If a proper Notice of Dispute is provided to The MLC, The MLC will take the following actions (as required by the USCO regulation):
- The MLC will provide a copy of the Notice of Dispute to the applicable DSP.
- When royalties subject to the Notice of Dispute become due (e.g.., when works are matched and the DSP is invoiced), The MLC will collect the amount of royalties in dispute from the DSP.
- The MLC will hold these royalties in an interest-bearing account. The amount will include the interest that would have accrued on such amount if The MLC had been holding it when the accrued historical unmatched royalties were transferred in February 2021. (See this press release for more information).
- The MLC will release those royalties on one of two occurrences:
- First, if the dispute is resolved by settlement or court judgment/order, The MLC with release the funds royalties as directed in the judgment/order.
- Second, if one year after The MLC collects the royalties from the applicable DSP, you are not engaged in active dispute resolution with the DSP, the Copyright Office regulation requires that The MLC return those royalties to the DSP.
As an example:
Assume that on December 1, 2022, The MLC identifies certain previously unmatched uses by the DSP (either Spotify or YouTube) that match to a catalog and time period covered by a Notice of Dispute.
The MLC invoices the DSP for those matched royalties.
The DSP pays the disputed royalties to The MLC on December 20, 2022, and The MLC holds those disputed royalties in an interest-bearing account.
If, on December 20, 2023, (i.e., one year after royalties are received by The MLC) the dispute has not been resolved and the copyright owner is not engaged in active dispute resolution with the DSP, then The MLC is required to refund those disputed royalties to the DSP.
Specifically, the regulation states, “If the mechanical licensing collective has not been so directed within one year after the funds have been received from the digital music provider, and if there is no active dispute resolution occurring at that time, the mechanical licensing collective shall treat the funds as an overpayment.
The MLC will notify all parties who have provided Notices of Dispute when it receives royalties from a DSP.