[Federal Register Volume 62, Number 29 (Wednesday, February 12, 1997)]
[Notices]
[Pages 6558-6562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3316]


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LIBRARY OF CONGRESS

Copyright Office
[Docket No. 95-1 CARP DD 92-94]


Distribution of the 1992, 1993, and 1994 Musical Works Funds

AGENCY: Copyright Office, Library of Congress.

ACTION: Distribution order.

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SUMMARY: The Librarian of Congress, upon recommendation of the Register 
of Copyrights, is announcing the distribution of the royalty fees 
collected for Digital Audio Recording Devices and Media (DART) in the 
1992, 1993, and the 1994 Musical Works Funds. The Librarian is adopting 
in part and rejecting in part the decision of the Copyright Arbitration 
Royalty Panel (CARP).

EFFECTIVE DATE: The distribution percentages announced in this Order 
are effective on February 12, 1997.

ADDRESSES: The full text of the CARP's report to the Librarian of 
Congress is available for inspection and copying during normal business 
hours in the Office of the General Counsel, James Madison Memorial 
Building, Room LM-407, First and Independence Avenue, S.E., Washington, 
DC. 20540.

FOR FURTHER INFORMATION CONTACT: William Roberts, Senior Attorney, or 
Tanya M. Sandros, Attorney-Advisor, P.O. Box 70977, Southwest Station, 
Washington, D.C. 20024. Telephone (202) 707-8380.

SUPPLEMENTARY INFORMATION:

I. Recommendation of the Register of Copyrights

Background

    On October 28, 1992, Congress enacted the Audio Home Recording Act, 
Pubic Law No. 102-563 (1992). This Act requires manufacturers and 
importers to pay royalties on digital audio recording devices and media 
(DART) that are distributed in the United States. The royalties are 
collected by the Copyright Office and deposited with the Treasury of 
the United States. 17 U.S.C. 1005. These funds are distributed by the 
Copyright Office to interested copyright parties who filed claims with 
the Copyright Office each year during January and February pursuant to 
either a universal settlement negotiated by the claimants to a 
particular subfund, or by Order of the Librarian of Congress 
(Librarian) following a distribution proceeding conducted by a 
Copyright Arbitration Royalty Panel (CARP).
    The Act provides that the royalties are to be divided into two 
funds: the Sound Recordings Fund, which accounts for 66\2/3\% of the 
royalties, and the Musical Works Fund, which accounts for the remaining 
33\1/3\% of the royalties. The Act further divides each fund into 
subfunds.
    The Sound Recordings Fund consists of four subfunds, two of which, 
the Nonfeatured Musicians Subfund and the Nonfeatured Vocalists 
Subfund, account for 2\5/8\% and 1\3/8\%, respectively, of the Sound 
Recordings Fund and are administered by an independent administrator. 
The remaining 96% of the Sound Recordings Fund is further distributed 
between two additional subfunds, the Featured Recording Artist Subfund 
and the Sound Recording Owners Subfund, which receive 40% and 60%, 
respectively, of the remaining 96% share of the fund. The Musical Works 
Fund consists of two subfunds, the Publishers Subfund and the Writers 
Subfund, each of which receives 50% of that Fund. 17 U.S.C. 1006(b).
    Thus, the Act establishes the percentages for each fund and 
subfund, but directs the CARPs, when necessary, to determine what 
amount each claimant within a subfund is entitled to receive. The 
determination and a full explanation underlying the conclusions are set 
out in a written report to the Librarian.

Distribution of Royalties

    Royalties are collected on a quarterly basis from any importer or 
manufacturer that distributes any digital audio recording device or 
digital audio recording medium that it manufactured in or imported into 
the United States. 17 U.S.C. 1003(c). As discussed above, these 
royalties are collected by the Copyright Office and invested in 
interest-bearing securities with the United States Treasury for 
subsequent distribution to interested copyright parties. 17 U.S.C. 
1005.
    An interested copyright party must submit each year a written claim 
to the Copyright Office during the months of January and February. 17 
U.S.C. 1007(a). Within 30 days after the last day for filing claims, 
the statute instructs the Librarian to ascertain whether there are any 
controversies among the claimants as to the proper distribution of the 
royalties in their fund/subfund. If there are no controversies, the 
Librarian authorizes the distribution of the funds according to the 
terms of the negotiated agreements; otherwise, the Librarian is 
directed to convene a CARP or CARPs to decide the proper distribution 
of the royalties in each unresolved fund/subfund. 17 U.S.C. 1007(b)(c).

This Proceeding

    The parties in this proceeding are Broadcast Music, Inc., the 
American Society of Composers, Authors, and Publishers, SESAC, Inc., 
the Harry Fox Agency, Inc. (a subsidiary of the National Music 
Publishers' Association, Inc.), Copyright Management Inc., The 
Songwriters Guild of America, and the Gospel Music Coalition 
(collectively, the ``Settling Parties''), and two pro se claimants, 
Eugene Curry and Alicia Carolyn Evelyn. Ms. Evelyn and Mr. Curry, both 
songwriters, chose to represent their own interests in the proceeding. 
Mr. Curry also represented the publishing interest of Tajai Music, Inc. 
(Tajai) for the three years in dispute. The Settling Parties represent 
the over 264,000 remaining publishers and songwriters with a claim to a 
share of the royalties. Settling Parties Direct Case at 2-3.
    The CARP in this proceeding was convened to determine the 
distribution of the royalties in the 1992, 1993, and 1994 Musical Works 
Funds, which totaled approximately $355,500.00.\1\ The Copyright Office 
received forty-one claims to the 1992 Musical Works Fund--twenty-one 
claims to the Writers Subfund and twenty claims to the Publishers 
Subfund. During the next filing cycle, the Office received twenty-two 
claims to the 1993 Musical Works Fund--twelve claims to the Writers 
Subfund and ten claims to the Publishers Subfund. In 1995, the Office 
received twenty-six claims to the 1994 Musical Works Fund, equally 
divided between the two subfunds.
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    \1\ Claimants to the royalties in the Sound Recordings Fund for 
1992, 1993, and 1994 negotiated a settlement amongst themselves. The 
Library has made a full distribution of these funds to the 
interested copyright parties who filed timely claims for a share of 
these royalties. See Order, Docket No. 94-2 CARP-DD (December 15, 
1994) and Order in Docket No. 95-1 CARP DD 92-94 (May 16, 1995).
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    This proceeding for the determination of the distribution of the 
DART royalties commenced on November 3, 1993, when the Settling Parties 
filed a motion with the Copyright Royalty Tribunal (Tribunal) \2\ to 
consolidate the 1992 and

[[Page 6559]]

1993 DART distribution proceedings. The CRT granted this motion on 
November 29, 1993, see Order, In the Matter of 1992 Audio Home 
Recording Act Distribution Proceeding, CRT Docket No. 93-1-92DRD (Nov. 
29, 1993), but further proceedings were suspended upon the abolition of 
the CRT.
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    \2\ When the Audio Home Recording Act was passed, the Copyright 
Royalty Tribunal had the authority to conduct the DART distribution 
proceedings. The Tribunal, however, was abolished by Congress in 
1993, and the authority to distribute DART funds was given to the 
CARPS, as administered by the Librarian of Congress. See the 
Copyright Royalty Tribunal Reform Act of 1993, Pubic Law No. 103-
198.
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    The Copyright Office instituted a new proceeding for the 
distribution of 1992 and 1993 DART royalties on March 1, 1994. 59 FR 
9773 (March 1, 1994). In response to this notice, the Settling Parties 
and other claimants filed a motion with the Office requesting the 
Office to consolidate the 1992, 1993, and 1994 DART distribution 
proceedings. The Office granted this request and announced that it 
would set a schedule for a DART distribution proceeding in 1995. 59 FR 
35762 (July 13, 1994).
    On February 23, 1995, the Office published a notice requesting 
comments as to the existence of controversies in the consolidated 
proceeding, and notices of intent to participate. 60 FR 12251 (March 6, 
1995). Twelve parties filed notices of intent to participate in this 
proceeding, including the Settling Parties, Ms. Evelyn, Mr. Curry and 
the publishing company he represents, Tajai.
    Through a series of motions to dismiss certain parties and as a 
result of continued negotiations, nine parties remained in the DART 
distribution proceeding when the Librarian initiated a CARP to 
determine the distribution of the Musical Works Fund royalties for 
1992, 1993, and 1994. 61 FR 40464 (August 2, 1996).
    On October 4, 1996, the Parties met with the Panel which 
determined, for good cause shown, to proceed on the basis of the 
written pleadings alone.\3\ CARP Order, Docket No. 95-1 CARP DD 92-94 
(October 4, 1996). Accordingly, the CARP instructed the parties to file 
their respective proposed findings of fact and conclusions of law by 
November 4, 1996, and to file reply findings on or before November 14, 
1996. The Panel limited the proposed findings of fact to the material 
contained in the written direct cases previously filed on March 25, 
1996. Transcript of October 4, 1996 Meeting at 33-35.
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    \3\ On June 14, 1996, the Settling Parties filed a motion to 
dispense with formal hearings and to conduct this proceeding on the 
basis of the written pleadings. The Librarian denied the motion, but 
designated the issue to the CARP for further consideration under 
their authority to suspend or waive the relevant provision of the 
regulations. Order, Docket No. 95-1 CARP DD 92-94 (July 25, 1996).
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    On December 16, 1996, the chairperson of the CARP delivered the 
Panel's written report to the Librarian.

The CARP Report

    The Panel, after reviewing the written record, determined that the 
royalties in the 1992, 1993, and 1994 Musical Works Funds should be 
allocated as follows:
    To Mr. Curry: 0.007096% of both the Writers and Publishers Subfunds 
in 1992; 0.001608% of both the Writers and Publishers Subfunds in 1993; 
and 0.003398% of both the Writers and Publishers Subfunds in 1994.
    To Ms. Evelyn: 0.000084% of only the Writers Subfund in 1993; and 
0.000082% of only the Writers Subfund in 1994.
    To the Settling Parties: 99.992904% of both the Writers and 
Publishers Subfunds in 1992; 99.998308% of the Writers Subfund and 
99.998392% of the Publishers Subfund in 1993; and 99.99652% of the 
Writers Subfund and 99.996602% of the Publishers Subfund in 1994. CARP 
Report, paras. 71-73.
    The Panel utilized the only formula presented for calculating a 
claimant's share of the royalties. CARP Report, para. 53. The formula 
determines each claimants' proportionate share of the royalties as a 
percentage of the total song titles sold during a particular year based 
on evidence of a claimants' total song title sales for that year. Id.

Standard of Review

    The Copyright Royalty Tribunal Reform Act of 1993 created a unique 
system of review of a CARP's determination. Typically, an arbitrator's 
decision is not reviewable, but the Reform Act created two layers of 
review: The Librarian of Congress, and the Court of Appeals for the 
District of Columbia Circuit. Section 802(f) of the Copyright Act 
directs the Librarian to either accept the decision of the CARP or 
reject it. If the Librarian rejects it, he must substitute his own 
determination ``after full examination of the record created in the 
arbitration proceeding.'' Id. If the Librarian accepts it, then the 
determination of the CARP has become the determination of the 
Librarian. In either case, through issuance of the Librarian's Order, 
it is his decision that is subject to review by the Court of Appeals.
    Section 802(f) of the Copyright Act directs that the Librarian 
shall adopt the report of the CARP ``unless the Librarian finds that 
the determination is arbitrary or contrary to the provisions of this 
title.'' Neither the Reform Act nor its legislative history indicates 
what is meant specifically by ``arbitrary,'' but there is no reason to 
conclude that the use of the term is any different from the 
``arbitrary'' standard described in the Administrative Procedure Act, 5 
U.S.C. 706(2)(A).
    Review of the case law applying the APA ``arbitrary'' standard 
reveals six factors or circumstances under which a court is likely to 
find that an agency acted arbitrarily. An agency is generally 
considered to be arbitrary when it:

    (1) Relies on factors that Congress did not intend it to 
consider;
    (2) fails to consider entirely an important aspect of the 
problem that it was solving;
    (3) Offers an explanation for its decision that runs counter to 
the evidence presented before it;
    (4) Issues a decision that is so implausible that it cannot be 
explained as a product of agency expertise or a difference of 
viewpoint;
    (5) Fails to examine the data and articulate a satisfactory 
explanation for its action including a rational connection between 
the facts found and the choice made; or
    (6) When the agency's action entails the unexplained 
discrimination or disparate treatment of similarly situated parties.

Motor Vehicle Manufacturers Association v. State Farm Mutual Insurance 
Co., 463 U.S. 29 (1983); Celcom Communications Corp. v. FCC, 789 F.2d 
67 (D.C. Cir. 1986); Airmark Corp. v. FAA, 758 F.2d 685 (D.C. Cir. 
1985).
    Given these guidelines for determining when a decision is 
``arbitrary,'' prior decisions of the Court of Appeals for the District 
of Columbia Circuit reviewing the determinations of the former 
Copyright Royalty Tribunal (Tribunal) have been consulted. The 
decisions of the Tribunal were reviewed under the ``arbitrary and 
capricious'' standard of 5 U.S.C. 706(2)(A) which, as noted above, 
appears to be applicable to the Librarian's review of the CARP's 
decision.
    Review of judicial decisions regarding Tribunal actions reveals a 
consistent theme: while the Tribunal was granted a relatively wide 
``zone of reasonableness,'' it was required to articulate clearly the 
rationale for its decision. See National Association of Broadcasters v. 
CRT, 772 F.2d 922 (D.C. Cir. 1985); Christian Broadcasting Network v. 
CRT, 720 F.2d 1295 (D.C. Cir. 1983); National Cable Television 
Association v. CRT, 689 F.2d 1077 (D.C. Cir. 1982); Recording Industry 
Association of America v. CRT, 662 F.2d 1 (D.C. Cir. 1981). As one 
panel of the D.C. Circuit succinctly noted:

    We wish to emphasize * * * that precisely because of the 
technical and discretionary nature of the Tribunal's work, we must

[[Page 6560]]

especially insist that it weigh all the relevant considerations and 
that it set out its conclusions in a form that permits us to 
determine whether it has exercised its responsibilities lawfully * * 
*.

Christian Broadcasting Network, Inc. v. CRT, 720 F.2d 1295, 1319 (D.C. 
Cir. 1983), quoting National Cable Television Association v. CRT, 689 
F.2d 1077, 1091 (D.C. Cir. 1982).
    Because the Librarian is reviewing the CARP decision under the same 
``arbitrary'' standard used by the courts to review the Tribunal's 
decisions, he must be presented by the CARP with a detailed rational 
analysis of its decision, setting forth specific findings of fact and 
conclusions of law. This requirement of every CARP report is confirmed 
by the legislative history to the Reform Act which notes that a ``clear 
report setting forth the panel's reasoning and findings will greatly 
assist the Librarian of Congress.'' H.R. Rep. No. 286, 103d Cong., 1st 
Sess. 13 (1993). Thus, to engage in reasoned decisionmaking, the CARP 
must ``weigh all the relevant considerations and * * * set out its 
conclusions in a form that permits [a determination of] whether it has 
exercised its responsibilities lawfully.'' National Cable Television 
Association v. CRT, 689 F.2d 1077, 1091 (D.C. Cir. 1982). This goal 
cannot be reached by ``attempt[ing] to distinguish apparently 
inconsistent awards with simple, undifferentiated allusions to a 10,000 
page record.'' Christian Broadcasting Network, Inc. v. CRT, 720 F.2d 
1295, 1319 (D.C. Cir. 1983).
    It is the task of the Register of Copyrights to review the CARP 
report and make her recommendation to the Librarian as to whether the 
report is arbitrary or contrary to the provisions of the Copyright Act 
and, if so, whether, and in what manner, the Librarian should 
substitute his own determination.

Petitions To Set Aside the Panel's Determination

    On January 2, 1997, and on January 3, 1997, the two pro se parties 
filed their petitions with the Librarian to modify and/or set aside the 
decision of the CARP, along with motions requesting leave to file the 
petitions late. See 37 CFR 251.55(a). The Office accepted the late 
filings and issued an order requesting that any replies to the 
petitions be filed with the Office no later than January 17, 1997. 
Order, Docket No. 95-1 CARP DD 92-94 (January 3, 1997). The purpose of 
the petitions to modify or set aside the Panel's determination is to 
identify aspects of the Panel's report which are arbitrary with respect 
to record evidence or contrary to the applicable statutory provisions.
    In her petition, Ms. Alicia Evelyn enumerated an array of reasons 
to set aside the determination of the CARP in this proceeding, stating 
that ``[t]he panel, in its report, failed to address matters in 
controversy * * *.'' Petition to Set Aside the Determination of the 
Copyright Arbitration Royalty Panel in the Above-Referenced Matter 
Submitted by Alicia Carolyn Evelyn, Individual, Pro Se, Claimant 
(Evelyn Petition) at 2. The purported controversies which the CARP 
failed to address include: (1) Failure on the part of the Settling 
Parties to identify their DART eligible associates and members and at 
least one DART eligible title for the 1992-94 period, Id. at 2; (2) 
failure on the part of the Settling Parties to provide data to 
individual claimants pertaining to their DART eligible songs, 
including, but not limited to the songs ``I'm Counting on You'' and ``I 
Thank You,'' Id. at 3; (3) selection of SoundScan to determine the 
extent of record sales rather than use of performance data, Id. at 7; 
(4) use by Mr. Michael Fine <SUP>4, expert witness for the Settling 
Parties, of an incomplete list of DART eligible songs when evaluating 
SoundScan data for record sales of Ms. Evelyn, Id. at 7; (5) 
unexplained use of total record sales, as reported by SoundScan, for 
1992, rather than record sales for the relevant period, October 28, 
1992--December 31, 1992, and concomitant use of total record sales for 
the claimant during this same period, Id. at 7-8; (6) failure to 
include record club sales and/or computer sales in the calculations for 
total record sales, Id. at 8; and (7) failure on the part of certain 
Settling Parties to fulfill their fiduciary obligations toward their 
members. Id. at 9-10.
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    \4\ Mr. Fine is the Chief Executive Officer of SoundScan, Inc. 
Witness Affidavit, Settling Parties' Direct Case.
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    Whereas Ms. Evelyn's petition stated her concerns with certain 
particularity, Mr. Curry's petition to set aside the panel's 
determination rests primarily on a fundamental assertion that the 
Settling Parties never proved their case. Petition to Set Aside the 
Determination of the Arbitration Royalty Panel, submitted by Eugene 
Curry (Curry Petition), at 1. Mr. Curry argues that he had to submit 
specific titles of his works and documentation of record sales whereas 
the Settling Parties produced no hard numbers for the record sales of 
any claimant represented by the Settling Parties. Id. at 2,3,4. Curry 
further argues that it was error for Ms. Smith <SUP>5 to supply Mr. 
Fine with authorship data and not present any data on the number of 
disseminations of his works through transmissions, i.e. radio play, id. 
at 2, implying that the Panel failed to properly apply the statutory 
criteria for making its determination. Additionally, Mr. Curry submits 
that he supplied the Settling Parties with documentation of record club 
sales in support of his argument that SoundScan was not the only source 
of record sales data, nor the best source, but this information was not 
utilized in the final report to adjust the sales figures. Id. at 4.
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    \5\ Ms. Smith is Vice President of Performing Rights of 
Broadcast Music, Inc. Witness Affidavit, Settling Parties' Direct 
Case.
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    In reply, the Settling Parties request that the Librarian deny Ms. 
Evelyn's and Mr. Curry's petitions on both procedural and substantive 
grounds. The Settling Parties contend that the Panel's report was not 
arbitrary or contrary to the law, when analyzed under the applicable 
standard of review, and therefore, should be adopted as filed by the 
Librarian. Furthermore, the Settling Parties oppose the Evelyn and 
Curry petitions because each petition failed to reference applicable 
sections of the party's proposed findings of fact and conclusions of 
law. See 37 CFR 251.55(a).

Sufficiency of Ms. Evelyn's and Mr. Curry's Petitions To Modify

    Before the Register can address the issues raised by Ms. Evelyn's 
and Mr. Curry's petitions to modify the determination of the Panel, the 
Register must first address the contention raised by the Settling 
Parties that the petitions must be dismissed for failure to comply with 
section 251.55(a) of the CARP rules. That section provides that each 
petition must ``state the reasons for modification or reversal of the 
panel's determination, and shall include applicable sections of the 
party's proposed findings of fact and conclusions of law.'' 37 CFR 
251.55(a).
    Review of Ms. Evelyn's and Mr. Curry's petitions reveals that 
neither comply with the second part of the rule which requires 
identification of applicable portions of a petitioner's proposed 
findings of fact and conclusions of law. The purpose of this 
requirement is to enable the Register, and the Librarian, to locate 
those portions of the testimony that support each party's petition. 
However, absent a showing of bad faith, the remedy for failure to 
comply with the requirement is not dismissal of a party's petition to 
modify. Rather, the remedy is for the Register to direct the offending 
party to amend his or her petition to include identification of the 
applicable portions of their proposed findings of fact and conclusions 
of law. This approach,

[[Page 6561]]

however, is not necessary in this proceeding because the record is 
relatively small. Therefore, Ms. Evelyn's and Mr. Curry's petitions to 
modify were accepted.

Review of the CARP Report

    In reviewing the determination of a CARP, the Register is required 
to confine her consideration to the record of the proceeding. 17 U.S.C. 
802(f). The record in this proceeding consists solely of the written 
direct cases of the Settling Parties, Ms. Evelyn, and Mr. Curry. 
Consequently, despite the protestations of Ms. Evelyn and Mr. Curry, 
the Register will not address issues raised in their petitions to 
modify which go beyond the evidence presented in the written direct 
cases.
    The Register's review is in three parts: (1) An analysis of the 
statutory criteria to be used in the current proceeding; (2) an 
analysis of the methodology adopted by the Panel to implement the 
statutory criteria; and (3) an analysis of the application of the 
adopted methodology to the record evidence.
    1. Statutory criteria. The Audio Home Recording Act of 1992 clearly 
delineates the statutory criteria to be considered when making a 
distribution of DART royalties. Specifically, a CARP may only consider 
``the extent to which, during the relevant period * * * each musical 
work was distributed in the form of digital musical recordings or 
analog musical recordings or disseminated to the public in 
transmissions.'' 17 U.S.C. 1006(c)(2). While a CARP is limited to these 
two statutory criteria in determining a DART royalty distribution, the 
statute does not require the application of both criteria. Thus, in 
circumstances where the parties to a DART distribution have presented 
evidence as to only one of the criteria, there is no requirement that a 
CARP request evidence as to the second criteria as well.
    In this proceeding, the parties presented credible evidence only as 
to the distribution criteria (record sales).<SUP>6 The Register 
concludes that the Panel acted properly in basing its determination 
solely on the evidence of record sales, and was not required to take 
record evidence as to the dissemination of musical works in 
transmissions when no such evidence was submitted by the parties. 
Further, the Register determines that the Panel acted properly by 
refusing to consider evidence presented by Ms. Evelyn and Mr. Curry 
that was not relevant to the section 1006(c)(2) criteria. See, CARP 
Report, para. 52.
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    \6\ The Panel found that while the Settling Parties and Mr. 
Curry did not present any evidence of performances, the evidence 
presented by Ms. Evelyn as to performances of her works was not 
competent. Report, paras. 46-47. After reviewing the record, the 
Register concludes that this determination by the Panel was not 
arbitrary.
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    2. Methodology. The Settling Parties presented the only systematic 
method for determining the distribution of the royalties in the Musical 
Works Funds. The formula divided the total song title sales credited to 
a claimant during a particular year by the total song titles sold 
during the same year. This calculation determines the claimant's 
proportionate share of the royalties for that period of time. The Panel 
found this formulation acceptable for making its determination because 
it allows each claimant to receive credit for actual sales during the 
relevant period. CARP Report, para. 54. Additionally, the Panel noted 
that Ms. Evelyn and Mr. Curry failed to propose any alternative 
systematic method or formula for calculating a claimant's share of the 
royalties. CARP Report, paras. 40 and 48.
    Although neither Ms. Evelyn nor Mr. Curry challenge the Settling 
Parties' formula for determining each claimant's share of the 
royalties, Mr. Curry does challenge application of the formula solely 
to himself and Ms. Evelyn,--that is, not the Settling Parties. The 
Register concludes that the Panel did not act arbitrarily by using the 
formula to determine Mr. Curry's and Ms. Evelyn's proportionate share 
of the royalties from actual sales data. First, the Panel found that 
the Settling Parties represent all claims except those of Mr. Curry and 
Ms. Evelyn. CARP Report, paras. 36 and 37. Second, based on this 
finding and application of the simple mathematical concept that the sum 
of the parts must equal the whole, the Panel accepted the presentation 
of evidence for the two individual claimants' share of the royalties 
and deducted this sum from 100% to determine the Settling Parties' 
share of the royalties. CARP Report, para. 69. Such an approach is 
logical and consistent and was fully within the discretion of the 
Panel.
    Ms. Evelyn raises a second challenge to the methodology utilized by 
the Panel. Specifically, she challenges the fact that the Panel 
considered the total sales figures for 1992, rather than only those 
sales which occurred during the time period that the Audio Home 
Recording Act was in effect (October 28, 1992 to December 31, 1992). 
The Register determines that this challenge is not fatal to the Panel's 
action. First, Ms. Evelyn did not file a claim to DART royalties for 
1992, and her distribution is not affected by the Panel's determination 
for 1992. Second, there is no evidence in the record that suggests that 
the Panel could have ascertained the universe of record sales, and the 
sales of Mr. Curry, for the period from October 28, 1992, through 
December 31, 1992. Nevertheless, the Panel determined Mr. Curry's 
percentage claim from the annual sales data under an apparent 
assumption that record sales occurred at the same rate throughout 1992. 
A careful review of the record reveals no evidence suggesting that the 
rate of record sales during the effective period of the Audio Home 
Recording Act was statistically different from the rate of sales 
throughout the remainder of the calendar year. Consequently, the 
Register finds the Panel's use of the annual sales figures not 
arbitrary, although evidence of record sales from this period would 
have provided the ideal precision for application of the formula. See, 
National Association of Broadcasters v. Copyright Royalty Tribunal, 675 
F.2d 367, 379 n.10 (D.C. Cir. 1982) (Tribunal's findings acceptable 
``though of less than ideal clarity,'' so long as ``the path which the 
agency follows can reasonably be discerned.'').
    3. Application of Methodology to Record Evidence. The Register 
finds that the Panel did act arbitrarily in determining Mr. Curry's 
<SUP>7 share of the 1992, 1993, and 1994 Publishers Subfunds. The Panel 
erred by determining that Mr. Curry, as writer, and Mr. Curry, as 
publisher, were to receive the same award.
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    \7\ In his capacity as sole representative of Tajai Music, Inc., 
Mr. Curry filed claims to the 1992, 1993, and 1994 Publishers 
Subfunds.
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    In determining Mr. Curry's record sales for the Writers Subfunds, 
the Panel prorated his sales based on his percentage contribution as 
author to each musical work. For example, the Panel accorded Mr. Curry 
credit for one-half, 50%, of the total record sales for the musical 
work ``Burnin'' because he was the co-author of the work. CARP Report, 
para. 34. While this approach is appropriate in determining Mr. Curry's 
share of the Writers Subfunds, it is contrary to the evidence in 
determining his share of the Publishers Subfunds. There is no evidence 
in the record which demonstrates that Mr. Curry was entitled to 
anything less than a one hundred percent publishing interest from the 
sales of the musical works credited to him by the Panel for the 
Publishers Subfunds. The Register is, therefore, recommending that Mr. 
Curry's award for the 1992-1994 Publishers Subfunds be adjusted to 
reflect a one hundred percent

[[Page 6562]]

publishing interest for Mr. Curry as sole representative of Tajai.
    One final point raised by Mr. Curry and Ms. Evelyn concerns the use 
of SoundScan as the definitive source of record sales data. The Report, 
however, clearly indicates that the Panel did consider evidence 
submitted by Mr. Curry regarding sales through record companies, and 
that after due consideration, the Panel rejected the evidence because 
he failed to provide the universe of record sales for these companies 
during the relevant time. CARP Report, para. 40. The Panel's decision 
to reject the record sales data submitted by Mr. Curry and rely upon 
the SoundScan data was not arbitrary.
    Similarly, Ms. Evelyn's contention that the Settling Parties failed 
to provide additional data concerning additional DART eligible songs is 
without merit. The Panel carefully analyzed her direct case and found 
no credible evidence of sales or performances in the U.S. during the 
relevant period, CARP Report, paras. 41-48; the Panel did credit her 
with sales of musical works introduced by the Settling Parties. CARP 
Report, para. 35. Furthermore, the Register notes that the evidence 
presented by the Settling Parties, and adopted by the Panel, for record 
sales of Ms. Evelyn and Mr. Curry credit them both with greater sales 
than the evidence they presented in their written direct cases, thereby 
increasing the size of their respective awards. CARP Report, para. 62 
and 64.
    As discussed earlier in this Order, the Librarian's scope of review 
is very narrow. The limited scope certainly does not extend to 
reconsideration of the relative weight to be accorded particular 
evidence, and the Librarian cannot second guess a CARP's balance and 
consideration of the evidence, unless it runs counter to the evidence 
presented to it. Motor Vehicle Manufacturers Association v. State Farm 
Mutual Auto Insurance Co., 463 U.S. 29, 43 (1983).

Conclusion

    For the above stated reasons, the Register recommends that the 
following should be the percentages for the distribution of the 
royalties in the 1992, 1993, and 1994 Musical Works Funds:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       1992                            1993                            1994             
                                                         -----------------------------------------------------------------------------------------------
                                                              Writers       Publishers        Writers       Publishers        Writers       Publishers  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Curry...................................................       00.007096       00.014745       00.001608       00.003802       00.003398       00.007066
Evelyn..................................................       NA              NA              00.000084       NA              00.000082       NA       
Settling Parties........................................       99.992904       99.985255       99.998308       99.996198       99.99652        99.992934
                                                         -----------------------------------------------------------------------------------------------
      Total.............................................      100.00          100.00          100.00          100.00          100.00          100.00    
--------------------------------------------------------------------------------------------------------------------------------------------------------

II. Order of the Librarian of Congress

    Having duly considered the recommendation of the Register of 
Copyrights regarding the report of the Copyright Arbitration Royalty 
Panel in the distribution of the 1992-1994 Musical Works Funds, the 
Librarian of Congress fully endorses and adopts her recommendation to 
accept the Panel's decision in part and reject it in part. For the 
reasons stated in the Register's recommendation, the Librarian is 
exercising his authority under 17 U.S.C. 802(f) and is issuing an order 
setting the distribution of the royalties in the 1992-1994 Musical 
Works Funds.
    Wherefore, it is ordered that the royalties in the 1992-1994 
Musical Works Funds shall be distributed according to the following 
percentages:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       1992                            1993                            1994             
                                                         -----------------------------------------------------------------------------------------------
                                                              Writers       Publishers        Writers       Publishers        Writers       Publishers  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Curry...................................................       00.007096       00.014745       00.001608       00.003802       00.003398       00.007066
Evelyn..................................................       NA              NA              00.000084       NA              00.000082       NA       
Settling Parties........................................       99.992904       99.985255       99.998308       99.996198       99.99652        99.992934
                                                         -----------------------------------------------------------------------------------------------
      Total.............................................      100.00          100.00          100.00          100.00          100.00          100.00    
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As provided in 17 U.S.C. 802(g), the period for appealing this 
Order to the United States Court of Appeals for the District of 
Columbia is 30 days from the effective date of this Order.

    Dated: February 3, 1997.
Marybeth Peters,
Register of Copyrights.
    Approved by:
James H. Billington,
The Librarian of Congress.
[FR Doc. 97-3316 Filed 2-11-97; 8:45 am]
BILLING CODE 1410-33-P