COPYRIGHT ACT OF 1976, AS AMENDED
CHAPTER 10. DIGITAL AUDIO RECORDING DEVICES AND MEDIA
Subchapter A. Definitions

Section 1001

As used in this chapter, the following terms have the following meanings:
(1) A "digital audio copied recording" is a reproduction in a digital recording format of a digital musical
recording, whether that reproduction is made directly from another digital musical recording or indirectly
from a transmission.

(2) A "digital audio interface device" is any machine or device that is designed specifically to communicate
digital audio information and related interface data to a digital audio recording device through a
nonprofessional interface.

(3) A "digital audio recording device" is any machine or device of a type commonly distributed to
individuals for use by individuals, whether or not included with or as part of some other machine or
device, the digital recording function of which is designed or marketed for the primary purpose of, and
that is capable of, making a digital audio copied recording for private use, except for--
(A) professional model products, and
(B) dictation machines, answering machines, and other audio recording equipment that is designed and
marketed primarily for the creation of sound recordings resulting from the fixation of nonmusical sounds.

(4)(A) A "digital audio recording medium" is any material object in a form commonly distributed for use
by individuals, that is primarily marketed or most commonly used by consumers for the purpose of
making digital audio copied recordings by use of a digital audio recording device.
(B) Such term does not include any material object--

(i) that embodies a sound recording at the time it is first distributed by the importer or manufacturer; or

(ii) that is primarily marketed and most commonly used by consumers either for the purpose of making
copies of motion pictures or other audiovisual works or for the purpose of making copies of nonmusical
literary works, including computer programs or data bases.

(5)(A) A "digital musical recording" is a material object--
(i) in which are fixed, in a digital recording format, only sounds, and material, statements, or instructions
incidental to those fixed sounds, if any, and
(ii) from which the sounds and material can be perceived, reproduced, or otherwise communicated,
either directly or with the aid of a machine or device.
(B) A "digital musical recording" does not include a material object:--
(i) in which the fixed sounds consist entirely of spoken word recordings, or
(ii) in which one or more computer programs are fixed, except that a digital musical recording may
contain statements or instructions constituting the fixed sounds and incidental material, and statements or
instructions to be used directly or indirectly in order to bring about the perception, reproduction, or
communication of the fixed sounds and incidental material.
(C) For purposes of this paragraph--
(i) a "spoken word recording" is a sound recording in which are fixed only a series of spoken words,
except that the spoken words may be accompanied by incidental musical or other sounds, and
(ii) the term "incidental" means related to and relatively minor by comparison.

(6) "Distribute" means to sell, lease, or assign a product to consumers in the United States, or to sell,
lease, or assign a product in the United States for ultimate transfer to consumers in the United States.

(7) An "interested copyright party" is--
(A) the owner of the exclusive right under section 106(1) of this title to reproduce a sound recording of a
musical work that has been embodied in a digital musical recording or analog musical recording lawfully
made under this title that has been distributed;
(B) the legal or beneficial owner of, or the person that controls, the right to reproduce in a digital musical
recording or analog musical recording a musical work that has been embodied in a digital musical
recording or analog musical recording lawfully made under this title that has been distributed;
(C) a featured recording artist who performs on a sound recording that has been distributed; or
(D) any association or other organization--
(i) representing persons specified in subparagraph (A), (B), or (C), or
(ii) engaged in licensing rights in musical works to music users on behalf of writers and publishers.

(8) To "manufacture" means to produce or assemble a product in the United States. A "manufacturer" is
a person who manufactures.

(9) A "music publisher" is a person that is authorized to license the reproduction of a particular musical
work in a sound recording.

(10) A "professional model product" is an audio recording device that is designed, manufactured,
marketed, and intended for use by recording professionals in the ordinary course of a lawful business, in
accordance with such requirements as the Secretary of Commerce shall establish by regulation

(11) The term "serial copying" means the duplication in a digital format of a copyrighted musical work or
sound recording from a digital reproduction of a digital musical recording. The term "digital reproduction
of a digital musical recording" does not include a digital musical recording as distributed, by authority of
the copyright owner, for ultimate sale to consumers.

(12) The "transfer price" of a digital audio recording device or a digital audio recording medium--
(A) is, subject to subparagraph (B)--
(i) in the case of an imported product, the actual entered value at United States Customs (exclusive of
any freight, insurance, and applicable duty), and
(ii) in the case of a domestic product, the manufacturer's transfer price (FOB the manufacturer, and
exclusive of any direct sales taxes or excise taxes incurred in connection with the sale); and
(B) shall, in a case in which the transferor and transferee are related entities or within a single entity, not
be less than a reasonable arms-length price under the principles of the regulations adopted pursuant to
section 482 of the Internal Revenue Code of 1986
(i) in the case of an imported product, the actual entered value at United States Customs (exclusive of
any freight, insurance, and applicable duty), and
(ii) in the case of a domestic product, the manufacturer's transfer price (FOB the manufacturer, and
exclusive of any direct sales taxes or excise taxes incurred in connection with the sale); and
(B) shall, in a case in which the transferor and transferee are related entities or within a single entity, not
be less than a reasonable arms-length price under the principles of the regulations adopted pursuant to
section 482 of the Internal Revenue Code of 1986, or any successor provision to such section.

(13) A "writer" is the composer or lyricist of a particular musical work.

Subchapter B. Copying Controls

Section 1002. Incorporation of copying controls

(a) Prohibition on importation, manufacture, and distribution
No person shall import, manufacture, or distribute any digital audio recording device or digital audio
interface device that does not conform to--
(1) the Serial Copy Management System;
(2) a system that has the same functional characteristics as the Serial Copy Management System and
requires that copyright and generation status information be accurately sent, received, and acted upon
between devices using the system's method of serial copying regulation and devices using the Serial Copy
Management System; or
(3) any other system certified by the Secretary of Commerce as prohibiting unauthorized serial copying.
(b) Development of verification procedure
The Secretary of Commerce shall establish a procedure to verify, upon the petition of an interested party,
that a system meets the standards set forth in subsection (a)(2).
(c) Prohibition on circumvention of the system
No person shall import, manufacture, or distribute any device, or offer or perform any service, the
primary purpose or effect of which is to avoid, bypass, remove, deactivate, or otherwise circumvent any
program or circuit which implements, in whole or in part, a system described in subsection (a).
(d) Encoding of information on digital musical recordings
(1) Prohibition on encoding inaccurate information.
No person shall encode a digital musical recording of a sound recording with inaccurate information
relating to the category code, copyright status, or generation status of the source material for the
recording.
(2) Encoding of copyright status not required.
Nothing in this chapter requires any person engaged in the importation or manufacture of digital musical
recordings to encode any such digital musical recording with respect to its copyright status.
(e) Information accompanying transmissions in digital format
Any person who transmits or otherwise communicates to the public any sound recording in digital format
is not required under this chapter to transmit or otherwise communicate the information relating to the
copyright status of the sound recording. Any such person who does transmit or otherwise communicate
such copyright status information shall transmit or communicate such information accurately.
(2) Encoding of copyright status not required.
Nothing in this chapter requires any person engaged in the importation or manufacture of digital musical
recordings to encode any such digital musical recording with respect to its copyright status.
(e) Information accompanying transmissions in digital format
Any person who transmits or otherwise communicates to the public any sound recording in digital format
is not required under this chapter to transmit or otherwise communicate the information relating to the
copyright status of the sound recording. Any such person who does transmit or otherwise communicate
such copyright status information shall transmit or communicate such information accurately.

Subchapter C. Royalty Payments

Section 1003. Obligation to make royalty payments

(a) Prohibition on importation and manufacture
No person shall import into and distribute, or manufacture and distribute, any digital audio recording
device or digital audio recording medium unless such person records the notice specified by this section
and subsequently deposits the statements of account and applicable royalty payments for such device or
medium specified in section 1004.
(b) Filing of notice
The importer or manufacturer of any digital audio recording device or digital audio recording medium,
within a product category or utilizing a technology with respect to which such manufacturer or importer
has not previously filed a notice under this subsection, shall file with the Register of Copyrights a notice
with respect to such device or medium, in such form and content as the Register shall prescribe by
regulation.
(c) Filing of quarterly and annual statements of account
(1) Generally.
Any importer or manufacturer that distributes any digital audio recording device or digital audio recording
medium that it manufactured or imported shall file with the Register of Copyrights, in such form and
content as the Register shall prescribe by regulation, such quarterly and annual statements of account
with respect to such distribution as the Register shall prescribe by regulation.
(2) Certification, verification, and confidentiality.
Each such statement shall be certified as accurate by an authorized officer or principal of the importer or
manufacturer. The Register shall issue regulations to provide for the verification and audit of such
statements and to protect the confidentiality of the information contained in such statements. Such
regulations shall provide for the disclosure, in confidence, of such statements to interested copyright
parties.
(3) Royalty payments. Each such statement shall be accompanied by the royalty payments specified in
section 1004.

Section 1004. Royalty payments

(a) Digital audio recording devices
(1) Amount of payment.
The royalty payment due under section 1003 for each digital audio recording device imported into and
distributed in the United States, or manufactured and distributed in the United States, shall be 2 percent
of the transfer price. Only the first person to manufacture and distribute or import and distribute such
device shall be required to pay the royalty with respect to such device.
(2) Calculation for devices distributed with other devices.
With respect to a digital audio recording device first distributed in combination with one or more devices,
either as a physically integrated unit or as separate components, the royalty payment shall be calculated
as follows:
(A) If the digital audio recording device and such other devices are part of a physically integrated unit, the
royalty payment shall be based on the transfer price of the unit, but shall be reduced by any royalty
payment made on any digital audio recording device included within the unit that was not first distributed
in combination with the unit.
(B) If the digital audio recording device is not part of a physically integrated unit and substantially similar
devices have been distributed separately at any time during the preceding 4 calendar quarters, the
royalty payment shall be based on the average transfer price of such devices during those 4 quarters.
(C) If the digital audio recording device is not part of a physically integrated unit and substantially similar
devices have not been distributed separately at any time during the preceding 4 calendar quarters, the
royalty payment shall be based on a constructed price reflecting the proportional value of such device to
the combination as a whole.
(3) Limits on royalties.
Notwithstanding paragraph (1) or (2), the amount of the royalty payment for each digital audio recording device shall not be less than $1 nor more than the royalty maximum. The royalty maximum shall be $8 per device, except that in the case of a physically integrated unit containing more than 1 digital audio recording device, the royalty maximum for such unit shall be $12. During the 6th year after the effective date of this chapter, and not more than once each year thereafter, any interested copyright party may petition the Librarian of Congress to increase the royalty maximum and, if more than 20 percent of the royalty payments are at the relevant royalty maximum, the Librarian of Congress shall prospectively increase such royalty maximum with the goal of having no more than 10 percent of such payments at the new royalty maximum; however the amount of any such increase as a percentage of the royalty maximum shall in no event exceed the percentage increase in the Consumer Price Index during the period under review.
(b) Digital Audio Recording Media
The royalty payment due under section 1003 for each digital audio recording medium imported into and
distributed in the United States, or manufactured and distributed in the United States, shall be 3 percent
of the transfer price. Only the first person to manufacture and distribute or import and distribute such
medium shall be required to pay the royalty with respect to such medium.

1005. Deposit of royalty payments and deduction of expenses

The Register of Copyrights shall receive all royalty payments deposited under this chapter and, after
deducting the reasonable costs incurred by the Copyright Office under this chapter, shall deposit the
balance in the Treasury of the United States as offsetting receipts, in such manner as the Secretary of
the Treasury directs. All funds held by the Secretary of the Treasury shall be invested in interest-bearing
United States securities for later distribution with interest under section 1007. The Register may, in the
Register's discretion, 4 years after the close of any calendar year, close out the royalty payments account
for that calendar year, and may treat any funds remaining in such account and any subsequent deposits
that would otherwise be attributable to that calendar year as attributable to the succeeding calendar
year.

Section 1006. Entitlement to royalty payments

(a) Interested copyright parties
The royalty payments deposited pursuant to section 1005 shall, in accordance with the procedures
specified in section 1007, be distributed to any interested copyright party--
(1) whose musical work or sound recording has been--
(A) embodied in a digital musical recording or an analog musical recording lawfully made under this title
that has been distributed, and
(B) distributed in the form of digital musical recordings or analog musical recordings or disseminated to
the public in transmissions, during the period to which such payments pertain; and
(2) who has filed a claim under section 1007.
(b) Allocation of royalty payments to groups
The royalty payments shall be divided into 2 funds as follows:
(1) The Sound Recordings Fund.
66 2/3 percent of the royalty payments shall be allocated to the Sound Recordings Fund. 2 5/8 percent of the royalty payments allocated to the Sound Recordings Fund shall be placed in an escrow account managed by an independent administrator jointly appointed by the interested copyright parties described in section 1001(7)(A) and the American Federation of Musicians (or any successor entity) to be
distributed to non-featured musicians (whether or not members of the American Federation of Musicians
or any successor entity) who have performed on sound recordings distributed in the United States. 1 3/8
percent of the royalty payments allocated to the Sound Recordings Fund shall be placed in an escrow
account managed by an independent administrator jointly appointed by the interested copyright parties
described in section 1001(7)(A) and the American Federation of Television and Radio Artists (or any
successor entity) to be distributed to non-featured vocalists (whether or not members of the American
Federation Television and Radio Artists or any successor entity) who have performed on sound
recordings distributed in the United States. 40 percent of the remaining royalty payments in the Sound Recordings Fund shall be distributed to the interested copyright parties described in section 1001(7)(C), and 60 percent of such remaining royalty payments shall be distributed to the interested copyright parties described in section 1001(7)(A).
(2) The Musical Works Fund.
(A) 33 1/3 percent of the royalty payments shall be allocated to the Musical Works Fund for distribution to interested copyright parties described in section 1001(7)(B).
(B)(i) Music publishers shall be entitled to 50 percent of the royalty payments allocated to the Musical Works Fund.
(ii) Writers shall be entitled to the other 50 percent of the royalty payments allocated to the Musical Works Fund.
(c) Allocation of royalty payments within groups
If all interested copyright parties within a group specified in subsection (b) do not agree on a voluntary
proposal for the distribution of the royalty payments within each group, the Librarian of Congress shall
convene a copyright arbitration royalty panel which shall, pursuant to the procedures specified under
section 1007(c), allocate royalty payments under this section based on the extent to which, during the
relevant period--
(1) for the Sound Recordings Fund, each sound recording was distributed in the form of digital musical
recordings or analog musical recordings; and
(2) for the Musical Works Fund, each musical work was distributed in the form of digital musical
recordings or analog musical recordings or disseminated to the public in transmissions.

Section 1007. Procedures for distributing royalty payments

(a) Filing of claims and negotiations
(1) Filing of claims.
During the first 2 months of each calendar year after the calendar year in which this chapter takes effect,
every interested copyright party seeking to receive royalty payments to which such party is entitled under
section 1006 shall file with the Librarian of Congress a claim for payments collected during the preceding
year in such form and manner as the Librarian of Congress shall prescribe by regulation.
(2) Negotiations.
Notwithstanding any provision of the antitrust laws, for purposes of this section interested copyright
parties within each group specified in section 1006(b) may agree among themselves to the proportionate
division of royalty payments, may lump their claims together and file them jointly or as a single claim, or
may designate a common agent, including any organization described in section 1001(7)(D), to negotiate
or receive payment on their behalf; except that no agreement under this subsection may modify the
allocation of royalties specified in section 1006(b).
(b) Distribution of payments in the absence of a dispute
Within 30 days after the period established for the filing of claims under subsection (a), in each year after
the year in which this section takes effect, the Librarian of Congress shall determine whether there exists
a controversy concerning the distribution of royalty payments under section 1006(c). If the Librarian of
Congress determines that no such controversy exists, the Librarian of Congress shall, within 30 days after
such determination, authorize the distribution of the royalty payments as set forth in the agreements
regarding the distribution of royalty payments entered into pursuant to subsection (a), after deducting its
reasonable administrative costs under this section.
(c) Resolution of disputes
If the Librarian of Congress finds the existence of a controversy, the Librarian shall, pursuant to chapter 8
of this title, convene a copyright arbitration royalty panel to determine the distribution of royalty
payments. During the pendency of such a proceeding, the Librarian of Congress shall withhold from
distribution an amount sufficient to satisfy all claims with respect to which a controversy exists, but shall,
to the extent feasible, authorize the distribution of any amounts that are not in controversy. The Librarian
of Congress shall, before authorizing the distribution of such royalty payments, deduct the reasonable
administrative costs incurred by the Librarian under this section.

SUBCHAPTER D. PROHIBITION ON CERTAIN INFRINGEMENT ACTIONS,
REMEDIES, AND ARBITRATION

Section 1008. Prohibition on certain infringement actions

No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.

Section 1009. Civil remedies

(a) Civil actions
Any interested copyright party injured by a violation of section 1002 or 1003 may bring a civil action in an
appropriate United States district court against any person for such violation.
(b) Other civil actions
Any person injured by a violation of this chapter may bring a civil action in an appropriate United States
district court for actual damages incurred as a result of such violation.
(c) Powers of the court
In an action brought under subsection (a), the court--
(1) may grant temporary and permanent injunctions on such terms as it deems reasonable to prevent or
restrain such violation;
(2) in the case of a violation of section 1002, or in the case of an injury resulting from a failure to make
royalty payments required by section 1003, shall award damages under subsection (d);
(3) in its discretion may allow the recovery of costs by or against any party other than the United States
or an officer thereof; and
(4) in its discretion may award a reasonable attorney's fee to the prevailing party.
(d) Award of damages
(1) Damages for section 1002 or 1003 violations.
(A) Actual damages.
(i) In an action brought under subsection (a), if the court finds that a violation of section 1002 or 1003
has occurred, the court shall award to the complaining party its actual damages if the complaining party
elects such damages at any time before final judgment is entered.
(ii) In the case of section 1003, actual damages shall constitute the royalty payments that should have
been paid under section 1004 and deposited under section 1005. In such a case, the court, in its
discretion, may award an additional amount of not to exceed 50 percent of the actual damages.
(B) Statutory damages for section 1002 violations.
(i) Device. A complaining party may recover an award of statutory damages for each violation of section
1002(a) or (c) in the sum of not more than $2,500 per device involved in such violation or per device on which a service prohibited by section 1002(c) has been performed, as the court considers just.
(ii) Digital musical recording. A complaining party may recover an award of statutory damages for each violation of section 1002(d) in the sum of not more than $25 per digital musical recording involved in such violation, as the court considers just.
(iii) Transmission. A complaining party may recover an award of damages for each transmission or
communication that violates section 1002(e) in the sum of not more than $10,000, as the court considers just.
(2) Repeated violations.
In any case in which the court finds that a person has violated section 1002 or 1003 within 3 years after a
final judgment against that person for another such violation was entered, the court may increase the
award of damages to not more than double the amounts that would otherwise be awarded under
paragraph (1), as the court considers just.
(3) Innocent violations of section 1002.
The court in its discretion may reduce the total award of damages against a person violating section 1002
to a sum of not less than $250 in any case in which the court finds that the violator was not aware and had no reason to believe that its acts constituted a violation of section 1002.
(e) Payment of damages
Any award of damages under subsection (d) shall be deposited with the Register pursuant to section
1005 for distribution to interested copyright parties as though such funds were royalty payments made
pursuant to section 1003.
(f) Impounding of articles
At any time while an action under subsection (a) is pending, the court may order the impounding, on such
terms as it deems reasonable, of any digital audio recording device, digital musical recording, or device
specified in section 1002(c) that is in the custody or control of the alleged violator and that the court has
reasonable cause to believe does not comply with, or was involved in a violation of, section 1002.
(g) Remedial modification and destruction of articles
In an action brought under subsection (a), the court may, as part of a final judgment or decree finding a
violation of section 1002, order the remedial modification or the destruction of any digital audio recording
device, digital musical recording, or device specified in section 1002(c) that--
(1) does not comply with, or was involved in a violation of, section 1002, and
(2) is in the custody or control of the violator or has been impounded under subsection (f).

Section 1010. Arbitration of certain disputes

(a) Scope of arbitration
Before the date of first distribution in the United States of a digital audio recording device or a digital
audio interface device, any party manufacturing, importing, or distributing such device, and any interested
copyright party may mutually agree to binding arbitration for the purpose of determining whether such
device is subject to section 1002, or the basis on which royalty payments for such device are to be made
under section 1003.
(b) Initiation of arbitration proceedings
Parties agreeing to such arbitration shall file a petition with the Librarian of Congress requesting the
commencement of an arbitration proceeding. The petition may include the names and qualifications of
potential arbitrators. Within 2 weeks after receiving such a petition, the Librarian of Congress shall cause
notice to be published in the Federal Register of the initiation of an arbitration proceeding. Such notice
shall include the names and qualifications of 3 arbitrators chosen by the Librarian of Congress from a list
of available arbitrators obtained from the American Arbitration Association or such similar organization as
the Librarian of Congress shall select, and from potential arbitrators listed in the parties' petition. The
arbitrators selected under this subsection shall constitute an Arbitration Panel.
(c) Stay of judicial proceedings
Any civil action brought under section 1009 against a party to arbitration under this section shall, on
application of one of the parties to the arbitration, be stayed until completion of the arbitration
proceeding.
(d) Arbitration proceeding
The Arbitration Panel shall conduct an arbitration proceeding with respect to the matter concerned, in
accordance with such procedures as it may adopt. The Panel shall act on the basis of a fully documented
written record. Any party to the arbitration may submit relevant information and proposals to the Panel.
The parties to the proceeding shall bear the entire cost thereof in such manner and proportion as the
Panel shall direct.
(e) Report to Librarian of Congress
Not later than 60 days after publication of the notice under subsection (b) of the initiation of an arbitration
proceeding, the Arbitration Panel shall report to the Librarian of Congress its determination concerning
whether the device concerned is subject to section 1002, or the basis on which royalty payments for the
device are to be made under section 1003. Such report shall be accompanied by the written record, and
shall set forth the facts that the Panel found relevant to its determination.
(f) Action by the Librarian of Congress
Within 60 days after receiving the report of the Arbitration Panel under subsection (e), the Librarian of
Congress shall adopt or reject the determination of the Panel. The Librarian of Congress shall adopt the
determination of the Panel unless the Librarian of Congress finds that the determination is clearly
erroneous. If the Librarian of Congress rejects the determination of the Panel, the Librarian of Congress
shall, before the end of that 60-day period, and after full examination of the record created in the
arbitration proceeding, issue an order setting forth the Librarian's decision and the reasons therefor. The
Librarian of Congress shall cause to be published in the Federal Register the determination of the Panel
and the decision of the Librarian of Congress under this subsection with respect to the determination
(including any order issued under the preceding sentence).
(g) Judicial review
Any decision of the Librarian of Congress under subsection (f) with respect to a determination of the
Arbitration Panel may be appealed, by a party to the arbitration, to the United States Court of Appeals for
the District of Columbia Circuit, within 30 days after the publication of the decision in the Federal
Register. The pendency of an appeal under this subsection shall not stay the decision of the Librarian of
Congress. The court shall have jurisdiction to modify or vacate a decision of the Librarian of Congress
only if it finds, on the basis of the record before the Librarian of Congress, that the Arbitration Panel or
the Librarian of Congress acted in an arbitrary manner. If the court modifies the decision of the Librarian
of Congress, the court shall have jurisdiction to enter its own decision in accordance with its final
judgment. The court may further vacate the decision of the Librarian of Congress and remand the case
for arbitration proceedings as provided in this section.