Copyright Office Issues Final Rule on Deposit Accounts

The Copyright Office is amending its regulations to set the minimum level of activity required to hold a deposit account at 12 transactions per year; require deposit account holders to maintain a minimum balance in that account; require the closure of a deposit account the second time it is overdrawn within any 12-month period; and offer deposit account holders the option of automatic replenishment of their account via their bank account or credit card.

This rule becomes takes effect on May 1, 2011.

The Copyright Office maintains a system of deposit accounts for those who frequently use its services. An individual or entity may establish a deposit account, make advance deposits into that account, and charge copyright fees against the balance instead of sending separate payments with applications and other requests for services. This process has proven to be more efficient and less expensive for both the Office and the applicant than sending separate payments to the Copyright Office for each application for registration or for other services.

The goal of this Final Rule is to solve the problems associated with the suspension of paper registration applications for lack of deposit account funds. As explained in the October 8, 2010 Federal Register Notice of Proposed Rulemaking (75 FR 62345), when the deposit account being used for payment has insufficient funds to process a paper application, the Copyright Office suspends processing of the application to notify the account holder that replenishment of the account is needed, and places the pending application and associated deposit copies in temporary storage.

The suspended applications, which may number 3,000 or more at any one time, must be reviewed regularly by Office staff to locate those that are newly funded and reprocess them. Thus, insufficient deposit account funding effectively doubles—at a minimum—the time Office staff must spend processing an application, time that would otherwise be more profitably spent on processing properly filed claims.

On average, one to three percent of paper applications for registration are suspended each year due to lack of sufficient deposit account funds.

In fiscal 2010, between 6,000 and 7,000 applications were carried on hold monthly for insufficient deposit account funds. The Office has expended substantial resources managing these suspended applications and deposits.

While the Office assesses service charges for deposit account overdrafts ($165) and dishonored deposit account replenishment checks ($85), see 37 CFR 201.3(d), these penalties do not recover all costs or solve the fundamental problems associated with the additional handling and the delay in processing underfunded applications for registration.

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