Rules regarding digital audio recording devices and media are found in The Audio Home Recording Act of 1992.

A “digital musical recording” is defined as a material object in which sounds as well as material, statements, or instructions incidental to those fixed sounds are fixed in a digital recording format.  Such fixed sounds and material can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.  A “digital audio recording device” is a machine or device of a particular type usually distributed for individual use.  It could be an independent device or a part of some other machine or device.  The digital recording function of such device is designed or marketed for making a digital audiocopied recording for private use.

Computers and their hard drives do not come under the purview of digital audio recording devices.  Their primary purpose is not to make digital audiocopied recordings.  Hand-held devices capable of receiving, storing, and re-playing a digital audio file stored on the hard drive of a personal computer, which does not record directly from digital music recordings, is not a “digital audio recording device” if that device only permits indirect reproductions of transmissions.  The Audio Home Recording Act of 1992 was not proposed to extend to “phonorecords” as defined by the Copyright Act’s to include Compact Discs plus Graphics (CD + G’s).

According to the Audio Home Recording Act of 1992, no person may import, manufacture, or distribute any digital audio recording device or digital audio interface device that does not conform to the Serial Copy Management System.   The law requires all copyright and generation status information to be sent, received, and acted upon accurately between devices using the system’s method of serial copying regulation and devices using the Serial Copy Management System; or any other system certified by the Secretary of Commerce.  The law also provides that such information must accompany transmissions in digital format.

“Serial copying” refers to the duplication of a copyrighted musical work or sound recording from a digital reproduction of a digital musical recording in a digital format.  The transfer of digital music files involves a two-step process.  First, the files are transferred from an audio compact disc to a computer hard drive.  From the computer hard drive, it is transferred to a small device with headphones that allows the user to listen to the transferred music files.  Although miniature devices with headphones allowing a user to download MP3 audio files from a computer for listening to them elsewhere are not capable of sending, receiving or acting on information about the generation and copyright status of the files that it plays, they violate the law regarding copying controls in the technical sense for failure to obtain a certificate from the Secretary of Commerce.  Lack of capability of such a device to permit downstream copying could lead the Secretary of Commerce to conclude that the device met the requirement of adequately prohibiting unauthorized serial copying.

In the words of law, no person may import and distribute, or manufacture and distribute, any digital audio recording device or digital audio recording medium unless such person records the appropriate notice and subsequently deposits the required quarterly and annual statements of account and applicable royalty payments.  The Audio Home Recording Act of 1992 lays down the amount and calculation of royalties with certain limitations on the amount.  All royalty payments have to be deposited with the Register of Copyrights.  The first person to manufacture and distribute or import and distribute a covered device shall be required to pay the royalty.  The royalty payments deposited with the Register of Copyrights shall be distributed to any interested copyright party who has filed the required claim.  Royalty payments have to be divided into Sound Recordings Fund, and the Musical Works Fund.  The law also provides for allocation of royalty payments within funds.  Two or more interested parties to the copyright may agree upon to divide royalty payments.  Royalty payments are distributed by the librarian of Congress after determining that there is no controversy concerning such distribution.  In case of a controversy, a copyright arbitration royalty panel shall be convened by the librarian to determine the distribution.

An action cannot be brought under the Copyright Act 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 for making digital musical recordings or analog musical recordings.  However, this provision does not preclude a copyright infringement action to the downloading of digital audio files to computer hard drives because computers and their hard drives cannot be held as “digital audio recording devices.”  This provision does not apply to contributory and vicarious copyright infringement claims brought by plaintiff record companies, songwriters, and music publishers against owners and operators of Internet file sharing services, where massive copying of digital MP3 files between computer hard drives of users of the file sharing service is alleged by plaintiffs.

Any copyright party injured by a violation of copyright laws can initiate a civil action in an appropriate United States district court against any person for such violation.  The court may grant a temporary or permanent injunction, or actual or statutory damages.  There are special provision for repeated violations and innocent violations.   The court may also impound certain articles and order to modify or destruct such articles.

Any party manufacturing, importing, or distributing a digital audio recording device or a digital audio interface device or any interested copyright party may mutually agree to binding arbitration for determining whether such device is subject to the requirements regarding copying controls or the basis on which royalty payments for such device are to be made.  The law provides for initiation, stay, and conduct of such arbitration proceedings; reports to the Librarian of Congress of the arbitration determination; the adoption or rejection of the arbitration determination by the Librarian of Congress; and judicial review of the determination by the United States Court of Appeals for the District of Columbia Circuit.

The remedies provided by the Copyright Act of 1976 are applicable to any one who carries out the following actions without the consent of the performer or performers involved.

• Fixing the sounds or sounds and images of a live musical performance in a copy or phonorecord, or reproducing copies or phonorecords of such a performance from an unauthorized fixation;
• Transmitting or otherwise communicating the sounds or sounds and images of a live musical performance to the public;
• Distributing or offering to distribute, selling or offering to sell, renting or offering to rent, or trafficking in any copy or phonorecord, regardless of whether the fixations occurred in the United States.