Copyright Office Fees

AGENCY:

Copyright Office, Library of Congress.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Copyright Office is proposing the adoption of new fees for the registration of claims, recordation of documents, special services, Licensing Division services, and processing of FOIA requests. The proposed fees would recover a significant part of the costs to the Office for services that benefit both copyright owners and the public, and provide full cost recovery for many services which benefit only or primarily the user of that service. As part of the fee setting process, the Office is providing an opportunity to the public to comment on the proposed changes before submitting the fee schedule to Congress for review.

DATES:

Comments must be received in the Office of the General Counsel of the Copyright Office no later than May 14, 2012.

ADDRESSES:

The Copyright Office strongly prefers that comments be submitted electronically. A comment page containing a comment form is posted on the Copyright Office Web site at http://www.copyright.gov/docs/newfees/comments/. The Web site interface requires submitters to complete a form specifying name and organization, as applicable, and to upload comments as an attachment via a browse button. To meet accessibility standards, all comments must be uploaded in a single file not to exceed six megabytes (MB) in one of the following formats: The Adobe Portable Document File (PDF) format that contains searchable, accessible text (not an image); Microsoft Word; WordPerfect; Rich Text Format (RTF); or ASCII text file format (not a scanned document). The form and face of the comments must include both the name of the submitter and the organization. All comments will be posted publicly on the Copyright Office Web site exactly as they are received, along with names and organizations. If electronic submission of comments is not feasible, please contact the Copyright Office at (202) 707-8380 for special instructions.

FOR FURTHER INFORMATION CONTACT:

Megan Rivet, Budget Analyst, or Tanya Sandros, Deputy General Counsel, at (202) 707-8380.

SUPPLEMENTARY INFORMATION:

The Copyright Act (the “Copyright Act” or “Act”) provides that the Register of Copyrights may, by regulation, adjust fees for certain, enumerated services based upon a study of costs incurred by the Copyright Office. The study must consider the timing of any adjustment as well as the authority to use such fees consistent with the budget. The Register's proposed changes are subject to review by Congress. However, the Register may implement the changes at the end of 120 days after submitting them to Congress in conjunction with an economic analysis unless, within that 120 day period, Congress enacts a law stating in substance that Congress does not approve the schedule. The Act further authorizes the Register to establish fees for services that are not enumerated in the statute, including, for example, the cost of preparing copies of Copyright Office records, based on the cost of providing the service. The Register is not required to submit these additional fees to Congress. See 17 U.S.C. 708(a)-(b).

Congress amended the Copyright Act in 1997 to allow the Register to set fees for Copyright Office services. Since this time, the Office has undertaken a fee study approximately every three years; the last one was undertaken in 2008 and implemented in 2009. See 74 FR 32805 (July 9, 2009). A new fee study was initiated on October 1, 2011 at the direction of the newly appointed Register of Copyrights. The study was identified in the Register's public report, “Priorities and Special Projects for the United States Copyright Office” as a key project for fiscal year 2012. See http://www.copyright.gov/docs/priorities.pdf. In executing the study, the Office is acutely aware of its fiscal responsibilities as an agency of the federal government, including the responsibility to set sound monetary policies and develop a budget derived primarily from fees for services. However, the Office is also deeply cognizant of its responsibility to authors and other copyright owners, and to users of copyrighted works, to price services in a manner that encourages participation in the Nation's registration and recordation systems and ensures a robust database of copyright information for purposes of commerce and the public good. Indeed, the Copyright Act requires that fees “shall be fair and equitable and give due consideration to the objectives of the copyright system.” 17 U.S.C. 708(b)(4).

The Register may not adjust fees more than that necessary to cover the reasonable costs incurred by the Copyright Office for its services plus a reasonable inflation adjustment to account for any estimated increase in costs. In fact, the Office's fees have not historically recovered full costs for all services. When fees were adjusted in 2009, the Office was recovering approximately 61.4% of its costs for services. In fiscal year 2011, fee receipts covered only 59.5% of the Office's costs, a recovery rate that is insufficient by any standard.

In the study at hand, the Office has calculated its true costs using a traditional methodology. The cost study uses an activity based costing methodology to calculate full costs of each Copyright Office service. The study includes a review of both direct and indirect costs associated with fee services in fiscal 2011. Most copyright activities are labor intensive and staff costs are tracked for each of the various fee services. The study requires directly assigning non-personnel costs that are associated with just one fee service. Once direct costs were applied, administrative and indirect costs related to fee services were allocated proportionately. The Office also considered statutory fee setting requirements, economic factors, and the objectives of the copyright system in arriving at the proposed fees.

The Office also sought comments from the public in a Notice of Inquiry published on January 24, 2012 on two specific issues: (1) Whether special consideration should be provided to individual author-claimants registering a single work, and (2) the identification of any special services and corresponding fees the Office should expand, improve or add to its offerings at this time, including, for example, additional expedited services and fee options. 77 FR 3506 (January 24, 2012). The proposed fee schedule published today reflects the public's comments on these issues.

The Office also acknowledges that commenters offered many additional interesting proposals that we appreciate but will not address today in the context of this fee study. Many of these proposals are not ready for action because the Office is considering them in the context of other major projects that are technical or legal in nature. Such proposals include, for example, the question of whether photographers may pay a flat fee for registration of photographs in the context of a business to business submission model; the question of whether copyright registration certificates and/or recorded documents can be made available online for free; and the question of whether the Office should accept deposits of works in electronic formats that may be insufficient for the Library's “best edition” requirement. The Office greatly appreciates these issues and suggestions and it will continue to consider them outside of this fee study.

The purpose of this Notice of Proposed Rulemaking is to offer the public an opportunity to comment on the Register's proposed fee adjustments, all of which would be implemented early in fiscal year 2013.

I. Registration, Recordation, and Related Service Fees

1. Basic registration. The Office will soon eliminate Form CO and will offer two options for filing basic registrations beginning this summer: online filings and the traditional paper application. See 76 FR 60774 (September 30, 2011). The Office receives approximately 87% of new copyright claims electronically through its online filing system. Such filings are far less costly to process. Nevertheless, the Office understands that some claimants have good reasons for preferring paper forms, despite the higher cost to the claimant, and the Office will continue to offer this option. However, the Office will continue to charge a higher fee for filing a claim using a paper application to encourage the use of the online filing option. Online filing is the option that is most efficient to the Office as well as the claimant. On average, a claimant who files an application online will receive a registration (or a denial of a registration) within 3 months, while a claimant filing with paper forms will wait about 10 months.

The Office is also proposing to offer a reduced fee to a single author who is also the claimant for the online filing of a claim in a single work that is not a work made for hire, for the policy reasons discussed below and after considering the comments received from the public in response to the January 24, 2012 Notice of Inquiry. The Copyright Office is committed to maintaining an affordable copyright registration system. No author or copyright owner should be deterred from registering a copyright because the cost of registration is too high, and the Office is mindful that there is not endless elasticity in pricing; pricing is a factor in whether one chooses to register. Many of the works that come from independent creators are critical to the Nation's economy and the Library of Congress' mint record and collection of American creativity. The copyright law itself is designed to promote and protect authorship and this includes facilitating registration for the establishment of a public record of copyright claims and to enable the copyright owner to seek all the remedies available in the Copyright Act. Similarly, users of copyrighted works rely on the Copyright Office registration records to identify copyright owners when they require licenses. If individual authors do not register and are therefore not part of the public database, they more than any other group of copyright owners may be difficult to find.

Commenters to the Notice of Inquiry support a separate and lower fee for single authors. They note, as did the Office, that such applications are easier to process; that registration provides important remedies for the author; and that registration benefits the public by creating a more robust public record.

The Office therefore sees a clear benefit to offering a lower fee to these claimants as an incentive to register their works. The details for filing such a claim will be fully set forth in a separate notice of proposed rulemaking later this year.

In setting the fees for basic registration, the Office closely examined its costs and recent success in recovering them. In fiscal year 2011, the Office recovered only 64% of its cost to process an online claim and only 58% of its cost to process paper applications. In light of these figures, the Office proposes increasing fees for both options for filing claims in order to recover a larger percentage of the Office's cost, but at levels that will still encourage copyright owners to register their works. As mentioned above, elasticity is an important consideration in setting fees. Copyright registration is a voluntary system, not required by law, and pricing that is unaffordable or which exceeds the reasonable expectation of a copyright owner will discourage or prevent participation in the system—to the public's detriment.

At this time, the Office proposes raising the fee for an online claim from $35 to $65 and the fee for filing a claim using a paper application from $65 to $100, but adopting a new fee of $45 for single authors filing an online claim for a single work that is not a work made for hire. As specified in the chart at the end of this document, the Office is also proposing to raise the registration fees for group registrations, mask works, and vessel hulls based upon the principles discussed above in order to recover a greater percentage of the basic costs for processing these claims.

2. Renewals. The Office is proposing a reduction in the fee for filing a renewal claim from $115 to $100. Renewal registration was required in the 28th year for works published or registered prior to 1978. The law no longer requires registration for the renewal term to vest. Renewal registration primarily serves those parties who need a certificate of registration for various commercial purposes. The cost study reveals that the actual cost of processing these claims is quite high. To set a fee to recover full cost would be prohibitive and negate the goals of the Office in encouraging registration of these older claims, many of which may still be commercially viable, and incorporating these claims into the public record. Similarly, the Office is proposing to reduce the fee for filing a Renewal Addendum, the necessary filing for renewal when basic registration for the work was not made during the original term, from $220 to $100 to avoid deterring these registrations.

3. Recordation. As outlined in the Register's Priorities and Special Projects document, the Office will reengineer the business processes for its recordation services, which allow copyright owners and other people to publicly record in the Copyright Office certain documents related to copyright interests, including, for example, assignments, licenses, mortgages and wills. There are some legal benefits to recording these documents but it is not required by law. The Office has begun discussions with stakeholders on topics including searchability and the feasibility of connecting to privately held records and databases, among others, and a plan will be finalized in the next 18 months. However, as of this writing, the Office is accepting paper submissions and, through a limited pilot, filings submitted on flashsticks. In either case, the basic cost of accepting, reviewing, indexing and recording a document, especially documents that are hundreds of pages long and have multiple titles, has not been recovered in recent years. For this reason, the Office is proposing an increase in the basic recordation fee from $105 to $120 and a slight increase in the fee for processing documents with multiple titles from $30 to $35 to approach full cost recovery.

4. Other related services. Other services including, for example, a receipt for a deposit under section 407 of the Act and certification of Copyright Office records, primarily benefit only the user of that service. In these instances, no overriding principles of public policy dictate the recovery of less than the direct cost of providing the service. This approach is supported by the Office of Management and Budget's guidance to Federal agencies on approaches to establishing fees for services, which states: “It is the objective of the United States government to * * * promote efficient allocation of the Nation's resources by establishing charges for special benefits provided to the recipient that are at least as great as costs to the Government of providing the special benefits.” See OMB Circular No. A-25 Revised at http://www.whitehouse.gov/omb/circulars_a025. The Office is therefore proposing to increase its fees for optional services and for services that are for personal or commercial purposes to recover fully its direct costs in most instances. One major exception is the fee for reference search reports, for which the Office proposes to increase fees but to recover only partial costs.

Historically, the fees for a reference search report have recovered only a small portion of the costs of the service. The Office concludes that it cannot set a fee at full cost recovery as a practical matter because the cost would be too high and it would be far out of the range of fees charged by private-sector providers of this service. A very high fee would prejudice requestors who, for legal reasons, need their searches prepared and certified by the Copyright Office. Therefore, the Office has adjusted its fees for reference search reports upward to recover more but not all of its direct costs for the service. The proposed fee is a $400 minimum with an additional fee of $200 for every hour after the first two hours.

II. Service Fees

The Copyright Office provides a number of services not enumerated in the Copyright Act and, as stated above, the Register has statutory authority to establish fees for such services. These include fees for expedited service (“special handling”), secure test processing, requests to reconsider rejections of claims, and fees for reproducing Copyright Office records, among others. The proposed fees reflect the costs of providing these services, Office-wide cost recovery, and policy considerations. Many cost adjustments reflect inflationary increases for the service. In other cases, the fees have not been adjusted, e.g., basic photocopying costs; or costs have decreased and the fees have been lowered, e.g., copying to CDs or DVDs. While this notice will not discuss proposed adjustments to fees that are set to recover costs or account for inflation, the Office believes further clarification is useful to understand the change in the fee schedule for the following services:

1. Expedited handling. The Office offers expedited services for processing claims; recording documents; searching, retrieving and copying Copyright Office records; and certifying registrations and other documents in an advanced timeframe. The proposed fees for these services will increase slightly to capture increased costs due to inflation. These fees continue to reflect the cost of the service, plus a premium payment that reflects the value of the expedited service to the customer and the disruption to the Office's regular statutory services.

In reviewing the fees for expedited services, the Office considered comments it received in response to the January 24, 2012 Notice of Inquiry as to whether the Office should offer additional services for expedited handling of claims that do not fit into the current categories for “Special Handling.” Historically Special Handling has been limited to cases where a compelling need for the service exists due to pending or prospective litigation, customs matters, or contracts or publishing deadlines that necessitate the expedited issuance of a certificate of registration. One suggestion was to drop the “compelling need” requirement for special handling and to offer a tiered fee schedule for special handling based on the turnaround time for processing the claim. The Office believes the concept of expedited services warrants further analysis and it will publish a separate public notice to address the issues fully. A decision on this issue, however, will not affect the fee for the service in the near future. The Office also considered the suggestion to adopt a tiered system for handling expedited claims, an option it will continue to consider but will not implement at this point in time, in part due to limited resources.

2. Secure test processing. The Office offers a special service for inspecting deposits of secure tests. The Office provides a private review of the full deposit of a secure test and compares it with the accompanying identifying material that does not disclose secret materials. The review process may include one or more staff depending on the number of claims being processed at any one time. For this reason, the proposed fee for this labor intensive service reflects an upward adjustment based on the processing cost to the Office and the number of staff doing the review; as such, the Office proposes a $250 fee per staff member per hour.

3. Requests for reconsideration of rejections of claims. A claimant whose work is rejected for registration may request reconsideration of its claim through a two-tiered administrative process. A staff attorney in the Registration Program who is not involved in the initial review of the claim handles the first request for reconsideration. If the work is not registered at this stage, the claimant may make a second request for reconsideration. Second requests are considered by the Review Board consisting of the Register of Copyrights, the General Counsel, and the Associate Register for the Registration Program or their qualified delegates. The fees for the first and second reconsideration of a single claim are not scheduled for change, in part because the Office recognizes that an increase in fees may prohibit a claimant from pursuing subsequent review. However, the Office is eliminating its practice of allowing the joinder of multiple related claims into a single request for reconsideration because there is no reduced cost in processing such claims, each of which must be analyzed separately. Instead, the fee for a request for reconsideration will cover only the works in a single original claim for registration.

III. Licensing Fees

The Licensing Division of the Copyright Office is responsible for administering various aspects of the statutory licenses set forth in sections 111-122 of the Copyright Act, including the processing of the statements of account filed along with royalties for use of the cable and satellite statutory licenses in accordance with sections 111 and 119, respectively. The Licensing Division also receives quarterly statements of account and royalties from companies that import and distribute or manufacture and distribute digital audio recording devices and media pursuant to Chapter 10 of the Act. In addition, this division accepts for recordation certain contracts and licensing agreements, notices of intent to use the statutory licenses in sections 112 and 114, and notices of intent to use musical works pursuant to the section 115 compulsory license, and it provides search and copying services to the public. Proposed fees are based either on a separate cost study related to the budget and expenditures of the Licensing Division or, in the case where the Licensing Division offers services that parallel other services in the Copyright Office, fees are based on the cost study covering the Copyright Office services. Fees which are being established for the first time are more fully explained below:

1. Filing fee for Cable and Satellite Statements of Account. In 2010, Congress enacted the Satellite Television Extension and Localism Act (“STELA”) which, for the first time, granted authority to the Office to set fees for filing cable and satellite statements of account. Prior to 2010, the cost of processing the statements was covered completely by the royalty fees collected under the statutory licenses for the benefit of the copyright owners. STELA allows the Office to apportion the cost of processing the statements of account equally between the copyright owners and the statutory licensees. According to section 708(a), fees “shall be reasonable and may not exceed one-half of the cost necessary to cover reasonable expenses incurred by the Copyright Office for the collection and administration of the statements of account and any royalty fees deposited with such statements.”

In conducting its cost study, the Office took into account the reengineering efforts of the Licensing Division (the purpose of which is to develop an online filing system) and the equities associated with apportioning costs fairly among the licensees. Consequently, the Office is proposing a three-tiered fee schedule that corresponds to the filing of the different types of cable statements of account. The fee for licensees who file a SA1 form and currently pay only $52 each accounting period is set at $15, the low end of the scale; whereas the fee for cable systems filing the SA2 form is set slightly higher at $20 because of the review of the basic calculation of the royalty fee for this group. Licensees who file the more complicated cable statements of account, the SA3 form, necessarily are expected to pay a correspondingly higher fee because of the time associated with reviewing the information on the forms, especially the classification of community groups and television stations. Thus, the proposed fee for filing the SA3 form is set at $500. Overall, these fees represent approximately one-half the cost on average of processing the current filings. The Office also recognizes that the proposed fees account for certain reengineering costs that may decline over time. Consequently, the Office anticipates initiating another targeted cost study after it has gained experience with the new electronic filing system.

The new fee schedule also includes a $75 filing fee for a satellite statement of account. In this case, there is a single statement of account applicable to all satellite carriers and a single fee for filing that statement. The filing fee of $75 is set at this level because the forms require some examination beyond that afforded to the SA1 and SA2 forms filed by cable operators, but they do not require the particularized examination that is afforded to the complex Form SA3 cable statement of account. As with the filing fees for the cable statements of account, the filing fee for the satellite statement of account represents no more than half the cost of processing this form.

2. Fee for filing Notices of Intention to Make and Distribute Phonorecords electronically. The Office accepts Notices of Intention to Obtain a Compulsory License for use of the statutory license to make and distribute phonorecords when the notice cannot be served on the copyright owner or when the Copyright Office records do not include the name and address of the copyright owner. Historically, this statutory license was used to obtain the rights to use a particular musical work to make a cover record, and the Office received very few such notices.

The advent of the digital age, however, changed the law and how businesses utilize the section 115 license. Today, the license is viewed as an acceptable way to license the reproduction and electronic distribution of the musical work embedded in a digital phonorecord. Consequently, the use of the license has expanded exponentially and the Office has responded by investing in the development of an online filing system. The Office is optimistic that the first iteration of the online filing system will be operational at the time the proposed fees become final. In anticipation of that day, the Office has undertaken a cost study to determine a basic filing fee and the costs for additional titles for an electronic notice which, based on recent experience and the comments to the Office's earlier Notice of Inquiry regarding additional services and fees, can include tens of thousands of titles. Based on this cost study, the Office is proposing to set the fee at $75 for each Notice with a single title. Notices with additional titles will incur an additional $20 fee per ten titles for a paper submission and an additional $10 fee per hundred titles for an online submission (which works out to $0.10 per additional title). In light of the low proposed fee for additional titles for filing a Notice online, the Office does not see a need to consider a cap on the total fees for any one Notice filed in this manner as suggested in a comment to the Office's January 24, 2012 Notice of Inquiry. As with the filing fees for the cable and satellite statements of account, the Office will reevaluate the fees for electronic filings in the future after gaining experience with the systems and the related costs.

IV. FOIA Fees

The Copyright Office last adjusted its fees for services associated with the Freedom of Information Act in 1999. See 64 FR 29518 (June 1, 1999). Fees are set in accordance with the guidelines established by the Office of Management and Budget in accordance with the OMB Uniform Freedom of Information Act Fee Schedule and Guidelines. 52 FR 10,012 (March 27, 1987). Currently, the Office has an hourly search fee of $65 for entities other than educational institutions, non-commercial scientific institutions, and representatives of the news media which mirrored the fee for searching Copyright Office records in 1999 when the fee was revised. Today's proposed increase in the FOIA fee schedule brings this and other FOIA fees up to date.

The OMB guidelines allow agencies to recoup the full allowable direct costs they incur and provide that separate rates may be established for searching the records and reviewing responsive records to determine, e.g., the applicability of an exemption. In both cases, where a single class of reviewers is typically involved in providing the service, agencies may establish a reasonable agency-wide average fee. Accordingly, the Office proposes adoption of a two-tiered fee structure for searches to reflect the direct costs of the service depending upon the level of the personnel conducting the search. The proposed fee for a search based on a FOIA request is set at $15 for the first half hour and $7.50 for each additional 15 minutes if conducted by administrative staff, and $35 for the first half hour and $17.50 for each additional 15 minutes if conducted by professional staff. Similarly, the Office is proposing to adopt new fees for reviewing the documents at the same rates as those proposed for a FOIA search. However, the fees for reviewing the documents will be based on 15 minute units and without a minimum fee. In addition, the Office is proposing to remove the separate fee for a copy of a certificate of copyright registration and the separate fee for certification services, currently listed in §§ 203.6(b)(1) and (4), respectively. The OMB guidelines state that such services are not covered by FOIA or its fee structure and that an agency should recover the full costs of such services. Therefore, the Office proposes that the FOIA fees for these services should be the same as the Copyright Office fees for these same services listed in the proposed schedule.

V. Schedule of Proposed Fees

The chart below sets forth the current and proposed fees for services related to Registration, Recordation; Special Services; the Licensing Division; and FOIA requests.

VI. Technical Amendments

The Office will adopt technical amendments as needed to conform existing regulations to the changes proposed in this notice.

VII. Request for Comments

The Copyright Office is publishing the proposed new fee schedule to provide the public with an opportunity to comment. The Office anticipates implementation of the new fees with the beginning of the new fiscal year, October 1, 2012.