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Regs. The Commissioner again rejected the industry’s position in
the temporary regulation by explicitly excluding computer software.
(5) Invalidating the temporary regulation would eradicate the
need for “copyrights” to appear in section 927(a)(2)(B) because most
copyrights would qualify. If the parenthetical were to be expanded
so as to be based upon the type of medium on which a copyrighted
work can be mastered, then copyrights in books would qualify.
In sum, the temporary regulation represents a “reasonable
accommodation of the competing interests of fairness,
administrability, and avoidance of abuse.” Atlantic Mut. Ins. Co.
Commissioner, 523 U.S. at 383. We believe that the temporary
regulation is a reasonable and permissible interpretation of section
927(a) and harmonizes with the language, purpose, and legislative
history of the statute.
4. Final Matters
In reaching our conclusions, we have considered all arguments
raised by the parties. For the sake of completeness, we now discuss
two arguments that heretofore have not been addressed.
(1) The parties disagree as to whether the royalties at issue
were paid solely for the exploitation of copyright rights, as
petitioner maintains, or for patents, trademark, and trade secrets,
in addition to copyrights rights, as respondent maintains.
Petitioner argues that assuming arguendo the royalties it received
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