft a rule 

trying to account for how the Exception 

may or may not apply in every possible 

situation. Even if the Office could craft 

such a rule, it would be challenging, if 

not impossible, for the MLC to evaluate 

each and every voluntary license to 

determine the Exception’s applicability 

based on whatever regulatory criteria 

the Office might adopt. Accordingly, the 

Office believes that the MLC should not 

exercise independent judgment 

regarding the application of the 

Exception to a voluntary license or its 

underlying grant of authority.74

Instead of tasking the MLC with 

making such an evaluation, the Office 

proposes that the MLC only act as 

directed pursuant to either: (1) a notice 

from the copyright owner entitled to 

receive royalties from the MLC under 

the Office’s regulations that designates 

an alternative royalty payee (such 

notices are discussed in Part II.F.1.iv 

below); or (2) the resolution of a dispute 

with respect to the applicability of the 

Exception to the relevant voluntary 

license or its underlying grant of 

authority. Under the supplemental 

proposed rule, the MLC’s 

implementation of the Exception 

through its efforts under section 

115(d)(3)(G)(i)(I)(bb) and 37 CFR 

210.27(g)(2)(ii), to confirm uses of 

musical works subject to voluntary 

licenses and deduct corresponding 

amounts from royalties that would 

otherwise be due under the blanket 

license, would therefore depend on how 

the MLC is directed to act. In the 

absence of any such direction, the Office 

proposes that the Exception would not 

apply to the MLC’s aforementioned 

efforts. 

The first type of direction the MLC 

may receive, from the copyright owner, 

is intended to accommodate situations 

where that owner may have 

contractually agreed to an alternative 

payment arrangement such that the 

MLC should act as if the Exception 

applies. The second type of direction 

the MLC may receive, pursuant to the 

resolution of a dispute, follows legal 

precedent holding that the pretermination copyright owner has the 

burden of proving that the Exception 

applies.75 This approach would place 

the burden on the pre-termination 

copyright owner to initiate a dispute 

regarding the application of the 

Exception. As discussed below, after 

initiating a dispute, the MLC would 

hold relevant royalties and interest 

pending its resolution. If the resolution 

of the dispute—whether through 

settlement or adjudication—requires the 

MLC to apply the Exception, then the 

MLC would be required to act as 

directed (see Part II.G.4 below 

discussing the resolution of disputes). 

C. The Copyright Owner at the Time of 

the Use Versus the Copyright Owner at 

the Time of the Payment 

To codify its preliminary conclusion 

that the statute entitles the ‘‘current 

copyright owner’’ to the royalties under 

the blanket license, the Office proposed 

in the NPRM that the copyright owner 

of the musical work as of the end of the 

monthly reporting period is the one who 

is entitled to the royalties and any other 

related amounts (e.g., interest), 

including any subsequent adjustments, 

for the uses of the work during that 

period.76 The NPRM explained the 

Office’s reasoning for its proposal and 

sought comments on it, including 

whether some other point in time might 

be appropriate.77 The Office refers to the 

approach proposed in the NPRM as 

distributing royalties to ‘‘the owner at 

the time of the use.’’ 


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78See, e.g., ClearBox Rights Initial Comments at 

8 (‘‘Attempting to identify, calculate and pay 

royalties by a specific day of the month in which 

the musical work was streamed based on the actual 

termination date would be administratively 

cumbersome and ripe for disputes.’’); Howard 

Initial Comments at 3; King, Holmes, Paterno & 

Soriano LLP Initial Comments at 1; Miller Initial 

Comments at 1; NSAI Initial Comments at 3; SGA 

et al. Initial Comments at 2, 5. 

79NMPA Initial Comments at 5–6; CMPA Initial 

Comments at 2. 

80NMPA Initial Comments at 6; CMPA Initial 

Comments at 2. 

81NMPA Initial Comments at 6 (explaining that 

‘‘any adjustments or other payments made after an 

ownership transfer are paid to the new owner of the 

composition, including for usage that occurred 

prior to the transfer’’); CMPA Initial Comments at 

2. 

82NMPA Ex Parte Letter at 3 (Feb. 6, 2023); see 

also id. at 4 (‘‘NMPA’s draft legislation would have 

required the copyright owner at the time of the 

usage to be paid for subsequent adjustments.’’). 

83MLC Initial Comments at 9 n.9. 

84See, e.g., William F. Patry, 6 Patry on 

Copyright, sec. 21:19 (2023) (‘‘An agreement to 

share royalties, or even assigning all rights to 

royalties is not a ‘transfer of copyright’; instead, it 

is merely a right to proceeds flowing from 

exploitation of an exclusive right.’’). 

85See ClearBox Rights Ex Parte Letter at 4 (June 

28, 2023) (stating that ‘‘the same rules should apply 

for songs which have ownership transferred in 

methods other than through terminations’’ and that 

‘‘if a song is sold from one person to another, the 

person who owns the work at the end of the 

reporting period should be entitled to the 

royalties’’). 

86 17 U.S.C. 115(c)(1)(C). 

87See, e.g., id. at 115(d)(3)(G)(i)(I)–(III), (d)(3)(I). 

88 Id. at 115(d)(4)(E)(ii)(II). 

89 Id. at 501(b). 

90Courts have held that a ‘‘ ‘copyright owner can 

assign its copyright but, if the accrued causes of 

action are not expressly included in the assignment, 

the assignee will not be able to prosecute them.’ 

. . . In the event that accrued claims are not 

expressly included in the assignment, ‘the assignor 

retains the right to bring actions accruing during its 

ownership of the right, even if the actions are 

brought subsequent to the assignment.’ ’’ John Wiley 

& Sons, Inc. v. DRK Photo, 882 F.3d 394, 404 (2d 

Cir. 2018) (quoting ABKCO Music, Inc. v. 

Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 

1991)); see also NMPA Ex Parte Letter at 5 (Feb. 6, 

2023) (explaining that ‘‘who has the right to sue for 

infringement for activity occurring prior to the 

ownership change’’ would ‘‘be addressed by private 

contract’’). 

91The Office declines to propose the changes 

suggested by ClearBox Rights to (1) omit the word 

‘‘monthly’’ before ‘‘reporting period’’ in case DMPs 

report semi-monthly, and (2) to clarify that the 

relevant reporting period is the ‘‘period of the 

[DMP’s] actual activity, and not the . . . period in 

which the MLC received and/or distributed the 

royalties.’’ ClearBox Rights Ex Parte Letter at 4–5 

(June 28, 2023). Regarding the first suggestion, the 

statute does not contemplate semi-monthly 

reporting. 17 U.S.C. 115(c)(2)(I), (d)(4)(A)(i). On the 

second suggestion, the Office believes the 

supplemental proposed rule is sufficiently clear, as 

it refers to the period ‘‘in which such musical work 

is used.’’ 

92 79 FR 56190, 56193 (Sept. 18, 2014). 

93 79 FR 56190, 56193. 

94NMPA Ex Parte Letter at 4. (Feb. 6, 2023). 

Commenters largely agree with the 

proposed approach.78 NMPA and the 

Church Music Publishers Association 

(‘‘CMPA’’) propose a different approach. 

Instead of distributing royalties to the 

owner at the time of the use, they 

suggest that royalties should be 

distributed to the copyright owner as of 

the date of the MLC’s relevant 

distribution—regardless of when the 

related use occurred.79 The Office refers 

to this approach as distributing royalties 

to ‘‘the owner at the time of the 

payment.’’ NMPA and CMPA state that 

this approach is better for terminating 

songwriters because they would be the 

owner at the time of the payment for 

any post-termination adjustments to 

pre-termination periods.80 NMPA and 

CMPA refer to distributing royalties to 

the owner at the time of the payment as 

‘‘industry practice,’’ 81 though NMPA 

later commented that ‘‘under current 

industry practice, once an ownership 

transfer occurs, the party receiving 

subsequent adjustment payments for 

usage of a musical work that occurred 

prior to the transfer is typically handled 

pursuant to the agreement between the 

previous owner and the new owner of 

the work.’’ 82 The MLC adds that, ‘‘as is 

standard in the industry, royalties from 

general reprocessing are normally paid 

to the current copyright owner, 

regardless of the usage month at 

issue.’’ 83

Regardless of whatever the industry 

norm may be under voluntary 

agreements, the Office remains inclined 

to believe that the owner at the time of 

the use is the more appropriate payee 

under the blanket license, absent an 

agreement to the contrary. While the 

right to royalties can be assigned via 

contract independently of ownership in 

the copyright,84 that has no bearing on 

who the proper payee is where no such 

agreement exists. In response to the 

claim that distributing royalties to the 

owner at the time of the payment 

benefits terminating songwriters, the 

Office notes that it is not seeking to 

adopt a rule that is limited to the 

termination context. The Office is 

proposing a rule to govern all MLC 

distributions under the blanket license, 

including in contexts where ownership 

may be transferred by means other than 

statutory termination.85

While the statute does not explicitly 

address whether the proper payee is the 

owner at the time of the use or the 

owner at the time of the payment, 

various statutory provisions support the 

Office’s view. Under section 

115(c)(1)(C), the payable royalties under 

the blanket license are for ‘‘every digital 

phonorecord delivery of a musical work 

made under [the blanket] license.’’ 86

Thus, where the statute refers to 

distributing royalties to the ‘‘copyright 

owner,’’ it most logically means the 

copyright owner at the time that the 

applicable digital phonorecord delivery 

is made.87 This understanding is 

supported by sections 115(d)(4)(E)(ii)(II) 

and 501(b). Under section 

115(d)(4)(E)(ii)(II), where a DMP’s 

blanket license is terminated by the 

MLC, ‘‘[s]uch termination renders the 

making of all digital phonorecord 

deliveries of all musical works (and 

shares thereof) covered by the blanket 

license for which the royalty . . . has 

not been paid actionable as acts of 

infringement under section 501.’’ 88

Section 501(b) provides that ‘‘[t]he legal 

or beneficial owner of an exclusive right 

under a copyright is entitled . . . to 

institute an action for any infringement 

of that particular right committed while 

he or she is the owner of it.’’ 89 Read 

together, it appears that, absent an 

agreement to the contrary,90 the 

copyright owner who can sue a DMP for 

infringement due to non-payment of 

royalties under the blanket license is the 

copyright owner at the time the 

infringement was committed—i.e., at 

the time of the use. It, therefore, seems 

reasonable to the Office for that owner 

to be the one to whom such royalties are 

paid by the MLC.91

The Office’s conclusion that the 

owner at the time of the use is the more 

appropriate payee under the statutory 

mechanical license is not a new one. It 

reached the same conclusion under the 

pre-MMA version of the statute almost 

a decade ago.92 There, the Office 

determined that while ‘‘[t]he 

transactions transferring copyright 

ownership may provide for a different 

result as a matter of private contract,’’ 

‘‘absent such an arrangement, any 

underpayment or overpayment 

stemming from the reconciliation of 

final performance royalty payments may 

properly be attributable to the copyright 

owner at the time of the relevant use of 

the statutory license.’’ 93

With respect to private agreements, 

the Office is inclined to agree with 

NMPA that it is important ‘‘to allow 

parties to agree by contract to a different 

payment arrangement and provide 

letters of direction to the MLC pursuant 

to those agreements.’’ 94 Therefore, the 

supplemental proposed rule would only 

establish the owner at the time of the 

use as the default payee—i.e., the proper 

payee to whom the MLC must distribute 

royalties and any other related amounts 

under the blanket license in the absence 

of an agreement to the contrary. As 

discussed below in Part II.F, the 


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95See, e.g., ClearBox Rights Reply Comments at 

4–5; ClearBox Rights Ex Parte Letter at 5 (June 28, 

2023); NMPA Initial Comments at 6 n.10; North 

Music Grp. Reply Comments at 2; McAnally & 

North Ex Parte Letter at 6–7 (Mar. 14, 2023). 

96With this clarification, the supplemental 

proposed rule removes as redundant the reference 

to section 115(d)(3)(J) proposed in § 210.29(b)(4)(i) 

of the NPRM. 

97See, e.g., NMPA Ex Parte Letter at 4 (Feb. 6, 

2023); CMPA Initial Comments at 2. 

98See NMPA Ex Parte Letter at 4 (Feb. 6, 2023). 

99See Public Law 115–264, tit. I, sec. 102(f)(1), 

132 Stat. at 3722; 17 U.S.C. 115(d)(3)(H)(i). 

100See, e.g., MLC Initial Comments at 10–11; 

ClearBox Rights Initial Comments at 8; ClearBox 

Rights Reply Comments at 5–6; Howard Initial 

Comments at 3–5; Howard Reply Comments at 2– 

3; SGA et al. Initial Comments at 2, 6–8. 

101Proposed paragraph (f) is discussed below in 

Part II.G.4. 

102See 37 CFR 210.24(b), (b)(8), (c), (d). The 

Office’s rationale for originally adopting those 

requirements can be found in the record of that 

proceeding. 85 FR 22518, 22519–21; 85 FR 58114, 

58116–18. 

supplemental proposed rule is designed 

to accommodate and give effect to 

contractual payment arrangements that 

deviate from this default rule. 

D. Unclaimed Royalties 

Commenters raise various questions 

about the MLC’s distribution of 

unclaimed royalties.95 With respect to 

the market-share-based distributions of 

unclaimed royalties, the Office proposes 

to clarify that the reporting and payment 

regulations in § 210.29 do not apply, as 

that section governs MLC distributions 

of royalties for matched works.96

Beyond this clarification, the Office 

views the market-share-based 

distributions of unclaimed royalties as 

beyond the scope of this proceeding. 

E. Matched Historical Royalties 

Similarly, commenters raise questions 

about the proposed rule and matched 

historical royalties.97 Here, the Office 

proposes to clarify that § 210.29 does 

apply and the MLC must report and 

distribute matched historical royalties 

in the same manner and subject to the 

same requirements that apply to the 

reporting and distribution of blanket 

license royalties. To avoid any 

confusion, the Office proposes to further 

clarify that matched historical royalties 

should be treated as accrued royalties 

distributable under § 210.29(b)(1)(ii). 

They would need to be included in 

applicable royalty statements and 

separately identified and broken out 

from blanket license royalties so 

copyright owners can easily ascertain 

the nature and source of the payment 

made to them by the MLC. The Office 

proposes this approach because, at least 

based on the current record, it generally 

sees no reason to treat the reporting and 

distributing of matched historical 

royalties and blanket license royalties 

differently. 

This would include the payee 

proposal discussed in Part II.C above, 

whereby the MLC would distribute 

royalties to the copyright owner at the 

time of the use, as opposed to the owner 

at the time of the payment. Despite this 

proposal, the Office is inclined to agree 

with NMPA that, given the age of some 

of the historical usage, there likely will 

be greater difficulty in identifying and 

locating historical copyright owners, 

and that requiring the MLC to pay the 

owner at the time of the use ‘‘may result 

in lower match rates and lower payouts 

of historic unmatched royalties, even 

where the current copyright owner is 

known, because the MLC may have 

possibly incomplete or unreliable 

historical ownership data.’’ 98 The 

Office also recognizes Congress’s clear 

interest in generally ‘‘reduc[ing] the 

incidence of unclaimed royalties.’’ 99

Therefore, it seeks comments regarding 

whether it should consider drawing a 

distinction between matched historical 

royalties and blanket license royalties 

when it comes to the royalty payee. For 

example, the MLC could be permitted to 

distribute matched historical royalties to 

the copyright owner at the time of the 

payment when the owner at the time of 

the use cannot be located and identified. 

The Office further seeks comments on 

whether it has the authority to adopt 

such a distinction or any other approach 

commenters may wish to propose. For 

example, would it be appropriate to 

consider works matched to the owner at 

the time of the payment, rather than the 

owner at the time of the use, as being 

‘‘matched’’ within the meaning of the 

statute, or does the statute require that 

such works be considered ‘‘unmatched’’ 

and subject to eventual market-sharebased distributions? 

F. Ownership Transfers and Other 

Changes to the Royalty Payee 

Several commenters, including the 

MLC, seek additional guidance from the 

Office on procedures concerning notice, 

documentation, timing, and other 

matters relating to the MLC’s 

implementation of a termination 

notification.100 Having considered these 

comments, the Office agrees that further 

guidance would be helpful to 

stakeholders. Specifically, the Office 

proposes to adopt regulations governing 

the MLC’s administration of all transfers 

of copyright ownership and other 

changes to the royalty payee entitled to 

distributions from the MLC. The Office 

believes such a rule will help establish 

standards and settle expectations for all 

parties with respect to such 

distributions. 

Under the supplemental proposed 

rule, current § 210.30—addressing a 

temporary exception to certain DMP 

reporting requirements with a deadline 

that passed over two years ago—would 

be repealed and replaced with an 

entirely new § 210.30. Under paragraph 

(b) of the newly proposed § 210.30, the 

MLC would be prohibited from taking 

any action to implement or give effect 

to a change in the royalty payee unless 

it receives a notice about the change that 

complies with the requirements of 

proposed paragraph (c) or is acting in 

connection with the resolution of a 

dispute under proposed paragraph 

(f).101 Where the requirements of 

proposed paragraph (c) are satisfied, the 

MLC would be required to implement 

and give effect to the change in payee 

in accordance with the provisions of 

proposed paragraph (d). 

1. Notice of a Change to the MLC 

Under proposed paragraph (c), the 

MLC would need to be appropriately 

notified in writing about any change in 

the royalty payee. The supplemental 

proposed rule would establish detailed 

and tailored notice requirements based 

on the type of payee change. Several of 

the proposed requirements—such as 

those about submission and receipt, 

certification and signature, and the 

identification of the relevant parties and 

musical works—are similar to the 

regulations governing the notices of 

license that DMPs must submit to the 

MLC to obtain a blanket license.102

Those requirements seem to be working 

in the DMP context and there are 

sufficient parallels between the two 

types of notices that the Office proposes 

to adopt them here. The Office 

encourages the MLC to develop an 

electronic form to assist submitters in 

completing notices about a change in 

payee. 

i. Transfers of Copyright Ownership 

Other Than by Will or Operation of Law 

Proposed paragraph (c)(1) addresses 

the requirements for a change in payee 

due to a transfer of copyright ownership 

other than by will or operation of law. 

Accordingly, these requirements would 

apply to a contractual assignment of the 

copyright in the relevant musical work, 

but not a reversion of the copyright 

resulting from the statutory termination 

of a prior grant concerning the work. 

The Office proposes that notices for the 

transfers covered by paragraph (c)(1) 

must include: (1) all relevant dates 

required for the MLC to properly 

implement and give effect to the 

transfer; (2) information identifying the 


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103See 37 CFR 201.10(f)(1)(i)(A). 

104See id. at 201.10(f)(1)(i)(B). 

105See 17 U.S.C. 203(a)(4)(A), 304(c)(4)(A) (‘‘A 

copy of the notice shall be recorded in the 

Copyright Office before the effective date of 

termination, as a condition to its taking effect.’’). 

106See 37 CFR 201.10(f)(2)(iii). 

107Proof of submission would not need to include 

proof of proper fee payment to the Office because 

an incorrect fee can be remedied without affecting 

the relevant date of recordation. Id. at 201.10(f)(3). 

108MLC Initial Comments at 11 (proposing, 

among other things, documents sufficient to 

‘‘identify the grants that the post-termination 

claimant claims have been terminated by the 

relevant termination notice’’ and to ‘‘show that the 

post-termination claimant or its assignor owns the 

termination interest’’). 

109ClearBox Rights Reply Comments at 5–6; 

Howard Reply Comments at 2–3; see 17 U.S.C. 203, 

304(c); 37 CFR 201.10; U.S. Copyright Office, 

Compendium of U.S. Copyright Office Practices, 

sec. 2310.3(D)(1)(c) (3d ed. 2021) (‘‘In most cases, 

the party issuing the notice of termination may not 

have a copy of the grant that is being terminated 

or may not have access to a copy. For these reasons, 

the terminating party does not need to identify the 

location of the grant, offer to produce a copy of the 

grant, or attach a copy of the grant to the notice.’’). 

110Howard Reply Comments at 2–3 (describing 

the MLC’s proposal as ‘‘a list of documents that will 

be impossible for an author or his/her statutory 

heirs to provide’’); see ClearBox Rights Reply 

Comments at 5–6. 

111 42 FR 45916, 45918 (Sept. 13, 1977); see id. 

at 45917 (‘‘[T]he preparation of notice of 

termination will be occurring at a time far removed 

from the original creation and publication of a work 

and, in many cases, will involve successors of 

original authors having little, if any, knowledge of 

the details of original creation or publication.’’); id. 

at 45918 (recognizing that ‘‘it will commonly be the 

case that the terminating author, or [other 

terminating party], will not have a copy of the grant 

or ready access to a copy’’). 

112For example, the Office’s regulations 

governing the content of statutory notices of 

termination already provide for an identification of 

each: (1) grant, 37 CFR 201.10(b)(1)(iv), (b)(2)(v); (2) 

pre-termination copyright owner, 37 CFR 

201.10(b)(1)(ii), (b)(2)(ii), (d)(2); (3) terminating 

party, 37 CFR 201.10(b)(1)(vii), (b)(2)(vii), (c)(2)–(3); 

(4) work, 37 CFR 201.10(b)(1)(iii), (b)(2)(iv); and (5) 

effective date of termination, 37 CFR 

201.10(b)(1)(v), (b)(2)(vi). 

113MLC Initial Comments at 11. 

114The Office also notes that with respect to 

fraud, federal law prohibits (and may punish with 

fine or imprisonment), ‘‘in any matter within the 

jurisdiction of the executive, legislative, or judicial 

branch of the Government of the United States,’’ the 

making of any ‘‘knowingly and willfully’’ 

‘‘materially false, fictitious, or fraudulent statement 

or representation’’ or the provision of ‘‘any false 

writing or document knowing the same to contain 

any materially false, fictitious, or fraudulent 

statement or entry.’’ 18 U.S.C. 1001(a)(3). This 

provision applies to submissions to the Office, 

including where a notice of termination is 

submitted for recordation. 

transferor (i.e., the prior musical work 

copyright owner); (3) information 

identifying the transferee (i.e., the new 

musical work copyright owner); and (4) 

either (i) an identification satisfactory to 

the MLC of any applicable catalog 

exclusions from the transfer (which may 

state that there are no such exclusions, 

and that, therefore, the whole catalog is 

subject to the transfer) or (ii) a list of all 

transferred musical works identified by 

appropriate unique identifiers. 

The Office further proposes that the 

required notice must be submitted and 

signed by the transferor or its 

representative certifying the accuracy of 

the information provided. This proposal 

is intended to reduce both the 

possibility of fraudulent notices and the 

effort required by the MLC to verify 

transfer claims where notice of the 

transfer is provided solely by a 

purported transferee. 

Where there are multiple transferors 

or transferees, the notice would also 

need to identify any applicable 

ownership shares for the transferred 

works. Where there are multiple 

transferors, the notice would be 

effective only as to those transferors 

whose information is provided in the 

notice and whom have signed and 

certified the notice. Where there are 

multiple transferees, the notice would 

be effective only as to those transferees 

whose information is provided in the 

notice. 

ii. Transfers of Copyright Ownership by 

Statutory Termination 

Proposed paragraph (c)(2) addresses 

the requirements for a change in payee 

due to a transfer of copyright ownership 

resulting from an effective termination 

under section 203 or 304. The Office 

proposes that the required notice for 

this type of payee change must include 

the following requirements: (1) a copy of 

the statutorily required notice of 

termination submitted to the Office for 

recordation; 103 (2) a copy of the 

statement of service submitted to the 

Office for recordation, if one was 

submitted; 104 (3) either (i) proof that the 

notice of termination was recorded in 

the Office before the effective date of 

termination, or (ii) if the Office has not 

yet recorded the notice, proof that the 

notice was submitted to the Office for 

recordation, so long as proof of timely 

recordation is delivered to the MLC at 

a later date; 105 and (4) information 

identifying the terminating party (i.e., 

the new musical work copyright owner). 

With respect to the first three items, 

the supplemental proposed rule would 

make clear that it is not necessary to 

provide the MLC with official Copyright 

Office certifications for this information. 

If the MLC has good reason to doubt the 

authenticity of the information 

provided, it should seek verification 

from the Office. Where the 

supplemental proposed rule refers to 

providing proof of recordation or proof 

of submission for recordation, the Office 

means more than a declaration by the 

terminating party or its representative. 

Adequate proof of timely recordation 

could be demonstrated by either 

providing the MLC with a copy of the 

certificate of recordation or the record as 

reflected in the Office’s online public 

catalog. Adequate proof of submission 

to the Office for recordation could take 

the form of courier tracking or a delivery 

confirmation, a return receipt from the 

Office,106 or some other communication 

from the Office confirming receipt.107

The MLC requests the inclusion of 

additional information and 

documentation.108 The Office declines 

to propose these additional 

requirements. It agrees with other 

commenters that the MLC’s requests 

exceed what is necessary to effectuate a 

statutory termination under the law.109

The Office also shares commenters’ 

concerns about the ability of terminating 

parties to provide some of what the 

MLC requests.110 The Office continues 

to ‘‘remain convinced that the required 

contents of the notice [of termination] 

must not become unduly burdensome to 

grantors, authors, or their successors, 

and must recognize that entirely 

legitimate reasons may exist for gaps in 

their knowledge and certainty.’’ 111 The 

intent of the Office’s proposal is to 

generally provide the MLC with the 

necessary information to process the 

termination without unduly burdening 

terminating parties.112

The Office appreciates that part of the 

MLC’s proposal is geared at 

‘‘maintaining basic fraud protection and 

avoiding unnecessary disputes.’’ 113

While the Office supports those aims, it 

is concerned that the MLC’s proposed 

measures could result in legitimate 

terminating parties being unable to 

exercise their rights because they are 

unable to provide the information the 

MLC seeks. Instead, the Office proposes 

a notice and dispute process as an 

alternative means of achieving the 

MLC’s stated goals in this context. 

Evaluating and potentially disputing a 

termination on the merits is the duty of 

the pre-termination copyright owner, 

not the MLC. The proposed notice and 

dispute process (discussed in more 

detail below) would provide the pretermination copyright owner with an 

opportunity to dispute a termination 

before the MLC would be required to 

implement it, thereby reducing the 

likelihood of the MLC acting on a 

fraudulent notice.114

Nevertheless, the Office recognizes 

that a valid notice of termination might 

not provide the MLC with sufficient 

information to process and implement 

the ownership change. In those cases, 

the Office proposes that the MLC should 


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115The Office declines to propose Linda Edell 

Howard’s suggestion to require the pre-termination 

copyright owner to be the one to notify the MLC 

of the termination. Howard Initial Comments at 4. 

While the supplemental proposed rule would 

permit the pre-termination owner to provide the 

notice, the Office does not propose to require that 

they be the one to provide it, in part, because it is 

not clear what the remedy for noncompliance 

would be. 

116ClearBox Rights Initial Comments at 8; see 

also ClearBox Rights Reply Comments at 6; Howard 

Reply Comment at 3 (‘‘[T]he default should be 

reversion of rights and royalties to the termination 

owners and the burden placed on the publisher to 

bring suit to challenge a Notice before the MLC 

could ignore one.’’). 

117See ClearBox Rights Reply Comments at 6. 

118See ClearBox Rights Initial Comments at 8 

(‘‘There is very little incentive for the pretermination owner to send an acknowledgement, 

and even if they don’t have an issue with doing so, 

administratively it could take them weeks, months, 

or in some cases, years.’’). 

119This would include regulations governing 

both blanket license royalties and matched 

historical royalties. 

120See NMPA Ex Parte Letter at 4 (Feb. 6, 2023) 

(requesting that the rule ‘‘allow parties to agree by 

contract to a different payment arrangement and 

provide letters of direction to the MLC pursuant to 

those agreements’’). 

engage in best efforts to identify the 

minimum necessary information, 

including through correspondence with 

both the terminating party and pretermination copyright owner (or their 

respective representatives). This may be 

a better approach than requiring 

terminating parties to provide 

additional information to the MLC at the 

outset that they may not readily have 

and which may not be needed to 

implement the change. 

Similar to other transfers, the Office 

proposes that the required notice must 

be submitted and signed by either the 

terminating party or the pre-termination 

copyright owner (or their respective 

representatives) certifying the accuracy 

of the information provided.115 The 

Office agrees with ClearBox Rights that 

a terminating party should not be ‘‘held 

hostage’’ by needing to wait for a pretermination copyright owner’s 

acknowledgement that the termination 

is valid and effective before the MLC 

can act on the notice.116 At the same 

time, however, the Office believes that 

pre-termination copyright owners must 

have a fair opportunity to dispute the 

validity of a termination where the MLC 

is notified of the payee change 

unilaterally by the terminating party. 

Therefore, if the notice to the MLC is 

submitted by the terminating party, the 

Office proposes additional requirements 

similar to those suggested by ClearBox 

Rights.117 First, the MLC would be 

required to inform the pre-termination 

copyright owner about the notice within 

15 days of receiving either the notice or 

the last piece of information necessary 

for the MLC to implement the change, 

whichever is later. Second, after being 

so notified, a pre-termination copyright 

owner who disputes the termination 

would have 30 days to initiate its 

dispute with the MLC. Third, if the pretermination copyright owner does not 

initiate a dispute within the allotted 

time, then the MLC would be required 

to implement and give effect to the 

ownership transfer resulting from the 

termination in accordance with the 

proposed implementation requirements 

discussed in Part II.F.2 below. The 

supplemental proposed rule would 

make clear that even if the pretermination copyright owner misses the 

regulatory deadline and the MLC 

implements the change, nothing 

prevents that owner from disputing the 

termination with the MLC at a later date 

or challenging the termination in court. 

The purpose of the proposal is not to 

limit a pre-termination copyright 

owner’s right or ability to oppose a 

purported termination, but rather to 

help ensure that the implementation of 

a terminating party’s notification to the 

MLC is not unduly delayed by a pretermination copyright owner’s 

inaction.118

Where there are multiple terminating 

parties or pre-termination copyright 

owners, the notice would need to 

identify any applicable ownership 

shares for the works subject to the 

termination. Where there are multiple 

terminating parties, the notice would be 

effective only as to those terminating 

parties whose information is provided 

in the notice. Also, the Office proposes 

that where there are multiple 

terminating parties, a notice that is 

signed and certified by any one of them 

would be sufficient as to all terminating 

parties. The Office invites comments on 

this proposal. 

iii. Other Transfers of Copyright 

Ownership 

Proposed paragraph (c)(3) addresses 

changes in payees due to any other type 

of ownership transfer, such as a transfer 

by will or through intestate succession. 

For these types of changes, the Office 

declines to propose any specific 

requirements at this time, but welcomes 

comments on whether it should adopt 

any. Under the supplemental proposed 

rule, such changes would be subject to 

any additional reasonable notice 

requirements established by the MLC. 

iv. Designating an Alternative Royalty 

Payee 

The last type of payee change covered 

under proposed paragraph (c) involves 

the circumstance where the copyright 

owner entitled to receive royalties from 

the MLC under the Office’s 

regulations 119 designates an alternative 

royalty payee to whom the MLC must 

distribute the royalties instead. This 

part of the supplemental proposed rule 

would apply where there is no transfer 

of copyright ownership. Instead, it 

addresses the situation where the 

regulatorily entitled copyright owner 

might voluntarily elect or be compelled 

by private agreement to request that the 

MLC distribute the royalties to someone 

else—e.g., a party contractually entitled 

to such royalties. The Office proposes 

this process as the means by which the 

supplemental proposed rule would 

accommodate and give effect to 

contractual payment arrangements that 

deviate from the proposed default payee 

rules discussed above.120

The proposed notice requirements for 

this type of payee change are similar to 

the requirements for contractual 

ownership transfers discussed above. 

The Office proposes that the required 

notice must include: (1) all relevant 

dates required for the MLC to properly 

implement and give effect to the 

request; (2) information identifying the 

copyright owner entitled to receive 

royalties from the MLC under the 

Office’s regulations; (3) information 

identifying the current royalty payee if 

different from such copyright owner 

(i.e., the previously designated royalty 

payee who is being superseded by a new 

designated payee); (4) information 

identifying the designated royalty payee 

(i.e., the new payee designated by the 

relevant copyright owner to receive 

royalty distributions from the MLC that 

would otherwise be paid to such owner 

under the Office’s regulations); and (5) 

either (i) an identification satisfactory to 

the MLC of any applicable catalog 

exclusions from the request (which may 

state that there are no such exclusions, 

and that, therefore, the whole catalog is 

subject to the request) or (ii) a list of all 

musical works subject to the request 

identified by appropriate unique 

identifiers. 

The Office proposes that the required 

notice must be submitted and signed by 

the copyright owner entitled to receive 

royalties from the MLC or its 

representative certifying the accuracy of 

the information provided. Where there 

are multiple copyright owners or 

designated royalty payees, the notice 

would also need to identify any 

applicable ownership shares for the 

relevant works. Where there are 

multiple copyright owners, the notice 

would be effective only as to those 

owners whose information is provided 

in the notice and whom have signed and 


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121SGA et al. Initial Comments at 2, 6–8. 

122 Id. at 2, 7–8 (‘‘[T]he coerced signing by an 

author of such [a letter of direction] concerning the 

disposition by the MLC of post-termination 

royalties—as a pre-condition set by the publisher 

for execution of the underlying publishing 

agreement with such author—is easily within the 

future scope of imaginable, attempted publisher 

overreach should the Proposed Rulemaking be 

adopted without amendment.’’); see also Howard 

Reply Comments at 2 (agreeing with SGA et al.’s 

proposal and the reasons behind it). 

123 37 CFR 210.31(f). 

124MLC Initial Comments at 10–11. 

125 Id.; see also ClearBox Rights Reply Comments 

at 5 (agreeing ‘‘that a minimum 30-day notice of a 

termination be required before the MLC has to 

implement the requested actions’’). 

126 37 CFR 210.24(f) (‘‘[T]he mechanical licensing 

collective shall not be required to undertake any 

obligations otherwise imposed on it by this subpart 

with respect to any voluntary license for which the 

collective has not received the description required 

by paragraph (b)(8) of this section at least 30 

calendar days prior to the delivery of a report of 

usage for such period, but such obligations attach 

and are ongoing with respect to such license for 

subsequent periods.’’). 

127For example, if the MLC receives a notice of 

a contractual ownership transfer on September 20, 

2023, for a transfer that, under the terms of the 

agreement, is effective on September 1, 2023, then 

the MLC would need to implement the change 

starting with the January 2024 royalty distribution 

(because the first monthly reporting period to 

commence after the effective date of the transfer 

would be the October 2023 reporting period, and 

the first distribution of royalties for that period 

would occur in January 2024). 

128For example, if the MLC receives a notice of 

a contractual ownership transfer on October 15, 

2023, for a transfer that, under the terms of the 

agreement, is effective on September 1, 2023, then 

the MLC would need to implement the change no 

later than the February 2024 royalty distribution 

(because the first payee snapshot to occur at least 

30 days after the MLC’s receipt of the notice would 

be the December 2023 snapshot, which would be 

for the November 2023 reporting period, and the 

first distribution of royalties for that period would 

occur in February 2024). 

129The MLC, Blanket Royalty Distributions, 

https://www.themlc.com/blanket-payments (last 

visited Sept. 20, 2023). 

certified the notice. Where there are 

multiple designated royalty payees, the 

notice would be effective only as to 

those payees whose information is 

provided in the notice. 

In addition to the foregoing, the Office 

proposes to adopt the Songwriters Guild 

of America et al.’s (‘‘SGA et al.’s’’) 

proposal for the scenario where the 

MLC is asked by the terminating party 

to implement an agreement directing the 

MLC to pay post-termination royalties to 

the pre-termination copyright owner.121

SGA et al. states that, without additional 

safeguards, it ‘‘will inadvertently open 

the door to . . . acts of contractual 

overreaching by publishers,’’ and that 

the ‘‘execution of ‘anticipatory [letters of 

direction]’ as part of publishing 

agreements has become common 

practice.’’ 122 Based on the current 

record, the proposal seems to be a 

reasonable safeguard, even if there is no 

such overreach at present. 

Consequently, the Office proposes 

that where the relevant copyright owner 

is the terminating party and the 

designated royalty payee is the pretermination copyright owner, the 

following additional notice 

requirements should apply: (1) the 

notice must be signed after the effective 

date of termination; (2) the notice must 

acknowledge the deviation from the 

standard royalty payee under the 

Office’s regulations; and (3) the notice 

must provide that neither the notice nor 

the distribution of royalties by the MLC 

in accordance with the notice prejudices 

the legal rights of either party. 

v. Multiple Changes 

The Office proposes that where 

multiple ownership transfers occur 

prior to providing notice of the change 

to the MLC, a compliant notice for each 

transfer in the chain must be delivered 

to the MLC. For example, where there 

is a termination followed by an 

assignment of the copyright in the 

musical work, both a notice for the 

termination and a notice for the 

subsequent assignment would need to 

be provided. Similarly, the Office 

proposes that where an ownership 

transfer and a request to designate or 

change an alternative royalty payee are 

related, a compliant notice for both the 

transfer and request must be delivered 

to the MLC. For example, where there 

is an assignment of the copyright in the 

musical work that includes a 

contractual right for the new owner to 

also be entitled to future royalty 

distributions for periods predating the 

transfer, both a notice for the 

assignment and a notice for the 

designation of the alternative royalty 

payee would need to be provided. 

The Office proposes these 

requirements to assist the MLC in 

verifying claimed changes in payees and 

to further the MLC’s duty to maintain an 

accurate public database of musical 

works and their owners. This includes 

tracking historical changes in 

ownership.123

2. Implementation of a Change by the 

MLC 

Proposed paragraph (d) sets out how 

the MLC would need to implement and 

give effect to a change in payee. 

i. Timing 

The Office agrees with the MLC that 

some amount of processing time must 

be given between the time when the 

MLC receives the notice and the time by 

which the change must be 

implemented.124 As the MLC 

requests,125 and based on the Office’s 

current rules governing its processing of 

DMP voluntary licenses,126 the Office 

proposes to give the MLC at least 30 

days to operationalize a payee change. 

The supplemental proposed rule 

contains two scenarios of general 

applicability. The first covers where the 

MLC receives a compliant notice before 

the start of the first monthly reporting 

period to begin after the relevant change 

is effective. In such cases, the MLC 

would need to implement and give 

effect to the change beginning with the 

first distribution of royalties for that 

reporting period.127

The second scenario covers where the 

MLC receives the notice on or after the 

start of that reporting period. In those 

cases, the MLC would need to 

implement and give effect to the change 

beginning no later than the first 

distribution of royalties based on the 

first ‘‘payee snapshot’’ taken by the MLC 

at least 30 days after it receives the 

notice.128 By ‘‘payee snapshot,’’ the 

Office means the royalty payee 

information contained in the MLC’s 

records as of a particular date that it will 

use for a particular monthly royalty 

distribution. According to the MLC, it 

currently takes the payee snapshot 10 

days after the end of the monthly 

reporting period, and it is this 

information that it uses to make the 

royalty distribution for that reporting 

period, which occurs about 65 days 

later.129

The supplemental proposal rule also 

contains a variant of both of these 

scenarios to accommodate the 

additional 45 days needed for the notice 

and dispute mechanism discussed 

above regarding a pre-termination 

copyright owner’s ability to initiate a 

dispute with the MLC. 

ii. Additional Provisions for 

Termination-Related Changes 

The supplemental proposed rule 

contains two additional MLC 

implementation provisions concerning 

termination-related changes. First, the 

Office proposes that where the MLC 

needs additional information to 

implement the change and such 

information is received after the notice, 

the timing requirements discussed 

above would apply based on the date 

that the MLC receives the last piece of 

necessary information. 

The second provision relates to where 

a compliant notice is accompanied by 

proof that the statutory notice of 

termination was submitted to the Office 

for recordation, but not proof that it was 

timely recorded. The supplemental 

proposed rule would prohibit the MLC 


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130See 17 U.S.C. 203(a)(4)(A), 304(c)(4)(A) (‘‘A 

copy of the notice shall be recorded in the 

Copyright Office before the effective date of 

termination, as a condition to its taking effect.’’). 

131See, e.g., MLC Initial Comments at 8; MLC 

Reply Comments at 2; Howard Initial Comments at 

3–4; ClearBox Rights Ex Parte Letter at 5 (June 28, 

2023). 

132Howard Initial Comments at 3–4. 

133MLC Initial Comments at 8; see also MLC 

Reply Comments at 2. 

134 37 CFR 210.24(f) (‘‘[T]he mechanical licensing 

collective shall not be required to undertake any 

obligations otherwise imposed on it by this subpart 

with respect to any voluntary license for which the 

collective has not received the description required 

by paragraph (b)(8) of this section at least 30 

calendar days prior to the delivery of a report of 

usage for such period, but such obligations attach 

and are ongoing with respect to such license for 

subsequent periods.’’). 

135The Office declines to propose Linda Edell 

Howard’s suggested solution involving the Office’s 

records. Howard Initial Comments at 4. At least 

based on the current record, it is not clear how the 

mechanics of that proposal would work in practice. 

136 Id. at 3. 

137To be clear, this proposed provision does not 

address the situation where the MLC simply makes 

a mistake. Where the MLC distributes royalties to 

the wrong payee due to an error on the MLC’s part 

(as opposed to where the MLC does not receive 

sufficiently advanced notice of a payee change to 

implement it before it is effective), the MLC must 

correct its error in a timely fashion. 

138MLC Initial Comments at 11–14. 

139 Id. at 11–12. 

140 Id. at 12. 

141 17 U.S.C. 115(d)(3)(K)(i). 

142 Id. at 115(d)(3)(K)(ii). 

143 In the NPRM, the Office proposed that the 

MLC be permitted to distribute royalties as directed 

‘‘by the mutual written agreement of the parties to 

an ownership dispute.’’ 87 FR 64405, 64412. The 

supplemental proposed rule would not allow this. 

On reflection, the Office is concerned about the 

administrative challenges that could ensue if 

distributed royalties need to be recovered. The 

Office, thus, seeks further comments on this issue, 

from implementing any termination 

unless and until proof of timely 

recordation is received.130 It would also 

make clear that the eventual receipt of 

proof that the statutory notice has been 

timely recorded should be treated as a 

type of additional information with 

respect to the timing of the MLC’s 

implementation. 

Even though the MLC would not 

implement the termination, to 

accommodate the fact that recordation is 

not an automatic process, the Office 

proposes that, after receiving notice that 

submission to the Office for recordation 

has been made, the MLC hold 

applicable royalties pending receipt of 

proof of timely recordation. After the 

MLC receives proof of timely 

recordation, it would need to implement 

the change in accordance with the 

above-discussed requirements, which 

would include distributing the held 

funds to the terminating party. If, on the 

other hand, the Office refuses to record 

the notice or the notice is recorded on 

or after the effective date of termination, 

and the termination is not effective, 

then the MLC would need to release the 

held funds to the pre-termination 

copyright owner. Under the 

supplemental proposed rule, if proof of 

timely recordation is not received 

within 6 months, the MLC would need 

to contact the Office to confirm the 

status of the relevant recordation 

submission and then act accordingly. 

iii. Effect of Implementation 

Multiple commenters, including the 

MLC, raise the issue of whether the 

MLC’s implementation of a payee 

change should only be forward-looking 

or whether the MLC should be required 

to implement the change going back to 

the effective date of the change, 

regardless of when it implements it.131

For example, Linda Edell Howard 

explains that in the termination context 

‘‘there will be a substantial delay in 

notifying the MLC (sometimes years) as 

to the correct and legal owner(s) of the 

copyright,’’ and expresses concern that, 

as a result, there is ‘‘little doubt the 

MLC will innocently misdirect royalty 

payments’’ to the pre-termination 

copyright owner.132 The MLC states that 

implementation ‘‘on a retroactive basis 

would require The MLC to design, 

implement, and manage a new, manual 

process to benefit a small group of 

members that would divert the limited 

resources of The MLC from critical 

services and activities that benefit all 

copyright owners.’’ 133

The Office welcomes further 

comments on this issue, including with 

regard to Linda Edell Howard’s 

termination-related concerns and what 

is standard in the industry. At this time, 

the Office is inclined to agree with the 

MLC that retroactive implementation 

may be too administratively 

burdensome to require for every payee 

change. Notably, the Office only 

requires prospective implementation 

with respect to the MLC’s processing of 

DMP voluntary licenses.134 The Office 

does not, however, wish to foreclose the 

possibility that there may be certain 

payee changes that the MLC could 

implement retroactively with little or no 

difficulty. Therefore, where a relevant 

change is effective prior to the MLC’s 

implementation of it, the Office 

proposes to permit, but not require, the 

MLC to implement the change going 

back to its effective date, if the notice to 

the MLC requests it.135

Relatedly, the Office proposes a 

savings clause to help allay Linda Edell 

Howard’s concern that the pretermination copyright owner ‘‘will 

claim they were the ‘copyright owner’ of 

record as of the last day of the monthly 

reporting period (because of the 

terminating party’s delay) and refuse to 

turn over the misdirected royalties to 

the rightful copyright owners.’’ 136 The 

proposed savings clause would make 

clear that even though the MLC may not 

be required to implement a change 

going back to its effective date, that fact 

does not affect a party’s right to royalties 

previously distributed by the MLC to 

someone else or that party’s ability to 

collect those royalties from that prior 

payee.137 For example, if the MLC is not 

required to implement a payee change 

until six months after it is effective, the 

MLC would have made several royalty 

distributions to the prior payee instead 

of the new payee. The fact that the 

supplemental proposed rule would not 

require the MLC to recover the 

previously distributed royalties from the 

prior payee and redistribute them to the 

new payee does not mean that the new 

payee is not still legally entitled to those 

royalties or cannot seek to collect them 

from the prior payee. 

G. Disputes 

The MLC requests guidance from the 

Office on several matters relating to 

termination-related disputes.138 The 

Office proposes to provide such 

guidance and to further elaborate on 

other dispute-related issues where it 

believes regulations would be helpful. 

1. Royalty Holds 

The MLC requests guidance ‘‘as to the 

types of disputes concerning 

termination claims for which The MLC 

should place relevant royalties on hold 

pending resolution.’’ 139 It also states 

that its ‘‘general policy is to place 

royalties on hold when a legal 

proceeding is commenced that would 

impact the proper payee for those 

royalties,’’ and asks the Office for 

clarification if it disagrees.140

Under section 115(d)(3)(K)(i), the 

MLC must ‘‘establish policies and 

procedures’’ ‘‘for copyright owners to 

address in a timely and equitable 

manner disputes relating to ownership 

interests in musical works licensed 

under this section and allocation and 

distribution of royalties by the 

mechanical licensing collective.’’ 141

Section 115(d)(3)(K)(ii) then requires the 

MLC’s ‘‘policies and procedures’’ to 

‘‘include a mechanism to hold disputed 

funds . . . pending resolution of the 

dispute.’’ 142 Therefore, if there is a bona 

fide dispute among purported copyright 

owners over the ownership of a musical 

work (or share), the applicable funds 

must be held pending resolution of the 

dispute.143 Because a dispute as to the 


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including as to whether it is permissible under the 

statute. See 17 U.S.C. 115(d)(3)(K)(ii). 

144MLC Initial Comments at 13. 

145 Id. (listing proposed requirements). 

146 Id. at 13–14. 

147ClearBox Rights Reply Comments at 6. 

148See Letter from U.S. Copyright Office to The 

MLC (Apr. 20, 2023), https://copyright.gov/ai/ 

USCO-Guidance-Letter-to-The-MLC-Letter-on-AICreated-Works.pdf. 

149 17 U.S.C. 115(d)(3)(K)(i). 

validity of a statutory termination— 

regardless of the grounds for the 

dispute—is a dispute as to the identity 

of the rightful copyright owner, it is an 

ownership dispute for which the MLC 

must hold applicable royalties. 

In contrast, a dispute as to the 

application of the Exception is not a 

dispute over ownership, but rather over 

the legal effect of a concededly valid 

termination. The Office’s final analysis 

and conclusions on the law in the 

current proceeding will govern the 

MLC’s treatment of the Exception. As a 

result, a disagreement over the 

application of the Exception would 

generally not constitute grounds for the 

MLC to hold related royalties. There are, 

however, two potential exceptions. 

The first is where litigation is 

commenced over the issue. In such 

cases—as with any type of dispute that 

is subject to a legal proceeding—the 

MLC should hold all applicable 

royalties pending the outcome of the 

proceeding unless the adjudicator 

orders otherwise. While the statute may 

not compel the MLC to implement legal 

holds in disputes unrelated to 

ownership, the Office believes it is 

prudent for the MLC to hold royalties 

whenever a litigation or other formal 

dispute procedure (e.g., arbitration) is 

initiated that implicates the disposition 

of royalties. 

Second, based on the Office’s initial 

analysis, it recognizes that the 

Exception could potentially apply to at 

least some types of DMP voluntary 

licenses. Consequently, the Office 

proposes that a pre-termination 

copyright owner be able to initiate a 

dispute with the MLC over the 

application of the Exception to a 

particular voluntary license or its 

underlying grant of authority, and that 

the MLC should hold applicable 

royalties pending resolution of such a 

dispute. 

2. Process and Documentation for 

Termination-Related Disputes 

Under the supplemental proposed 

rule, only the pre-termination copyright 

owner or its representative would be 

permitted to initiate a terminationrelated dispute with the MLC. A 

terminating party would not need to 

initiate such a dispute because it would 

always have the ability to submit the 

notice of a payee change to the MLC that 

would obligate the MLC to implement 

the termination in the absence of a 

dispute. 

The Office agrees with the MLC that 

a pre-termination copyright owner 

should provide certain information to 

initiate the dispute and substantiate that 

it is bona fide.144 The Office proposes 

requirements similar to those suggested 

by the MLC, but with some additions.145

It proposes that the minimum 

information that must be delivered to 

the MLC to substantiate, and trigger a 

royalty hold for, a dispute as to the 

validity of a termination consists of: (1) 

a detailed explanation of the grounds for 

the dispute; (2) documentation 

sufficient to support those grounds, 

consisting of copies of (i) each grant in 

dispute, (ii) any other document 

necessary to support the grounds for the 

dispute, and (iii) any other reasonable 

information required by the MLC’s 

dispute policy; (3) an identification 

satisfactory to the MLC of each musical 

work in dispute; and (4) an appropriate 

certification regarding the accuracy of 

the information made by the submitter. 

Where the dispute is over the 

application of the Exception to a 

voluntary license, the Office proposes to 

additionally require: (1) a copy of each 

voluntary license at issue; (2) an 

identification satisfactory to the MLC of 

each relevant sound recording that 

constitutes a derivative work prepared 

with appropriate authority; and (3) the 

date of preparation for each such sound 

recording, which must be before the 

effective date of termination. 

The Office proposes that any and all 

documentation provided to the MLC in 

connection with a termination-related 

dispute be shared with all parties to the 

dispute. If a party to the dispute is not 

a party or a successor to a party to an 

otherwise confidential document, then 

the supplemental proposed rule would 

require the disclosure to be subject to 

that party’s acceptance of an appropriate 

written confidentiality agreement. The 

Office believes that all parties to a 

dispute have a right to know the basis 

for the dispute and to see the other 

party’s supporting evidence. The 

proposed approach seeks to safeguard 

that right while ensuring that 

confidential information is not made 

public. 

3. Disclosure and Confidentiality 

The MLC seeks guidance as to 

whether it ‘‘should be required to 

disclose information about the royalties 

being held to the parties involved,’’ 

stating that it ‘‘typically does not 

disclose the amount of royalties on hold 

to the parties in a dispute pending 

agreement or resolution of a 

dispute.’’ 146 The Office is inclined to 

agree with ClearBox Rights that the MLC 

should disclose information about such 

royalties to the parties to a dispute.147

All parties to the dispute should know 

the amount in controversy so that they 

are on equal footing in developing a 

strategy for resolving the dispute, 

including the negotiation of a 

settlement. Therefore, the Office 

proposes an exception to its 

confidentiality regulations to clarify that 

such disclosures are required. 

The supplemental proposed rule 

would further recognize that there are 

other circumstances, unrelated to an 

ownership dispute, where the MLC may 

put amounts on hold. In such cases, 

including where the MLC initiates the 

hold unilaterally (e.g., in connection 

with an investigation),148 the affected 

parties should have a right to know the 

grounds for the hold. 

The supplemental proposed rule, 

thus, would require that where the MLC 

is holding royalties or other monies, it 

must disclose the amount being held 

and the reason for the hold to anyone 

with a bona fide legal claim to the 

funds. More specifically, the Office 

proposes that the MLC provide the 

equivalent of monthly royalty 

statements for the amounts held along 

with monthly updates concerning the 

status of the hold. The Office 

encourages the MLC to disclose required 

information and provide updates 

through its member portal. 

4. Dispute Resolution 

Though not raised by the commenters, 

the Office proposes regulations 

governing the resolution of disputes 

among purported copyright owners or 

royalty payees and the associated 

release of held funds. The Office 

proposes these regulations to provide 

certainty to both the MLC and disputing 

parties about what constitutes the 

resolution of a dispute, how held funds 

should be released, and how the MLC 

should implement any related change in 

payee that results from the resolution of 

the dispute. The Office also believes 

that it may be useful to adopt a rule to 

prevent the MLC having to hold 

disputed funds indefinitely. Indeed, the 

statute requires disputes to be 

‘‘address[ed] in a timely and equitable 

manner.’’ 149

Accordingly, the supplemental 

proposed rule contemplates three 

scenarios. The first is where the dispute 

is resolved through the mutual 


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150To be clear, this proposal would not cover 

other types of potential disputes that may arise in 

connection with the MLC’s administration of the 

blanket license, such as a dispute involving a DMP 

or the MLC itself. 

151 87 FR 64405, 64412. 

152 Id. 

153See, e.g., MLC Initial Comments at 6–8; 

ClearBox Rights Reply Comments at 3–4; ClearBox 

Rights Ex Parte Letter at 2–4 (June 28, 2023); 

Howard Initial Comments at 6; Promopub Initial 

Comments at 2; Promopub Reply Comments at 3; 

North Music Grp. Reply Comments at 2. 

154Promopub Initial Comments at 2. 

155ClearBox Rights Ex Parte Letter at 4 (June 28, 

2023) (proposing that the MLC ‘‘ ‘borrow’ from the 

unallocated, unidentified funds pool’’). 

156 Id. 

157 Id. 

158MLC Initial Comments at 7. 

159 Id. at 7–8. 

160See, e.g., MLC Initial Comments at 7–8; 

ClearBox Rights Reply Comments at 3–4; ClearBox 

Rights Ex Parte Letter at 3–4 (June 28, 2023); 

Promopub Reply Comments at 3; NMPA Initial 

Comments at 5; CMPA Initial Comments at 2; 

McAnally & North Ex Parte Letter at 5–6, 9 (Mar. 

14, 2023). 

161See, e.g., ClearBox Rights Reply Comments at 

3–4; ClearBox Rights Ex Parte Letter at 2–4 (June 

28, 2023) (stating that ‘‘[c]ompanies like ClearBox 

Rights . . . do these types of calculations all the 

time’’ and that it ‘‘is laughable’’ to suggest the 

process would be burdensome for the MLC); SONA 

et al. Reply Comments at 3 (‘‘It is not ‘undue 

hardship’ to request a government-mandated body 

undertake a retroactive accounting—not where such 

an outcome could and should have been avoided 

by the very body that would undertake such an 

accounting.’’); Promopub Reply Comments at 3 

(‘‘We are confident that most, if not all, of the 

publishers who have benefitted from the Policy . . . 

have the means to promptly refund all royalties 

paid them in error[.]’’); McAnally & North Ex Parte 

Letter at 3–4 (Mar. 14, 2023) (‘‘Any suggestion that 

publishers cannot render retroactive payments or 

that doing so would be so difficult the process 

should require a change in the law is inconsistent 

with our lived experience.’’); Howard Reply 

Comments at 2; NMPA Initial Comments at 5 (‘‘This 

would create a significant administrative and 

financial burden on the MLC, as well as on 

publishers or other recipients of these royalty 

payments who likely already distributed some 

portion of those amounts pursuant to their 

contractual obligations with their songwriters.’’); 

CMPA Initial Comments at 2 (‘‘[T]he likelihood of 

recovering what was previously paid out to the 

songwriter(s) in order to create an accounting to the 

post-termination owner, whether or not that be the 

songwriter(s) themselves, would be both unlikely, 

and an onerous obligation to place on the pretermination publisher.’’). 

agreement of the relevant parties. In 

such cases, released funds would be 

paid in accordance with the agreement. 

If the agreement changes the royalty 

payee, then the release of the held funds 

would be subject to the same notice and 

implementation requirements discussed 

above in Part II.F, except that payments 

would need to be made for applicable 

reporting periods predating the MLC’s 

implementation of the change. 

The second scenario is where the 

dispute is resolved by order of an 

adjudicative body (e.g., a court or 

arbitrator). In such cases, released funds 

would be paid in accordance with the 

order. The MLC’s implementation of 

any associated payee change would be 

in accordance with the order, rather 

than the above-discussed notice and 

implementation requirements. Absent a 

stay issued by the adjudicatory body, 

the appeal or request for reconsideration 

of such order would not delay the 

distribution of the affected monies. 

The last scenario is focused on 

preventing disputed funds from being 

held indefinitely. It would enforce a 

proposed requirement that all funds 

held by the MLC pursuant to a dispute 

among purported copyright owners or 

royalty payees be subject to active 

dispute resolution by the relevant 

parties.150 It would do so by providing 

that if the disputed funds have been 

held for at least one year, and no legal 

proceeding has been commenced, then 

during every subsequent 6-month 

period the parties to the dispute would 

need to submit a jointly signed notice to 

the MLC stating that they are continuing 

to engage in active dispute resolution. If 

the MLC does not receive such notice, 

it would be required to release the funds 

to the party who would have received 

them if the funds had not been placed 

on hold. This would put the onus on the 

party who initiates the dispute to 

eventually commence a legal proceeding 

to maintain the hold. The Office 

proposes this approach because the 

initiating party is the one seeking to 

change the status quo. It welcomes 

comments on this proposal, including 

whether there are any industry 

analogues to consider. 

H. Corrective Royalty Adjustment 

In the NPRM, the Office proposed to 

require the MLC to adjust any royalties 

distributed under its (now-suspended) 

termination dispute policy within 90 

days.151 The Office explained that the 

purpose of this proposal is to make 

copyright owners whole for any 

distributions the MLC made based on an 

erroneous understanding and 

application of the Exception.152

In response, several commenters, 

including the MLC, seek further 

guidance from the Office as to how the 

proposed corrective royalty adjustment 

should work.153 For example, Promopub 

states that the adjustment process ‘‘may 

take an unacceptably long time if the 

MLC must recoup sums from publishers 

whose other mechanical royalties are 

insufficient for full and prompt 

recoupment. In such instances, it may 

be appropriate to require such 

publishers to return the royalties 

received in error from their own funds 

rather than extending the adjustment 

period.’’ 154 ClearBox Rights says that 

the MLC ‘‘should be responsible to 

recoup all payments known to have 

been incorrectly made to original 

publishers for effectively terminated 

works, and should not wait until 

recoupment of the sums incorrectly paid 

before paying the correct royalties to the 

terminated owners.’’ 155 ClearBox Rights 

explains that this ‘‘is standard operating 

procedure for many if not most of the 

publishers in the industry when 

incorrect payments are made.’’ 156

ClearBox Rights further states that ‘‘it is 

fair that any party that was ultimately 

overpaid in error, including publishers, 

writers, and other third party recipients, 

should be eligible to have their overpaid 

royalties recouped from future funds in 

order to correct the issue.’’ 157

The MLC requests that the Office 

make clear that the MLC ‘‘is not 

required to pay [previously distributed] 

royalties to a new payee until The MLC 

is able to fully recover those royalties 

from the previously-paid payee.’’ 158

The MLC further asks the Office to 

confirm that it ‘‘may recover those 

royalties at any time from any funds 

payable to the previously-paid payee, 

since there may not be any additional 

royalties payable to that payee for the 

works in question given that such 

payee’s rights to those works have now 

been terminated.’’ 159 The MLC, as well 

as other commenters, also raise 

questions about the recovery of royalties 

from publishers who have already 

distributed a portion of those royalties 

to songwriters.160 Additionally, 

commenters disagree over how 

complicated and burdensome it might 

be to administer the corrective royalty 

adjustment, with some opposing the 

proposed adjustment on this basis.161

Based on its review of these 

comments to date, the Office proposes 

to replace its original proposed rule 

with a more detailed one that would lay 

out the operational procedures for the 

corrective royalty adjustment. In making 

this proposal, the Office reiterates that 

it is continuing to evaluate comments 

regarding its authority to adopt 

regulations concerning a corrective 

royalty adjustment and welcomes 

further comments on the subject. By 

seeking comments on the revised 

proposal, the Office does not mean to 

suggest that it has reached any final 

conclusions about its authority to adopt 

the proposal. 

While the Office welcomes comments 

on the relative burdens associated with 

its proposal versus some alternative 

adjustment process, it is inclined to 

disagree with commenters suggesting 

that there should not be any corrective 

adjustment because of the potential 


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162See, e.g., Promopub Reply Comments at 2 

(‘‘[T]he concept of retroactive royalty adjustments is 

one with which the NMPA’s members should be 

familiar because other collecting organizations 

regularly employ retroactive royalty adjustments 

when music publishing royalties have been paid 

erroneously.’’); McAnally & North Ex Parte Letter at 

3–5 (Mar. 14, 2023) (explaining that ‘‘it is of the 

essence of the role of publishers large and small, 

including collectives like The MLC, to be able to 

make allocation corrections involving adjusting 

debits and credits,’’ that ‘‘[t]hese adjustments 

necessarily require retroactive payments,’’ and that 

‘‘these bread-and-butter adjustments [are] a matter 

of routine practice’’). 

163 17 U.S.C. 115(d)(4)(A)(iv)(II); 37 CFR 

210.10(k), 210.27(k). 164The MLC, Guidelines for Adjustments secs. 

2.1, 3.4 (Jan. 2022), https://f-hubspotusercontent40.net/hubfs/8718396/files/2022-02/ 

MLC%20Guidelines%20for%20Adjustments.pdf. 165ClearBox Rights Ex Parte Letter at 4 (June 28, 

2023). 166See id. at 3–4; ClearBox Rights Reply 

Comments at 3–4. 167The Office proposes to include held royalties 

to reflect the fact that the MLC states that it is 

presently holding applicable royalties pending the 

outcome of the current rulemaking proceeding. See 

The MLC, Policies, https://www.themlc.com/ 

dispute-policy (last visited Sept. 20, 2023). 

168See, e.g., ClearBox Rights Ex Parte Letter at 4 

(June 28, 2023) (proposing that the MLC ‘‘‘borrow’ 

from the unallocated, unidentified funds pool’’). 

169See 17 U.S.C. 115(d)(7)(C). 

170The Office proposes that the same rule also 

apply if there is a bona fide dispute regarding the 

application of the Exception to a relevant voluntary 

license or its underlying grant of authority. 

burdens involved. Corrective royalty 

adjustments are common in the music 

industry 162 and explicitly contemplated 

by the statute and the Office’s existing 

regulations.163 Nothing in the current 

record suggests that this adjustment 

would be any more or less burdensome 

than others, whether for the MLC, 

publishers, or songwriters. Indeed, the 

MLC’s own guidelines provide that 

adjustments, including ‘‘a correction of 

an overpayment,’’ ‘‘may be made by The 

MLC retroactively to January 1, 2021 

(i.e., the License Availability Date).’’ 164

For similar reasons, the Office 

declines to propose any specific 

procedures at this time regarding where 

a publisher has already distributed a 

portion of the applicable royalties to its 

songwriters. That is a possibility with 

any type of adjustment for an 

overpayment. For example, at least one 

commenter asserts that ‘‘many of the 

standard songwriter agreements allow 

the publishers to recoup any 

overpayment made by the publishers to 

the writers.’’ 165 The Office welcomes 

further comments on this issue, 

including on the feasibility of ClearBox 

Rights’ proposal that the MLC only 

recoup the publisher’s share.166

The Office’s proposal reflects its 

preliminary conclusions about the 

Exception discussed above in Part II.B. 

Under the supplemental proposed rule, 

the corrective adjustment would apply 

where the MLC’s prior erroneous 

application of the Exception, whether or 

not through its termination dispute 

policy, affected: (1) the distribution of 

blanket license royalties or matched 

historical royalties; (2) the holding of 

such royalties; 167 or (3) the deduction 

from a DMP’s payable blanket license 

royalties made by matching usage to 

voluntary licenses or individual 

download licenses. 

With respect to previous 

distributions, the MLC would be 

required to recover any overpayment 

from the prior payee and distribute it to 

the proper payee (i.e., the payee legally 

entitled to the royalties under the 

correct interpretation of the Exception 

under current law). The MLC would 

have thirty days from publication of the 

final rule to notify the prior payee of the 

overpayment, and then the prior payee 

would have thirty days to return it. If 

the prior payee fails to do so, then the 

MLC would be required to debit its 

future royalties, for all works (and 

shares), until the full amount of the 

overpayment is recovered. The Office 

proposes that the debit be limited to 

50% of payable amounts to the prior 

payee each month. 

While the Office is sympathetic to 

commenters calling for the corrective 

adjustment to be made quickly, it is also 

concerned that smaller publishers, who 

may no longer be in possession of the 

applicable funds, may be unable to 

repay the full overpayment all at once 

or financially withstand the debiting of 

most of their mechanical royalties each 

month. Additionally, the Office does not 

propose that the MLC should borrow 

against the pool of unclaimed 

royalties.168 Assuming, without 

deciding, that the statute would even 

allow it,169 the Office does not believe 

it would be prudent for the MLC to do 

so at this time. The total sum of such 

royalties is not yet known because of the 

adjustments DMPs will be making in 

connection with the recent final 

determination in the Copyright Royalty 

Judges’ Phonorecords III Remand 

proceeding. 

With respect to deducted royalties 

related to voluntary licenses or 

individual download licenses, the 

Office proposes that the same recovery 

procedures apply as for previously 

distributed royalties. For such purposes, 

the prior payee from whom the MLC 

would need to recover the royalties 

would be the copyright owner to whom 

the relevant usage was originally (and 

erroneously) matched. As for royalties 

the MLC is already holding, the 

supplemental proposed rule would give 

it thirty days after the effective date of 

the final rule to distribute them to the 

proper payee. 

Lastly, the supplemental proposed 

rule would clarify that the Office’s 

adoption of the corrective adjustment 

mechanism would not prejudice the 

proper payee’s right or ability to 

otherwise recover the overpayment from 

the prior payee outside of the abovedescribed process. If the overpayment, 

however, is recovered directly or a legal 

proceeding is commenced, the MLC 

would need to be notified by the parties. 

The MLC would then be required to 

discontinue the above-described 

recovery efforts.170

List of Subjects in 37 CFR Part 210 

Copyright, Phonorecords, Recordings. 

Proposed Regulations 

For the reasons set forth in the 

preamble, the U.S. Copyright Office 

proposes amending 37 CFR part 210 as 

follows: 

PART 210—COMPULSORY LICENSE 

FOR MAKING AND DISTRIBUTING 

PHYSICAL AND DIGITAL 

PHONORECORDS OF NONDRAMATIC 

MUSICAL WORKS 

■ 1. The authority citation for part 210 

continues to read as follows: 

Authority: 17 U.S.C. 115, 702. 

■ 2. Amend § 210.22 as follows: 

■ a. Redesignate paragraphs (d), (e), (f), 

(g), (h), (i), and (j) as paragraphs (e), (g), 

(h), (i), (j), (m), and (n), respectively. 

■ b. Add paragraphs (d), (f), (k), and (l). 

The additions read as follows: 

§ 210.22 Definitions. 

* * * * * 

(d) The term derivative works 

exception means the limitations 

contained in 17 U.S.C. 203(b)(1) and 

304(c)(6)(A). 

* * * * * 

(f) The term historical unmatched 

royalties means the accrued royalties 

transferred to the mechanical licensing 

collective by digital music providers 

pursuant to 17 U.S.C. 115(d)(10) and 

§ 210.10. 

* * * * * 

(k) The term matched historical 

royalties means historical unmatched 

royalties attributable to a musical work 

(or share thereof) matched after being 

transferred to the mechanical licensing 

collective. 

(l) The term pre-termination copyright 

owner means the owner of the relevant 

copyright immediately prior to: 


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(1) The effective date of termination 

for an effective termination under 17 

U.S.C. 203 or 304; or 

(2) The purported effective date of 

termination for a claimed, disputed, or 

invalid termination under 17 U.S.C. 203 

or 304. 

* * * * * 

■ 3. Amend § 210.27 as follows: 

■ a. Redesignate paragraph (g)(2)(ii) as 

paragraph (g)(2)(ii)(A). 

■ b. Add paragraph (g)(2)(ii)(B). 

The addition reads as follows: 

§ 210.27 Reports of usage and payment for 

blanket licensees. 

* * * * * 

(g) * * * 

(2) * * * 

(ii)(A) * * * 

(B) To the extent applicable to the 

mechanical licensing collective’s efforts 

under paragraph (g)(2)(ii)(A) of this 

section: 

(1) The derivative works exception 

does not apply to any individual 

download license and no individual or 

entity may be construed as the copyright 

owner or royalty payee of a musical 

work (or share thereof) used pursuant to 

any such license based on the derivative 

works exception. 

(2) The derivative works exception 

does not apply to any voluntary license 

and no individual or entity may be 

construed as the copyright owner or 

royalty payee of a musical work (or 

share thereof) used pursuant to any such 

license based on the derivative works 

exception, unless and only to the extent 

that the mechanical licensing collective 

is directed otherwise pursuant to: 

(i) The resolution of a dispute under 

§ 210.30(f) regarding the application of 

the derivative works exception to a 

particular voluntary license or its 

underlying grant of authority; or 

(ii) A notice submitted under 

§ 210.30(c)(4) designating or changing 

an alternative royalty payee. 

* * * * * 

■ 4. Amend § 210.29 as follows: 

■ a. In paragraph (a): 

■ i. Remove ‘‘reporting obligations’’ and 

add in its place ‘‘reporting and payment 

obligations’’. 

■ ii. Add two sentences at the end of the 

paragraph. 

■ b. Add paragraphs (b)(4), (j), and (k). 

The additions read as follows: 

§ 210.29 Reporting and distribution of 

royalties to copyright owners by the 

mechanical licensing collective. 

(a) * * * This section also prescribes 

reporting and payment obligations of 

the mechanical licensing collective to 

copyright owners for the distribution of 

matched historical royalties. This 

section does not apply to distributions 

of unclaimed accrued royalties under 17 

U.S.C. 115(d)(3)(J). 

(b) * * * 

(4)(i)(A) The copyright owner of a 

musical work (or share thereof) as of the 

last day of a monthly reporting period 

in which such musical work is used 

pursuant to a blanket license is entitled 

to all royalty payments and other 

distributable amounts (e.g., accrued 

interest), including any subsequent 

adjustments, for the uses of that musical 

work occurring during that monthly 

reporting period. As used in the 

previous sentence, the term uses means 

all covered activities engaged in under 

blanket licenses as reported by blanket 

licensees to the mechanical licensing 

collective. 

(B) The derivative works exception 

does not apply to any blanket license 

and no individual or entity may be 

construed as the copyright owner or 

royalty payee of a musical work (or 

share thereof) used pursuant to a 

blanket license based on the derivative 

works exception. 

(ii) Subject to the requirements of and 

except to the extent permitted by 

§ 210.30, the mechanical licensing 

collective shall not distribute royalties 

in a manner inconsistent with paragraph 

(b)(4)(i) of this section. 

* * * * * 

(j) Matched historical royalties. The 

mechanical licensing collective shall 

report and distribute matched historical 

royalties and related accrued interest 

and adjustments in the same manner 

and subject to the same requirements as 

apply to the reporting and distribution 

of royalties for musical works licensed 

under the blanket license, as if such 

matched historical royalties were 

royalties payable for musical works 

licensed under the blanket license, but 

subject to the following clarifications: 

(1) Matched historical royalties shall 

be treated as accrued royalties 

distributable under paragraph (b)(1)(ii) 

of this section and shall be separately 

identified in applicable royalty 

statements. 

(2) With respect to the requirements 

of paragraph (b)(2) of this section, 

royalty distributions based on 

adjustments to matched historical 

royalties reflected in cumulative 

statements of account delivered to the 

mechanical licensing collective by 

digital music providers pursuant to 

§ 210.10(b)(3)(i) shall be made by the 

mechanical licensing collective at least 

once annually, upon submission of one 

or more statements of adjustment 

delivered to the mechanical licensing 

collective by digital music providers 

pursuant to § 210.10(k), to the extent 

any such statement of adjustment is 

delivered to the mechanical licensing 

collective during such annual period. 

(k) Corrective royalty adjustment. Any 

distribution under paragraph (b) of this 

section (including any distribution of 

matched historical royalties, including 

related accrued interest or adjustments) 

or deduction under § 210.27(g)(2)(ii) 

made by the mechanical licensing 

collective before [EFFECTIVE DATE OF 

FINAL RULE] and based on an 

application of the derivative works 

exception that is inconsistent with 

paragraph (b)(4)(i) of this section 

(including as such paragraph applies to 

matched historical royalties through 

paragraph (j) of this section) or 

§ 210.27(g)(2)(ii), as each of those 

provisions exist on [EFFECTIVE DATE 

OF FINAL RULE], shall be adjusted by 

the mechanical licensing collective. 

Such adjustment shall also apply to any 

amounts held by the mechanical 

licensing collective in connection with 

such application of the derivative works 

exception as of [EFFECTIVE DATE OF 

FINAL RULE]. The adjustment shall be 

made as follows: 

(1) To the extent required by this 

paragraph (k), where a royalty payee 

(the prior payee) received amounts from 

the mechanical licensing collective that 

such prior payee would not have 

received had the distribution been made 

in a manner consistent with the 

application of the derivative works 

exception embodied in paragraph 

(b)(4)(i) of this section, the mechanical 

licensing collective shall recover such 

overpayment from such prior payee and 

shall distribute it to the royalty payee 

(the proper payee) who is entitled to 

such funds under the application of the 

derivative works exception embodied in 

paragraph (b)(4)(i) of this section. The 

following requirements shall apply to 

the recovery and distribution of any 

such overpayment: 

(i) The mechanical licensing 

collective shall notify the prior payee of 

such overpayment no later than 

[EFFECTIVE DATE OF FINAL RULE], 

and request that the prior payee return 

such overpayment no later than 30 

calendar days after receipt of the notice. 

Any returned amounts shall be 

distributed to the proper payee with the 

next regular monthly royalty 

distribution. 

(ii) If such overpayment is not 

returned in full in accordance with 

paragraph (k)(1)(i) of this section, then 

beginning with the first distribution of 

royalties to occur after the deadline 

specified in that paragraph, 50 percent 

of any and all accrued royalties and 

other distributable amounts (e.g., 


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accrued interest) that would otherwise 

be payable to the prior payee from the 

mechanical licensing collective each 

month, regardless of the associated work 

(or share), shall instead be distributed to 

the proper payee until such time as the 

full amount of the overpayment is 

recovered. Where more than one proper 

payee is entitled to a corrective royalty 

adjustment from the same prior payee 

for different musical works, any 

amounts recovered and distributed 

under this paragraph (k)(1)(ii) shall be 

apportioned equally among such proper 

payees. 

(2) Where, as of [EFFECTIVE DATE 

OF FINAL RULE], the mechanical 

licensing collective is holding amounts 

that would constitute an overpayment 

under paragraph (k)(1) of this section if 

such amounts had been distributed to 

the prior payee, such amounts shall be 

distributed to the proper payee no later 

than [DATE 30 DAYS AFTER 

EFFECTIVE DATE OF FINAL RULE]. 

(3) The recovery and distribution 

processes described in paragraphs (k)(1) 

and (2) of this section shall also apply, 

as applicable, to amounts deducted, or 

held pending deduction, by the 

mechanical licensing collective under 

§ 210.27(g)(2)(ii) where the proper payee 

is not the copyright owner to whom the 

relevant usage was originally matched. 

For purposes of this paragraph (k)(3), 

the copyright owner to whom the 

relevant usage was originally matched 

shall constitute the prior payee as that 

term is used in paragraphs (k)(1), (2), 

and (4) of this section. Where this 

paragraph (k)(3) applies, the mechanical 

licensing collective shall flag the change 

in payee, including by specifying the 

affected reporting periods, in the next 

response file delivered to the relevant 

digital music provider after [EFFECTIVE 

DATE OF FINAL RULE]. 

(4) Nothing in this paragraph (k) shall 

be construed as prejudicing the proper 

payee’s right or ability to otherwise 

recover such overpayment from the 

prior payee outside of the adjustment 

process detailed in this paragraph (k). 

Where the overpayment is recovered 

outside of such adjustment process, a 

legal proceeding is commenced seeking 

recovery of the overpayment, or, with 

respect to paragraph (k)(3) of this 

section, a dispute is initiated with the 

mechanical licensing collective 

pursuant to § 210.30(e) regarding the 

application of the derivative works 

exception to a particular voluntary 

license or its underlying grant of 

authority, the mechanical licensing 

collective must be notified. Upon 

receipt of such notice, the mechanical 

licensing collective shall discontinue 

any recovery efforts engaged in under 

this paragraph (k). 

■ 5. Revise § 210.30 to read as follows: 

§ 210.30 Transfers of copyright ownership, 

designating or changing an alternative 

royalty payee, and related disputes. 

(a) General. This section prescribes 

rules governing the mechanical 

licensing collective’s administration of 

transfers of copyright ownership, the 

designating or changing of an alternative 

royalty payee, and related disputes. 

(b) Requirements for the mechanical 

licensing collective to implement a 

change. The mechanical licensing 

collective shall not take any action to 

implement or give effect to any transfer 

of copyright ownership (including a 

transfer resulting from an effective 

termination under 17 U.S.C. 203 or 304) 

or request to distribute royalties to a 

payee other than the copyright owner 

identified in § 210.29(b)(4)(i) (or request 

to change such alternative royalty 

payee), unless the requirements of 

paragraph (c) of this section are satisfied 

or the mechanical licensing collective is 

acting in connection with the resolution 

of a dispute pursuant to paragraph (f) of 

this section. Where the requirements of 

paragraph (c) of this section are 

satisfied, the mechanical licensing 

collective shall implement and give 

effect to such transfer or request in 

accordance with paragraph (d) of this 

section. 

(c) Notices of change. The mechanical 

licensing collective must be 

appropriately notified in writing with 

respect to any transfer or request 

described in paragraph (b) of this 

section. Subject to the further 

requirements of this paragraph (c), such 

notice must comply with any reasonable 

formatting and submission requirements 

established by the mechanical licensing 

collective and made publicly available 

on its website. No fee may be charged 

for submitting such a notice. Upon 

submitting such a notice, or any 

additional information related to such 

notice, the submitter shall be provided 

with a prompt response from the 

mechanical licensing collective 

confirming receipt of the notice, or 

additional information, and the date of 

receipt. 

(1) Specific requirements for notices 

about transfers of copyright ownership, 

other than transfers by will or operation 

of law, are as follows: 

(i) The required notice shall include 

all of the following information: 

(A) All relevant dates required for the 

mechanical licensing collective to 

properly implement and give effect to 

the transfer. 

(B) The transferor (i.e., the prior 

musical work copyright owner), 

identified by name and any known and 

appropriate unique identifiers, and 

appropriate contact information for the 

transferor or their administrator or other 

representative. 

(C) The transferee (i.e., the new 

musical work copyright owner), 

identified by name and any known and 

appropriate unique identifiers, 

appropriate contact information for the 

transferee or their administrator or other 

representative, and, if the transferee is 

not already receiving royalty 

distributions from the mechanical 

licensing collective, any additional 

information that is necessary for the 

transferee to receive royalty 

distributions from the mechanical 

licensing collective. 

(D) A satisfactory identification of any 

applicable catalog exclusions from the 

transfer or a list of all transferred 

musical works identified by appropriate 

unique identifiers. 

(ii) The required notice shall be 

submitted and signed by the transferor 

(or its duly authorized representative). 

Such signature shall be accompanied by 

the name and title of the person signing 

the notice and the date of the signature. 

The notice may be signed electronically. 

The person signing the notice shall 

certify that they have appropriate 

authority to submit the notice to the 

mechanical licensing collective and that 

all information submitted as part of the 

notice is true, accurate, and complete to 

the best of the signer’s knowledge, 

information, and belief, and is provided 

in good faith. 

(iii) Where there is more than one 

transferor or transferee, the required 

notice shall include a satisfactory 

identification of any applicable 

ownership shares for the transferred 

musical works. Where there is more 

than one transferor, the notice shall be 

effective only as to those transferors 

whose information is provided in 

accordance with paragraph (c)(1)(i)(B) of 

this section and whom have signed and 

certified the notice in accordance with 

paragraph (c)(1)(ii) of this section. 

Where there is more than one transferee, 

the notice shall be effective only as to 

those transferees whose information is 

provided in accordance with paragraph 

(c)(1)(i)(C) of this section. 

(2) Specific requirements for notices 

about transfers of copyright ownership 

resulting from an effective termination 

under 17 U.S.C. 203 or 304 are as 

follows: 

(i) The required notice shall include 

all of the following information: 

(A) A true, correct, complete, and 

legible copy of the signed and as-served 


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notice of termination submitted to the 

Copyright Office for recordation 

pursuant to § 201.10. 

(B) A true, correct, complete, and 

legible copy of the statement of service 

submitted to the Copyright Office for 

recordation pursuant to § 201.10, if one 

was submitted. 

(C) Either: 

(1) Proof that the notice of termination 

was recorded in the Copyright Office 

before the effective date of termination; 

or 

(2) If the Copyright Office has not yet 

recorded the notice of termination, 

proof that the notice of termination was 

submitted to the Copyright Office for 

recordation, provided that proof that the 

notice of termination was recorded in 

the Copyright Office before the effective 

date of termination is delivered to the 

mechanical licensing collective at a later 

date. 

(D) The terminating party (i.e., the 

new musical work copyright owner), 

identified by name and any known and 

appropriate unique identifiers, 

appropriate contact information for the 

terminating party or their administrator 

or other representative, and, if the 

terminating party is not already 

receiving royalty distributions from the 

mechanical licensing collective, any 

additional information that is necessary 

for the terminating party to receive 

royalty distributions from the 

mechanical licensing collective. 

(ii) With respect to the information 

required by paragraphs (c)(2)(i)(A) 

through (C) of this section, providing an 

official Copyright Office certification for 

any such information shall not be 

required. If the mechanical licensing 

collective has good cause to doubt the 

authenticity of any such information, 

the mechanical licensing collective shall 

seek verification from the Copyright 

Office. 

(iii) Where the information required 

by paragraph (c)(2)(i) of this section is 

insufficient to enable the mechanical 

licensing collective to implement and 

give effect to the termination, the 

mechanical licensing collective shall 

engage in best efforts to identify the 

relevant musical works or other 

necessary information. To the extent 

necessary, the mechanical licensing 

collective shall correspond with the 

terminating party and the pretermination copyright owner (or their 

respective representatives) to attempt to 

obtain the minimum necessary 

information. 

(iv) The required notice shall be 

submitted and signed by either the 

terminating party or the pre-termination 

copyright owner (or their respective 

duly authorized representatives). Such 

signature shall be accompanied by the 

name and title of the person signing the 

notice and the date of the signature. The 

notice may be signed electronically. The 

person signing the notice shall certify 

that they have appropriate authority to 

submit the notice to the mechanical 

licensing collective and that all 

information submitted as part of the 

notice is true, accurate, and complete to 

the best of the signer’s knowledge, 

information, and belief, and is provided 

in good faith. If the notice is submitted 

by the terminating party, the following 

additional requirements shall apply: 

(A) The mechanical licensing 

collective shall notify the pretermination copyright owner about the 

terminating party’s notice within 15 

calendar days of receiving either the 

notice or the last piece of information 

necessary for the mechanical licensing 

collective to implement the change, 

whichever is later. 

(B) If the pre-termination copyright 

owner does not initiate a dispute with 

the mechanical licensing collective 

regarding the termination, in accordance 

with paragraph (e) of this section, 

within 30 calendar days of receiving 

such notice, the mechanical licensing 

collective shall implement and give 

effect to the transfer of copyright 

ownership resulting from the 

termination, in accordance with 

paragraph (d) of this section. Nothing in 

this paragraph (c)(2)(iv)(B) shall prevent 

the pre-termination copyright owner 

from disputing the termination with the 

mechanical licensing collective at a later 

date or challenging the termination in a 

legal proceeding. 

(v) Where there is more than one 

terminating party or pre-termination 

copyright owner, the required notice 

shall include a satisfactory 

identification of any applicable 

ownership shares for the musical works 

that are subject to the termination. 

Where there is more than one 

terminating party, the notice shall be 

effective only as to those terminating 

parties whose information is provided 

in accordance with paragraph 

(c)(2)(i)(D) of this section. Where there 

is more than one terminating party, a 

notice that is signed and certified by any 

one terminating party in accordance 

with paragraph (c)(2)(iv) of this section 

is sufficient as to all terminating parties. 

(3) Any transfer of copyright 

ownership that is not covered by 

paragraphs (c)(1) or (2) of this section 

(e.g., transfers by will or intestate 

succession) shall be subject to any 

reasonable notice requirements 

established by the mechanical licensing 

collective and made publicly available 

on its website. 

(4) Specific requirements for notices 

requesting that the mechanical licensing 

collective distribute royalties to a payee 

other than the copyright owner 

identified in § 210.29(b)(4)(i) and 

notices requesting to change such 

alternative royalty payee are as follows: 

(i) The required notice shall include 

all of the following information: 

(A) All relevant dates required for the 

mechanical licensing collective to 

properly implement and give effect to 

the request. 

(B) The copyright owner identified in 

§ 210.29(b)(4)(i), identified by name and 

any known and appropriate unique 

identifiers, and appropriate contact 

information for the copyright owner or 

their administrator or other 

representative. 

(C) If the copyright owner identified 

in paragraph (c)(4)(i)(B) of this section is 

not also the current royalty payee, the 

current royalty payee (i.e., the 

previously designated royalty payee 

who is being superseded by the payee 

identified in paragraph (c)(4)(i)(D) of 

this section), identified by name and 

any known and appropriate unique 

identifiers, and appropriate contact 

information for the payee or their 

administrator or other representative. 

(D) The designated royalty payee (i.e., 

the new payee designated by the 

copyright owner identified in 

§ 210.29(b)(4)(i) to receive royalty 

distributions from the mechanical 

licensing collective that would 

otherwise be paid to such owner under 

§ 210.29(b)(4)(i)), identified by name 

and any known and appropriate unique 

identifiers, appropriate contact 

information for the payee or their 

administrator or other representative, 

and, if the payee is not already receiving 

royalty distributions from the 

mechanical licensing collective, any 

additional information that is necessary 

for the payee to receive royalty 

distributions from the mechanical 

licensing collective. 

(E) A satisfactory identification of any 

applicable catalog exclusions from the 

request or a list of all musical works 

subject to the request identified by 

appropriate unique identifiers. 

(ii) The required notice shall be 

submitted and signed by the copyright 

owner identified in paragraph 

(c)(4)(i)(B) of this section (or its duly 

authorized representative). Such 

signature shall be accompanied by the 

name and title of the person signing the 

notice and the date of the signature. The 

notice may be signed electronically. The 

person signing the notice shall certify 

that they have appropriate authority to 

submit the notice to the mechanical 

licensing collective and that all 


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information submitted as part of the 

notice is true, accurate, and complete to 

the best of the signer’s knowledge, 

information, and belief, and is provided 

in good faith. 

(iii) Where the required notice is 

made in connection with a notice about 

a transfer of copyright ownership 

resulting from an effective termination 

under 17 U.S.C. 203 or 304 submitted 

under paragraph (c)(2) of this section, 

and the copyright owner identified in 

paragraph (c)(4)(i)(B) of this section is 

the terminating party and the designated 

royalty payee identified in paragraph 

(c)(4)(i)(D) of this section is the pretermination copyright owner, the 

following additional requirements shall 

apply: 

(A) The notice must be signed after 

the effective date of termination. 

(B) The notice must set forth in plain 

language an acknowledgement that the 

requested action alters the royalty payee 

from the standard royalty payee 

established by § 210.29(b)(4)(i). 

(C) The notice must include a clear 

statement stipulating that neither the 

notice nor the distribution of royalties 

by the mechanical licensing collective 

in accordance with the notice prejudices 

the rights of either party. 

(iv) Where there is more than one 

copyright owner or designated royalty 

payee, the required notice shall include 

a satisfactory identification of any 

applicable ownership shares for the 

musical works subject to the request. 

Where there is more than one copyright 

owner, the notice shall be effective only 

as to those copyright owners whose 

information is provided in accordance 

with paragraph (c)(4)(i)(B) of this 

section and, subject to paragraph 

(c)(4)(iii) of this section to the extent it 

applies, whom have signed and certified 

the notice in accordance with paragraph 

(c)(4)(ii) of this section. Where there is 

more than one designated royalty payee, 

the notice shall be effective only as to 

those payees whose information is 

provided in accordance with paragraph 

(c)(4)(i)(D) of this section. 

(v) The references to § 210.29(b)(4)(i) 

in paragraphs (b) and (c)(4) of this 

section shall, as applicable, be read to 

incorporate § 210.29(j). 

(5) Where multiple transfers of 

copyright ownership occur prior to 

providing notice of the change to the 

mechanical licensing collective, a 

compliant notice for each transfer must 

be provided to the mechanical licensing 

collective. For example, where there is 

a termination followed by an 

assignment of the copyright in the 

musical work, notice of the termination 

under paragraph (c)(2) of this section 

and notice of the subsequent assignment 

under paragraph (c)(1) of this section 

must both be provided to the 

mechanical licensing collective. 

(6) Where a transfer of copyright 

ownership and a request to designate or 

change an alternative royalty payee are 

related, a compliant notice for both the 

transfer and request must be provided to 

the mechanical licensing collective. For 

example, where there is an assignment 

of the copyright in the musical work 

that includes a contractual right for the 

assignee to also be entitled to future 

royalty distributions for periods 

predating the transfer, notice of the 

assignment under paragraph (c)(1) of 

this section and notice of the 

designation of an alternative royalty 

payee under paragraph (c)(4) of this 

section must both be provided to the 

mechanical licensing collective. 

(d) Implementation of a change. Upon 

receiving a notice that complies with 

the requirements of paragraph (c) of this 

section, the mechanical licensing 

collective shall implement and give 

effect to the identified transfer or 

request as follows: 

(1)(i) Except as provided by paragraph 

(d)(1)(ii) of this section, where the 

mechanical licensing collective receives 

the notice before the first day of the first 

monthly reporting period to commence 

after the change is effective, the 

mechanical licensing collective shall 

implement and give effect to the change, 

on a prospective basis, beginning with 

the first distribution of royalties for such 

reporting period. 

(ii) Where the notice concerns a 

transfer of copyright ownership 

resulting from an effective termination 

under 17 U.S.C. 203 or 304 submitted by 

the terminating party under paragraph 

(c)(2) of this section, and the pretermination copyright owner does not 

initiate a dispute as described in 

paragraph (c)(2)(iv)(B) of this section, 

then the mechanical licensing collective 

shall implement and give effect to the 

change as follows: Where the 

mechanical licensing collective receives 

the notice at least 45 calendar days 

before the first day of the first monthly 

reporting period to commence after the 

change is effective, the mechanical 

licensing collective shall implement and 

give effect to the change, on a 

prospective basis, beginning with the 

first distribution of royalties for such 

reporting period. 

(2)(i) Except as provided by paragraph 

(d)(2)(ii) of this section, where the 

mechanical licensing collective receives 

the notice on or after the first day of the 

first monthly reporting period to 

commence after the change is effective, 

the mechanical licensing collective shall 

implement and give effect to the change, 

on a prospective basis, beginning no 

later than the first distribution of 

royalties based on the first payee 

snapshot taken by the mechanical 

licensing collective at least 30 calendar 

days after the mechanical licensing 

collective receives the notice. As used 

in the previous sentence and in 

paragraph (d)(2)(ii) of this section, the 

term payee snapshot means the royalty 

payee information in the mechanical 

licensing collective’s records as of a 

particular date that will be used for a 

particular monthly royalty distribution. 

(ii) Where the notice concerns a 

transfer of copyright ownership 

resulting from an effective termination 

under 17 U.S.C. 203 or 304 submitted by 

the terminating party under paragraph 

(c)(2) of this section, and the pretermination copyright owner does not 

initiate a dispute as described in 

paragraph (c)(2)(iv)(B) of this section, 

then the mechanical licensing collective 

shall implement and give effect to the 

change as follows: Where the 

mechanical licensing collective receives 

the notice less than 45 calendar days 

before the first day of the first monthly 

reporting period to commence after the 

change is effective, the mechanical 

licensing collective shall implement and 

give effect to the change, on a 

prospective basis, beginning no later 

than the first distribution of royalties 

based on the first payee snapshot taken 

by the mechanical licensing collective at 

least 30 calendar days after the pretermination copyright owner’s deadline 

to dispute under paragraph (c)(2)(iv)(B) 

of this section. 

(3) Where additional information 

related to the notice is required to 

enable the mechanical licensing 

collective to implement and give effect 

to the change, and such information is 

received after receipt of the notice, the 

timing requirements described in 

paragraphs (d)(1) and (2) of this section 

shall be based on the date that the last 

piece of necessary information is 

received by the mechanical licensing 

collective. 

(4) Where the change is effective as to 

one or more monthly reporting periods 

for which the mechanical licensing 

collective distributed royalties before 

implementing and giving effect to the 

change, the mechanical licensing 

collective may, but is not required to, 

make a corrective royalty adjustment if 

the notice requests one. 

(5) Where the notice concerns a 

transfer of copyright ownership 

resulting from an effective termination 

under 17 U.S.C. 203 or 304 submitted 

under paragraph (c)(2) of this section, 

and the notice is accompanied by proof 

that the notice of termination was 


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submitted to the Copyright Office for 

recordation, but not that it was recorded 

in the Copyright Office before the 

effective date of termination, the 

mechanical licensing collective shall act 

as follows: 

(i) The receipt of proof that the notice 

of termination was recorded in the 

Copyright Office before the effective 

date of termination shall be treated as a 

type of additional information under 

paragraph (d)(3) of this section. The 

mechanical licensing collective shall 

not implement or give effect to any such 

termination unless and until such proof 

is received. 

(ii) Notwithstanding paragraph 

(d)(5)(i) of this section, the mechanical 

licensing collective shall hold 

applicable accrued royalties and 

accrued interest pending receipt of 

proof that the notice of termination was 

recorded in the Copyright Office before 

the effective date of termination as 

follows: 

(A) The mechanical licensing 

collective shall commence holding such 

amount no later than the 

implementation deadline that would 

apply under paragraphs (d)(1) through 

(3) of this section, as applicable, if proof 

of recordation had been provided with 

the notice. 

(B) After proof that the notice of 

termination was recorded in the 

Copyright Office before the effective 

date of termination is received, the 

mechanical licensing collective shall 

implement and give effect to the 

termination as provided by paragraphs 

(d)(1) through (4) and (5)(i) of this 

section, as applicable. 

(C) Where the Copyright Office 

refuses to record the notice of 

termination or the notice of termination 

is recorded on or after the effective date 

of termination, such that the 

termination is not effective, the 

mechanical licensing collective shall 

release the held funds to the pretermination copyright owner. 

(D) If proof that the notice of 

termination was recorded in the 

Copyright Office before the effective 

date of termination is not received by 

the mechanical licensing collective 

within 6 months after the mechanical 

licensing collective commences holding 

applicable accrued royalties and 

accrued interest, the mechanical 

licensing collective shall contact the 

Copyright Office to confirm the status of 

the relevant recordation submission. If 

the submission remains pending at that 

time, the mechanical licensing 

collective shall continue to check its 

status monthly. Upon confirmation from 

the Copyright Office regarding whether 

the applicable notice of termination has 

been timely recorded or not, the 

mechanical licensing collective shall act 

in accordance with paragraph 

(d)(5)(ii)(B) or (C) of this section, as the 

case may be, except that no further 

proof shall be required to be submitted 

to the mechanical licensing collective 

for it to act. 

(6) No action or inaction by the 

mechanical licensing collective with 

respect to implementing and giving 

effect to a payee change shall affect any 

party’s right to royalties pursuant to 

such change or such party’s ability to 

collect such royalties from someone 

other than the mechanical licensing 

collective if such royalties were not 

distributed to such party by the 

mechanical licensing collective. 

(e) Termination disputes. The 

following requirements shall apply to 

any dispute initiated with the 

mechanical licensing collective 

regarding a termination under 17 U.S.C. 

203 or 304: 

(1) Such a dispute must be with 

regard to the validity of the termination 

or the application of the derivative 

works exception to a particular 

voluntary license or its underlying grant 

of authority. 

(2) Only the pre-termination copyright 

owner (or its representative) may 

initiate such a dispute. 

(3) If the pre-termination copyright 

owner (or its representative) initiates 

such a dispute and delivers the 

information required to substantiate the 

dispute to the mechanical licensing 

collective under paragraph (e)(4) of this 

section, the mechanical licensing 

collective shall hold applicable accrued 

royalties and accrued interest pending 

resolution of the dispute. 

(4) The minimum information that 

must be delivered to the mechanical 

licensing collective to substantiate a 

termination-related dispute shall consist 

of the following: 

(i) A cognizable explanation of the 

grounds for the dispute, articulated with 

specificity. 

(ii) Documentation sufficient to 

support the grounds for the dispute, 

which shall consist of the following: 

(A) A true, correct, complete, and 

legible copy of each grant in dispute. 

(B) A true, correct, complete, and 

legible copy of any other agreement or 

document necessary to support the 

grounds for the dispute. 

(C) Such other documentation or 

substantiating information as the 

mechanical licensing collective may 

reasonably require pursuant to a dispute 

policy adopted under 17 U.S.C. 

115(d)(3)(K). 

(iii) A satisfactory identification of 

each musical work in dispute. 

(iv) A certification that the submitter 

has appropriate authority to initiate the 

dispute with the mechanical licensing 

collective and that all information 

submitted in connection with the 

dispute is true, accurate, and complete 

to the best of the submitter’s knowledge, 

information, and belief, and is provided 

in good faith. 

(v) If the dispute concerns the 

application of the derivative works 

exception to a particular voluntary 

license or its underlying grant of 

authority: 

(A) A true, correct, complete, and 

legible copy of each voluntary license at 

issue. 

(B) A satisfactory identification of 

each relevant sound recording that 

constitutes a derivative work within the 

meaning of 17 U.S.C. 101 that was 

prepared pursuant to appropriate 

authority. 

(C) The date of preparation for each 

such sound recording, which must be 

before the effective date of termination. 

(5) Notwithstanding anything to the 

contrary that may be contained in 

§ 210.34, any and all documentation 

provided to the mechanical licensing 

collective pursuant to paragraph (e)(4) 

of this section shall be disclosed to all 

parties to the dispute. If a party to the 

dispute is not a party or successor to a 

party to an otherwise confidential 

document, such disclosure shall be 

subject to an appropriate written 

confidentiality agreement. 

(f) Resolution of a dispute and release 

of disputed funds. All disputed funds 

held by the mechanical licensing 

collective pursuant to a dispute among 

purported copyright owners or royalty 

payees must be subject to active dispute 

resolution by the relevant parties. Such 

funds shall no longer be considered to 

be in dispute and the mechanical 

licensing collective shall release such 

funds under the following 

circumstances, which shall constitute 

the resolution of the dispute as to such 

funds: 

(1) Where the mechanical licensing 

collective is directed to do so by mutual 

agreement of the relevant parties. Funds 

released under this paragraph (f)(1) shall 

be paid in accordance with such 

agreement, subject to the relevant 

requirements of paragraphs (c) and (d) 

of this section if the agreement changes 

the royalty payee, except that, 

notwithstanding paragraph (d)(4) of this 

section, payments of released funds 

shall be made for applicable monthly 

reporting periods predating the 

mechanical licensing collective’s 

implementation of the change. 

(2) Where the mechanical licensing 

collective is directed to do so by order 


lotter on DSK11XQN23PROD with PROPOSALS1
Federal Register / Vol. 88, No. 185 / Tuesday, September 26, 2023 / Proposed Rules 65927 

1Petition of the United States Postal Service for 

the Initiation of a Proceeding to Consider Proposed 

Changes in Analytical Principles (Proposal Six), 

September 15, 2023 (Petition). 

of an adjudicative body with 

appropriate authority. Funds released 

under this paragraph (f)(2) shall be paid 

in accordance with such order. 

(3) Except where a legal proceeding is 

commenced, where, during any 6-month 

period starting one year after the 

disputed funds are placed on hold, the 

mechanical licensing collective does not 

receive a joint notice signed by all 

relevant parties that they are continuing 

to engage in active dispute resolution. 

Such notice must comply with any 

reasonable formatting and submission 

requirements established by the 

mechanical licensing collective and 

made publicly available on its website. 

Funds released under this paragraph 

(f)(3) shall be paid to the party who 

would have received such funds if the 

funds were not placed on hold pursuant 

to a dispute. 

■ 6. Amend § 210.34 as follows: 

■ a. Add paragraph (c)(6). 

■ b. In paragraph (c)(5), remove ‘‘to 

paragraph (c)(4) of’’ and add in its place 

‘‘to paragraph (c)(4) or (c)(6) of’’. 

The addition reads as follows: 

§ 210.34 Treatment of confidential and 

other sensitive information. 

* * * * * 

(c) * * * 

(6)(i) Notwithstanding paragraph 

(c)(1) of this section, where the 

mechanical licensing collective has 

placed any accrued royalties, accrued 

interest, or other monies on hold with 

respect to particular reported usage or a 

particular work (or share thereof) (e.g., 

where there is an ownership dispute or 

a legal proceeding has been 

commenced), the mechanical licensing 

collective shall disclose the amount 

being held and reason for the hold to 

any individual or entity with a bona fide 

legal claim to such funds or a portion 

thereof. 

(ii) Such disclosure shall be made to 

each such claimant no later than 10 

business days after placing the amount 

on hold, where the mechanical licensing 

collective is aware of the claimant’s 

claim at that time. Where the 

mechanical licensing collective is not 

aware of a claimant’s claim when the 

amount is placed on hold, such 

disclosure shall be made to that 

claimant no later than 10 business days 

after becoming aware. For any amounts 

placed on hold before [EFFECTIVE 

DATE OF FINAL RULE], where the 

mechanical licensing collective is aware 

of a claimant’s claim at that time, such 

disclosure shall be made to such 

claimant no later than [DATE 10 

BUSINESS DAYS AFTER EFFECTIVE 

DATE OF FINAL RULE]. Where the 

mechanical licensing collective is not 

aware of a claimant’s claim as of 

[EFFECTIVE DATE OF FINAL RULE], 

such disclosure shall be made to that 

claimant no later than 10 business days 

after becoming aware. 

(iii) Disclosure of the amount being 

held with respect to particular reported 

usage or a particular work (or share 

thereof) shall be accompanied by a 

statement that complies with the 

requirements of § 210.29 as if such held 

amount were to instead be distributed 

pursuant to § 210.29. Disclosure of the 

reason for the hold shall be made with 

specificity. The mechanical licensing 

collective shall provide all claimants 

with monthly updates concerning the 

status of the hold and the amount being 

held. The mechanical licensing 

collective shall respond to any inquiry 

from a claimant about the hold within 

10 business days and shall provide any 

reasonably requested additional 

information about the hold within a 

reasonable period of time commensurate 

with the request. 

* * * * * 

Dated: September 21, 2023. 

Suzanne V. Wilson, 

General Counsel and Associate Register of 

Copyrights. 

[FR Doc. 2023–20922 Filed 9–25–23; 8:45 am] 

BILLING CODE 1410–30–P 

POSTAL REGULATORY COMMISSION 

39 CFR Part 3050 

[Docket No. RM2023–11; Order No. 6692] 

Periodic Reporting 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Commission is 

acknowledging a recent filing requesting 

the Commission initiate a rulemaking 

proceeding to consider changes to 

analytical principles relating to periodic 

reports (Proposal Five). This document 

informs the public of the filing, invites 

public comment, and takes other 

administrative steps. 

DATES: Comments are due: October 20, 

2023. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system at http://

www.prc.gov. Those who cannot submit 

comments electronically should contact 

the person identified in the FOR FURTHER

INFORMATION CONTACT section by 

telephone for advice on filing 

alternatives. 

FOR FURTHER INFORMATION CONTACT: 

David A. Trissell, General Counsel, at 

202–789–6820. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Proposal Six 

III. Notice and Comment 

IV. Ordering Paragraphs 

I. Introduction 

On September 15, 2023, the Postal 

Service filed a petition pursuant to 39 

CFR 3050.11 requesting that the 

Commission initiate a rulemaking 

proceeding to consider changes to 

analytical principles relating to periodic 

reports.1 The Petition identifies the 

proposed analytical changes filed in this 

docket as Proposal Six. 

II. Proposal Six 

Background. Proposal Six relates to 

modifications to the mail processing 

and destination entry cost models for 

letter-shaped USPS Marketing Mail 

pieces to account for recent price 

structure changes. Petition, Proposal Six 

at 1. The cost models were last 

presented in Docket No. ACR2022, 

Library References USPS–FY22–10 and 

USPS–FY22–13, respectively. Id. If 

approved, the Postal Service intends to 

incorporate the requested modifications 

in the preparation of its the Fiscal Year 

(FY) 2023 Annual Compliance Review 

(ACR) and apply new cost avoidances 

figures in its ‘‘July 2024 Market 

Dominant price change.’’ Id. 

As part of Docket No. R2023–2, the 

Commission approved two new 

workshare discounts for USPS 

Marketing Mail letter-shaped pieces 

prepared on sectional center facility 

(SCF) pallets: (1) USPS Marketing Mail 

Automation and Non-automation letters; 

and (2) USPS Marketing Mail Carrier 

Route, High Density, High Density Plus 

and Saturation letters. Id. at 1–2. 

Proposal. Proposal Six presents four 

modifications to support the new 

discounts: (1) the addition of tray 

sorting cost data to Library Reference 

USPS–FY22–10, (2) the incorporation of 

a standalone tray sorting cost avoidance 

estimate into Library Reference USPS– 

FY22–10, (3) the reclassification of tray 

sorting cost pools in Library Reference 

USPS–FY22–10, and (4) the removal of 

tray sorting costs from Library Reference 

USPS–FY22–13. Id. at 2. The first three 

modifications are made to the mail 

processing cost model and the fourth 

modification is made to the destination 

entry cost model. Id. The Postal Service 

provided a modified mail processing 

cost model in the Excel file ‘‘USPS– 


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