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: Final rule.

SUMMARY: The U.S. Copyright Office is issuing a final rule regarding how the
Copyright Act’s derivative works exception to termination rights applies to the statutory
mechanical blanket license established by the Music Modernization Act. The final rule
also addresses other matters relevant to identifying the proper payee to whom the
mechanical licensing collective must distribute royalties. Among other things, the Office
is adopting regulations addressing the mechanical licensing collective’s distribution of
matched historical royalties and administration of ownership transfers, other royalty
payee changes, and related disputes.
DATES: This rule is effective [INSERT DATE 30 DAYS AFTER DATE OF
PUBLICATION IN THE FEDERAL REGISTER]. However, compliance by the
mechanical licensing collective, other than with respect to §§ 210.27(g)(2)(ii)(B)(1),
210.29(b)(4)(i)(C), 210.29(k), and 210.30(c)(1)(i)(B), is not required until the first
distribution of royalties based on the first payee snapshot taken after [INSERT DATE 90
DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER]. The
Copyright Office may, upon request, extend the compliance deadlines in its discretion by
providing public notice through its website.

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 final rule subsequent to a
supplemental notice of proposed rulemaking (“SNPRM”), published in the Federal
Register on September 26, 2023,1 and a notice of proposed rulemaking (“NPRM”),
published in the Federal Register on October 25, 2022.2 This final rule assumes
familiarity with the NPRM and SNPRM, as well as the public comments received in
response to those notices.3
While the final rule retains many elements from the SNPRM, it also adopts a
number of changes in response to the public comments, including a scaling back of
certain proposals. We have adopted a number of commenter suggestions where
reasonable, and have striven to establish a fair and balanced approach to the issues
presented in this proceeding. In particular, the Office has endeavored to find solutions to
the practical and administrative concerns that were raised by commenters. We are
thankful for their participation in this process.

88 FR 65908 (Sept. 26, 2023).

87 FR 64405 (Oct. 25, 2022).

The NPRM stemmed from a previous rulemaking, 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-parte-communications.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/musicmodernization. Comments received in response to the NPRM and SNPRM are available at
https://copyright.gov/rulemaking/mma-termination/. References to the public comments are by
party name (abbreviated where appropriate), followed by “NPRM Initial Comments,” “NPRM
Reply Comments,” “SNPRM Initial Comments,” “SNPRM Reply Comments,” or “Ex Parte
Letter,” as appropriate.
This document first summarizes the Office’s earlier proposals and the public
comments. It next addresses questions raised regarding our rulemaking authority. Finally,
it discusses the different parts of the final rule: termination and the derivative works
exception; the copyright owner entitled to blanket license royalties; matched historical
royalties; ownership transfers and royalty payee changes; disputes; the corrective royalty
adjustment; and the rule’s effective date and compliance deadline.
A. The NPRM
The Office commenced this proceeding after the Mechanical Licensing Collective
(“MLC”)4 adopted a termination dispute policy (“Termination Policy”) that conflicted
with prior Office guidance and was based on an erroneous interpretation of how the
Copyright Act’s derivative works exception (“Exception”) to termination rights applies to
the statutory mechanical blanket license (“blanket license”) established by the Orrin G.
Hatch-Bob Goodlatte Music Modernization Act (“MMA”).5 The Office concluded it was
necessary to address the legal issues more directly, including how termination law and
the Exception intersect with the blanket license.6 In the NPRM, it explained that
clarifying the issues “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.”7 The NPRM
contained a detailed discussion of the procedural background leading to this rulemaking,8

The preamble uses the terms “Mechanical Licensing Collective” or “MLC” to refer to the
currently designated mechanical licensing collective. The regulatory text uses the lowercase
statutory term “mechanical licensing collective,” as the regulations apply to any designated
mechanical licensing collective, including the current or any future designee.
5

87 FR 64405, 64407.

Id.

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.”).
8

Id. at 64406–07.

the Office’s regulatory authority,9 and legal background about the Copyright Act’s
termination provisions and the Exception.10
The Office then analyzed the application of the Exception in the context of the
blanket license and preliminarily concluded that the MLC’s Termination Policy was
“inconsistent with the law.”11 We 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.”12 This means that “the posttermination 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.”13
The Office proposed a rule to recognize the payee under the blanket license who
is legally entitled to royalties following a statutory termination.14 We also proposed to
require the MLC to immediately repeal its Termination Policy in full after concluding
that it was “contrary to the Office’s interpretation of current law.”15 We 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 it made based on “an erroneous
understanding and application of current law.”16
After the NPRM was published, the MLC said that it voluntarily “suspended [its
Termination Policy] pending the outcome of the [Office’s] rulemaking proceeding” and

Id. at 64407–08.

Id. at 64408–10.

Id. at 64410–11.

Id. at 64411.

Id.

Id. at 64411–12.

Id. at 64412.

Id.

will “hold[] all royalties for uses of musical works that are subject to statutory
termination claims beginning with the royalties for the October 2022 usage period, which
would have been initially distributed in January 2023.”17 To the Office’s knowledge, the
MLC continues to hold such royalties.
B. The NPRM Comments
The Office received over 40 public comments in response to the NPRM. These
comments reflected the views of hundreds of interested parties, including songwriters,
music publishers and administrators, record companies, public interest groups,
academics, and practitioners. Most commenters, including multiple music publishers and
administrators, generally supported the NPRM.18 While some commenters raised
concerns with certain aspects of the NPRM,19 the National Music Publishers’ Association
(“NMPA”) was the only commenter to oppose the proposed rule more broadly, though it
supported the NPRM’s goal of “ensuring that royalties for uses under the Section 115(d)
blanket license . . . are paid to the proper copyright owner.”20
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:

The MLC, Policies, https://www.themlc.com/dispute-policy (last visited June 14, 2024).

See, e.g., Authors All. et al. NPRM Initial Comments at 1–3; BMG Rights Mgmt. NPRM
Initial Comments at 1–2; BMG Rights Mgmt. NPRM Reply Comments at 1; ClearBox Rights
NPRM Initial Comments at 2, 6–8; Fishman & Garcia NPRM Initial Comments at 1–4; Gates
NPRM Reply Comments; Howard NPRM Initial Comments at 1–2; Howard NPRM Reply
Comments at 2–3; King, Holmes, Paterno & Soriano LLP NPRM Initial Comments; Landmann
NPRM Initial Comments; Miller NPRM Initial Comments; North Music Grp. NPRM Reply
Comments at 2–3; NSAI NPRM Initial Comments at 3; Promopub NPRM Initial Comments at 1–
2; Promopub NPRM Reply Comments at 1–2; Recording Academy NPRM Reply Comments at
2–3; Rights Recapture NPRM Initial Comments; SGA et al. NPRM Initial Comments at 1–2, 5;
SONA et al. NPRM Initial Comments at 2–3; SONA et al. NPRM Reply Comments at 3;
Songwriters NPRM Reply Comments at 1; Wixen Music Publ’g NPRM Initial Comments at 1–2.
See, e.g., CMPA NPRM Initial Comments at 1–2; A2IM & RIAA NPRM Reply Comments at
1–2; MPA NPRM Reply Comments at 2–5.
20

See generally NMPA NPRM Initial Comments; NMPA Ex Parte Letter (Feb. 6, 2023).

•

Application of the Exception to other types of statutory mechanical licenses;21

•

Application of the Exception to voluntary licenses;22

•

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;23

•

Procedures concerning notice, documentation, timing, and other matters relating
to the MLC’s implementation of a termination notification;24 and

•

Procedures concerning termination disputes and related confidential
information.25

The MLC emphasized the importance of the Office providing guidance regarding its
termination-related procedures, explaining that rules addressing these procedures are
“essential to processing royalties in connection with statutory termination claims” and
“would provide important guidance to parties involved in termination claims.”26
C. The SNPRM
After considering the requests for further guidance and other comments received,
the Office issued an SNPRM modifying the NPRM, providing additional detail, and
expanding the NPRM’s scope. In addition to addressing the Exception, the SNPRM

See, e.g., MLC NPRM Initial Comments at 6; MLC NPRM Reply Comments at 2; ClearBox
Rights NPRM Initial Comments at 6; ClearBox Rights NPRM Reply Comments at 2; Howard
NPRM Initial Comments at 5; King, Holmes, Paterno & Soriano LLP NPRM Initial Comments.
See, e.g., MLC NPRM Initial Comments at 4–6; MLC NPRM Reply Comments at 2; ClearBox
Rights NPRM Initial Comments at 6; ClearBox Rights NPRM Reply Comments at 2; Howard
NPRM Initial Comments at 5; Rights Recapture NPRM Initial Comments.
See, e.g., MLC NPRM Initial Comments at 6–8; ClearBox Rights NPRM Reply Comments at
3–4; ClearBox Rights Ex Parte Letter at 2–4 (June 28, 2023); Howard NPRM Initial Comments
at 6; Promopub NPRM Initial Comments at 2; Promopub NPRM Reply Comments at 3; North
Music Grp. NPRM Reply Comments at 2.
See, e.g., MLC NPRM Initial Comments at 10–11; ClearBox Rights NPRM Initial Comments
at 8; ClearBox Rights NPRM Reply Comments at 5–6; Howard NPRM Initial Comments at 3–5;
Howard NPRM Reply Comments at 2–3; SGA et al. NPRM Initial Comments at 2, 6–8.
See, e.g., MLC NPRM Initial Comments at 11–14; ClearBox Rights NPRM Reply Comments
at 6.
26

MLC NPRM Initial Comments at 9–10; see also MLC NPRM Reply Comments at 2.

addressed and sought comments on other matters relevant to identifying the proper payee
to whom the MLC must distribute royalties. Such matters included issues related to the
MLC’s distribution of matched historical royalties and administration of ownership
transfers, other royalty payee changes, and related disputes. While requests for additional
guidance largely pertained to termination-related issues, those requests and other
comments suggested that more comprehensive regulations would be beneficial to the
MLC, publishers, songwriters, and the wider music industry. As the SNPRM explained,
“[t]he accurate distribution of royalties is a core objective of the MLC” and “[a]dopting
the [supplemental proposed rule] would establish standards and settle expectations for all
parties with respect to such distributions.”27 At a high level, the SNPRM provided the
following views and proposals beyond those in the NPRM:
•

The Office’s preliminary views on the application of the Exception to matched
historical royalties,28 pre-2021 statutory mechanical licenses, individual download
licenses, and voluntary licenses.29

•

Additional discussion relating to the Office’s preliminary view in the NPRM that
the owner at the time of the use is entitled to distributions of blanket license
royalties absent an agreement to the contrary, and a related proposal to
accommodate and give effect to contractual payment arrangements that may
require a different result.30

88 FR 65908, 65909.

Phrases defined in the SNPRM—e.g., “historical unmatched royalties,” “matched historical
royalties,” “the owner at the time of the use,” and “the owner at the time of the payment”—have
the same meaning here. See id. at 65909–10, 65912–13.
29

Id. at 65910–12.

Id. at 65912–14.

•

A proposal that the MLC 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.31

•

A proposal regarding how the MLC should be notified about an ownership
transfer or other royalty payee change, with detailed provisions covering different
types of changes, such as those relating to contractual assignments, statutory
terminations, and other changes (e.g., when parties direct the MLC to pay an
alternative designated payee).32

•

A proposal regarding how the MLC should implement and give effect to such
payee changes.33

•

A proposal regarding the process and documentation for termination-related
disputes initiated with the MLC.34

•

A proposal regarding the resolution of all types of disputes initiated with the
MLC.35

•

A proposal regarding certain disclosures to be made by the MLC in connection
with disputes and other royalty holds.36

•

A proposal regarding how the MLC should administer a corrective royalty
adjustment to cure any distributions it previously made under its since-suspended
Termination Policy.37

D. The SNPRM Comments

Id. at 65914.

Id. at 65914–65917.

Id. at 65917–18.

Id. at 65919.

Id. at 65919–20.

Id. at 65919.

Id. at 65920–21.

The Office received over 50 public comments in response to the SNPRM from a
wide variety of interested parties across the music industry. Some parties supported
aspects of the SNPRM,38 while others were critical of certain provisions. The primary
criticism addressed the question of whether the owner at the time of the use or the owner
at the time of the payment should receive distributions of blanket license royalties from
the MLC.39 Commenters also took issue with the Office’s proposed expansion of the rule
beyond the NPRM, with some commenters requesting that those new issues be removed
from consideration.40 The MLC provided a regulatory proposal that shared many
similarities with the SNPRM and was “aimed at implementing certain proposals of the

See, e.g., MAC et al. SNPRM Initial Comments at 2, 4 (“The Copyright Office’s proposed
rules, both initially and as altered here, accurately, clearly, concisely, and properly addresses the
implementation of the MMA while maintaining and supporting the significant advances made by
the MLC. We continue to enthusiastically support this proposed rule and remain thankful to the
Copyright Office for addressing this area of great need by utilizing its oversight and governance
authority.”); Howard SNPRM Initial Comments at 1 (“I support the supplemental rulemaking and
directives proposed by the Office.”).
See, e.g., MLC SNPRM Initial Comments at 1–16; NMPA SNPRM Initial Comments at 2–13;
NMPA Ex Parte Letter at 1–2 (Jan. 24, 2024); AIMP SNPRM Initial Comments at 1–4;
Combustion Music SNPRM Initial Comments; Endurance Music Grp. SNPRM Initial Comments
at 1–2; Farris, Self & Moore, LLC SNPRM Initial Comments at 1–2; Boom Music SNPRM
Initial Comments; Jonas Grp. Publ’g SNPRM Initial Comments; Kobalt Music SNPRM Initial
Comments at 2; Liz Rose Music SNPRM Initial Comments at 1–2; Big Machine Music SNPRM
Initial Comments at 1–2; Legacyworks SNPRM Initial Comments; Me Gusta Music SNPRM
Initial Comments at 1–2; Relative Music Grp. SNPRM Initial Comments at 1–2; Harding
SNPRM Initial Comments; Moore SNPRM Initial Comments; North Music Grp. SNPRM Initial
Comments at 2; NSAI SNPRM Initial Comments at 2–5; Big Yellow Dog SNPRM Initial
Comments; Reservoir Media Mgmt. SNPRM Initial Comments at 1–2; SMACKSongs SNPRM
Initial Comments; Sony Music Publ’g SNPRM Initial Comments at 1–5; Spirit Music Grp.
SNPRM Initial Comments at 1–3; Turner SNPRM Initial Comments at 1–2; Wiatr & Assocs.
SNPRM Initial Comments; Jody Williams Songs SNPRM Initial Comments at 1; Concord Music
Publ’g SNPRM Initial Comments at 1–3; ClearBox Rights SNPRM Reply Comments at 4–5;
Creative Nation SNPRM Reply Comments at 1–2; The Greenroom Resource SNPRM Reply
Comments at 1; MAC et al. SNPRM Reply Comments at 2; Recording Academy SNPRM Reply
Comments at 3; SONA SNPRM Reply Comments at 2–5; Universal Music Publ’g Grp. SNPRM
Reply Comments at 1–5; Warner Chappell Music SNPRM Reply Comments at 3–8; DLC
SNPRM Reply Comments at 2–4.
See, e.g., MLC SNPRM Initial Comments at 17–20; NMPA SNPRM Initial Comments at 3–4;
NMPA Ex Parte Letter at 2–3 (Jan. 24, 2024); Kobalt Music SNPRM Initial Comments at 3; Big
Machine Music SNPRM Initial Comments at 2; NSAI SNPRM Initial Comments at 1–2; North
Music Grp. SNRPM Initial Comments at 1, 3–4; MAC et al. SNPRM Reply Comments at 2–3;
MAC Ex Parte Letter at 1–2 (Dec. 29, 2023); Recording Academy SNPRM Reply Comments at
1–2; Warner Chappell Music SNPRM Reply Comments at 2–3; ClearBox Rights SNPRM Reply
Comments at 3, 10; SONA SNPRM Reply Comments at 5; DLC SNPRM Reply Comments at 1.
Office concerning statutory terminations, while omitting language concerning” various
other issues that, in its view, “do not need further regulation.”41
II. Rulemaking Authority
Having considered all relevant comments, the Office concludes that we have
appropriate statutory authority to adopt the final rule for the reasons explained in the
NPRM and SNPRM, as well as the additional reasons discussed below.42 As previously
explained, section 702 of the Copyright Act specifically grants the Office the authority to
“establish regulations not inconsistent with law for the administration of the functions
and duties made the responsibility of the Register under [title 17].”43 Implementation of
the MMA is one of those “functions and duties” that Congress made the Office’s
responsibility. Specifically, the Office has been granted the authority to “conduct such
proceedings and adopt such regulations as may be necessary or appropriate to effectuate
the provisions of [the MMA pertaining to the blanket license.]”44 Several commenters
explicitly supported the Office’s general rulemaking authority.45 The only commenter to
question the Office’s authority was NMPA, which offered various arguments for why the
Office lacks authority to issue this rule.46 None are persuasive.

MLC SNPRM Reply Comments at 2 & App. A; MLC SNPRM Initial Comments at 17 (stating
that “the Office’s procedural guidance on notice and transfer procedures in the terminations
context is helpful” and that “much of the proposal with respect to terminations generally
addresses a regulatory need”); see also NMPA Ex Parte Letter at 3 (Jan. 24, 2024) (conveying
“its desire for the Office to provide any guidance the MLC has requested”).
42

87 FR 64405, 64407–08; 88 FR 65908, 65910.

17 U.S.C. 702.

Id. at 115(d)(12)(A).

See, e.g., ClearBox Rights NPRM Initial Comments at 2; SONA et al. NPRM Initial Comments
at 2; SGA et al. NPRM Initial Comments at 2; Howard NPRM Reply Comments at 3; Recording
Academy NPRM Reply Comments at 2; Promopub NPRM Reply Comments at 2; MCNA et al.
Ex Parte Letter at 2 (Mar. 15, 2024).
NMPA NPRM Initial Comments at 7–10. Despite its previous objections, NMPA’s SNPRM
comments appear to signal a change in its position on the Office’s general rulemaking authority,
though this is not entirely clear. See NMPA SNPRM Initial Comments at 2 & n.2 (stating that
“[t]here is clear industry consensus on the [proposed rule requiring that all post-termination
royalties under the blanket license be paid to the post-termination copyright owner], and the
[Office] should adopt it immediately,” but then also noting some of its previous concerns).
NMPA first argued that the Office has no authority under section 702 of the
Copyright Act or the MMA to promulgate rules that involve substantive questions of
copyright law.47 This is clearly incorrect. The Office “has statutory authority to issue
regulations necessary to administer the Copyright Act” and “to interpret the Copyright
Act.”48 As the NPRM detailed, “[t]he Office’s authority to interpret title 17 in the context
of statutory licenses in particular has long been recognized.”49
Indeed, as the Office has previously explained, “[t]he Office exercises its
authority under section 702 when it is necessary ‘to interpret the statute in accordance
with Congress’[s] intentions and framework.’”50 That is what the Office is doing here,
just as we have done on numerous previous occasions, for example to determine that
satellite carriers are not “cable systems” within the meaning of section 111 and therefore
do not qualify for that statutory license,51 to state the meaning of “digital phonorecord
delivery” under the section 115 statutory license,52 and to determine that internet
streaming of AM/FM broadcast signals are not exempted “broadcast transmissions”
within the meaning of section 114.53 The Office has done this in the termination context

See NMPA NPRM Initial Comments at 7–8.

Motion Picture Ass’n of Am., Inc. v. Oman, 750 F. Supp. 3, 6 (D.D.C. 1990), aff’d, 969 F.2d
1154 (D.C. Cir. 1992); see also, e.g., Fox Tel. Stations, Inc. v. Aereokiller, LLC, 851 F.3d 1002,
1011 (9th Cir. 2017) (recognizing that “the Copyright Office has a much more intimate
relationship with Congress [than the courts] and is institutionally better equipped than we are to
sift through and to make sense of the vast and heterogeneous expanse that is the Act’s legislative
history”); Satellite Broad. & Commc’ns Ass’n of Am. v. Oman, 17 F.3d 344, 345, 347–48 (11th
Cir. 1994), cert. denied, 513 U.S. 823 (1994) (recognizing the Copyright Office’s authority to
issue regulations and “statutory authority to interpret the provisions of the compulsory licensing
scheme” found in 17 U.S.C. 111).
49

87 FR 64405, 64408.

73 FR 40802, 40806 (July 16, 2008) (quoting 57 FR 3284, 3292 (Jan. 29, 1992)).

57 FR 3284, 3290–92, 3296; see Satellite Broad. & Commc’ns Ass’n of Am., 17 F.3d 344.

73 FR 66173, 66174–75 (Nov. 7, 2008).

65 FR 77292, 77293–95 (Dec. 11, 2000); see Bonneville Int’l Corp. v. Peters, 347 F.3d 485 (3d
Cir. 2003).
as well, adopting a rule addressing the meaning of “executed” under section 203 in the
context of gap grants.54
Regarding the Office’s specific authority under the MMA, we have issued several
rules that required analyzing substantive provisions of the statute. For example, the
Office determined what constitutes “the due date for payment” under section
115(d)(8)(B)(i),55 how the endorsement criterion for designating the MLC is to be
evaluated under section 115(d)(3)(A)(ii),56 the meaning of “producer” under section
115(d)(4)(A)(ii)(I)(aa),57 and what constitutes minimum “good-faith, commercially
reasonable efforts” under section 115(d)(4)(B).58
NMPA also made a series of arguments based on the premise that any rulemaking
authority the Office may have with respect to section 115 or other statutory licenses does
not extend to other areas of the Copyright Act, like those dealing with termination.59
These arguments, and their underlying premise, are similarly unsupported by title 17. The
MMA and section 702 provide the Office with ample authority to interpret sections 203

76 FR 32316, 32316–20 (June 6, 2011). While the Office has express authority to regulate the
content of notices of termination, we also referred to our authority under section 702 in adopting
the rule and stated that the focus of the rulemaking was our recordation practices. Id. at 32319–
20. Moreover, the rulemaking required the Office to opine on a substantive area of copyright law,
namely whether or how the statute’s termination provisions apply to gap grants. Id. at 32316–17;
see U.S. Copyright Office, Analysis of Gap Grants under the Termination Provisions of Title 17
(2010), https://www.copyright.gov/reports/gap-grant-analysis.pdf. At least one court appears to
have followed the Office’s interpretation. See Mtume v. Sony Music Ent., 408 F. Supp. 3d 471,
475–76 (S.D.N.Y. 2019).
55

88 FR 60587, 60590–91 (Sept. 5, 2023).

84 FR 32274, 32280–84 (July 8, 2019).

85 FR 22518, 22532.

85 FR 58114, 58119 (Sept. 17, 2020). We also note that, in addition to the specific authority
granted in section 115 and general authority granted in section 702, Congress gave the Office the
responsibility to interpret title 17 when questions of law arise in proceedings before the Copyright
Royalty Judges. 17 U.S.C. 802(f)(1)(B)(i), (f)(1)(D) (granting the Office the ability to “resolve”
any “novel material question of substantive law concerning an interpretation of those provisions
of [title 17] that are the subject of [a] proceeding” before the Copyright Royalty Judges and to
review the Judges’ final determinations for “legal error . . . of a material question of substantive
law under [title 17]”).
59

NMPA NPRM Initial Comments at 8–10.

and 304, as well as other provisions of the Copyright Act, in the context of the blanket
license and the MLC’s operations.60
As explained in the NPRM, despite its focus on termination issues, “this
rulemaking ultimately reflects the Office’s oversight and governance of the MLC’s
reporting and payment obligations to copyright owners.”61 The Office has exercised its
authority in this area before. As discussed in the NPRM, the Office previously issued
regulations regarding the MLC’s reporting and distribution of royalties to copyright
owners with “no dispute regarding the propriety or authority of the Office to promulgate
[them].”62 In that prior proceeding, we concluded that we have “the authority to
promulgate these rules under the general rulemaking authority in the MMA.”63
The final rule in this proceeding is no different. It governs how the MLC is to
report and distribute royalties to copyright owners, including with respect to identifying
the proper royalty payee. The fact that the final rule addresses that core MLC function in
a context that raises substantive questions of copyright law (like termination)—and thus
requires analysis of various points of substantive copyright law (such as termination and
the Exception)—does not deprive the Office of its authority to regulate how the MLC
reports and pays royalties. Nor does the fact that parts of the Office’s analysis or
reasoning could potentially be applied by others in contexts outside the scope of this
proceeding.64

See 17 U.S.C. 115(d)(12)(A), 702; see also, e.g., Motion Picture Ass’n of Am., Inc., 750 F.
Supp. at 6; Aereokiller, LLC, 851 F.3d at 1011; Satellite Broad. & Commc’ns Ass’n of Am., 17
F.3d at 345, 347–48.
61

87 FR 64405, 64408.

Id. at 64408 & n.39 (quoting 85 FR 22549, 22550–52 (Apr. 22, 2020)).

85 FR 22549, 22551 (quoting 17 U.S.C. 115(d)(12)) (observing that “Congress provided
general authority to the Register of Copyrights to ‘conduct such proceedings and adopt such
regulations as may be necessary or appropriate to effectuate the provisions of this subsection’”).
At a minimum, this proceeding has demonstrated that it is “necessary or appropriate” to
“adopt . . . regulations” “to effectuate” section 115(d)(3)(G)(i)(II), requiring the MLC to
The flaw in NMPA’s argument is highlighted by considering its consequences. If
the Office’s authority is as limited as NMPA suggested, it would mean that the MLC
would be the one (in the absence of a lawsuit) to determine the meaning of any
questioned statutory provisions. The Office’s oversight of the MLC through regulatory
action cannot be frustrated when such oversight may involve addressing substantive
issues of copyright law. Concluding otherwise would be contrary to the statute’s logic
and Congress’s intent. Congress intentionally invested the Office with “broad regulatory
authority” under the MMA, in part to oversee the MLC, such as by “thoroughly
review[ing]” MLC policies “to ensure the fair treatment of interested parties.”65
NMPA also specifically challenged the Office’s authority to adopt the corrective
royalty adjustment, arguing that it is an impermissible retroactive rule and an
unconstitutional taking.66 We disagree with this characterization and address this topic in
Part III.F., below.
III. Final Rule
Having reviewed and considered all comments, the Office has weighed the
relevant legal, business, and practical implications and equities raised, and pursuant to its
authority under 17 U.S.C. 115 and 702 is adopting a final rule regarding MLC royalty
distributions. The Office finds it reasonable to adopt much of the SNPRM as final

“distribute royalties to copyright owners in accordance with . . . the ownership and other
information contained in the records of the [MLC].” 17 U.S.C. 115(d)(3)(G)(i)(II), (12)(A); see
also, e.g., 87 FR 64405, 64407 (discussing need to revisit the termination issue more directly,
including “how termination law intersects with the blanket license”); 88 FR 65908, 65909–10
(explaining that the MLC sought additional regulatory guidance “necessary” and “essential” to its
operations). Thus, the current rulemaking “is consistent with the Office’s practice of
promulgating regulations to construe statutory terms that are critical to the administration of a
statutory license administered by the Office.” 73 FR 66173, 66175.
H.R. Rep. No. 115-651, at 5–6 (2018); S. Rep. No. 115-339, at 5 (2018); Report and Sectionby-Section Analysis of H.R. 1551 by the Chairmen and Ranking Members of Senate and House
Judiciary Committees 4 (2018) (“Conf. Rep.”),
https://www.copyright.gov/legislation/mma_conference_report.pdf.
NMPA NPRM Initial Comments at 4–6, 12–13; NMPA Ex Parte Letter at 2 (Feb. 6, 2023);
NMPA SNPRM Initial Comments at 2 n.2; see also CMPA NPRM Initial Comments at 1–2
(arguing against retroactivity); Warner Chappell Music SNPRM Reply Comments at 2–3 (same).
regulations, but with some significant modifications. As discussed in more detail below,
the Office is adopting a final rule that is a scaled-down version of the SNPRM and
applies a different solution to the issue of identifying the payee to whom the MLC must
distribute royalties.
Specifically, in response to the comments that the SNPRM was too broad67 and
the MLC’s own regulatory proposal,68 the Office has narrowed the scope of the rule to
provide the guidance the MLC sought without expanding the rule to other areas that do
not appear to need regulation at this time based on the current record.69 While some
commenters would prefer that the Office not address any issues beyond those raised in
the original NPRM, the Office disagrees. As discussed above, the MLC and several other
commenters had requested additional guidance from the Office on various related topics.
Consequently, the Office issued the SNPRM seeking public comments on a supplemental
proposed rule focused on providing such guidance. When the MLC requests guidance
from the Office, we will generally provide it given the oversight role we play under the
MMA. The Office finds that it is reasonable and appropriate to provide such guidance
here.
To the extent some commenters suggested that the Office is moving too quickly
on some of these issues or has not engaged in a sufficient administrative process, the
Office disagrees.70 The Office issued the SNPRM precisely to solicit substantive

See, e.g., Kobalt Music SNPRM Initial Comments at 3; Big Machine Music SNPRM Initial
Comments at 2; NSAI SNPRM Initial Comments at 1–2; North Music Grp. SNRPM Initial
Comments at 1, 3–4; MAC et al. SNPRM Reply Comments at 2–3; MAC Ex Parte Letter at 1–2
(Dec. 29, 2023); Recording Academy SNPRM Reply Comments at 1–2; Warner Chappell Music
SNPRM Reply Comments at 2–3; ClearBox Rights SNPRM Reply Comments at 3, 10; SONA
SNPRM Reply Comments at 5.
68

MLC SNPRM Reply Comments at App. A.

To be clear, the Office reserves the right to regulate these other areas in the future should it
become necessary or appropriate to do so.
See, e.g., North Music Grp. SNRPM Initial Comments at 1, 3–4; Recording Academy SNPRM
Reply Comments at 1–2; ClearBox Rights SNPRM Reply Comments at 3, 10.
comments from interested parties about these expanded topics. In doing so, the Office
provided for both initial and reply comment periods as well as deadline extensions,
ultimately providing parties with over two months to submit written comments. The
Office also made itself available for ex parte meetings for several months after the period
for written comments ended. Given this ample opportunity to engage with the Office on
these issues, we see no reason to delay providing the MLC with the guidance it needs to
operate. As always, the Office will continue to monitor the effect of the rule, and if there
are any unforeseen consequences or should anything not operate as intended, we can
consider amending the rule in the future.
Where parties have objected to certain aspects of the SNPRM, the Office has
considered those comments and addressed these issues, as discussed below. If not
otherwise discussed, the Office has concluded that the relevant proposed provision should
be adopted for the reasons stated in the NPRM or SNPRM.
A. Termination and the Exception
In the NPRM, the Office engaged in an extensive preliminary analysis that
concluded that “[w]hether or not the Exception applies to a 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 posttermination.”71 We explained that 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.”72
Based on the MLC’s and other commenters’ requests for additional guidance,73
the SNPRM contained additional analysis and made further preliminary conclusions,

87 FR 64405, 64410–11.

Id. at 64411.

88 FR 65908, 65909–10.

including that: (1) the Exception does not apply to matched historical royalties;74 (2) with
respect to covered activities, record companies’ pre-2021 individual download licenses
and the authority obtained from them by DMPs are the only pre-2021 statutory
mechanical licenses to have continued in effect after the license availability date;75 (3) the
Exception does not apply to individual download licenses;76 and (4) the Exception may
apply to some voluntary licenses, but not others.77
Most comments addressing the Office’s termination analysis were in response to
the NPRM, as parties largely did not comment on the additional analysis from the
SNPRM. While many commenters agreed with the Office’s analysis,78 others raised some
concerns.79 Several commenters, even some who raised concerns with the Office’s
analysis, supported its end result that the post-termination copyright owner is entitled to
post-termination royalties under the blanket license.80

Id. at 65910–11.

Id. at 65911.

Id.

Id. at 65911–12.

See, e.g., A2IM & RIAA NPRM Reply Comments at 2; Authors All. et al. NPRM Initial
Comments at 2–3; BMG Rights Mgmt. NPRM Initial Comments at 2; ClearBox Rights NPRM
Initial Comments at 6–7; Fishman & Garcia NPRM Initial Comments at 1–4; King, Holmes,
Paterno & Soriano LLP NPRM Initial Comments; North Music Grp. NPRM Reply Comments at
2; Recording Academy NPRM Reply Comments at 2; SGA et al. NPRM Initial Comments at 2,
5; SONA et al. NPRM Initial Comments at 2–3; King, Holmes, Paterno & Soriano LLP SNPRM
Reply Comments.
See NMPA NPRM Initial Comments at 2–3; NMPA Ex Parte Letter at 2–3 (Feb. 6, 2023);
MPA NPRM Reply Comments at 2–5; see also A2IM & RIAA NPRM Reply Comments at 2;
A2IM & RIAA SNPRM Initial Comments at 1–4; Fishman & Garcia NPRM Initial Comments at
4; NMPA SNPRM Initial Comments at 2 n.2.
See, e.g., NMPA SNPRM Initial Comments at 1–2 (“NMPA supported and continues to
support the bright-line rule that the [Office] proposed to establish in the NPRM, requiring that all
post-termination royalties under the Blanket License be paid to the post-termination copyright
owner.”); Universal Music Publ’g Grp. SNPRM Reply Comments at 5 n.4; Warner Chappell
Music SNPRM Reply Comments at 2; Kobalt Music SNPRM Initial Comments at 1; NSAI
SNPRM Initial Comments at 2; Promopub SNPRM Initial Comments at 2.
Having considered all relevant comments, the Office is adopting the terminationrelated aspects of the SNPRM’s proposal as final for the reasons discussed below, as well
as the reasoning in the NPRM and SNPRM in relevant part.
1. Blanket Licenses
i. Background
In the NPRM, the Office thoroughly analyzed the Exception in the context of the
blanket license. In that analysis, the Office made two overarching conclusions that: (1)
the Exception does not apply to blanket licenses; and (2) even if the Exception did apply,
under the terms of the blanket license (i.e., the applicable text of section 115 and related
regulations), a terminated publisher still would not be entitled to post-termination blanket
license royalties.81
In concluding that the Exception does not apply, the Office made three further
overall conclusions. First, the Office concluded that “[t]o be subject to termination, a
grant must be executed by the author or the author’s heirs,” and that, “[a]s a type of
statutory license, the blanket license is ‘self-executing,’ such that it cannot be terminated”
under section 203 or 304.82 The Office explained that “[i]f a blanket license cannot be
terminated, then it cannot be subject to an exception to termination; the license simply
continues in effect according to its terms.”83
Second, the Office concluded that “[s]ection 115’s blanket licensing regime is
premised on the assumption that DMPs are not preparing derivative works pursuant to
their blanket licenses,” and that “where no sound recording derivative is prepared
pursuant to a DMP’s blanket license, that blanket license is not part of any preserved
grants that make the Exception applicable.”84 The Office explained that “[i]f no

87 FR 64405, 64410–11.

Id. at 64410.

Id.

Id. at 64410–11.

derivative work is prepared ‘under authority of the grant,’ then the Exception cannot
apply,” but recognized that “[p]roponents of the Exception’s application to the blanket
license might argue that the blanket license should be construed as being included within
a so-called ‘panoply’ of grants pursuant to which a pre-termination derivative work of the
musical work was prepared.”85 The Office observed that the “only panoply to which the
blanket license could theoretically belong would be the grant (or chain of successive
grants) emanating from the songwriter and extending to the record company (or other
person) who prepared the sound recording derivative licensed to the DMP.”86 After
analyzing that possibility, the Office concluded that “[t]he Exception, as interpreted by
[the Supreme Court in Mills Music, Inc. v. Snyder],87 should not be read as freezing other
grants related to, but outside of, the direct chain of successive grants providing authority
to utilize the sound recording derivative, such as the musical work licenses obtained by
DMPs,” and the Office discussed several reasons explaining why.88
Third, the Office concluded that applying the Exception to the blanket license in
the manner the MLC had done previously, whereby the payee would be frozen in time,
would lead to an “extreme result” because it would also freeze all other aspects of the
license in time.89 For example, “it would freeze in time everything from DMP reporting
requirements and MLC royalty statement requirements to the rates and terms of royalty
payments for using the license set by the [Copyright Royalty Judges].”90
The SNPRM addressed this analysis as well.91 There, the Office described the
NPRM’s conclusions about the Exception as “preliminary,” making clear that we

Id.

Id.

469 U.S. 153 (1985).

87 FR 64405, 64410–11.

Id. at 64411.

Id.

88 FR 65908, 65910.

“welcome[d] further comments and legal discussion.”92 The Office has considered all
comments, including those raising concerns with aspects of this analysis. For the reasons
discussed below, we find those concerns unpersuasive. Therefore, the Office is adopting
the termination analysis from the NPRM and SNPRM as final for the reasons discussed
in the NPRM and SNPRM, subject to the further discussion below.
ii. Comments and Discussion
The principal critics of the NPRM’s analysis were NMPA and the Motion Picture
Association (“MPA”). NMPA asserted that “[t]he Exception has historically been
interpreted by many industry stakeholders to permit the pre-termination musical
composition copyright owner to continue to receive mechanical royalties posttermination for uses of those compositions in derivative sound recordings, including in
interactive streaming, provided that the mechanical license was issued pre-termination
and the recording was prepared pre-termination.”93 NMPA said that “[t]his interpretation
was based on, inter alia, the Supreme Court’s decision in Mills Music, Inc. v. Snyder, and
the Second Circuit’s decision in Woods v. Bourne Co.,”94 and that “[b]ased on this
interpretation, before the MMA was enacted, [DMPs], along with other Section 115
statutory licensees, continued to pay mechanical royalties to the pre-termination rights
owner for uses of recordings prepared pre-termination pursuant to pre-termination
mechanical licenses.”95 NMPA stated that it “never understood the MMA to change or
resolve the law of statutory termination or to provide a new or different rule applicable to

Id. at 65912 n.69.

NMPA NPRM Initial Comments at 2–3; see also NMPA Ex Parte Letter at 2 (Feb. 6, 2023).

60 F.3d 978 (2d Cir. 1995).

NMPA NPRM Initial Comments at 3; see also NMPA Ex Parte Letter at 2 (Feb. 6, 2023).

Blanket Licenses.”96 It explained its view that “the MMA addresses the termination issue
in Section 115(d)(9)(A),” which was intended to “preserve the status quo.”97
After a full review and analysis, the Office is not persuaded by NMPA’s
argument. We do not dispute NMPA’s assertion that certain publishers may have adopted
a different approach to termination, but this approach is not supported by the law in the
context of the blanket license. As discussed further below in Part III.F., the Office is not
adopting a new position, or changing the law as it relates to termination or the Exception.
Nor are we contending that the MMA or blanket license altered the law as it relates to the
Exception. The Office is merely stating what the law is and has always been.
In support of its approach, NMPA suggested that its view of the Exception was
universally relied on as the status quo. The comments, however, reveal otherwise. For
example, ClearBox Rights said that “there has not been consistency in the history of how
these royalties have been paid [with respect to the Exception], so such past practices
should not be interpreted as any kind of precedent or guidance into how they should be
paid in the future, or adjusted for any given period of time.”98 NMPA even described its
views with qualifying language, stating that its interpretation of Mills Music has been
followed by “some” copyright owners and that “legal interpretations of this holding and
views as to the applicability of the [Exception] to the [blanket license] may differ.”99

NMPA NPRM Initial Comments at 3.

Id. at 3 n.5.

ClearBox Rights NPRM Reply Comments at 1–2 (further stating that performing rights
organizations “fairly consistently pass through to the post-termination rights holder the
performance side of these very same [DMP] interactive streams”); see also, e.g., King, Holmes,
Paterno & Soriano LLP NPRM Initial Comments at 1 (“We have been concerned for years about
some music publishers’ claims that the [Exception] entitles the original publisher of a
composition to continue to collect indefinitely on mechanical licenses issued pursuant to the
compulsory license provisions of the U.S. Copyright Act. Such claims do not comport with the
language of the [Exception] itself or the legislative history surrounding it.”); McAnally & North
Ex Parte Letter at 2 (Mar. 14, 2023) (asserting that views like NMPA’s are “inconsistent with our
understanding of how terminations have been treated in the industry regarding payments of
mechanical royalties under Section 115”).
99

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

Further, NMPA’s claim that section 115(d)(9)(A) supports its position is
misplaced. That provision does not speak to the Exception or the preservation of any preMMA status quo (outside the narrow context of individual download licenses). As
explained in the SNPRM, that provision, read together with section 115(d)(9)(B),
provides, with respect to covered activities, that “only record companies’ pre-2021
individual download licenses and the authority obtained from them by DMPs survived
the license availability date.”100 The Office explained that “[b]ecause 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.”101
The statute plainly states that the blanket license was “automatically substituted
for and supersede[d] any existing compulsory license previously obtained under [section
115].”102 The language NMPA highlighted—that this substitution happened “without any
interruption in license authority enjoyed by [a DMP]”—simply means that the
substitution did not cause there to be any gap in a DMP’s licensing authority, between the
old pre-2021 statutory license and the new blanket license, that could potentially subject
the DMP to an infringement claim.103 If this language meant that all previous licensing
authority remains intact indefinitely after the license availability date, then it would
render the rest of the provision superfluous. There would be no need to have the blanket
license substitute for and supersede the pre-2021 license because the authority provided
by the pre-2021 license would continue in effect. It would also directly contradict section
115(d)(9)(B), which states that “licenses other than individual download licenses

88 FR 65908, 65911.

Id.

See 17 U.S.C. 115(d)(9)(A).

See id.

obtained under [section 115] for covered activities prior to the license availability date
shall no longer continue in effect.”104 Thus, the Office disagrees with NMPA’s reading of
the statute.105
NMPA next argued that “the phrase ‘terminated grant’ in the statutory text
appears to refer to the original grant from the author to the publisher that is being
terminated, and not to subsequent grants made by the publisher under the authority of that
original grant.”106 It asserted that “[s]ubsequent grants of the right to prepare and use
derivative works made by the publisher are not the terminated grant under Sections 203
and 304 and are instead part of the ‘panoply’ of licenses preserved by the [Exception].”107
Thus, in NMPA’s view, “the terminable grant that must be executed by the author is the
original license from author to publisher; therefore, whether Section 115 licenses are
‘self-executing’ would be inapposite to the relevant analysis” because “[t]he subsequent
grants of the right to prepare derivative works are in virtually all cases not ‘executed by
the author or the author’s heirs.’”108
The Office disagrees. The phrase “terminated grant” in the statutory text is not
limited solely to the original grant from the songwriter to the publisher. In Mills Music,
the Supreme Court concluded that all three references to the word “grant” in the text of
the Exception should be given a “consistent meaning,” and that each reference

See id. at 115(d)(9)(B).

See also 85 FR 58114, 58118 (discussing how “the statutory provisions regarding notices of
[blanket] license and the transition to the blanket license must be read together, such that DMPs
transitioning to the blanket license must still submit notices of license to the MLC”).
NMPA Ex Parte Letter at 3 (Feb. 6, 2023); see also NMPA NPRM Initial Comments at 11
n.27.
NMPA Ex Parte Letter at 3 (Feb. 6, 2023); see also NMPA NPRM Initial Comments at 11
n.27.
108

NMPA NPRM Initial Comments at 11 n.27.

encompasses both the original grant and subsequent grants.109 That lack of distinction
between the original grant and subsequent grants was central to the Court’s holding that
the Exception preserved “the total contractual relationship.”110 The cornerstone of the
Court’s opinion was its conclusion that the successive grants were connected to each
other in such a way that they both needed to be preserved under the Exception in the
context at issue.111
In asserting that the NPRM’s conclusions about the application of the Exception
to the blanket license must be wrong because the subsequent grants of the right to prepare
derivative works are almost always not executed by the author or the author’s heirs,
NMPA misapprehends how the subsequent grants are connected to the original grant.
Outside the context of a statutory license, where a songwriter makes a grant to a publisher
and the publisher then makes subsequent grants to third parties (e.g., to a record company
to prepare a sound recording derivative, to a DMP to make and distribute phonorecords,
or an assignment of the full copyright to a different publisher), each of those subsequent
grants, despite not being executed by the songwriter or the songwriter’s heirs, can still be

Mills Music, 469 U.S. at 164–67 (concluding that the phrase “under the terms of the grant after
its termination” “as applied to any particular licensee would necessarily encompass both the 1940
grant [from the songwriter to the publisher] and the individual license [from the publisher to the
record company to prepare a sound recording derivative] executed pursuant thereto”); see id. at
164 (explaining that the Exception is “defined by reference to the scope of the privilege that had
been authorized under the terminated grant and by reference to the time the derivative works
were prepared”) (emphasis added); id. at 173 (explaining that “[p]retermination derivative
works—those prepared under the authority of the terminated grant—may continue to be utilized
under the terms of the terminated grant”) (emphasis added); see also Howard B. Abrams & Tyler
T. Ochoa, 2 The Law of Copyright sec. 12:44 (2023) (“[T]he term “grant” is read to include the
entire chain of authority for the preparation of a derivative work.”).
Mills Music, 469 U.S. at 163–69 (“We are not persuaded that Congress intended to draw a
distinction between authorizations to prepare derivative works that are based on a single direct
grant and those that are based on successive grants.”).
Id. at 166–69 (explaining that, with respect to the particular facts in the case, defining the
relevant “terms of the grant” as “the entire set of documents that created and defined each
licensee’s right to prepare and distribute derivative works” meant preserving not only the record
companies’ right to prepare and distribute the derivative works, but also their corresponding duty
to pay the publisher any due royalties and the publisher’s duty to pay the songwriter’s heirs any
due royalties, and that if it were otherwise, then there would be no contractual or statutory
obligation on the publisher or record companies to pay the songwriter’s heirs any royalties).
terminated. This is because the authority for each of those subsequent grants derives from
and is dependent upon the authority conveyed by the original grant from the songwriter to
the publisher. Thus, when the original grant is terminated, it also terminates the
subsequent grants (subject to the possible preservation of certain contractual terms
governing the utilization of pre-termination derivative works under the Exception).112 It is
a foundational legal principle that one cannot give what one does not have.113 In this
context, what the publisher possesses with respect to the original grant, and can therefore
subsequently convey to third parties, is encumbered by the songwriter’s termination
rights.114 This concept is plainly embodied in the statute, which makes reference not only
to “the grantee,” but also “the grantee’s successor in title.”115
The blanket license, however, operates differently. Unlike voluntary licenses, the
authority a DMP has to make and distribute phonorecords of musical works under a
blanket license does not derive from and is not dependent upon any authority granted by
a songwriter or publisher. The blanket license is self-executing,116 and a DMP’s authority
under it is established by Congress.117 Therefore, if the original grant from the songwriter
to the publisher is terminated, it has no effect on the DMP’s blanket license (other than
Melville B. Nimmer & David Nimmer, 3 Nimmer on Copyright sec. 11.02[C][2] (2023)
(“When A terminates the original grant to B, it follows that B’s license to C will also terminate.”).
Legal Maxims, Black’s Law Dictionary (11th ed. 2019) (“Nemo dat quod non habet. No one
gives what he does not have; no one transfers (a right) that he does not possess.”).
Melville B. Nimmer & David Nimmer, 3 Nimmer on Copyright sec. 11.02[A][4][b] (2023)
(“If the original grant from A to B had by its terms provided for a reversion to A thirty-five years
after execution, B would lack the power to convey rights to C beyond such thirty-five-year
period. The fact that reversion from B to A occurs by operation of law rather than by the express
terms of the grant to B does not enlarge the rights that B can convey to C.”); see also Int’l Ribbon
Mills, Ltd. v. Arjan Ribbons, Inc., 325 N.E.2d 137, 139 (N.Y. 1975) (“It is elementary ancient law
that an assignee never stands in any better position than his assignor. He is subject to all the
equities and burdens which attach to the property assigned because he receives no more and can
do no more than his assignor.”).
115

See 17 U.S.C. 203(a)(4), (b)(4); id at 304(c)(4), (6)(D).

Mills Music, 469 U.S. at 168 n.36; see Melville B. Nimmer & David Nimmer, 3 Nimmer on
Copyright sec. 11.02 n.121 (2023); Paul Goldstein, Goldstein on Copyright sec. 5.4.1.1.a (3d ed.
2023).
See also Mills Music, 469 U.S. at 168 n.36 (referring to section 115 statutory licenses as “a
statutory right” belonging to the licensee) (emphasis added).
the transfer of copyright ownership causing the royalty payee to change). Unlike a
voluntary license, the grant of authority provided to the DMP under its blanket license
was never encumbered by the songwriter’s termination rights, so exercising those rights
has no impact on the continuation of the DMP’s authority. As a blanket license cannot be
terminated under section 203 or 304, whether directly or indirectly, “it cannot be subject
to an exception to termination; the license simply continues in effect according to its
terms.”118
MPA’s criticism of the NPRM focused on a different issue, namely its concerns
that the Office’s legal analysis “could be read as narrowing the holdings [of Mills Music
and Woods] by injecting a ‘direct chain’ limitation on the pre-termination grants
preserved under the [Exception].”119 MPA argued that:
To the extent that the Office’s discussion of Mills [Music] could be read to
limit the [Exception] solely to a “direct chain” of grants, such a reading
would appear to be in tension not only with the [Exception]—which
provides that a derivative work prepared under authority of a grant “may
continue to be used under the terms of the grant,”. . . —but also the
Supreme Court’s interpretation of that language in Mills [Music], as well
as the Second Circuit’s further explication of the [Exception] in Woods v.
Bourne. Mills [Music] held that, as used in the [Exception], “the terms of
the grant” means the “entire set of documents that created and defined
each licensee’s right to prepare and distribute derivative works.” 469 U.S.
at 167. The [Exception] thus encompasses the original grant from author
to publisher, as well as the succeeding grants derived therefrom,

87 FR 64405, 64410. As noted in the NPRM, this “does not mean that entitlement to royalties
is fixed. It travels with ownership of the copyright.” Id. at 64410 n.70.
119

MPA NPRM Reply Comments at 2.

potentially involving multiple licensees. See id. at 165–67 (emphasis
added).120
MPA further said that “[i]n some cases, an initial grant by an author to a movie studio or
music publisher, and that entity’s subsequent grants to third parties to for the use and
distribution of derivative works, will generate ‘branches’ of licensing authority rather
than a simple linear chain.”121 According to MPA, “[t]here is nothing in the [Exception]
or Mills [Music] . . . to suggest that a pre-termination publisher is entitled to royalties
only if the pre-termination license falls within a single ‘direct chain’ to the party that
prepared the derivative.”122
MPA then pointed to Woods for confirmation that “Mills [Music] is not so
limited.”123 It stated that “[a]s further explicated in Woods, the Supreme Court’s holding
in Mills [Music] established that ‘where multiple levels of licenses govern use of a
derivative work, the “terms of the grant” encompass the original grant from author to
publisher and each subsequent grant necessary to enable the particular use at issue,’”
and that “[t]he effect of Mills [Music] is to preserve during the post-termination period
the panoply of contractual obligations that governed pre-termination uses of derivative
works by derivative work owners or their licensees.”124 MPA asserted that “[c]onsistent
with its understanding of Mills [Music], the Woods court upheld the pre-termination
publisher’s right to collect public performance royalties from [the performing rights
organization,] ASCAP for post-termination performances in movies and television
programs even though ASCAP’s licensing relationship was outside of the ‘direct chain’
of authority by which the original publisher had granted synch rights to the producers of

Id. at 4 (citing 17 U.S.C. 203(b)(1), 304(c)(6)(A)).

Id.

Id.

Id. at 4–5.

Id. (quoting Woods, 60 F.3d at 987).

those shows.”125 MPA highlighted that the Second Circuit said that “the ‘terms of the
grant’ included ‘the provisions of the grants from [the publisher] to ASCAP and from
ASCAP to the television stations’ in place at the time of termination,” and that “‘[t]he
fact that the performance right in the Song [was] conveyed separately through ASCAP
[was] simply an accommodation’ that did not negate the applicability of the
[Exception].”126 It concluded that “[n]either the [Exception], nor Mills [Music] or Woods,
limits post-termination utilization of a derivative based on the particular configuration of
the relevant pre-termination grants” and that “[i]n considering the applicability of the
[Exception], the correct question is not whether the user prepared the derivative pursuant
to some ‘direct chain’ of authority, but whether the use is permitted under the entire ‘set’
or ‘panoply’ of grants emanating from the original grant by the author.”127
The Office disagrees with these assertions to the extent they relate to the blanket
license. The blanket license is not part of any so-called “panoply,” regardless of whether
a panoply is limited to a “direct chain” of successive grants or can include “branches” of
related grants outside of that chain. As discussed above, the blanket license, as a type of
statutory license, is fundamentally different from voluntary licenses. Because the
authority provided by a blanket license is supplied by law and is divorced from any
authority deriving from an author or any terminated grant, it is an intervening grant. It sits
outside of any potential panoply of grants authorized by the author and the author’s
successors, assignees, licensees, and the like that form the overall transaction involving
the relevant derivative work and which is subject to termination and possibly the
Exception. The blanket license simply is not part of that contractual transaction.128

Id. at 5 (citing Woods, 60 F.3d at 984).

Id. (all alterations, except the last one, in original) (quoting Woods, 60 F.3d at 987–88).

Id.

See also 17 U.S.C. 115(d)(2) (explaining how a DMP may obtain a blanket license based on
its unilateral actions).
Neither Mills Music nor Woods holds otherwise, as neither involved a statutory
license. In both cases, all of the grants at issue were contractual and emanated from a
songwriter’s copyright and the authority initially conveyed by the original grant from the
songwriter to a publisher.129 Thus, neither case’s holding is directly applicable to the
operation of the Exception to a non-contractual intervening grant, like the blanket license.
The Supreme Court, in Mills Music, noted that statutory licenses are different and were
not at issue in the case.130 And key language in Woods specifically refers to “the panoply
of contractual obligations.”131
The Office’s conclusions about the Exception are fully consistent with Mills
Music, both as described here and in the NPRM. Neither MPA nor any other commenter
addressed the specific points made in the NPRM regarding how the Exception operates
with respect to panoplies of grants,132 other than to assert that the overall conclusion was
at odds with Mills Music and Woods.
Relying on a single out-of-context quote, MPA argued that, because Mills Music
said that “‘the terms of the grant’ means the ‘entire set of documents that created and
defined each licensee’s right to prepare and distribute derivative works,’” it must mean
that the Exception “thus encompasses the original grant from author to publisher, as well
as the succeeding grants derived therefrom, potentially involving multiple licensees.”133
The Office is not persuaded. Read in its proper context, the Court’s reference to “each
licensee” is not referring to multiple licensees across different branches of grants
involved in the preparation and utilization of a single derivative work. Rather, it is plainly

Mills Music, 469 U.S. at 154–58; Woods, 60 F.3d at 981–84, 987–88.

Mills Music, 469 U.S. at 168 n.36; see also id. at 185 n.12 (White, J. dissenting).

Woods, 60 F.3d at 987 (emphasis added).

See 87 FR 64405, 64410 (“The Exception, as interpreted by Mills Music, should not be read as
freezing other grants related to, but outside of, the direct chain of successive grants providing
authority to utilize the sound recording derivative, such as the musical work licenses obtained by
DMPs.”).
133

MPA NPRM Reply Comments at 4 (quoting Mills Music, 469 U.S. at 165–67).

referring to a single licensee for each derivative work; specifically, each record company
that prepared one of the sound recording derivatives at issue in the case (which involved
over 400 voluntary mechanical licenses and the preparation of over 400 sound recording
derivatives).134 This conclusion is apparent not only from reading the opinion as a whole,
but from the sentence immediately preceding the one quoted by MPA, which states that
“a fair construction of the phrase ‘under the terms of the grant’ as applied to any
particular licensee would necessarily encompass both the 1940 grant [from the
songwriter to the publisher] and the individual [voluntary mechanical] license [from the
publisher to the record company] executed pursuant thereto.”135
Other language in the Court’s opinion similarly reflects that it was only
addressing direct chains of successive grants providing authority to prepare derivative
works.136 For example, the Court was “not persuaded that Congress intended to draw a
distinction between authorizations to prepare derivative works that are based on a single
direct grant and those that are based on successive grants.”137 The Court found it to be “a
matter of indifference . . . whether the authority to prepare the work had been received in
a direct license from an author, or in a series of licenses and sublicenses.”138 According
to the Court, “Congress saw no reason to draw a distinction between a direct grant by an
author to a party that produces derivative works itself and a situation in which a
middleman is given authority to make subsequent grants to such producers.”139 It makes
sense that the Court’s opinion was limited to discussing a direct chain of successive

See Mills Music, 469 U.S. at 158, 167, 168 n.36.

See id. at 166–67 (emphasis added).

See Howard B. Abrams & Tyler T. Ochoa, 2 The Law of Copyright sec. 12:44 (2023)
(explaining that “the Supreme Court seemed to be using the concept that the series of documents
running from the author to the ultimate preparer of the derivative work should best be treated as a
single transaction although it was spread over several documents executed at different times”).
137

Mills Music, 469 U.S. at 163–64 (emphasis added).

Id. at 173–74 (emphasis added).

Id. at 172 (emphasis added).

grants because that is what was at issue in the case. We continue to believe that our
reading of the statute and Mills Music, as well as our analysis and conclusions regarding
panoplies and direct chains of successive grants, are correct.140
With respect to Woods, even if the discussion in that case could be read in the
broad manner that MPA suggested, it is not clear that the court’s reasoning was correct or
involved the same circumstances at issue here. Among other concerns, Woods did not
speak to all the issues identified in the NPRM.141 For example, nothing in Woods appears
to address the fact that if the word “grant” is given a consistent meaning within the text of
the Exception—which, according to Mills Music, it should—it cannot be referring to a
grant that did not provide authority to prepare the derivative work at issue.142
The Woods court did not engage in this level of textual analysis. Instead, it
reviewed Mills Music and cited a law review article for the proposition that the Exception
applies to “each subsequent grant necessary to enable the particular use at issue.”143 As
discussed above, the Office does not believe Mills Music is so expansive. Nor does the
cited law review article appear to support such a broad reading.144 In any event, we
emphasize that because Woods is distinguishable with respect to section 115 statutory
licenses, it is not necessary for the Office to resolve these disagreements to adopt the final
rule.

See 87 FR 64405, 64410–11; see also, e.g., Fishman & Garcia NPRM Initial Comments at 1–4
(agreeing with the Office’s analysis and conclusions); SONA et al. NPRM Initial Comments at 2–
3 (same).
141

See 87 FR 64405, 64410–11.

See id. at 64411 (explaining that because “[t]he Exception’s first use of ‘grant’ is to a
‘derivative work prepared under authority of the grant,’” it “cannot be referring to the DMP’s
musical work licenses pursuant to which no derivative work was prepared”).
143

See Woods, 60 F.3d at 986–88 (emphasis added).

Woods quotes from a law review article “describing [the] holding in Mills Music as
‘preserving the entire paper chain that defines the entire transaction.’” Woods, 60 F.3d at 987
(quoting Howard B. Abrams, Who’s Sorry Now? Termination Rights and the Derivative Works
Exception, 62 U. Det. L. Rev. 181, 234–35 (1985) (“Abrams”)). But a few sentences earlier, that
article explained that the “transaction” being referred to was the “set of transfers and licenses that
ran from the author to a record company.” Abrams at 234.
Lastly, Professors Fishman and Garcia, while supportive of most of the Office’s
analysis, believed that the NPRM overestimated what would happen if the Exception did
apply to blanket licenses.145 They said that the NPRM’s suggestion that all of the blanket
license’s terms “would be frozen indefinitely” under the Exception, such as “the royalty
rate to be paid,” “would contradict the plain terms established in [section] 115, which
explicitly contemplate a variable rate to be determined by the [Copyright Royalty
Judges].”146 They explained that “[t]hat variability is a term of the grant,” and that to
conclude otherwise “would read into the terms of the blanket license a permanently fixed
royalty rate that does not exist.”147 The professors then noted that the NPRM “correctly
rejected the possibility of freezing the payee on the same basis.”148
Considering this comment, the Office wishes to clarify this point from the NPRM.
We meant to illustrate the problems with the MLC’s previous view of how the Exception
would apply—that the Exception would freeze the royalty payee.149 This portion of the
NPRM was intended to explain that if the MLC were correct that the Exception applied
in such a manner as to freeze the royalty payee, then the Exception would have to freeze
everything else too, which would lead to the “extreme result.”150
2. Individual Download Licenses
The Office received few comments responding to the SNPRM’s analysis
regarding individual download licenses. The American Association of Independent Music
and the Recording Industry Association of America (“A2IM & RIAA”) sought “to clarify
ambiguity in [the sections of the proposed rule about individual download licenses and
Fishman & Garcia NPRM Initial Comments at 4.

Id.

Id.

Id.

See 87 FR 64405, 64411 (premising the discussion on the observation that if the Exception
applies to the blanket license, “then it is not clear why it would only apply to the payee, as the
MLC’s prior rulemaking comments seem to suggest”) (emphasis added).
150

See id.

voluntary licenses] and to ensure that the proposed rule will not affect the status quo as it
applies to record companies’ mechanical licensing and payment practices.”151 They stated
that “the broadened scope of the current SNPRM in fact could have unintended
consequences for record company practices in ways that are contrary to both the law and
established industry practice, and in a manner that is not necessary to the Office’s
regulation of the [MLC].”152
Regarding individual download licenses, A2IM & RIAA agreed with parts of the
Office’s legal analysis of the Exception, but said that “in a regulation about the MLC’s
recognition of deductions from royalties that would otherwise be due under the blanket
license, [the] proposed language is opaque and potentially confusing.”153 They said that:
[T]he main point is that a termination pursuant to Section 203 or 304 does
not affect an individual download license, so a blanket license royalty
deduction for usage pursuant to an individual download license that was
appropriate prior to termination remains so after termination. The
regulations should state that plainly, rather than the language that is
currently proposed. In any event, it should be clear that [this provision]
does not mean that a record company that relied on an individual
download license for the creation of a sound recording cannot continue to
rely on that license for distribution of the recording (in download form or
otherwise) after termination of the author’s publishing agreement.154
The Office disagrees that the language is confusing. The provision clearly
provides that the Exception does not apply to an individual download license, and further
states that, for avoidance of doubt, no one may be understood to be the copyright owner

A2IM & RIAA SNPRM Initial Comments at 1.

Id.

Id. at 2–3.

Id. at 3.

or royalty payee of a work used under an individual download license based on an
interpretation or application of the Exception. A2IM & RIAA’s statement that a
termination “does not affect an individual download license” is accurate.155 But it is
important to recognize that, as explained in the NPRM and SNPRM, even though “the
license simply continues in effect according to its terms,” under those terms, “entitlement
to royalties . . . travels with ownership of the copyright.”156 “[W]henever a change is
effectuated, whether via a contractual assignment or by operation of a statutory
termination, the new owner becomes the proper payee entitled to royalties under the
[individual download] license.”157 This provision is meant to clarify the Exception’s
correct operation in light of the MLC’s prior views.158
3. Voluntary Licenses
The Office also received few comments regarding the SNPRM’s discussion of
voluntary licenses. A2IM & RIAA agreed with the SNPRM’s description of the
complexities involved, noting that “record companies regularly obtain voluntary
mechanical licenses rather than compulsory licenses, and generally pass through
download rights to DMPs.”159 They asserted that the “[r]ights that the record company
obtains from the pre-termination copyright owner are clearly preserved by the
[Exception] when the record company relies on its voluntary mechanical license for the
creation of either a first use recording or a cover.”160 Based on this, A2IM & RIAA
“question the treatment of voluntary licenses in the proposed rule.”161 They said that
“[n]either the pre-termination nor post-termination copyright owner would be motivated

See id.

87 FR 64405, 64410–11 & n.70; 88 FR 65908, 65911 & n.67.

87 FR 64405, 64411; 88 FR 65908, 65911 & n.67.

See 87 FR 64405, 64406–07.

A2IM & RIAA SNPRM Initial Comments at 3.

Id.

Id.

to provide the required notice, when the effect of failing to give notice is that the DMP
would in effect pay twice—once to the pre-termination copyright owner through the
record company and once to the post-termination copyright owner through the MLC.”162
They believed that “[r]oyalty payments would more often be handled appropriately if the
default assumption were that the [Exception] will apply to rights obtained by a record
company under a voluntary license and passed through to a DMP.”163
The Digital Licensee Coordinator (“DLC”) raised similar concerns about
potentially paying twice, stating that “in no event can DMPs be in the position of doublepaying the royalties at issue, potentially being subject to late fees as a result of any delay
in payment to the correct rightsholder.”164 In the DLC’s view, “the most sensible
approach” to dealing with disputes over the application of the Exception to voluntary
licenses “would be to not require any payment from the DMP to the MLC until the
dispute is resolved.”165
In subsequent comments, the DLC clarified that its “concern arises with respect to
the MLC’s ability to demand payment when there is a dispute related to termination that
involves one or more voluntary licensors.”166 It explained that “the circumstances where
a voluntary license partner has a right to demand royalties notwithstanding who the
MLC’s records show is entitled to payment is ultimately a matter of private contract
between the parties, and there is no industry standard approach to that issue.”167 The DLC
also said that it did not believe the statute requires the MLC to hold royalties pending the
resolution of disputes over the application of the Exception to voluntary licenses because

Id. at 4.

Id.

DLC SNPRM Initial Comments at 3–4.

Id. at 4.

DLC Ex Parte Letter at 2 (Mar. 4, 2024).

Id.

such disputes are not ownership disputes within the meaning of the statute.168 Based on
these comments, the DLC does not appear to take issue with the possibility of double
payments under the proposed rule where no dispute is initiated with the MLC.
The Office does not believe that these comments warrant any substantive changes
to the provision governing voluntary licenses. First, this provision does not embody a
presumption or a default rule about the Exception as A2IM & RIAA suggested. Rather, it
is a regulatory application of legal precedent establishing that the pre-termination
copyright owner bears the burden of proving that the Exception applies.169 The Office
continues to believe 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” and that
“the MLC should not exercise independent judgment regarding the application of the
Exception to a voluntary license or its underlying grant of authority.”170
If the Office were to adopt the default assumption A2IM & RIAA requested, it
would open the door to default assumptions in other voluntary license contexts.
Moreover, doing so would require the MLC to determine, at minimum, whether the
licenses at issue were indeed relied upon “for the creation of either a first use recording or
a cover.”171 That is precisely the type of fact-finding and independent judgment the
Office does not believe the MLC should be required to undertake in this context.
Second, given that the DLC does not appear to share A2IM & RIAA’s concern
about DMPs potentially double paying, the Office does not believe that any change to
this aspect of the rule is warranted. The DLC made clear that this issue is one of private
contract between the relevant parties.172 Even if that were not the case, the possibility of

Id. at 2–3.

88 FR 65908, 65912.

Id.

See A2IM & RIAA SNPRM Initial Comments at 3–4.

DLC Ex Parte Letter at 2 (Mar. 4, 2024).

making double payments in this context does not appear to be any different than in other
contexts where a DMP may be caught in the middle of a dispute between purported
copyright owners. Any time someone claims to be the owner of a copyright purportedly
licensed to a DMP by someone else, it will need to decide which party to pay. Depending
on the relevant contract’s terms, the DMP may well decide to pay both parties to limit its
potential liability for failing to pay the party who ultimately prevails in the dispute. Thus,
the situation that could arise under the rule does not appear to be a special one
necessitating a regulatory solution.
With respect to the DLC’s request that DMPs not be required to pay royalties to
the MLC to be held pending the resolution of a dispute initiated with the MLC, the Office
disagrees. As the Office explained in the SNPRM, even though “a dispute as to the
application of the Exception is not a dispute over ownership,” “a pre-termination
copyright owner [should] 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 . . . the MLC should hold applicable royalties pending resolution of such a
dispute.”173
Even if such a royalty hold is not required by the statute, the Office nevertheless
finds it to be a reasonable and prudent approach to the administration of such disputes, as
it ensures that the relevant funds will be available upon the resolution of the dispute. As
between allowing a DMP to hold the relevant royalties versus the MLC, the more
appropriate approach is for them to be held by the MLC, rather than a DMP with whom
the purported copyright owner may have no relationship. Moreover, even if the Office
did not require this, a DMP would risk late fees, or even default and termination of its
blanket license, if it declined to pay the applicable royalties to the MLC and the voluntary

88 FR 65908, 65919.

licensor does not prevail in the dispute. Thus, the final rule has been clarified to state that
the MLC shall invoice the relevant DMP for the applicable royalties.
The DLC asked that if the Office adopts this approach, we “provide guidance on
how any interest accrued by the MLC during the pendency of a termination dispute is
handled.”174 Specifically, it requested that “where resolution of the dispute results in a
service paying the voluntary licensor, the interest should be paid back to the service (with
any requirement to pay that interest onto the voluntary licensor dictated by the terms of
the voluntary license).”175 The DLC further said that “where resolution of the dispute
results in payment being made by the MLC to a blanket licensor, then any interest earned
should be used to offset the MLC’s administrative costs.”176
The Office had proposed that royalties held in connection with these kinds of
disputes accrue interest, but did not elaborate further.177 Our intent was for the MLC to
hold royalties in the same manner as any other held royalties under section
115(d)(3)(H)(ii).178
The final rule makes three clarifications regarding the funds held due to a
termination-related dispute involving a voluntary license. First, the applicable funds shall
be held by the MLC in the same manner and at the same interest rate as any other held
funds. Second, where the resolution of the dispute results in payment being made by the
MLC pursuant to a blanket license, that payment must include accrued interest. In that
situation, the Office sees no reason why the MLC or DMPs (through an offsetting of the
MLC’s costs) should profit from the fact that there was a dispute. Third, where the
resolution of the dispute results in a DMP paying royalties to a voluntary licensor, the

DLC Ex Parte Letter at 3 (Mar. 4, 2024).

Id. at 3 n.10.

Id.

88 FR 65908, 65926.

17 U.S.C. 115(d)(3)(H)(ii)(I).

MLC must promptly return the held funds, including accrued interest, to the DMP, who
then may or may not be required to pass that interest on to the voluntary licensor
depending on the terms of their agreement.
The Office disagrees with the MLC that “under the explicit language of [section
115(d)(3)(H)], interest earned . . . can only be for the benefit of copyright owners,” such
that “such accrued interest cannot be transmitted to [DMPs] for their own benefit (or to
be disposed of in their discretion), even where royalties are ultimately refunded to
[DMPs] as associated with voluntary licenses.”179 Section 115(d)(3)(H) does not apply in
the context of funds held during disputes over the application of the Exception to
voluntary licenses.
First, section 115(d)(3)(H) provides requirements for the holding of royalties and
accrual of interest with respect to “unmatched” works.180 As discussed above, disputes
over the application of the Exception are not ownership disputes.181 Since ownership is
not in question, and the owner would need to already be registered with the MLC for
there to even be a dispute of this kind, the works at issue in such a dispute would not be
“unmatched” within the meaning of the statute.182
Second, section 115(d)(3)(H) does not apply through section
115(d)(3)(G)(i)(III)(bb), which provides that the MLC shall “deposit into an interestbearing account, as provided in subparagraph (H)(ii), royalties that cannot be distributed
due to . . . a pending dispute before the dispute resolution committee of the [MLC].”183
Such disputes are described in section 115(d)(3)(K)(i) as “disputes relating to ownership

MLC Ex Parte Letter at 5–6 (Mar. 22, 2024).

See 17 U.S.C. 115(d)(3)(H).

88 FR 65908, 65919.

See 17 U.S.C. 115(e)(35) (“The term ‘unmatched’, as applied to a musical work (or share
thereof), means that the copyright owner of such work (or share thereof) has not been identified
or located.”).
183

See id. at 115(d)(3)(G)(i)(III)(bb).

interests in musical works licensed under this section.”184 The Office reiterates that a
dispute over the application of the Exception is not an ownership dispute. It is a dispute
over the legal effect of a valid termination.185
For these reasons, the Office is regulating how the MLC should handle these
types of disputes and the associated royalties and interest. With respect to the interest
issue, we believe the most equitable approach is for the MLC to pay the interest along
with the royalties, regardless of to whom such royalties are paid. The reason for requiring
the accrual of interest is to make the applicable party whole for the time-value of money
while the dispute is pending resolution. The Office is requiring the interest rate to be the
same as for funds held under section 115(d)(3)(H)(ii) because that is a rate that Congress,
by enacting it as part of the MMA, has found to be reasonable. Where there is a voluntary
license at issue, whether the DMP or the voluntary licensor is to be made whole is up to
the relevant agreement. Therefore, depending on the terms of the agreement, either the
DMP will be permitted to retain the interest for itself or will be required to pay it through
to the voluntary licensor. A voluntary licensor should not gain a benefit beyond the terms
of its agreement simply because the Office is requiring the disputed funds to be held at
the MLC rather than at the DMP.
B. The Copyright Owner at the Time of the Use Versus the Copyright Owner at the
Time of the Payment
In both the NPRM and SNPRM, the Office proposed that the copyright owner at
the time of the use is legally entitled to royalty distributions from the MLC unless the
MLC is directed otherwise. In response to the SNPRM, the Office received numerous
comments from publishers, songwriters, and other industry stakeholders expressing
concern with that approach. As discussed below, their concerns related to whether the

Id. at 115(d)(3)(K)(i).

88 FR 65908, 65919.

Office’s understanding of the law conflicted with current music industry royalty
administration practices or would cause administrative challenges for the MLC. In this
final rule, the Office is adopting our earlier proposal with some modifications to address
these operational concerns.
1. Background
In addressing whether the owner at the time of the use or the owner at the time of
the payment is entitled to blanket license royalties, the NPRM stated that a copyright
owner is entitled to blanket license royalties at the moment in time when the use of the
relevant musical work by a DMP occurs.186 The Office refers to this understanding as the
“owner at the time of the use” approach.
The SNPRM provided further analysis of this approach, concluding that “it
appears that, absent an agreement to the contrary, 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.”187 The Office’s conclusion that the owner at the time of
the use is entitled to the royalty distribution was based on both the MMA and broader
copyright law principles.188 The SNPRM proposed regulatory text identifying the owner
at the time of the use as the legally entitled party.
The Office, recognizing the importance of giving effect to private contracts that
may call for different payment arrangements, also proposed that the 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

87 FR 64405, 64412.

88 FR 65908, 65913.

See id. at 65912 (reflecting the Office’s statutory analysis).

license in the absence of an agreement to the contrary.”189 We then proposed additional
provisions to govern notification of the MLC about alternative payee designations, such
as through letters of direction, “to accommodate and give effect to contractual payment
arrangements that deviate from this default rule.”190
Finally, the NPRM also proposed that the MLC should use the last day of the
relevant monthly reporting period to identify the proper copyright owner for that month’s
royalty distribution. The Office suggested that doing so would be in line with the monthly
reporting and royalty distribution process created by the MMA and our regulations and
would make the rule reasonably administrable for the MLC, compared to requiring the
MLC to identify the copyright owner entitled to royalties on a day-to-day basis.191 The
Office sought comments on this proposed approach, including whether some other point
in time might be appropriate.192
2. Comments
Comments from publishers, songwriters, and other industry stakeholders
expressed concern with the owner at the time of the use approach.193 Many of these

Id. at 65913.

Id. at 65913–14, 65916–17.

87 FR 64405, 64412.

Id.

See, e.g., MLC SNPRM Initial Comments at 1–16; NMPA SNPRM Initial Comments at 2–13;
NMPA Ex Parte Letter at 1–2 (Jan. 24, 2024); AIMP SNPRM Initial Comments at 1–4;
Combustion Music SNPRM Initial Comments; Endurance Music Grp. SNPRM Initial Comments
at 1–2; Farris, Self & Moore, LLC SNPRM Initial Comments at 1–2; Boom Music SNPRM
Initial Comments; Jonas Grp. Publ’g SNPRM Initial Comments; Kobalt Music SNPRM Initial
Comments at 2; Liz Rose Music SNPRM Initial Comments at 1–2; Big Machine Music SNPRM
Initial Comments at 1–2; Legacyworks SNPRM Initial Comments; Me Gusta Music SNPRM
Initial Comments at 1–2; Relative Music Grp. SNPRM Initial Comments at 1–2; Harding
SNPRM Initial Comments; Moore SNPRM Initial Comments; North Music Grp. SNPRM Initial
Comments at 2; NSAI SNPRM Initial Comments at 2–5; Big Yellow Dog SNPRM Initial
Comments; Reservoir Media Mgmt. SNPRM Initial Comments at 1–2; SMACKSongs SNPRM
Initial Comments; Sony Music Publ’g SNPRM Initial Comments at 1–5; Spirit Music Grp.
SNPRM Initial Comments at 1–3; Turner SNPRM Initial Comments at 1–2; Wiatr & Assocs.
SNPRM Initial Comments; Jody Williams Songs SNPRM Initial Comments at 1–2; Concord
Music Publ’g SNPRM Initial Comments at 1–3; ClearBox Rights SNPRM Reply Comments at
parties favored an approach where royalties would be distributed to the copyright owner
identified in the MLC’s records as of the date of each monthly royalty distribution. The
Office refers to this as “the owner at the time of the payment” approach.
At a high level, commenters’ primary concerns with the owner at the time of the
use approach were practical ones. Specifically, they asserted that this approach is not a
standard practice in the music industry and is contrary to how industry contracts
generally work, that it will be burdensome and disruptive across the industry (including
to the MLC), and that it will result in inaccurate and delayed payments (including to
songwriters).194
A few commenters supported the Office’s legal conclusions regarding the proper
copyright owner who is entitled to blanket license royalties.195 Others suggested a
bifurcated approach to addressing the issue. For example, the Music Artists Coalition
(“MAC”) said that, in the termination context, the payee should be the owner at the time
of the use, but for everything else, it should be the owner at the time of the payment.196

4–5; Creative Nation SNPRM Reply Comments at 1–2; The Greenroom Resource SNPRM Reply
Comments at 1; MAC et al. SNPRM Reply Comments at 2; Recording Academy SNPRM Reply
Comments at 3; SONA SNPRM Reply Comments at 2–5; Universal Music Publ’g Grp. SNPRM
Reply Comments at 1–5; Warner Chappell Music SNPRM Reply Comments at 3–8; DLC
SNPRM Reply Comments at 2–4.
Examples of other issues raised by the comments include that: it may upset commercial
expectations and cause problems with financial modeling and reporting; it may lead to an increase
in fraudulent claims; implementation would require the development of new data and processing
systems and new reporting formats and standards across the entire industry that will be costly and
time-consuming to create; once a publisher’s or administrator’s rights period expires, they should
not be burdened with the expense and liability of needing to ensure that any future income they
receive flows through to the current owner to whom rights have been transferred; former
publishers and administrators are not set up to distribute royalties to former songwriter partners,
and practically would not have current contact or banking information available to make such
distributions to their former songwriters; the choice of songwriters to change publishers or
administrators should be honored, and they should not be forced to continue a relationship with
their former representative with respect to these royalties that may be inefficient or lack
transparency and accountability; it will lead to lower match rates and more unmatched royalties at
the MLC, especially for pre-2021 periods.
See, e.g., Howard SNPRM Initial Comments at 1–2; King, Holmes, Paterno & Soriano LLP
SNPRM Reply Comments.
196

MAC Ex Parte Letter at 2 (Dec. 29, 2023).

Similarly, NMPA, as a “compromise,” proposed regulatory text based on the NPRM that
“applies a time of use rule solely in the termination context.”197 It argued, however, “that
a rule providing for payment to the owner at the time of distribution in all contexts is the
more appropriate one.”198
3. Legal Entitlement to Blanket License Royalties
Despite the lack of support from commenters, few addressed the statutory text or
the Office’s legal analysis. Only NMPA and the MLC provided substantive arguments
that the MMA’s statutory language and legislative history support the MLC distributing
royalties to the owner at the time of the payment.199
NMPA conceded that the Office’s proposal “is not based on an unreasonable legal
interpretation.” At the same time, it asserted that “unless the statute is clear, a legal
interpretation of relevant statutory provisions should not cause disruption in a private,
functioning market.”200 It also disagreed with the Office’s statutory analysis and proposed
a different reading. NMPA’s statutory arguments referred to sections 115(d)(3)(G)(i)(II)
and 115(d)(3)(J)(i) (provisions governing royalty distributions), stating that they must be
read together with sections 115(d)(3)(E)(i) and 115(d)(3)(E)(ii)(II)–(III) (provisions
governing the MLC’s ownership database). Relying on those provisions, NMPA stated:
The MLC is . . . not directed by statute to maintain . . . historical copyright
ownership or chain of title information within its musical works database.

NMPA Ex Parte Letter at 2 (Jan. 24, 2024).

Id.

NMPA SNPRM Initial Comments at 11–13; MLC SNPRM Initial Comments at 4–11. NMPA
also made an argument based on language used by the Office in the NPRM’s analysis of the
Exception which stated that the “current copyright owner” is entitled to blanket license royalties,
that owner “can change over time” and, after such a change, “the new owner becomes the proper
payee.” NMPA SNPRM Initial Comments at 11 (citing 87 FR 64405, 64411; 88 FR 65908,
65912). To clarify, the Office’s use of the term “current” was intended to identify that the proper
payee is the copyright owner concurrent with the time the work was used. While the last
copyright owner in time may be the proper payee, we were not suggesting that this is necessarily
always the case.
200

NMPA SNPRM Initial Comments at 11.

Because the MLC does not maintain in the musical works database
records that would enable it to identify the “copyright owner” at the
precise time of use, and the “copyright owner” as identified in the musical
works database is always the then-current copyright owner (and not the
owner at the time of use or at some other prior time), the direction to pay
“copyright owners in accordance with . . . the ownership and other
information contained in the records of [the MLC]” should be read as a
direction to pay the owner at the time of payment.201
NMPA then referred to section 115(d)(3)(I), asserting that “once a match is made,
all the accrued royalties with respect to such previously unmatched work are paid to the
then-current copyright owner to which the work has been matched. There is no
requirement for the MLC to determine which portion of those royalties may relate to uses
made at a time when a different (potentially not yet identified) copyright owner owned
the work.”202 NMPA concluded by stating that it “does not believe that the sections
referred to by the [Office] support a different conclusion,” as those provisions “do not
address the issue of who has the statutory right to receive Blanket License royalty
payments.”203
The MLC made similar statutory arguments, referencing some of the MMA’s
same sections,204 as well as its legislative history.205 Similar to NMPA, the MLC asserted

Id. at 12 (second and third alterations in original).

Id. at 12–13.

Id. at 13.

MLC SNPRM Initial Comments at 4–7 (referencing 17 U.S.C. 115(d)(3)(G)(i)(II),
115(d)(3)(J)(i), 115(d)(3)(E)(i)–(ii), and 115(d)(3)(I)).
Id. at 4–11. Regarding legislative history, the MLC primarily pointed to there being “no
mention or contemplation of the creation of a database that includes temporal histories of past
ownership” and that a description of the provisions concerning market share-based distributions
of unclaimed royalties “conveys an understanding that royalties would be paid to the entities that
currently represent songwriters, not to an entity that may have represented the songwriter in the
past but is no longer authorized to do so.” Id. at 8–9 (citing H.R. Rep. No. 115-651, at 7–9, 13
and S. Rep. No. 115-339, at 8–9, 14).
that “[t]he MMA directive to distribute royalties based on the ‘information in [its]
records’ is most appropriately read to mean that The MLC is to distribute royalties to the
copyright owners’ current registered payee.”206
The Office acknowledges the practical consequences of our analysis in the
SNPRM. However, those practicalities do not create legal entitlements or change the
terms of title 17, absent contractual or other arrangements. While sections
115(d)(3)(G)(i)(II) and 115(d)(3)(I) provide the “copyright owner” with legal entitlement
to the royalties, neither they nor the other cited provisions speak to which copyright
owner possesses such entitlement between the owner at the time of the use or the owner
at the time of the payment.207 That is why the Office engaged in the analysis it did in the
NPRM and SNPRM.208
The MMA’s references to the MLC’s records do not resolve this issue. They
merely provide instructions as to how the MLC shall distribute royalties to legally
entitled copyright owners. Such distributions must be made to such copyright owners “in
accordance with . . . the ownership and other information contained in the records of the
[MLC].”209 Those records contain important information about how to make the
distribution, including contact, banking, and other information about the owner, as well

Id. at 5–6.

Nor do these provisions necessarily require that there be only a single payee contained in the
MLC’s records for each work (or share). At best, these provisions are silent on that issue. The
MLC’s reliance on legislative history is similarly misplaced, as their cited references also do not
appear to directly speak to this issue. In particular, market share-based distributions of unclaimed
royalties are a unique feature of the MMA, and whatever the meaning of the specific provisions
governing that special type of distribution—which is a matter beyond the scope of this
proceeding—they do not speak to the legal entitlement to or distribution requirements for blanket
license royalties that have not yet become “unclaimed” within the meaning of the statute. See 17
U.S.C. 115(d)(3)(J), (e)(34).
88 FR 65908, 65912 (explaining that the analysis regarding the owner at the time of the use
versus the owner at the time of the payment issue concerned the Office’s proposal “[t]o codify its
preliminary conclusion that the statute entitles the ‘current copyright owner’ to the royalties under
the blanket license”).
209

See 17 U.S.C. 115(d)(3)(G)(i)(II).

as whether payment is to be made to an administrator or other representative or
designee.210
Of course, the statute’s direction to the MLC to make distributions based on the
information in its records does not resolve any underlying dispute regarding who is
entitled to the royalty distribution. Clearly, the MLC can only distribute royalties based
on known information. But what the MLC “knows,” based on its records, could turn out
to be wrong, for example, if an imposter managed to successfully register a fraudulent
ownership claim, or a legitimate copyright owner accidentally but erroneously claimed a
work in good faith. If the statute is understood to confer entitlement to the royalties on
whomever is identified in the MLC’s records, it creates a conflict with the rest of the
statutory text that confers this entitlement on the copyright owner. Moreover, such a
reading would provide perverse incentives for parties to race to submit as many
fraudulent claims to the MLC as possible in the hope of gaining such legal entitlement.
Congress did not intend to create such an absurd scheme, whereby claimants who may be
intentionally lying can obtain legal entitlement to royalties for uses of copyrighted works
instead of the actual copyright owners.
Thus, while the individual or entity legally entitled to the royalties and the
individual or entity actually receiving the distribution from the MLC will, in most cases,
be the same, this will not always be the case. If they are not the same, being identified in
the MLC’s records alone will not alter or prejudice the true copyright owner’s legal
entitlement to those royalties. The Office concludes that this is the only reasonable way
to read the MMA’s instructions to the MLC regarding distributions.
With respect to the Office’s further analysis contained in the NPRM and SNPRM,
to the extent NMPA or the MLC is suggesting that Congress meant to establish a special

See, e.g., 37 CFR 210.31(b)(1)(iii), (b)(1)(v)(D).

exception regarding copyright ownership or royalty entitlement in connection with the
blanket license, the Office disagrees. As explained in the SNPRM, reading section 501(b)
in conjunction with section 115(d)(4)(E)(ii)(II) (which directly references section 501),
“it appears that, absent an agreement to the contrary, 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.”211 This is the best reading of the statute: that Congress expected the party who is
legally entitled to the royalties and the party who is legally permitted to sue a DMP for
infringement for the nonpayment of such royalties to be one and the same. That
understanding is best reflected in section 115(d)(4)(E)(ii)(II)’s cross reference to section
501. If Congress had intended an exception to the operation of section 501(b) for
infringement cases related to the blanket license, it would have articulated one. The
Office recognizes that legal entitlements can be varied by contract, but that variation is
not relevant to understanding how the statute works absent any such agreement’s terms.
Some commenters suggested to the Office that potential concerns over the time of
use approach are addressed through contract.212 But contract terms stating that acquiring
publishers will be paid royalties for pre-acquisition uses of musical works imply
agreement with the Office’s conclusions about default royalty entitlement in the absence
of a relevant agreement. Additionally, most of the comments addressing the time of use
approach focused on concerns related to business practices (e.g., paperwork, royalty
processing, data tracking) rather than the law. While such concerns are relevant to the
practical administrability of the rule, and support certain changes the Office ultimately

88 FR 65908, 65913.

See, e.g., MLC SNPRM Initial Comments at 11; NMPA SNPRM Initial Comments at 4–5 &
n.4, 10; Kobalt Music SNPRM Initial Comments at 2; Reservoir Media Mgmt. SNPRM Initial
Comments at 1; Sony Music Publ’g SNPRM Initial Comments at 1–2; Spirit Music Grp. SNPRM
Initial Comments at 1; Concord Music Publ’g SNPRM Initial Comments at 2; Universal Music
Publ’g Grp. SNPRM Reply Comments at 2.
made to the final rule (which are discussed below), they have no bearing on the statutory
analysis discussed above or in the NPRM or SNPRM.
Based on the foregoing, as well as the relevant discussion in the NPRM and
SNPRM, the Office is adopting the owner at the time of the use rule as final, but only
with respect to identifying who is legally entitled to blanket license royalties under the
statute as a default matter. Unlike the SNPRM, the final rule does not mandate that the
MLC may only make distributions to either the owner at the time of the use or an
alternative payee specifically designated by such owner.213 Rather, it contains a new
provision (detailed in the section below) governing how the MLC is to make royalty
distributions based on the information in its records.
As discussed above, the MLC’s records are not determinative with respect to who
is legally entitled to royalties. At the same time, the Office agrees with NMPA and the
MLC that section 115(d)(3)(G)(i)(II) directs the MLC to make distributions in
accordance with the information in its records.214 The Office has therefore decided to
adopt two provisions—one that describes who is legally entitled to the royalties and
another that directs to whom the MLC shall distribute royalties. The two provisions avoid
confusion, making clear that the MLC’s distribution does not mean that the recipient is
legally entitled to those royalties, but instructing the MLC regarding the distributions that
it should make. Adopting regulations directing the MLC to act, unaccompanied by
regulations identifying who is legally entitled to the royalties, could create a
misunderstanding regarding proper application of the law. But, as discussed below,
aligning the legal entitlement with the directive to the MLC in all cases would be

Despite this change, the final rule still provides that the relevant owner is the owner as of the
last day of the monthly reporting period in which the work is used pursuant to a blanket license.
While the Office’s original reasoning for that was partially based on concerns about requiring the
MLC to manage day-to-day ownership changes occurring mid-month, it also rested on the fact
that the MMA established a monthly-based reporting scheme for DMPs. 87 FR 64405, 64412.
The Office relies on the latter in adopting the final rule. See 17 U.S.C. 115(d)(4)(A).
214

17 U.S.C. 115(d)(3)(G)(i)(II).

administratively infeasible. The new distribution provision instead enables the MLC to
make royalty distributions to the owner at the time of the payment in accordance with the
standard industry practice for which commenters expressed virtually universal support.
Some commenters continued to voice concerns with the Office articulating who is
legally entitled to the royalties as a default matter, even when coupled with the new
distribution provision discussed below.215 The Office has considered these concerns, but
declines to remove the entitlement provision from the final rule. Especially considering
the new distribution provision discussed below, the Office believes it is important to
provide a clear statement of the party who is legally entitled to blanket license royalties
as a default matter.
First, the Office is always mindful of potential unintended consequences
that may stem from its rules. To the extent the Office’s legal conclusions may
differ from the practices of certain industry participants, those differences seem to
be based on expectations arising out of contracts or business norms, not title 17.
Moreover, failure to explain that entitlement to royalties is based on the time of
the use could lead to confusion and the mistaken impression that the MLC’s
royalty distributions, which are based on information in its records at the time of
the payment—principally for administrative convenience—reflects a
determination of entitlement. On balance, the best way to minimize confusion is
for the Office to articulate our interpretation of the statute.
Second, the Office disagrees with the argument that the rule is
unnecessary because private agreements will govern anyway. That argument
presupposes that every private agreement will speak to this issue. Nothing in the
record indicates that this is universally true, indicating there is at least some

See NMPA Ex Parte Letter at 1–2 (Jan. 24, 2024); MLC Ex Parte Letter at 3 (Feb. 5, 2024);
MAC & NSAI Ex Parte Letter at 1 (Feb. 12, 2024).
subset of contracts as to which this provision will be applicable.216 Moreover, this
argument presupposes that all transfers are contractual, which is incorrect.
Finally, the Office disagrees that the existence of non-contractual
transfers, like intestate succession or bankruptcy, weigh against this rule, as their
existence does not change the statutory analysis discussed above and in the
SNPRM. The Office has, however, clarified in the final rule that the entitlement to
royalties can be transferred and that the default royalty entitlement provided for is
subject to any such transfer.
4. The MLC’s Distribution of Royalties Based on Its Records
As mentioned above, the final rule includes a new provision to address the MLC’s
royalty distributions based on the information in its records, as required by section
115(d)(3)(G)(i)(II). The new regulation has four main parts summarized here.
i. Default Royalty Distribution Practices Regarding Ownership and the MLC’s
Records
The first part of the regulation provides that, when making a distribution, the
MLC shall treat the individual or entity identified in its records as of the date of the payee
snapshot used for the applicable distribution as legally authorized to receive the
distribution (e.g., meaning that such party is the owner at the time of the use (or such
owner’s representative or designee) or a successor in interest to such owner’s entitlement
to the royalties (or such successor’s representative or designee)). In other words, the
MLC is to distribute royalties based on its records and to assume that whoever is in its
records is legally entitled to the distribution, subject to the additional provisions below.
By making royalty distributions to the owner reflected in the MLC’s records on the date

The Office, of course, does not mean to suggest that this provision should in any way override
the intent of contracting parties if an agreement is ambiguous. If the parties disagree as to whether
an agreement conveyed the entitlement to the applicable royalties, the usual standards under
applicable state law for construing private contracts would still apply. The MLC should treat any
such disagreement like an ownership dispute.
of the payee snapshot (i.e., at the time of the payment), the MLC will be acting in
accordance with widespread industry practice without contravening the statute. One
commenter called it “an elegant solution.”217
This default distribution provision is both consistent with the language of the
statute and responsive to the MLC’s request for the “inclusion of a provision confirming
that [it] can distribute royalties for a musical work to the current payee registered in its
database.”218 The Office concludes that the new provision is a reasonable and appropriate
approach which facilitates the MLC’s administration of royalty distributions. Moreover,
this result was overwhelmingly supported by commenters. The comments made clear that
the party identified in the MLC’s records at the time of the payee snapshot (or its
representative or designee) will be the party who is legally entitled to the distribution in
the vast majority of cases.219 Permitting the MLC to act on the information in its records

MAC & NSAI Ex Parte Letter at 1 (Feb. 12, 2024); see also MCNA et al. Ex Parte Letter at
1–2 (Mar. 15, 2024) (articulating qualified support for this solution in the termination context and
subject to other various caveats, calling it “a reasonable and practical solution that accounts for
both business considerations and the protection of creators’ rights under the law in termination
rights situations”).
MLC Ex Parte Letter at 3–4 (Feb. 5, 2024); see also MLC Ex Parte Letter at 1 (Feb. 21,
2024); MLC Ex Parte Letter at 1 (Mar. 22, 2024); Warner Chappell Music SNPRM Reply
Comments at 5–6 (“[I]n light of the undisputed comments to the SNPRM detailing how and why
the U.S. and international music publishing industry is universally built on maintaining current
information for—and paying—the then-current owner or administrator, Warner Chappell
advocates for adopting that as a default rule.”); NMPA SNPRM Initial Comments at 10 (“[A]
‘default rule’ should be the rule that applies in the vast majority of cases, and should not be the
rule that applies only in exceptional cases.”).
See, e.g., MLC SNPRM Initial Comments at 11 (“[I]n most industry agreements the current
payee typically has the right to receive royalties for all periods (both prospective and historical).
Thus, a default rule that provides for payments to be made to the current payee (a result that is
consistent with most industry agreements) would produce more accurate results than a default
rule that provides for payments to be made to a historical payee (a result that does not align with
most industry agreements.”); NMPA SNPRM Initial Comments at 4–5 (“[T]he custom and
practice in the music industry is for royalties to be paid to the owner of the copyright at the time
of payment rather than at the time of use, unless a different arrangement is agreed to between that
copyright owner and a different payee, e.g., the prior owner/assignor of the copyright. This
custom and practice is memorialized in industry contracts and the royalty and administration
systems of publishers, administrators, and CMOs are built around that custom and practice. In
other words, the industry ‘default rule’ is the opposite of the ‘default rule’ proposed in the
SNPRM.”); Kobalt Music SNPRM Initial Comments at 2 (“The administrator who is registered at
will lead to accurate payments without overburdening copyright owners and the MLC
with new, potentially significant, data, reporting, and payment requirements, which could
result in a delay in royalty distributions.220

the time of a distribution is nearly always the entity that all royalties should be paid to, and this is
how industry contracts and CMOs generally operate. Any exceptions to this practice would be the
distinct minority.”); Sony Music Publ’g SNPRM Initial Comments at 1–2 (“The Prior Owner
Rule is inconsistent with the contracts around which the music publishing industry is built. . . .
When music catalogues are bought and sold, the terms of the acquisition documents generally
provide that the acquiring party has the right to collect all income after the date of sale.”);
Universal Music Publ’g Grp. SNPRM Reply Comments at 2 (“Under industry contracts, where
rights are transferred or revert, the right to receive royalties (including those previously earned
but not yet paid) generally follows the rights. . . . The Time of Use Rule will therefore . . . usually
result in payment to the wrong party under the relevant contractual arrangements.”); Warner
Chappell Music SNPRM Reply Comments at 5 (“[A]ny rule that would establish the ‘default
payee’ as anyone other than the current rightsholder at the time of the payment will, by definition,
carry a real and inherent risk of compelling payment to someone not entitled to received it. . . .
[T]he U.S. and international music publishing industry is universally built on maintaining current
information for—and paying—the then-current owner or administrator.”); Big Machine Music
SNPRM Initial Comments at 2 (“I have never seen a copyright transfer that doesn’t include a
letter of direction to effectively set out the process for the new owner to receive all future
income.”); Reservoir Media Mgmt. SNPRM Initial Comments at 2 (“There is nothing to gain
from some of these changes beyond a mirage of accuracy that is not in alignment with actual
collection rights.”); SONA SNPRM Reply Comments at 3 (“Songwriters, publishers, and other
third parties acquiring and/or licensing publishing rights in the music industry transfer rights,
including the right to administer and collect royalty income, as of a specific date of transfer so
that the party that is newly entitled to administer, collect and receive income in connection with
the particular works will do so as of that specific effective date regardless of when those monies
were earned.”). Other commenters also noted that this practice is not completely universal, and
that there may be exceptions. See, e.g., MLC SNPRM Initial Comments at 11; NMPA SNPRM
Initial Comments at 4–5; Kobalt Music SNPRM Initial Comments at 2; Sony Music Publ’g
SNPRM Initial Comments at 1–2; Universal Music Publ’g Grp. SNPRM Reply Comments at 2;
Warner Chappell Music SNPRM Reply Comments at 6 (“In the rare instance where parties
actually intend for someone other than the current owner or administrator to receive an MLC
distribution, those parties are best positioned to so notify the MLC.”).
The Office acknowledges that this default distribution provision could lead to the “wrong”
result with respect to the narrow category of post-termination royalties paid for pre-termination
uses. In such cases, the pre-termination copyright owner remains entitled to those royalties absent
a contrary agreement because the reversion of the copyright by operation of law does not
encompass the additional entitlement to those royalties. The Office nevertheless finds the default
distribution provision to be reasonable in these cases in light of the reduced burden it places on
the MLC, the various exceptions to the default distribution provision discussed below, as well as
comments from publishers suggesting agreement with the end-result of having the MLC
distribute post-termination royalties for pre-termination uses to the post-termination owner. See,
e.g., NMPA NPRM Initial Comments at 6; CMPA NPRM Initial Comments at 2 (“Although it
may not be in the financial interest of the pre-termination owner, . . . it would be CMPA’s
recommendation that any and all adjustments of this nature be paid to the current copyright owner
(that being the post-termination owner) at the time of the payment, and not at the time when the
usage was made.”); see also NMPA SNPRM Initial Comments at 5 (“[I]t is the custom and
However, the Office recognizes that there may be instances where the MLC’s
distribution of royalties to the owner at the time of the payment under the default
distribution provision would result in an improper party being paid. Therefore, the Office
has included clarifications and limitations. First, any distribution made by the MLC is not
a determination of a party’s legal entitlement to the royalties and does not prejudice any
such party’s legal claim. The purpose of the default distribution provision is to reduce
burdens, gain efficiencies, and enhance accuracy by applying industry practice to the
MLC’s distributions. It does not alter anyone’s underlying legal rights—especially if the
MLC, in relying on this provision, ends up distributing royalties to an individual or entity
who is not legally entitled to them. The MLC specifically supported the inclusion of such
a provision.221
Second, the default distribution provision does not apply where there is a dispute
between parties or an investigation by the MLC covering the applicable works (or shares)
or payees. The reference to an investigation is meant to include situations where the MLC
may be looking into, for example, a potentially fraudulent registration or claim. The
purpose is to make clear that where the MLC has knowledge that there is a cloud over the

practice in the industry for the new owner or the songwriter to whom rights have been assigned or
reverted to be paid all unpaid royalties regardless of when they were earned.”).
Additionally, the comments suggested that at least some publishers do not wish to receive
such royalties due to the administrative burdens involved in sharing those royalties with former
songwriter partners. See, e.g., NMPA SNPRM Initial Comments at 8; Kobalt Music SNPRM
Initial Comments at 3 (“In our experience, former administrators in general are not set up to
distribute royalties to their former songwriters, and almost no one—not even the former
administrators themselves—wants them to continue to receive those royalties once all rights
periods expire.”); Big Machine Music SNPRM Initial Comments at 1–2 (“The collection and redistribution of this income to the new owner creates an additional administrative burden for our
company, taxes the human resources of my team and creates an unwanted liability for us without
any benefit.”); Me Gusta Music SNPRM Initial Comments at 2; Relative Music Grp. SNPRM
Initial Comments at 1. By including these royalties within the MLC’s default distribution
provision, it allows publishers to choose for themselves how they would like to handle these
situations. They can do nothing, and the royalties will be distributed to the post-termination
owner. Or, if they wish to assert their entitlement to the royalties, they can defeat the default
distribution provision and obtain them by simply notifying the MLC, as discussed below.
MLC Ex Parte Letter at 2 (Feb. 21, 2024).

ownership of the relevant work (or share), it must continue holding royalties until that
cloud has cleared.
Third, the default distribution provision does not apply if the MLC has been
“notified otherwise.” This language is meant to cover circumstances where the MLC
receives information that would indicate to a reasonable person that the payee identified
in its records is not in fact entitled to the royalty distribution. In enacting the statutory
requirement for the MLC to distribute royalties pursuant to its records, Congress did not
intend for the MLC to knowingly make inaccurate payments after being expressly
informed otherwise.222 Whether particular information received is sufficient, or whether
any such information is adequately substantiated, for the MLC to actually be “notified” is
a matter the Office leaves to the MLC’s reasonable discretion based on its experience,
practices, and policies, subject to the Office’s guidance.223
ii. The Default Distribution Provision Does Not Change the MLC’s Duty to
Verify the Accuracy of Royalty Distributions
The next part of the provision states that despite the default distribution provision,
the MLC must continue to engage in reasonable efforts to verify the information provided
to it and to combat against fraudulent registrations and claims. This provision is not
intended to require the MLC to engage in additional efforts beyond those it currently
undertakes, but rather to ensure that it continues to engage in such efforts after the rule is

See H.R. Rep. No. 115-651, at 9 (referring to “the efficient and accurate collection and
distribution of royalties” as the MLC’s “highest responsibility”); S. Rep. No. 115-339, at 9
(same); Conf. Rep. at 7 (same).
While the MLC suggested that such notifications will always take the form of disputes, the
Office cautions that this might not always be the case. See MLC Ex Parte Letter at 1–2 (Mar. 22,
2024). That is why the final rule provides separate explicit provisions for both disputes and where
the MLC is notified otherwise. The notification provision is meant to be broader to encompass
other possible scenarios outside of a formal dispute. While the degree of overlap between the two
provisions may be substantial, it is not necessarily total.
enacted.224 An examination of the MLC’s current such efforts and their sufficiency is
beyond the scope of this proceeding.
iii. The MLC Must Still Correct its Own Errors
The final part of the provision is meant to codify and clarify a point made in the
SNPRM that “[w]here the MLC distributes royalties to the wrong payee due to an error
on the MLC’s part . . . , the MLC must correct its error in a timely fashion.”225 The
regulation makes clear that the applicable type of error is one caused by the MLC’s
actions, as opposed to where the MLC acts in accordance with the default distribution
provision or otherwise reasonably relies on information provided to it by others that turns
out to be inaccurate.226 The reference to the MLC’s actions encompasses the actions of its
employees, but the Office also intends for it to cover actions of others acting on its
behalf.
C. Matched Historical Royalties
Outside the context of the owner at the time of the use versus the owner at the
time of the payment issue, the Office received few comments regarding our proposal that
the MLC 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.227 Notably, the MLC supported this proposal by including it in its own
regulatory proposal and no commenters appear to have objected.228 The Office is,

See MLC Ex Parte Letter at 5 (Feb. 21, 2024) (explaining that the MLC “has substantial
review processes in place to prevent fraudulent or improper claiming and diversion of royalties”);
see also U.S. Copyright Office, Unclaimed Royalties: Best Practice Recommendations for the
Mechanical Licensing Collective iii, 60 (2021), https://copyright.gov/policy/unclaimedroyalties/unclaimed-royalties-final-report.pdf (“[T]he MLC should have mechanisms in place to
help review, verify, and quality-check information, and recognize problems like conflicts,
inconsistencies, inaccuracies, and potential fraud.”).
225

88 FR 65908, 65918 n.137.

See MLC Ex Parte Letter at 2 (Mar. 22, 2024).

See 88 FR 65908, 65914.

See MLC SNPRM Reply Comments, App. A. at iii–iv.

therefore, adopting this portion of the SNPRM as final for the reasons stated in the
SNPRM.229
D. Ownership Transfers and Royalty Payee Changes
The final rule retains the overall framework and structure from the SNPRM with
respect to the provisions governing notice to and implementation by the MLC of
ownership transfers and other royalty payee changes.230 The Office, however, has made
several changes from the SNPRM.
1. Notice of a Change to the MLC
The SNPRM contained detailed and tailored notice requirements based on the
type of payee change at issue. It proposed such requirements for the following
circumstances: (1) transfers of copyright ownership other than by will or operation of
law; (2) transfers of copyright ownership by statutory termination; (3) other transfers of
copyright ownership; and (4) designations of alternative royalty payees.231
In response to the SNPRM, several commenters criticized the non-terminationrelated notice requirements, including on the ground that the Office does not need to
regulate standard operational processes, like those concerning contractual transfers and
letters of direction, for which the MLC has well-functioning systems in place.232
Commenters also contended that the SNPRM’s requirements were unworkable or unduly
burdensome.233

88 FR 65908, 65914.

See id.

Id. at 65914–17.

See e.g., Kobalt Music SNPRM Initial Comments at 3; Spirit Music Grp. SNPRM Initial
Comments at 2; Reservoir Media Mgmt. SNPRM Initial Comments at 2; ClearBox Rights
SNPRM Reply Comments at 10.
See e.g., NMPA SNPRM Initial Comments at 4, 14–15; Spirit Music Grp. SNPRM Initial
Comments at 2; Farris, Self & Moore, LLC SNPRM Initial Comments at 1; Warner Chappell
Music SNPRM Reply Comments at 7–8; Universal Music Publ’g Grp. SNPRM Reply Comments
at 2 n.1; Reservoir Media Mgmt. SNPRM Initial Comments at 2.
The MLC echoed these comments and submitted a regulatory proposal that
largely retained the Office’s proposed requirements for termination-related transfers, but
replaced the other notice requirements with a catch-all provision providing that such
notice be made in accordance with requirements established by the MLC.234 Few
commenters supported the Office’s proposal with respect to non-termination-related
notices.235
Based on these comments, the Office has scaled back the notice requirements,
generally in line with the MLC’s proposal. Outside of the termination context, it does not
appear that regulation is currently necessary. Instead, the Office is issuing a rule directing
the MLC to adopt a written policy reflecting its practices and requirements for nontermination-related notices. The Office will monitor this area and will consider
potentially adopting regulations in the future if presented with a record reflecting a need
to intervene.
i. Non-Termination-Related Transfers of Copyright Ownership and Royalty
Payee Changes
As discussed above, the final rule omits the previously proposed requirements for
non-termination-related notices and replaces them with a directive for the MLC to adopt
and publish requirements for such notices. More specifically, the final rule provides that
parties seeking to make payee changes outside the context of a termination must notify
the MLC pursuant to such reasonable requirements as it establishes and makes publicly
available on its website. To the extent the MLC does not already have such a policy on its
website as of the date this final rule is published in the Federal Register, the MLC will
have 60 days to adopt one and make it public, unless the Office permits an extension.
MLC SNPRM Reply Comments at 3–5, App. A at iv–xii; MLC SNPRM Initial Comments at
18–20; MLC Ex Parte Letter at 2 (Mar. 22, 2024) (explaining “the need for flexibility to
incorporate evolving industry practices into processes to effectuate the various types of transfers
and payee changes that occur in the normal course of business for rightsholders”).
235

See, e.g., Promopub SNPRM Initial Comments at 5.

Additionally, there is one aspect of the SNPRM regarding non-termination-related
notices that the final rule retains. In response to the NPRM, the Songwriters Guild of
America et al. (“SGA et al.”) proposed specific requirements to apply where the MLC is
asked by the terminating party to implement an agreement directing it to pay posttermination royalties to the pre-termination copyright owner.236 SGA et al. was concerned
about contractual overreach by publishers requiring the execution of anticipatory letters
of direction as part of publishing deals.237 The Office included the proposal as part of the
SNPRM, explaining that “[b]ased on the current record, the proposal seems to be a
reasonable safeguard, even if there is no such overreach at present.”238 No commenter
specifically opposed this proposal, and the MLC included it in its regulatory proposal.239
The Office has, thus, retained most of the proposal in the final rule with some minor
conforming edits.240
ii. Transfers of Copyright Ownership by Statutory Termination
In contrast to the Office’s proposal on non-termination-related notices,
commenters generally did not oppose the Office’s proposal on notices to the MLC about
payee changes resulting from statutory terminations. Indeed, multiple commenters
affirmatively supported it.241 For example, MAC et al. said that they “fully support the

88 FR 65908, 65917.

Id.

Id.

MLC SNPRM Reply Comments, App. A. at vi–vii.

The final rule does not include the requirement that such a 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” as such a
requirement would be unnecessary, considering that the regulations also require the notice to be
signed after the effective date of termination.
See, e.g., MLC SNPRM Initial Comments at 20; MLC SNPRM Reply Comments at 3; MAC
et al. SNPRM Initial Comments at 2–3; Promopub SNPRM Initial Comments at 5. Despite its
general support, Promopub also expressed concern that “[i]f the terminating party has already
been subjected to a dispute process at the MLC, the pre-termination copyright owner/prior payee
should not have another opportunity to add salt to the wound by way of the proposed Rule
Office’s proposal,” calling it “simple, practical and efficient.”242 The MLC “welcome[d]
regulatory clarity from the Office” on this topic243 and said that “[m]uch of the provisions
concerning termination procedure are consistent with MLC practice, or could be
implemented.”244 The MLC and other commenters, however, proposed modifications to
the Office’s proposal to address discrete concerns.
Based on the comments and the discussion in the SNPRM, the Office is adopting
as final the proposed notice requirements regarding payee changes resulting from
statutory terminations with the modifications discussed below.
a. Whether the notice requirements should be a floor.
The Office disagrees with the MLC’s proposal to turn the notice requirements into
a floor.245 While the Office acknowledged in the SNPRM that the proposed information
that must be submitted to the MLC might not provide sufficient information to process
and implement the ownership change in some cases, the Office also proposed a means by
which the MLC could obtain the minimum necessary information to implement the
change.246 In doing so, the Office explained that “[t]his 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.”247

creating another notification and dispute cycle.” Promopub SNPRM Initial Comments at 5. To
clarify, these notice requirements and the dispute mechanism contained within them are only
effective prospectively. This means that if a terminating party previously notified the MLC about
an effective termination and the MLC acknowledged the sufficiency of that notice, then nothing
in the final rule would require the terminating party to submit a new notice to the MLC.
MAC et al. SNPRM Initial Comments at 2–3.

MLC SNPRM Reply Comments at 3.

MLC SNPRM Initial Comments at 20.

See MLC SNPRM Reply Comments, App. A at v.

88 FR 65908, 65915–16.

Id. at 65916.

The Office continues to believe that this is the most appropriate approach.
Turning the requirements into a floor would allow the MLC to request additional and
potentially unnecessary information that may be challenging to produce up front, which
was precisely the concern that led to the Office’s proposal.248 As further discussed below,
if the initial submission to the MLC lacks what it needs, the MLC can request additional
information at that point.
b. Treatment of notices containing multiple works.
The Office agrees with Linda Edell Howard that the rule should be clarified to
recognize that a single notice—whether a change notice to the MLC or a statutory notice
of termination submitted to the Office for recordation—may identify more than one
musical work, and that the relevant statuses of those works may be different.249 The final
rule makes clear that, in such cases, any implication as to one work does not affect
another listed in the same notice. Each work must be treated independently. This is
clarified throughout the final rule, including in the notice, implementation, and dispute
provisions.
For example, if there is a dispute as to one work, but not another in the same
change notice submitted to the MLC, the MLC must still implement and give effect to the
change with respect to the work that is not in dispute (assuming that there are no other
issues). The same is true where the MLC has sufficient information to implement the
change as to one work, but not for another from the same notice. As another example, if a
notice of termination identifying multiple musical works is timely recorded in the Office
as to some works but not others, assuming that there are no other issues, the MLC should
implement the termination of those as to which the notice is timely recorded, even though
the works with untimely recorded notices cannot be terminated.

Id. at 65915–16.

See Howard SNPRM Initial Comments at 4, 6, 8.

c. Requirement to provide the statutory notice of termination.
Linda Edell Howard asserted that it can sometimes be difficult or expensive to
obtain a copy of the notice of termination submitted to the Office for recordation.250 She
did not, however, make any alternative suggestions. The Office continues to believe that
providing a copy of the actual notice of termination is reasonable and not unduly
burdensome.
d. Requirement to provide proof of recordation or proof of submission to
the Office for recordation.
The Office agrees with the MLC’s proposal to clarify that the proof of submission
of the statutory notice of termination to the Office must reflect that it was submitted
before the effective date of termination.251 For a notice of termination to be timely
recorded, it must be received by the Office before the effective date.252
The Office disagrees with ClearBox Rights that the proof of recordation
requirement should be dropped because it is “cumbersome and potentially not
necessary.”253 ClearBox Rights made three arguments to support its position. First, it
contended that it “would prove to be an administrative burden on the MLC to maintain a
schedule of such notices to be delivered.”254 This argument is unpersuasive given that the
MLC did not object to this requirement and included it in its regulatory proposal.255
Moreover, the rule does not require the MLC to maintain any such schedule.
Second, ClearBox Rights asserted that “there may be instances where the
Copyright Office has not yet recorded such documents for various reasons, including that

Id. at 4.

See MLC SNPRM Reply Comments, App. A at v.

See 37 CFR 201.10(f)(1)(ii)(A), (f)(3).

See ClearBox Rights SNPRM Reply Comments at 9–10.

Id. at 9.

See MLC SNPRM Reply Comments, App. A at v.

perhaps one copyright out of many on the notice is under review or possibly not valid.”256
It argued that the “lack of recordation or delay of recordation of one document with many
copyrights because one or more copyrights is in question for further review should not
negatively impact the other copyrights on that document.”257 The Office does not believe
that these concerns are grounds for eliminating the proof of recordation requirement.
While the Office agrees, as discussed above, that the rule should accommodate notices
identifying multiple works and that each work should be handled individually, timely
recordation is still required by the statute “as a condition to [the termination] taking
effect.”258 Thus, the MLC should not implement a change as to a particular work until
proof of recordation of the relevant notice of termination for that work is delivered.
Third, ClearBox Rights noted that “recordation of the termination at the Office
may never happen.”259 It said that it has “seen instances where a notice of termination
was filed, and the pre-termination owner acknowledges the termination to be effective
even though there was an issue in the notice filing or recordation.”260 ClearBox Rights
explained that “[s]ometimes the pre-termination owner will simply overlook the technical
issues of the termination process and grant the rights back to the post-termination
party.”261 Linda Edell Howard made similar statements, noting that sometimes the pretermination copyright owner “waives the recordation requirement.”262
The Office does not believe that these possible problems provide any basis to not
require proof of recordation. As noted above, timely recordation is a statutory condition

ClearBox Rights SNPRM Reply Comments at 10.

Id.

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

ClearBox Rights SNPRM Reply Comments at 10.

Id.

Id.

Howard SNPRM Initial Comments at 4.

for the termination to be effective.263 If the termination is not effective, no rights change
hands pursuant to section 203 or 304. To the extent the pre-termination copyright owner
nevertheless acquiesces to the attempted termination, that may simply result in an
ordinary transfer of copyright ownership from the pre-termination copyright owner to the
terminating party. As such, it would be subject to the requirements for notifying the MLC
about a non-termination-related change, rather than a termination-related change.
Based on the foregoing discussion, however, the Office concludes that the final
rule should clarify that a termination-related payee change notice submitted to the MLC
can be withdrawn or converted into a non-termination-related payee change notice
pursuant to such reasonable requirements as the MLC establishes and makes publicly
available on its website. The scenarios raised by the commenters demonstrate a need for
flexibility.
Regarding Ms. Howard’s question about what proof will qualify if notices of
termination are recorded with the Office though electronic means,264 the Office reiterates
that “[a]dequate 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,” and that “[a]dequate 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, or some other communication from the Office confirming
receipt.”265 The eventual ability to submit notices of termination through the Office’s
online Recordation System will not impair the availability of adequate proof. For
example, while courier tracking or delivery confirmation would not be available, the

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

Howard SNPRM Initial Comments at 4.

88 FR 65908, 65915.

remitter would instead have such proof in the form of an electronic communication from
the Office confirming receipt.
e. Requirement to identify the relevant works.
The Office declines the MLC’s proposal to add a requirement to provide “[a]
satisfactory identification of all musical works subject to the notice of termination
identified by appropriate unique identifiers.”266 The MLC said that this is needed because
it “cannot implement a change in ownership of musical works without knowing which
musical works are subject to the change in ownership.”267 As the Office previously
explained in the SNPRM, the regulations governing the content of statutory notices of
termination (which must be submitted to the MLC as part of the change notice) already
provide for an identification of each work.268 While the Office acknowledged in the
SNPRM that such identification might not provide the MLC with sufficient information
to process and implement the ownership change in some cases, the Office also proposed a
means, further discussed below, by which the MLC could obtain the minimum necessary
information.269 The Office agrees with other commenters “that the default position should
be to make it as easy as possible for a terminating songwriter to comply with processes to
effect their right.”270 Thus, we decline to include a requirement that unique identifiers for
all musical works must be provided up front. As further discussed below, if the MLC
ultimately needs them for certain works, it can request them after attempting to
implement the change based on the information in the notice.
f. The MLC’s duty to request additional necessary information.

MLC SNPRM Reply Comments, App. A at v.

Id. at 3.

88 FR 65908, 65915 & n.112 (citing 37 CFR 201.10(b)(1)(iii), (b)(2)(iv)).

Id. at 65915–16.

MAC & NSAI Ex Parte Letter at 1 (Feb. 12, 2024).

In the SNPRM, the Office proposed that where a compliant termination-related
change notice does not provide the MLC with sufficient information to process and
implement the ownership change, the MLC should engage in best efforts to identify the
minimum necessary information, including through correspondence with both the
terminating party and pre-termination copyright owner (or their respective
representatives).271 The MLC expressed concern with this proposal, stating that it is “not
clear if this reference to ‘best efforts’ is meant to imply a responsibility to make findings
as to what works are subject to termination.”272 The MLC said that the requirement to
correspond with the relevant parties “is a reasonable step” and that it “does not object to
making reasonable efforts to reach out to parties where paperwork is incomplete.”273 It
said, however, that it “cannot itself identify the ‘relevant musical works,’ make decisions
itself about what is contained in private contracts that may be subject to termination, or
determine what works are, or are not, subject to termination in any particular disputed
case.”274
The Office is clarifying this portion of the rule in light of the MLC’s comments.
To eliminate any confusion, the “best efforts” language has been eliminated in the final
rule, while the requirement to correspond has been retained. In doing so, the Office
emphasizes that the final rule’s reference to information that is “insufficient to enable the
[MLC] to implement and give effect to the termination” is meant to be interpreted
narrowly. In some cases, submitted information can be sufficient to enable the MLC to
act, even if it must undertake certain reasonable efforts. For example, even if the
identification of the works in the notice of termination does not appear sufficient on its
face, perhaps lacking unique identifiers, the information is nevertheless considered

88 FR 65908, 65915–16.

MLC SNPRM Initial Comments at 20.

Id. at 20–21.

Id. at 21.

sufficient if the MLC can act on the information after undertaking reasonable efforts to
attempt to match the works identified in the notice of termination with the corresponding
works in its records. The Office is not mandating that the MLC engage in exhaustive
efforts or do this in all cases, but in the termination context, it should provide assistance
within reason.
Additionally, Promopub noted that there is no time limit on the MLC in this
provision and said that “delay should be assiduously avoided.”275 It proposed that “the
MLC give notice of receipt of an appropriately documented claim within 15 calendar
days of receipt” and that, “[i]f more information is required to process the claim, that
explanatory notice should be given within 30 calendar days of receipt.”276 It also wanted
the MLC to establish a “hot line” and dedicated webpages that terminating parties can
access for assistance.277 The Office agrees that the MLC should have dedicated webpages
and other member support for terminating parties, and strongly encourages it to provide
such support as soon as reasonably possible. The final rule adds the word “promptly” to
signal that the MLC should move expeditiously, since, as discussed above, the Office
expects the MLC to undertake some reasonable efforts in addition to correspondence.
Should the Office become aware of widespread unreasonable delays, we can reconsider a
specific timing requirement at a later date.
Lastly, the Office understands that this approach may lead to longer lead times
before the MLC ends up implementing a change than if additional information were
required to be submitted at the outset. As discussed above and in the SNPRM,278 the
Office continues to believe that this is the better approach. However, we wish to
encourage terminating parties to voluntarily provide additional useful information to the

Promopub SNPRM Initial Comments at 5–6.

Id. at 6.

Id.

88 FR 65908, 65915–16.

MLC, such as unique identifiers, as part of their initial notice submission if it is possible
to do so. To that end, in amending its form for submitting termination-related payee
change notices based on the final rule, the MLC could include fields for additional
information it believes would be helpful in implementing the change, provided that the
form clearly identifies those non-required fields as being optional.
g. The meaning of “terminating party.”
The final rule clarifies the definition of “terminating party.” Throughout the rule,
this term is used to refer to parties entitled to royalties from the MLC based on an
effective termination and who may notify the MLC of such entitlement. This term is not
defined by reference to who singed and served the statutory notice of termination.
The SNPRM defined the term as “the new musical work copyright owner.”279
That language did not, however, account for the fact that the termination may not yet be
effective at the time the payee change notice is submitted to the MLC, meaning that the
relevant party is not the new owner at that point in time. The SNPRM’s definition also
did not clearly provide that a successor in interest to a terminating author or heir (e.g.,
their new publisher or administrator) can also be a “terminating party” within the
meaning of the rule. Including successors in interest is necessary because there may be
times where the termination becomes effective and reverted rights are re-granted before
the MLC is notified. The final rule makes these clarifications.
The Office disagrees with Linda Edell Howard that the term “terminating party”
“should include only those who signed the notice of termination, not those non-signatory
heirs or authors,” because “[t]he non-signatory statutory heirs or authors are represented
by those who signed and served the notice of termination.”280 As noted above, this
misunderstands the way the term “terminating party” is used throughout the rule.

Id. at 65924.

See Howard SNPRM Initial Comments at 6.

The Office also disagrees that “[i]nformation concerning non-signatories should
not be required to implement a change in copyright ownership and payee status, or reduce
the percentage to be paid out.”281 Each terminating party must be treated independently,
just like any other copyright owner when there is more than one. That is why the MLC is
only required to implement a change as to those terminating parties whose information is
provided in the notice of change. That being said, to the extent a particular terminating
party is in fact represented by another terminating party, as Ms. Howard suggested, or by
someone else, then the information provided to the MLC would be for that
representative.282
h. Verification obligations.
In the SNPRM, the Office proposed that where the MLC has good reason to doubt
the authenticity of the information submitted, such as the statutory notice of termination
or proof of recordation, it should seek verification from the Office.283 The MLC proposed
instead to require the submitter to seek verification from the Office and deliver
documentation of such verification to the MLC.284 The MLC asserted that “it would be
inappropriate to shift to The MLC the role of monitoring and obtaining ownership
documentation,” and that “[m]embers must remain primarily responsible for the
completeness and accuracy of their works registrations and claims, and it would be
inefficient to shift this task to The MLC.”285

See id.

The Office further declines Ms. Howard’s proposal to make the identification of the
terminating party plural throughout the rule because “[r]arely is the terminating party one
individual.” Howard SNPRM Initial Comments at 4. There are already specific provisions in the
rule speaking to the case of multiple terminating parties (e.g., 37 CFR 210.30(c)(2)(v)), which
means that the rest of the rule contemplates the possibility of there being more than one.
Moreover, “[i]n determining the meaning of any Act of Congress, unless the context indicates
otherwise,” “words importing the singular include and apply to several persons, parties, or
things.” 1 U.S.C. 1.
283

88 FR 65908, 65915.

MLC SNPRM Reply Comments at 3–4, App. A at v.

Id. at 4.

The Office agrees with the MLC’s position. While we have endeavored to
minimize the burden on a terminating party to have their termination implemented by the
MLC, on reflection, it is more appropriate for the submitter to obtain whatever
verification may be necessary. Therefore, the final rule provides that where authenticity is
in doubt, the MLC shall either seek verification from the Office or request that the
submitter provide such verification.
i. Dispute-related issues.
In the SNPRM, the Office proposed that where the MLC receives a payee change
notice from the terminating party, it must inform the pre-termination copyright owner
within 15 days of receiving either the notice or the last piece of information necessary to
implement the change, whichever is later.286 After being so notified, a pre-termination
copyright owner who disputes the termination would have 30 days to initiate its dispute
with the MLC before the MLC must implement the change.287 The Office agrees with
Linda Edell Howard that the terminating party should be contemporaneously alerted
when the MLC informs the pre-termination copyright owner.288 This way, the terminating
party will know when the 30-day dispute period commences. We disagree, however, with
Ms. Howard’s proposal to shorten the 30-day period to 15 days.289 While the pretermination copyright owner should already be on notice about the termination generally,
the Office believes that 30 days is a reasonable amount of time after being notified that a
change is being sought at the MLC, in case they wish to initiate a dispute, which requires
providing specific documentation to the MLC that may take time to assemble.
2. Implementation of a Change by the MLC

88 FR 65908, 65916.

Id.

See Howard SNPRM Initial Comments at 5.

See id.

The SNPRM proposed various requirements to govern how the MLC implements
and gives effect to a payee change, both in termination and non-termination contexts.290
Commenters generally did not oppose these requirements, though some raised discrete
questions.291 The MLC generally supported the proposed requirements, including those
for non-termination-related changes.292 Based on the comments and the discussion in the
SNPRM, the Office is adopting the proposed implementation requirements as final with
the modifications discussed below.
i. Prospective Versus Retroactive Implementation
In the SNPRM, the Office proposed that, where a relevant change is effective
prior to the MLC’s implementation, the MLC should be permitted, but not required, to
implement it going back to its effective date, if requested in the notice to the MLC.293 In
response, MAC et al. said that “the MLC can and should implement payee changes going
back to the date of the change, regardless of when implemented,” and disagreed that it is
too burdensome for the MLC to do so.294 Linda Edell Howard raised concerns about lag
times in notifying the MLC in the termination context.295 The MLC “welcome[d]” the
Office’s proposal.296
The Office is not persuaded to alter the rule. In the SNPRM, the Office considered
similar comments and weighed them against the MLC’s concerns about such a
requirement being overly burdensome.297 We were “inclined to agree with the MLC that

88 FR 65908, 65917–18.

See, e.g., MAC et al. SNPRM Initial Comments at 3; Howard SNPRM Initial Comments at 8–

9.
MLC SNPRM Reply Comments at 5, App. A at vii–ix, xi–xii; MLC SNPRM Initial
Comments at 18 n.25.
293

88 FR 65908, 65918.

MAC et al. SNPRM Initial Comments at 3.

Howard SNPRM Initial Comments at 9.

MLC SNPRM Reply Comments at 5.

88 FR 65908, 65918.

retroactive implementation may be too administratively burdensome to require for every
payee change,” and noted that our regulations require only prospective implementation
by the MLC in processing DMP voluntary licenses.298 The Office also “welcome[d]
further comments on this issue,” including on “what is standard in the industry.”299 The
minimal comments received in response to the SNPRM do not meaningfully grow the
record in a way that persuades the Office to impose this requirement on the MLC at this
time.
ii. Timing
In its regulatory proposal, the MLC proposed to soften the implementation
deadlines the Office proposed, by replacing requirements to implement a change within a
specified period of time with language requiring only “reasonable efforts to” do so.300
While the MLC’s comments do not explain why they requested this change, presumably
it is to avoid technical violations of the regulations, such as due to circumstances beyond
its control or where it inadvertently makes a mistake without realizing it (e.g., where an
employee accidentally fails to enter the change into the system).301
The Office declines to adopt the MLC’s proposal, but has modified the final rule
to address this issue. The provision’s purpose is to set expectations for how the MLC will
act, and that entails meaningful deadlines that parties to a payee change can rely on in
conducting their business. The Office has imposed deadlines on the MLC’s actions in
other contexts and sees no reason not to do so here. We are not opposed, however, to

Id.

Id.

MLC SNPRM Reply Comments, App. A at vii.

If the MLC wanted more time for all implementations, the Office believes it would have made
that request more specifically. Notably, the SNPRM proposed to give the MLC at least 30 days to
implement all changes, which was in line with an earlier request from the MLC. See MLC NPRM
Initial Comments at 10–11. The proposal was also in line with the Office’s rules governing the
MLC’s processing of DMP voluntary licenses. See 37 CFR 210.24(f).
providing the MLC with some leeway if an implementation deadline is accidentally
missed.
Under the final rule, in such a situation, the MLC must implement the change as
soon as reasonably practicable, but no later than the next regular monthly royalty
distribution that occurs either: (1) after the original implementation deadline; or (2) at
least 30 days after the date that the MLC learns that the change was not implemented on
time—whichever is later. The Office believes that this solution gives the MLC reasonable
flexibility without being so open-ended that the parties to a change have no idea when
their change will be implemented.
Importantly, the rule further provides that if the MLC is late in implementing the
change, it must do so retroactively to the date of the original implementation deadline.
The rule does not provide a separate deadline for making any corrective royalty
adjustment. Rather, the Office expects the MLC to make any such adjustments in
accordance with its regular practices. Regardless of any associated burdens, we believe
this is a fair burden to place on the MLC when it fails to meet the rule’s deadlines, even if
that failure is accidental.
iii. Additional Provisions for Termination-Related Changes
In the SNPRM, the Office proposed that 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 MLC should hold applicable
royalties pending receipt of proof of timely recordation.302 After the MLC receives proof
of timely recordation, it would need to implement the change, which would include
distributing the held funds to the terminating party.303 If, on the other hand, the Office
refuses to record the notice or it is recorded on or after the effective date of termination,

88 FR 65908, 65917–18.

Id. at 65918.

the MLC would need to release the funds to the pre-termination copyright owner.304 The
Office further proposed that if proof of timely recordation is not received within 6
months, the MLC should contact the Office to confirm the status of the relevant
recordation submission.305
No commenter objected to this proposal, but the MLC took exception to the part
requiring it to contact the Office to confirm the status of the recordation submission.306
For the same reasons discussed above in Part III.D.1.ii.h., it proposed instead that the
submitter be required to check the status with the Office and provide the MLC with
documentation of the confirmed status.307 The MLC proposed that if the submission still
remains pending, the submitter should provide monthly updates to the MLC.308 It further
proposed that if the submitter fails to provide a monthly status confirmation, the MLC
must then act in accordance with the other implementation provisions.309
On reflection, as with the provision discussed above in Part III.D.1.ii.h., the
Office agrees with the MLC’s general position that the obligation to confirm the status of
the submission is more appropriately placed on the submitter. The Office, however,
disagrees with the MLC’s specific proposal. It would be unnecessary and overly
burdensome for the terminating party to be required to contact the Office and provide the
MLC with monthly updates. Instead, the final rule provides that the MLC may request
periodic updates at its discretion.
Additionally, the Office disagrees that if the terminating party fails to provide an
update, the MLC should simply act in accordance with the rest of the implementation

Id.

Id.

MLC SNPRM Reply Comments at 3–4, App. A. at viii–ix.

Id.

Id. at App. A at viii–ix.

Id.

regulations. That would result in the funds being released to the pre-termination
copyright owner. The Office does not believe the MLC should release the funds while the
recordation status remains pending. Instead, the final rule provides that the MLC must
hold the funds until it is informed of the notice of termination’s final recordation status
and then act accordingly. The rule purposefully does not specify who must provide that
final status to the MLC. Where the result is a timely recordation, the terminating party
will be incentivized to provide confirmation of the final status, but in other situations
(e.g., where recordation is refused), the pre-termination copyright owner would be
incentivized to provide it so that the royalties do not remain on hold. Additionally,
nothing prevents the MLC from contacting the Office directly, if it chooses to.
Though not raised by commenters, the final rule also clarifies that the royalty hold
should be lifted where the recordation submission to the Office is withdrawn by the
remitter. There is no reason to hold royalties pending recordation where the recordation
submission has been resolved. The omission of that scenario from the SNPRM was an
unintentional oversight.
E. Disputes
1. Process and Documentation for Termination-Related Disputes
The Office received few comments on our proposal for the handling of
termination-related disputes. The MLC generally supported this aspect of the SNPRM.310
Another commenter, Linda Edell Howard took issue with the idea that the MLC could
substantiate a dispute claim without hearing from the terminating party, and raised
concerns about the power imbalance between the pre-termination copyright owner and
terminating party in this context.311 While the Office appreciates these concerns, we

Id. at 5, App. A at ix–x.

Howard SNPRM Initial Comments at 5–6 & n.3, 8 (discussing, among other things, how there
is a one-sided ability to hold up royalties in a dispute to give the pre-termination copyright owner
leverage over the terminating party).
decline to address these broader issues in the current proceeding for the reasons discussed
in Part III.E.2. below. Moreover, some of Ms. Howard’s concerns are connected to a
subject of inquiry in a separate, open proceeding reviewing the MLC’s statutory
designation.312
Based on the comments and the discussion in the SNPRM, the Office is adopting
the proposed requirements pertaining to termination-related disputes as final. In doing so,
and as discussed above in Part III.A.3., we have added language to clarify the operation
of the provision in the context of disputes concerning the application of the Exception to
voluntary licenses.
In adopting the final rule, the Office requests that the MLC’s dispute resolution
committee, which the MMA tasks with establishing the MLC’s dispute policies, promptly
establish a new policy for termination-related disputes that adheres to the requirements
adopted in this final rule. The final rule sets certain key requirements based on the issues
raised by commenters, but it is not a substitute for a comprehensive dispute policy.
2. Dispute Resolution
The Office has decided to omit the proposed provisions about how disputes
should be resolved from the final rule.313 Instead, unless and until the Office regulates in
this area, disputes are to be resolved pursuant to the MLC’s dispute policies. No one
specifically supported the SNPRM proposal, and some commenters raised concerns with
it.314 Other commenters raised other concerns and sought various regulations to address
them. For example, North Music Group asked for the MLC to “be prohibited from

See 89 FR 5940, 5943 (Jan. 30, 2024) (requesting “information regarding: (1) any steps that
the [MLC] is taking to protect against the incidence of fraudulent ownership claims and frivolous
ownership disputes; and (2) whether these steps have been successful”).
313

See 88 FR 65908, 65919–20.

See, e.g., MLC Ex Parte Letter at 5 (Feb. 5, 2024); Kobalt Music SNPRM Initial Comments at
3; Spirit Music Grp. SNPRM Initial Comments at 2; MAC et al. SNPRM Initial Comments at 3;
Howard SNPRM Initial Comments at 8–9.
creating disputes on its own motion,” or for there to at least be “some process and
constraints applicable to its actions.”315 The record on these issues, however, is thin.
We do not take these dispute-related concerns lightly, but given the record of the
proceeding, we decline to take up these issues at this time. The Office may, however,
consider addressing them in a future proceeding where they can be more fully explored to
determine whether any regulatory action may be needed. In the meantime, the Office
requests that the MLC’s dispute resolution committee consider the concerns raised by
commenters, as well as the SNPRM’s proposal to require ongoing active dispute
resolution. In doing so, the Office asks the committee to: (1) examine whether such issues
are arising in connection with disputes initiated with the MLC; (2) evaluate how these
issues are addressed elsewhere in the industry; and (3) determine whether the MLC’s
dispute policies should be amended to address any of them.
3. Disclosure and Confidentiality
In responding to the NPRM, the MLC asked for guidance about whether it
“should be required to disclose information about the royalties being held to the parties
involved” and stated 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.”316 ClearBox Rights
stated that the MLC should disclose the royalties on hold to parties involved in a
dispute.317
Based on these comments, the SNPRM proposed amending the Office’s
confidentiality regulations to require that the MLC “disclose the amount being held and
reason for the hold to any individual or entity with a bona fide legal claim to such funds

North Music Grp. SNPRM Initial Comments at 3; see also, e.g., Howard SNPRM Initial
Comments at 6, 8–9 (discussing concerns with power imbalances and how disputes could affect
litigation with respect to ripeness and the statute of limitations).
316

MLC NPRM Initial Comments at 13–14.

ClearBox Rights NPRM Reply Comments at 6.

or a portion thereof.”318 The Office reasoned that this requirement would put the parties
“on equal footing in developing a strategy for resolving the dispute, including the
negotiation of a settlement.”319 The Office also proposed that the MLC “provide the
equivalent of monthly royalty statements for the amounts held along with monthly
updates concerning the status of the hold.”320 These proposed disclosure requirements
were not exclusive to termination-related disputes.
Commenters on this provision generally supported it, recognizing the value of
disclosing the amount of royalties on hold to parties involved in the dispute.321 The MLC,
however, voiced concerns over administrability and potential misuse.
The MLC stated that the proposed rule would be burdensome, involve significant
manual processing, and divert resources from other duties.322 The MLC also stated that
providing “every party to a dispute” with “confidential information could . . . result in
disclosure of confidential information to improper parties in some situations, and would
be ripe for abuse,”323 and that it had not received member complaints “around such
disclosures in the context of disputes or holds.”324 Further, the MLC was concerned that
the proposed regulation’s use of the term “bona fide legal claim” was not a clear enough
standard to administer, and that passing judgment on what is “bona fide” could expose it

88 FR 65908, 65919, 65927.

Id. at 65919.

Id.

See Spirit Music Grp. SNPRM Initial Comments at 2 (“We do agree with the [Office’s]
position to disclose earnings and to provide royalty statements that are in suspense due to
conflicts and disputes. We also agree the MLC portal should make this information visible.”);
Promopub SNPRM Initial Comments at 7 (“In the context of a dispute, we agree with the Office
that if royalties are being held, the MLC should disclose the held amounts to the parties and
provide updates as necessary during the pendency of the dispute. This information may be
valuable to the parties for purposes of resolving the dispute.”).
MLC SNPRM Reply Comments at 8; MLC Ex Parte Letter at 4 (Feb. 21, 2024). But see MLC
Ex Parte Letter at 4–5 (Feb. 21, 2024) (suggesting that the MLC regularly discloses total amounts
of royalties on hold to interested parties).
323

MLC SNPRM Reply Comments at 7.

MLC Ex Parte Letter at 3 (Mar. 22, 2024).

to liability.325 Finally, the MLC shared a general preference for prioritizing
confidentiality and claimed that parties could obtain confidential information by
agreement or via the legal process.326
The MLC later stated that, in the context of a termination-related dispute, it could
“provide summary-level information to both the pre- and post-termination copyright
owners” at “the outset of a dispute.”327 This information would “identify the approximate
amount of royalties to be distributed to a work in the first distribution occurring after the
hold is requested and will be based upon information in the monthly reports of usage that
The MLC received and processed at the time of the request.”328 The MLC noted its
preference that the Office not include provisions governing periodic (or initial) updates,
including until it “has time to scope and develop a workable, systematic way to provide
this information.”329 If the Office were to retain such a requirement, those updates
“should be limited to where a disclosure has been affirmatively requested and should not
be more frequently than quarterly, to limit the burden and diversion of resources from
critical path activities.”330
Based on the foregoing, the Office is retaining a version of this rule, while
narrowing its scope to make it easier for the MLC to administer. The final rule only
applies to termination-related disputes, and limits disclosure requirements to the total
amount of royalties being held and not the more granular information that would be

MLC SNPRM Reply Comments at 7–8.

Id. at 6–7.

MLC Ex Parte Letter at 2 (Mar. 22, 2024). The MLC previously stated that it could “provide
the total amount of royalties being held in connection with disputed works” in certain “discrete
and low-volume” circumstances, namely “situations of agreement or legal process.” MLC
SNPRM Reply Comments at 8.
MLC Ex Parte Letter at 2 (Mar. 22, 2024); see also MLC Ex Parte Letter at 4–5 (Feb. 21,
2024). Notwithstanding this offer, the MLC reiterated its concern that providing this information
to parties for all disputes—i.e., not limited to parties in a termination-related dispute—would be
burdensome. MLC Ex Parte Letter at 5 (Feb. 21, 2024).
329

MLC Ex Parte Letter at 2 (Mar. 22, 2024).

Id.

contained in a royalty statement. It also reduces the periodic update requirement to apply
only when requested by either party and only once a quarter. As the final rule applies to
royalties being held pursuant to a termination-related dispute, the phrase “bona fide legal
claim” was eliminated from the regulatory text.
F. Corrective Royalty Adjustment
1. Background
In the NPRM, the Office proposed a corrective royalty adjustment that would
have “require[d] the MLC to adjust any royalties distributed under [its now-suspended
Termination Policy], or distributed in a similar manner if not technically distributed
pursuant to the [Termination Policy], within 90 days.”331 At the outset, the Office notes
that the MLC estimates the corrective adjustment to involve “less than $2 million” and
the “total amounts that would likely change hands” to terminating songwriters “would be
less than $1 million.”332
The NPRM explained that the adjustment provision was intended “to make
copyright owners whole for any distributions the MLC made based on an erroneous
understanding and application of current law.”333 Responding to the NPRM, parties asked
the Office for further guidance regarding “how the proposed corrective royalty
adjustment should work” in practice.334 The SNPRM subsequently proposed “a more
detailed [regulation] that would lay out the operational procedures for the corrective
royalty adjustment.”335

87 FR 64405, 64412.

MLC Ex Parte Letter at 4 (Feb. 21, 2024).

87 FR 64405, 64412.

88 FR 65908, 65920 (citing MLC NPRM Initial Comments at 6–8; ClearBox Rights NPRM
Reply Comments at 3–4; ClearBox Rights Ex Parte Letter at 2–4 (June 28, 2023); Howard
NPRM Initial Comments at 6; Promopub NPRM Initial Comments at 2; Promopub NPRM Reply
Comments at 3; North Music Grp. NPRM Reply Comments at 2).
335

88 FR 65908, 65920.

The SNPRM proposed that “the corrective adjustment would apply where the
MLC’s prior erroneous application of the Exception, whether or not through its
[Termination Policy], affected: (1) the distribution of blanket license royalties or matched
historical royalties; (2) the holding of such royalties; or (3) the deduction from a DMP’s
payable blanket license royalties made by matching usage to voluntary licenses or
individual download licenses.”336 For previously distributed overpayments made pursuant
to the Termination Policy, the MLC would be required to notify the prior payee of the
overpayment within thirty days, the prior payee would have thirty days to return the
overpayment, and then the MLC would distribute those royalties to the proper payee with
the next regular monthly royalty distribution. If the prior payee failed to repay the MLC,
then the MLC would debit the prior payee’s future royalties—up to 50% of payable
royalties each month—until it recovered the overpayment.337 The SNPRM also proposed
that the royalty recovery and distribution instructions would apply where the MLC
matched usage to a voluntary licensee or individual download licensee who was not the
proper payee under the rule.338 For royalties that were held by the MLC following the
suspension of its Termination Policy, the SNPRM proposed that they would be paid to
the proper payee no later than thirty days after the final rule’s effective date.339 Finally,
the SNPRM included a savings clause that would preserve the proper payee’s right to
recover the overpayment outside of the corrective adjustment process.340
The SNPRM did not propose “any specific procedures” addressing circumstances
where “a publisher [e.g., a prior payee] has already distributed a portion of the applicable
royalties to its songwriters” because that “is a possibility with any type of adjustment for

Id. at 65921.

Id.

Id. at 65923.

Id.

Id.

an overpayment.”341 The Office, however, expressly sought further comments on that
issue, including on a commenter’s proposal that the MLC only recoup the publisher’s
share of those royalties.342
2. Comments
Several commenters, including songwriters, publishers, and others, favored a rule
that includes a corrective adjustment.343 Promopub suggested a relatively more
aggressive approach to the corrective adjustment. First, where “a prior payee’s accrued
royalties for a month exceed the full amount owed to the proper payee by at least twentyfive [percent],” it would require the MLC “to deduct the full amount owed to the proper
payee from such monthly accrued royalties.”344 It also proposed that, if the proper payee
was not paid back in full within six months of the MLC’s initial corrective adjustment
payment, the Office “should require the terminated publisher to repay the balance to the

Id. at 65921.

Id. (citing ClearBox Rights Ex Parte Letter at 3–4 (June 28, 2023); ClearBox Rights NPRM
Reply Comments at 3–4).
See, e.g., BMG NPRM Initial Comments at 2 (“BMG fully supports . . . the requirement[] that
. . . the MLC must pay post-termination royalties to those parties who own the U.S. copyrights in
the works at issue and adjust these parties’ accounts in order that they may receive every dollar
previously paid in error to terminated publishers.”); BMG NPRM Reply Comments at 1;
Christian Castle NPRM Reply Comments at 4–5 (“Any curative action required by the Office
should, of course, be retroactive.”); Promopub NPRM Reply Comments at 1–2 (noting that it
“fully supports the proposed repeal of the [MLC’s Termination] Policy and the corresponding
proposed royalties adjustments” and that “other collecting organizations regularly employ
retroactive royalty adjustments when music publishing royalties have been paid erroneously”);
North Music Grp. NPRM Reply Comments at 2 (supporting the rule’s corrective adjustment);
Miller NPRM Initial Comments at 1 (supporting 90-day adjustment period for the MLC); NSAI
SNPRM Initial Comments at 2 (supporting corrective adjustments made “retroactively”); SONA
et al. NPRM Reply Comments at 3 (supporting the rule’s corrective adjustment); ClearBox Rights
NPRM Reply Comments at 3–4 (supporting the rule’s corrective adjustment provision and noting
disagreement with NMPA and CMPA); McAnally & North Ex Parte Letter at 3–4 (Mar. 14,
2023) (voicing that these parties “categorically disagree” that the rule should not be
“retroactive”); MAC et al. SNPRM Initial Comments at 3–4; Howard SNPRM Initial Comments
at 2; ClearBox Rights SNPRM Reply Comments at 8–9.
Promopub SNPRM Initial Comments at 3. Promopub suggested these amendments, based on
its concern that publishers may not return overpayments immediately and would “instead rely on
the piecemeal monthly process offered.” Id.
MLC within 30 calendar days for the MLC to, in-turn, distribute to the proper payee
within 30 calendar days of receipt.”345
Other commenters, however, disagreed that there should be a corrective
adjustment, even though some of them supported post-termination copyright owners
receiving post-termination royalties going forward.346 These commenters’ concerns
focused on the burdens associated with administering a corrective adjustment and the
Office’s authority to require such an adjustment. Regarding the Office’s authority,
NMPA had concerns that the corrective adjustment would be an impermissible
“retroactive” rule and may also be an unconstitutional “taking.”347
Regarding songwriters’ and publishers’ ability to engage in a corrective
adjustment, commenters stated that portions of these royalties would have already been
distributed to songwriters and would be difficult to recover.348 Warner Chappell added
that “retroactive debits would wreak havoc where songwriter contracts are royalty- or
recoupment-based, as when recoupment has triggered the end of a contract’s term, or
when a publisher has paid a contractually-due advance or bonus because the writer
received a certain sum of royalties,” and that “[p]ublishers, songwriters, and others who’d
received such payments would also bear tax and accounting obligations on income
‘wrongly’ received and already spent.”349

Id.; see also Spirit Music Grp. SNPRM Initial Comments at 3 (“[A]pplying 50% of the debt to
the erroneous party, who may be earning only a few dollars, will result in never ending debt for
the erroneously paid party. We realize the USCO is concerned with the financial impact to the
incorrect party, but it is at the expense of the entitled party.”).
See, e.g., CMPA NPRM Initial Comments at 1–2; NMPA NPRM Initial Comments at 4–6;
NMPA Ex Parte Letter at 2 (Feb. 6, 2023); NMPA SNPRM Initial Comments at 1–2 & n.2;
NMPA Ex Parte Letter at 2 (Jan. 24, 2024); Warner Chappell Music SNPRM Reply Comments at
2–3.
NMPA NPRM Initial Comments at 2, 4–6; see also NMPA Ex Parte Letter at 2 (Feb. 6,
2023); NMPA SNPRM Initial Comments at 2 n.2.
CMPA NPRM Initial Comments at 2; Warner Chappell Music SNPRM Reply Comments at
2–3; see also NMPA NPRM Initial Comments at 5; MLC Ex Parte Letter at 3 (Mar. 22, 2024).
349

Warner Chappell Music SNPRM Reply Comments at 2–3.

Commenters further suggested that it would also be administratively burdensome
for the MLC to carry out a corrective adjustment.350 The MLC requested that the Office
“take into consideration the impact of its rule on [its] regular royalty processing
operations and timelines,” which are “orders of magnitude larger than the total sums that
would be involved in corrective adjustments for statutory terminations.”351 The MLC
suggested a “more efficient” solution that “would avoid the problems associated with
clawing back royalties from songwriters.”352 This “alternative approach” would involve
the MLC providing information to the prior payee and proper payee regarding the
royalties distributed to the prior payee for post-termination periods.353 The parties would
then voluntarily be able to make any corrective royalty adjustments themselves (a
“voluntary adjustment”).354 The MLC also said that a “claw-back and redistribution
approach” could be used in combination with its proposal to incentivize compliance “if a
significant period elapsed without resolution by the parties.”355
3. The Final Rule’s Approach
Having considered all comments on this issue, the Office is adopting a final rule
with an approach to corrective royalty adjustments that is similar to the SNPRM’s
proposal for the reasons stated in the NPRM and SNPRM, but with certain modifications,
as discussed below. Other corrective adjustment provisions proposed in the SNPRM are
included in the final rule, with minor conforming adjustments.

NMPA NPRM Initial Comments at 5 (noting that a corrective adjustment “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 NPRM Initial
Comments at 2 (explaining that “retroactive accounting might cause an undue hardship on The
MLC as it would be well above its normal workload”); see also MLC Ex Parte Letter at 3–4
(Feb. 21, 2024); MLC Ex Parte Letter at 3–5 (Mar. 22, 2024).
351

MLC SNPRM Reply Comments at 2–3.

MLC Ex Parte Letter at 4 (Feb. 21, 2024).

Id.

Id. at 4–5.

Id. at 5.

While the Office appreciates concerns regarding potential administrative burdens
associated with a corrective adjustment, we continue to “disagree with commenters
suggesting that there should not be any corrective adjustment because of the potential
burdens involved.”356 As the Office previously explained, “[c]orrective royalty
adjustments are common in the music industry and explicitly contemplated by the statute
and the Office’s existing regulations.”357
The Office notes that the MLC already has guidelines to address the
circumstances when it needs to make royalty distribution adjustments, including, for
example:
•

when there was “an incorrect match of a sound recording to a [musical work]
registration”;

•

where there was an under- or overpayment “attributable to a clerical or
administrative error”; or

•

in “other situations that The MLC may determine from time to time in its
discretion.”358

These guidelines allow the MLC to adjust royalty distributions for uses going back to the
first date the blanket license was available (i.e., January 1, 2021).359
Moreover, the Office must consider not only the burdens to the MLC and
publishers, but also fairness to terminating songwriters, and the comparative efficiency
associated with the corrective adjustment. Without a corrective adjustment, proper payees
could be forced to bring their terminated publishers to court to unwind the MLC’s

88 FR 65908, 65920–21.

Id. at 65921; see MAC et al. SNPRM Initial Comments at 3–4; Howard SNPRM Initial
Comments at 2 (agreeing with Office’s position).
The MLC, Guidelines for Adjustments secs. 2.1, 3.4 (Jan. 2022),
https://f.hubspotusercontent40.net/hubfs/8718396/files/202202/MLC%20Guidelines%20for%20Adjustments.pdf.
359

Id. at sec. 3.4.

erroneous payments. This would lead to a multiplicity of lawsuits and associated
unnecessary costs incurred by songwriters and publishers. It may also be illusory, as
songwriters who were proper payees are less likely to sue to recover royalties that, in
total, may be less than the cost of hiring an attorney to litigate the matter.360
i. Voluntary Adjustments
The first modification adopts the MLC’s suggestion to build in a voluntary
process to reduce potential burdens on the parties or the MLC associated with any
corrective adjustment. The initial step in this process is for the MLC to notify the relevant
parties (i.e., the prior payee, proper payee, and any successors in interest) of the
overpayment within 30 days of the final rule’s effective date. Such notice must include:
(1) a summary of the Office’s conclusions regarding the Exception; (2) a description of
the corrective adjustment process laid out in the final rule, including the option for the
parties to engage in a voluntary adjustment in lieu of an MLC-administered adjustment;
(3) for each musical work at issue, the amounts that were erroneously paid to the prior
payee that are subject to being adjusted; and (4) the respective contact information for the
parties contained in the MLC’s records. With this information, the parties will have the
opportunity to make the corrective adjustment themselves.
The parties would notify the MLC within another 30 days regarding whether the
parties are engaging in a voluntary adjustment, were unable to reach such an agreement,
or are still attempting to do so. If the parties engaged in a voluntary adjustment, the MLC
will not make any adjustments in connection with the overpayment, but will retain
records related to the voluntary adjustment. If the parties do not elect the voluntary

See U.S. Copyright Office, Copyright Small Claims 1 (2013) (noting that “federal litigation is
expensive and time-consuming, and therefore out of reach for many copyright owners” and that
the problems of enforcement of modest claims “appears to be especially acute for individual
creators”); id. at 118 (noting that songwriters would benefit from an alternative to Federal court to
enforce the Copyright Act’s termination provisions (citing statement of Charles Sanders, SGA));
see also, e.g., Howard SNPRM Initial Comments at 6 (noting perceived power and sophistication
imbalances between authors and publishers).
adjustment option or if the MLC does not receive the required notice from the parties, the
MLC will commence implementing the adjustment process within 30 days of the end of
the voluntary adjustment period. If the parties notify the MLC that they are continuing
efforts to reach an agreement, the MLC will not commence the corrective adjustment
process unless and until it receives a subsequent notice that the parties were unable to
reach an agreement. If such a subsequent notice is received more than 18 months after the
effective date of the rule, the MLC may, but is not required to, adjust the overpayment.
The Office believes that it is reasonable to give the prior and proper payees an
opportunity to engage in the adjustment process themselves, but that option would be
ineffective without also requiring the MLC to implement a corrective adjustment as an
alternative. Further, even if one party was willing to engage in a voluntary adjustment,
the other party may wish to have the MLC implement the corrective adjustment for tax or
accounting purposes.361
While parties should jointly be able to determine the method they want to pursue
to complete the adjustment, the Office does not believe that decision should be
unbounded in time. Parties must decide whether the MLC is going to engage in a
corrective adjustment (and notify the MLC of that decision) within 18 months of this
rule’s effective date. After that time, the MLC will not be required to initiate the
corrective adjustment process.362 The Office believes that the MLC should not be
required to undertake the corrective adjustment indefinitely.
Finally, the Office is not adopting Promopub’s repayment proposals for the
corrective adjustment, as it wishes to first monitor how the adjustment process is working
in practice, before making any significant amendments. We are, however, incorporating
See Warner Chappell Music SNPRM Reply Comments at 2–3.

As the final rule makes clear, the MLC will discontinue any recovery efforts if it is notified
that the overpayment was recovered outside of the corrective adjustment process (e.g., where
there was a subsequent agreement or settlement) or a legal proceeding was commenced seeking
recovery of the overpayment.
in the final rule Promopub’s requested clarification that the MLC must provide royalty
statements to proper payees when it makes a corrective adjustment.363
ii. Limiting Recovery of the Overpayment to the Publisher’s Share
The Office did not receive significant comments directly responding to ClearBox
Rights’ proposal that the MLC may only recover the publisher’s share of the
overpayment to make the corrective adjustment.364 Consequently, that provision is not
included as a requirement in the final rule. The Office, however, sees no reason why
songwriters, publishers, and the MLC could not agree to this type of agreement as a type
of voluntary solution. Nothing in this rule prohibits the prior payee, proper payee, and
MLC from all agreeing to engage in a corrective adjustment that only recovers and
distributes the publisher’s share of the overpayment.
The Office notes that the MLC stated that the rule envisioned a process that
“requires a songwriter to pay back royalties to the pre-termination publisher” before that
publisher returns funds to the MLC.365 The MLC claimed that this could be problematic
for songwriters as “the process could lead to songwriters having to use funds to
temporarily pay back royalties paid to them years ago, and then wait several months or
more to get those funds back.”366 It also noted that it does not “know the terms of the
private contracts between the parties or how much was paid to the songwriter out of the
total initial distribution,”367 making it problematic to recover only the publisher’s share in
any corrective adjustment procedure.

Promopub SNPRM Initial Comments at 3.

88 FR 65908, 65921. But see MAC et al. SNPRM Initial at 3–4 (stating that “‘where a
publisher has already distributed a portion of the applicable royalties to its songwriters,’ we
believe the Office’s proposal regarding recovery of overpayment by the MLC is the proper
course” (quoting 88 FR 65908, 65921)).
365

MLC Ex Parte Letter at 4 (Feb. 21, 2024).

Id.

Id.

The MLC’s comments imply that the rule requires songwriters (or other
downstream royalty payees) to repay the prior payee before that prior payee would need
to remit royalties to the MLC for further processing and distribution to the proper payee.
Such an initial songwriter-repayment procedure, however, was not a requirement of the
proposed rule and is not included in the final rule.
iii. Voluntary Licenses
The final rule does not require the MLC to make a corrective adjustment with
respect to any amounts deducted, or held pending deduction, in connection with
voluntary licenses. As discussed in Part III.A.3. above, the Office believes that voluntary
licenses should be treated differently than section 115 statutory licenses.
3. The Final Rule is Not an Impermissible Retroactive Rule or an
Unconstitutional Taking
As an initial matter, the Office recognizes the unusual circumstances that led to
this rule, namely that a government-designated collective adopted and distributed
royalties pursuant to a policy that embodied a legal interpretation of the Exception, in
conflict with the Office’s prior guidance. While the MLC may have intended to ensure
“prompt and uninterrupted royalty payments” with its actions,368 it is the Office (and not
the MLC) that has authority to interpret the Copyright Act, including with respect to the
Act’s termination provisions in the context of the blanket license.369 As discussed at

87 FR 64405, 64407 (noting that “[i]n meetings with the Office, the MLC described its policy
as a middle ground and explained that the policy was intended, in part, to avoid circumstances
where parties’ disputes could cause blanket license royalty payments to be held, pending
resolution of the dispute, to the disadvantage of both songwriters and publishers”).
While the Office acknowledges that, in the notice of proposed rulemaking in the earlier
rulemaking proceeding about DMP reporting obligations, we suggested that the “MLC’s
interpretation of the [Exception] seems at least colorable,” the Office’s intention was to “give
interested persons an opportunity to participate in the rule making through submission of written
data, views, or arguments,” 5 U.S.C. 553(c), without prejudging the rulemaking’s outcome,
especially as termination was “one of the more complicated [topics] in [that earlier] proceeding”
and parties had not provided much commentary on the MLC’s theory. 85 FR 22518, 22532 n.210,
22533.
length above, the Office finds that the MLC’s Termination Policy was based on an
unreasonable reading of the Act, specifically regarding its understanding of the
Exception. The final rule’s corrective adjustment fixes that legal error.370
With that background, the Office now turns to the NMPA’s objection that
promulgating the proposed corrective adjustment provision is outside the Office’s
authority. First, NMPA suggested that this provision “may arguably be an
unconstitutional taking in violation of the Fifth Amendment,” as “it effectively takes
property interests that pre-termination copyright owners may have had and transfers them
to the post-termination copyright owner.”371 Second, it stated that a rule that required the
MLC to make an adjustment to previously distributed royalties would be an
impermissibly “retroactive” rule because it would “expressly undo royalty payments
already made under the Blanket License pursuant to the MLC’s [then-]current
[Termination Policy].”372
i. “Takings” Concerns
The Constitution’s Takings Clause prohibits the government from “depriving
private persons of vested property rights except for a ‘public use’ and upon payment of
‘just compensation.’”373 It is self-evident that, for there to be a taking, a party must
possess (and then be deprived of) a vested property right.

See, e.g., Farmers Tel. Co. v. FCC, 184 F.3d 1241, 1250 (10th Cir. 1999) (holding that when
the FCC established an organization to prepare and file access tariffs, whose board was
comprised of industry participants, and that organization issued an interpretation of a regulation
which was later overruled by the agency, the agency’s interpretation did not implicate the
prohibition on retroactive rulemaking, including because the organization had “no authority to
perform any adjudicatory or governmental functions”).
371

NMPA NPRM Initial Comments at 12.

Id. at 5. NMPA also argued that directing the MLC to pay the copyright owner at the time of
the use would “impact all subsequent adjustments and accrued interest payments made based on
usage not only prior to a valid termination, but also prior to any other type of ownership transfer.”
Id. This second point is discussed in depth in Part III.B. above.
373

Landgraf v. USI Film Prods., 511 U.S. 244, 266 (1994) (referencing U.S. Const. Amend. V).

That is not what the corrective adjustment does. It merely applies the law as it
existed at the time the MLC made the royalty distributions at issue. As the Office’s legal
analysis in the NPRM, SNPRM, and Part III.A.1. above make clear, prior payees never
had a vested property right to the post-termination royalties the MLC distributed to them.
These royalties always belonged to the post-termination copyright owner. Because prior
payees have no vested property right in the erroneous overpayments they received,
recovering those amounts so they can be properly distributed in accordance with the law
is not a “taking” within the meaning of the Takings Clause.374
ii. “Retroactivity” Concerns
The Office disagrees that the final rule’s corrective adjustment process to remedy
improper prior MLC distributions constitutes an impermissible retroactive rule. NMPA is
correct that, generally, a “statutory grant of legislative rulemaking authority will not . . .
be understood to encompass the power to promulgate retroactive rules unless that power
is conveyed by Congress in express terms.”375 The Office is not, however, adopting a
new retroactive rule regarding the effect of termination on section 115 statutory licenses.
Instead, we are adopting a rule applying the law as it existed at the time that the improper
royalty distributions were made, and implementing the law by requiring parties to act in
accordance with their legal obligations.
Promulgating the corrective adjustment process is the most efficient, reasonable,
and least burdensome, means of fixing the MLC’s legal error. Far from establishing new

See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1027 (1992) (observing that,
under a takings claim, compensation is not owed where the government is depriving a person of
something that they were not entitled to in the first place).
NMPA NPRM Initial Comments at 5, n.8 (quoting Bowen v. Georgetown Univ. Hosp., 488
U.S. 204, 208 (1988)).
obligations, the Office is merely enforcing preexisting obligations to ensure that parties
who should have received the applicable payments from the start can obtain them.376
In promulgating this rule, the Office has considered any reasonable reliance
interests and expectations of the prior payee and proper payee. We conclude that any
disruption caused by the corrective adjustment process adopted in this rule is likely to be
modest, and that any reliance interests or expectations are minimized by several factors.
First, the MLC’s interpretation of the law was in doubt no later than September 2020,
when the Office warned that parties viewed its interpretation as being “legally
erroneous.”377 Second, as the SNPRM noted, “[c]orrective royalty adjustments are
common in the music industry and explicitly contemplated by the statute[,] the Office’s
existing regulations,” and the MLC’s own guidelines.378 Third, the MLC only started
distributing royalties in 2021, its Termination Policy reflects a September 2021 date,379
and it was suspended in November 2022.380 To the extent that the corrective adjustment
is potentially burdensome to prior payees, as discussed in Part III.F.2. above, the Office
has both weighed that burden against the proper payees’ interests and taken steps to
alleviate those burdens by adjusting the rule’s regulatory language. We believe that the
final rule’s corrective adjustment provision embodies the most reasonable course of

Moreover, this rule does not alter any party’s royalty entitlements. Although the Copyright
Office is directing the MLC to adjust the amounts distributed to various entities, the MLC’s
distributions do not constitute a final determination of the amounts to which any entity is entitled.
377

87 FR 64405, 64407.

88 FR 65908, 65921.

The original version of the MLC’s Termination Policy has a September 2021 date, The MLC,
Notice and Dispute Policy: Statutory Terminations (Sept. 2021),
https://www.themlc.com/hubfs/Marketing/Website/Original.pdf, while the current version has an
August 2022 date, The MLC, Notice and Dispute Policy: Statutory Terminations (Aug. 2022),
https://www.themlc.com/hubfs/Marketing/Website/MLC%20Statutory%20Terminations%20Polic
y%20v1.2.pdf. The Office is not aware when the MLC started making distributions based on an
erroneous view of the Exception.
The MLC, October Member Updates (Nov. 1, 2022) (on file with the Office) (noting that “The
MLC is immediately suspending its [Termination] Policy pending the outcome of the rulemaking
proceeding initiated by the U.S. Copyright Office” and that it would be placing all royalties
associated with work shares previously subject to that policy on hold “effective with the first
distribution of blanket license royalties related to October 2022”).
action, as it implements the law as it already existed, while accounting for various
administrability concerns.
G. Effective Date and Compliance Deadline
As is typical for many rules enacted by the Office, this final rule is effective 30
days after being published in the Federal Register. However, because the Office agrees
with the MLC that it will need more than 30 days to update its processes and systems
before it can reasonably be expected to implement most of the final rule,381 its
compliance deadline is extended to the first distribution of royalties based on its first
payee snapshot after the date that is 90 days after the rule is published in the Federal
Register. This deadline is based on the timing requested by the MLC382 and is consistent
with the Office’s practice of providing reasonable transition periods where MMA-related
rules necessitate significant process changes and system updates and development.383
This later compliance deadline does not apply to four sections of the final rule: (1)
the provision embodying the Office’s legal conclusions about how the Exception operates
in connection with blanket licenses; (2) the provision embodying the Office’s legal
conclusions about how the Exception operates in connection with individual download
licenses; (3) the corrective royalty adjustment remedying the MLC’s previous

See MLC Ex Parte Letter at 3–4 (Mar. 22, 2024) (“This estimated timeframe accounts for
basic code development, testing phases, and the general integration of new processes into The
MLC’s end-to-end overlapping distribution cycle process. This estimate also recognizes that,
particularly regarding the distribution of royalties from periods after the effective date, the rule as
currently proposed requires The MLC to operationalize nuanced practices and processes
including requirements that must be met before implementing a change, requirements for
confirming receipt of appropriate notice of a change, and timelines for implementing a change
(among others).”).
Id. The Office does not believe the MLC needs the longer transition period it requested “[i]f
the final rule directs The MLC to distribute royalties to a pre-termination owner and/or a posttermination owner, depending on when corresponding usage occurred, regardless of which party
is the current payee registered in The MLC database.” See id. at 4. While that might be a
possibility under the final rule going forward, it would appear to only arise in the context of
adjustments, which the MLC is only required to make once annually. See 37 CFR 210.29(b)(2).
Thus, the MLC has ample time to complete those particular updates.
383

See, e.g., 37 CFR 210.27(e)(2)(i), (e)(3)(ii), (e)(5).

misapplication of the Exception; and (4) the provision requiring the MLC to adopt notice
requirements for non-termination-related payee changes.
The first two provisions are carved out because they state the accurate
interpretation of the law with respect to the Exception and section 115 statutory licenses.
Because the MLC has already suspended its Termination Policy and, to the best of the
Office’s knowledge, is not currently making distributions in a manner inconsistent with
these provisions, it should not need any additional time to comply with the prohibitions
they contain.
The second two provisions are carved out because those provisions have their
own separate timing requirements written into the regulatory text. With respect to the
corrective adjustment, the MLC is required to send and receive certain notices sooner
than the general compliance deadline, which the Office believes is reasonable to require
given the relatively low burden involved. Additionally, the rule requires the MLC to
distribute amounts currently on hold sooner than the general compliance deadline
because it did not explain why it needed more time for that particular action and the
equities weigh in favor of terminating parties obtaining their royalties in a timely manner.
The Copyright Office may, upon the MLC’s request, extend the compliance
deadlines in our discretion by providing public notice through our website.384
List of Subjects in 37 CFR Part 210
Copyright, Phonorecords, Recordings.
Final Regulations
For the reasons set forth in the preamble, the U.S. Copyright Office amends 37
CFR part 210 as follows:

Any extensions will be reflected on the Copyright Office’s website at
https://copyright.gov/rulemaking/mma-termination/.
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), (n), and (p), respectively; and
b. Add new paragraphs (d) and (f) and paragraphs (k), (l), (m) and (o).
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 payee snapshot means the royalty payee information in the
mechanical licensing collective’s records as of a particular date used for a particular
monthly royalty distribution.

(m) The term pre-termination copyright owner means the owner of the relevant
copyright immediately prior to:
(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.
*****
(o) The term terminating party means:
(1) A party entitled under 17 U.S.C. 203 or 304 to terminate a grant, who is
seeking to terminate such a grant under such provisions;
(2) A party who has effectuated termination of a grant under 17 U.S.C. 203 or
304;
(3) A party to whom rights have reverted or are expected to revert pursuant to the
effective termination of a grant under 17 U.S.C. 203 or 304; or
(4) A successor in interest to a party identified in paragraph (o)(1), (2), or (3) of
this section (e.g., a subsequent publisher or administrator).
*****
3. Amend § 210.27 by redesignating paragraph (g)(2)(ii) as paragraph
(g)(2)(ii)(A) and adding 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 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)(1).
*****
4. Amend § 210.29 as follows:
a. In paragraph (a), remove “reporting obligations” and add in its place “reporting
and payment obligations” and add two sentences at the end; and
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, unless such entitlement has been
transferred to another individual or entity. 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)(1) For the purpose of making any distribution of royalties or other amounts
(e.g., accrued interest), as a matter of reasonable administrability, the mechanical
licensing collective, in the absence of a dispute or investigation, shall treat the individual
or entity identified in its records as of the date of the payee snapshot used by the
mechanical licensing collective for the applicable distribution as legally authorized to
receive such distribution, unless the mechanical licensing collective is notified otherwise.
(2) Nothing in paragraph (b)(4)(i)(B)(1) of this section shall be construed as
absolving the mechanical licensing collective of its responsibility to engage in reasonable
verification and antifraud efforts in connection with the registration and claiming of
musical works (or shares thereof).
(3) No distribution made by the mechanical licensing collective shall alter or
prejudice any party’s legal entitlement to any of the distributed funds or such party’s
ability to collect such funds from someone other than the mechanical licensing collective
if such funds were not distributed to such party by the mechanical licensing collective.
(4) Notwithstanding any other provision of this section, where the mechanical
licensing collective distributes royalties to the wrong party and that error is caused by the
actions of the mechanical licensing collective, the mechanical licensing collective shall

promptly correct its error upon learning of it. For purposes of this paragraph
(b)(4)(i)(B)(4), an error is not caused by the mechanical licensing collective where it acts
in accordance with paragraph (b)(4)(i)(B)(1) of this section or otherwise reasonably relies
on information provided to it by others that turns out to be inaccurate.
(C) 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 that 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, or related accrued
interest or adjustments) or deduction under § 210.27(g)(2)(ii) (other than a deduction
related to a voluntary license) made by the mechanical licensing collective before
[INSERT DATE 30 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL
REGISTER] and based on an application of the derivative works exception that is
inconsistent with paragraph (b)(4)(i)(C) of this section (including as such paragraph
applies to matched historical royalties through paragraph (j) of this section) or
§ 210.27(g)(2)(ii)(B)(1), as each of those provisions exist on [INSERT DATE 30 DAYS
AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER], shall be subject to
adjustment by the mechanical licensing collective. Any amounts held by the mechanical
licensing collective in connection with such application of the derivative works exception
as of [INSERT DATE 30 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL
REGISTER] shall also be subject to adjustment. The adjustment process shall be as
follows:
(1)(i) 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)(C)
of this section, the mechanical licensing collective shall, except as otherwise provided for
by this paragraph (k), 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)(C) of
this section.
(ii) The mechanical licensing collective shall notify each prior payee and proper
payee (collectively, the parties) of the overpayment no later than [INSERT DATE 30
DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER]. Such notice
shall contain at least the following information:
(A) A summary of the Copyright Office’s conclusions embodied in paragraph
(b)(4)(i)(C) of this section and § 210.27(g)(2)(ii)(B);
(B) A description of the adjustment process detailed in this paragraph (k),
including the option for the parties to reach a voluntary agreement concerning the
overpayment;
(C) For each musical work (or share thereof) at issue, the amount of the
overpayment; and
(D) The respective contact information for each of the parties contained in the
mechanical licensing collective’s records.
(iii) After receiving such notice, the parties may attempt to reach a voluntary
agreement with respect to the overpayment. Before [INSERT DATE 60 DAYS AFTER
DATE OF PUBLICATION IN THE FEDERAL REGISTER], the parties shall notify the
mechanical licensing collective that:
(A) The parties reached a voluntary agreement with respect to the overpayment;
(B) The parties are in the process of attempting to reach a voluntary agreement
with respect to the overpayment; or
(C) The parties did not reach a voluntary agreement with respect to the
overpayment.
(iv) The mechanical licensing collective shall act as follows in connection with
such notice:

(A) If the mechanical licensing collective receives notice that the parties reached a
voluntary agreement with respect to the overpayment, it shall not make any adjustment in
connection with the overpayment.
(B) If the mechanical licensing collective receives notice that the parties are in the
process of attempting to reach a voluntary agreement with respect to the overpayment, it
shall not take any action unless and until it receives a subsequent notice. If the subsequent
notice states that the parties reached a voluntary agreement with respect to the
overpayment, the mechanical licensing collective shall not make any adjustment in
connection with the overpayment. If the subsequent notice states that the parties did not
reach a voluntary agreement with respect to the overpayment, the mechanical licensing
collective shall commence the adjustment process described in paragraph (k)(1)(v) of this
section. If such a subsequent notice is received after [INSERT DATE 30 DAYS AND 18
MONTHS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER], the
mechanical licensing collective shall not be required to make any adjustment in
connection with the overpayment.
(C) If the mechanical licensing collective receives notice that the parties did not
reach a voluntary agreement with respect to the overpayment, it shall commence the
adjustment process described in paragraph (k)(1)(v) of this section.
(D) If the mechanical licensing collective does not receive a timely notice under
paragraph (k)(1)(iii) of this section, it shall commence the adjustment process described
in paragraph (k)(1)(v) of this section.
(v) Where, pursuant to paragraph (k)(1)(iv) of this section, the mechanical
licensing collective is required to commence an adjustment process with respect to the
overpayment, the following requirements shall apply:
(A) Not later than [INSERT DATE 90 DAYS AFTER DATE OF
PUBLICATION IN THE FEDERAL REGISTER] or 30 calendar days after receiving an

applicable subsequent notice under paragraph (k)(1)(iv)(B) of this section, whichever is
later, the mechanical licensing collective shall notify the prior payee that the adjustment
process has commenced and request that the prior payee return the overpayment no later
than [INSERT DATE 120 DAYS AFTER DATE OF PUBLICATION IN THE
FEDERAL REGISTER] or 30 calendar days after receiving the notice, whichever is later.
Any returned amounts shall be distributed, accompanied by an appropriate royalty
statement, to the proper payee with the next regular monthly royalty distribution to occur
at least 30 calendar days after any such amounts are returned.
(B) If such overpayment is not returned in full in accordance with paragraph
(k)(1)(v)(A) of this section, then beginning with the first distribution of royalties to occur
at least 30 calendar days after the deadline specified in that paragraph, 50 percent of any
and all accrued royalties and other distributable amounts (e.g., 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,
accompanied by an appropriate royalty statement, to the proper payee until such time as
the full amount of the overpayment is recovered. Where the amount to be recovered
under this paragraph during a monthly royalty distribution constitutes less than 50 percent
of the applicable accrued royalties and other distributable amounts, the mechanical
licensing collective shall recover the full amount of the overpayment. 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)(v)(B) shall be apportioned equally among such proper payees.
(2) Where, as of [INSERT DATE 30 DAYS AFTER DATE OF PUBLICATION
IN THE FEDERAL REGISTER], 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,

accompanied by an appropriate royalty statement, to the proper payee 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 [INSERT DATE 30 DAYS AFTER
DATE OF PUBLICATION IN THE FEDERAL REGISTER].
(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), other than
with respect to amounts relating to voluntary licenses, where the proper payee is not the
payee to whom the relevant usage was originally matched. For purposes of this paragraph
(k)(3), the payee to whom the relevant usage was originally matched shall constitute the
prior payee as that term is used elsewhere in this paragraph (k).
(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 or a legal proceeding is commenced
seeking recovery of the overpayment, 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) Notwithstanding the adjustment process detailed in this paragraph (k), the
parties and the mechanical licensing collective may voluntarily agree to an alternative
adjustment process.
5. Revise § 210.30 to read as follows:
§ 210.30 Transfers of copyright ownership, royalty payee changes, and related
disputes.

(a) General. This section prescribes rules governing the mechanical licensing
collective’s administration of transfers of copyright ownership, other royalty payee
changes, 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 other change to a 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. Where the requirements
of paragraph (c) of this section are satisfied, the mechanical licensing collective shall
implement and give effect to such transfer or other change 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 other change 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 that the mechanical
licensing collective establishes and makes 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 any
additional information related to such notice, and the date of receipt.
(1)(i)(A) Subject to paragraph (c)(1)(ii) of this section, for any transfer or other
payee change not addressed by paragraph (c)(2) of this section, the mechanical licensing
collective shall be notified of such transfer or payee change in accordance with any
reasonable requirements that the mechanical licensing collective establishes and makes
publicly available on its website.

(B) If such requirements are not publicly available on the mechanical licensing
collective’s website as of [INSERT DATE OF PUBLICATION IN THE FEDERAL
REGISTER], the mechanical licensing collective shall adopt such requirements and make
them available as soon as reasonably practicable, but no later than [INSERT DATE 60
DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER], unless the
Copyright Office allows for an extension in its discretion. The mechanical licensing
collective shall make such requirements publicly available on its website at least 30
calendar days before such requirements become effective.
(C) The mechanical licensing collective shall make any amendment to such
requirements publicly available on its website at least 30 calendar days before such
amendment becomes effective, unless the mechanical licensing collective can articulate
good cause for not providing such advanced notice. In no case shall an amendment be
effective before being published on the mechanical licensing collective’s website.
(ii) Notwithstanding paragraph (c)(1)(i) of this section, any notice seeking to
change the royalty payee from a terminating party (or its designee) to a corresponding
pre-termination copyright owner (or its designee) is subject to the following additional
requirements:
(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 that established by § 210.29(b)(4)(i).
(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 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, as to a particular musical work, that the notice of termination was
recorded in the Copyright Office before the effective date of termination. Where the
notice of termination identifies more than one musical work, each musical work shall be
treated independently; or
(2) If the Copyright Office has not yet recorded the notice of termination, proof,
as to a particular musical work, that the notice of termination was submitted to the
Copyright Office for recordation before the effective date of termination, provided that
proof, as to such musical work, 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. Where the notice of termination identifies more than
one musical work, each musical work shall be treated independently.
(D) The terminating party, 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

either seek verification from the Copyright Office or request that such verification be
provided to the mechanical licensing collective by the submitter.
(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 with respect to a particular musical work, the mechanical licensing
collective shall promptly correspond with the terminating party and the pre-termination
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 steps shall be required:
(A) The mechanical licensing collective shall notify the pre-termination 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 as to a particular musical work, whichever is later, and shall
contemporaneously alert the terminating party that such notice was sent to the pretermination copyright owner.
(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 each musical work 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.
(vi)(A) A notice submitted to the mechanical licensing collective pursuant to this
paragraph (c)(2) may be withdrawn in accordance with any reasonable requirements that
the mechanical licensing collective establishes and makes publicly available on its
website.
(B) A notice submitted to the mechanical licensing collective pursuant to this
paragraph (c)(2) may be converted into a notice under paragraph (c)(1) of this section in
accordance with any reasonable requirements that the mechanical licensing collective
establishes and makes publicly available on its website.
(C) Such requirements shall comply with the requirements of paragraphs
(c)(1)(i)(B) and (C) of this section.
(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 other payee change on a per work
basis 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 no later than 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 pre-termination copyright owner does not
initiate a dispute as described in paragraph (c)(2)(iv)(B) of this section, 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 no later than 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.
(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 pre-termination copyright owner does not

initiate a dispute as described in paragraph (c)(2)(iv)(B) of this section, 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 pre-termination 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) If the mechanical licensing collective does not implement and give effect to
the change in accordance with the deadlines prescribed by paragraphs (d)(1) through (3)
of this section, the mechanical licensing collective shall implement and give effect to the
change as soon as reasonably practicable, provided that the change is implemented and
given effect by the mechanical licensing collective no later than the next regular monthly
royalty distribution to occur either after the implementation deadline that originally
applied under paragraphs (d)(1) through (3) of this section, as applicable, or at least 30
calendar days after the date that the mechanical licensing collective learns that the change
was not implemented on time, whichever is later. In such cases, the mechanical licensing

collective shall implement and give effect to the change as of the implementation
deadline that originally applied under paragraphs (d)(1) through (3) of this section, as
applicable, including by making any necessary corrective royalty adjustments.
(6) No action or inaction by the mechanical licensing collective with respect to
implementing and giving effect to a transfer or other payee change shall alter or prejudice
any party’s rights to royalties pursuant to such change or such party’s right 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.
(7) 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
submitted to the Copyright Office for recordation, but the notice is not accompanied by
proof that it was recorded in the Copyright Office before the effective date of
termination, the mechanical licensing collective shall act as follows:
(i) Upon subsequent receipt of proof that the notice of termination was recorded
in the Copyright Office before the effective date of termination, the mechanical licensing
collective shall treat the proof of recordation 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) Until receipt of the proof described in paragraph (d)(7)(ii)(B) or (C) of this
section, as the case may be, and subject to paragraph (d)(7)(ii)(D) 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 receiving 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 (5) and (d)(7)(i) of this section, as applicable.
(C) After receiving proof that the Copyright Office refused to record the notice of
termination, the recordation submission was withdrawn, or the notice of termination was
recorded on or after the effective date of termination, the mechanical licensing collective
shall release the held funds to the pre-termination copyright owner.
(D) If the mechanical licensing collective does not receive the proof described in
either paragraph (d)(7)(ii)(B) or (C) of this section within 6 months after the mechanical
licensing collective commences holding applicable accrued royalties and accrued interest,
the mechanical licensing collective shall request that the terminating party provide an
update about the status of the relevant recordation submission. If the submission remains
pending at that time, the mechanical licensing collective may continue to request periodic
updates from the terminating party in its discretion. Upon receiving the proof described in
either paragraph (d)(7)(ii)(B) or (C), the mechanical licensing collective shall act in
accordance with paragraph (d)(7)(ii)(B) or (C), as the case may be.
(iii) Where a notice of termination identifies more than one musical work,
whether the notice is timely recorded in the Copyright Office shall be determined on a
per work basis with respect to each musical work identified in the notice.
(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 a pre-termination copyright owner (or its representative) may initiate
such a dispute.
(3)(i) If a 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.
(ii) With respect to any dispute concerning the application of the derivative works
exception to a particular voluntary license or its underlying grant of authority:
(A) The mechanical licensing collective shall, as needed and on an ongoing basis,
invoice any applicable digital music provider for the royalties associated with the dispute.
(B) The mechanical licensing collective shall hold such royalties in the same
manner and at the same interest rate as any other funds held pursuant to 17 U.S.C.
115(d)(3)(H)(ii).
(C) Where the resolution of the dispute results in payment being made by the
mechanical licensing collective pursuant to a blanket license, the payment must include
any accrued interest. Where the resolution of the dispute results in a digital music
provider paying a voluntary licensor, the mechanical licensing collective must promptly
return the held amount, including any accrued interest, to the digital music provider
accompanied by notice that the dispute has been resolved in such manner.
(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) The following additional information 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.
(6) Any dispute initiated with the mechanical licensing collective under this
paragraph (e) shall be limited to those musical works identified pursuant to paragraph
(e)(4)(iii) of this section. The existence of such a dispute shall not affect the
implementation of a change with respect to any other musical work identified in the same
notice of change and that is not subject to a dispute.
6. Amend § 210.34 as follows:
a. In paragraph (c)(5), remove “to paragraph (c)(4) of” and add in its place “to
paragraph (c)(4) or (6) of”; and
b. Add paragraph (c)(6).
The addition reads as follows:
§ 210.34 Treatment of confidential and other sensitive information.
*****
(c) * * *
(6) Notwithstanding paragraph (c)(1) of this section, where the mechanical
licensing collective places any amount on hold pursuant to a dispute initiated under
§ 210.30(e), the mechanical licensing collective shall promptly disclose the total amount
held for each disputed work (or share thereof) to the parties to the dispute, which shall
include an identification of the approximate amount of royalties expected to have been
distributed for each disputed work (or share thereof) in the first monthly distribution to
occur after the initiation of the hold. Upon the written request of any party to the dispute,
the mechanical licensing collective shall provide an update about the amount held to all
parties to the dispute within a reasonable period of time, except that the mechanical

licensing collective is not required to provide such an update more frequently than once
every three months.
*****
Dated: June 25, 2024.


Suzanne Wilson,
General Counsel and
Associate Register of Copyrights.

Approved by:


Carla D. Hayden,
Librarian of Congress.
[BILLING CODE 1410-30-P]
[FR Doc. 2024-14609 Filed: 7/8/2024 8:45 am; Publication Date: 7/9/2024]