§1004 Royalty payments

Summary

A 2 percent royalty must be paid on the transfer price for each digital audio recording device that is imported into or made and sold in the United States. Only the first person who makes and sells, or imports and sells, the device in the U.S. must pay. If the device is first sold as part of a bundle, the royalty is figured differently: if the device is built into a single unit, the royalty is based on the unit’s transfer price but you subtract any royalty already paid for included devices that were sold earlier on their own; if it is sold with other parts but not built in and similar devices were sold separately in the prior 4 calendar quarters, the royalty is based on the 4-quarter average transfer price of those similar devices; if no similar devices were sold separately in those 4 quarters, the royalty is based on a constructed price that reflects the device’s share of the bundle. The royalty per device can never be less than $1 and never more than $8. For a physically integrated unit that contains more than one digital audio recording device, the top limit is $12. In the 6th year after the chapter takes effect, and no more than once each year after that, an interested copyright party may ask the Copyright Royalty Judges to raise the top limit. If more than 20 percent of payments hit the current top limit, the judges must raise it so that no more than 10 percent of payments hit the new top limit, but any percentage increase cannot exceed the percentage increase in the Consumer Price Index for the period they review. A 3 percent royalty must be paid on the transfer price for each digital audio recording medium that is imported into or made and sold in the United States. Only the first person who makes and sells, or imports and sells, the medium in the U.S. must pay.