NCTA, DirecTV, NPR and others asked the Copyright Office to adopt...

NCTA, DirecTV, NPR and others asked the Copyright Office to adopt audit procedure rules in the implementation of audit provisions mandated by the Satellite Television Extension and Localism Act. The organizations jointly submitted replies to the office in the audit provision rulemaking, which would allow copyright owners to audit certain statements of account with the office. Replies were due this month. The rules were carefully tailored “to take into consideration the unique characteristics of the cable and satellite compulsory licenses,” the joint reply said (http://xrl.us/bnwozh). For each semiannual statement of account filed with the office for accounting periods beginning Jan. 1, 2010, the licensee must maintain all records “necessary to confirm the correctness of the calculations and royalty payments reported in each statement for at least three and one-half years after the last day of the year in which that statement or an amendment of that statement was filed with the office,” they said. Following the selection of the auditor and “until the distribution of the auditor’s report to the participating copyright owner ... there may be no ex parte communications regarding the audit between the selected auditor and the participating copyright owner(s) of their representatives provided, however, that the auditor may engage in such ex parte communications” where either the auditor has a reasonable basis to suspect fraud or the auditor provides the licensee with a reasonable opportunity to participate in communications with the participating copyright owners, they said. The procedures for designating an auditor “should be strengthened and specifically preclude the payment of contingent fees,” AT&T said (http://xrl.us/bnwo45). Although the NCTA/copyright owners’ proposal addresses these issues to a degree, “AT&T continues to believe that additional requirements should be imposed,” the telco said. The audit shouldn’t be allowed to commence “until any objections regarding the auditor’s independence have been resolved,” it said. The company also said that the regulations “should limit the scope of the audit to issues that are not evident on the face of the statement of account."