Yesterday, a three judge panel of the US Court of Appeals in Washington, D.C. denied the Emergency Motion for a Stay of the Internet Radio Royalty rates set earlier this year by the Copyright Royalty Board. Our coverage of the stay motion can be found here and here. Coverage of the entire royalty issue and the surrounding controversy can be found in various posts on our blog, here. The denial of the stay means that, absent Congressional action or some voluntary agreement of the parties, the new rates will go into effect with payments for the period since the CRB decision being due on Monday, July 16.
The Court’s decision was very brief – in essence three sentences which merely stated that the moving parties had not met the high legal burden necessary for the Court to impose a stay. A stay is an extraordinary legal action, taken by a Court as part of its equitable powers to insure that justice is carried out. In order to justify a stay, a party must show the Court that there is a likelihood of success on the merits of the case (in other words, it must prove in a 20 page stay motion the likelihood that it will eventually win its appeal after full briefing and oral argument), plus it must prove that there will be irreparable harm if the stay is not issued (more than simply a loss of money – but harm that cannot be remedied if the appeal is eventually successful). Weighing those factors, and balancing the competing interests of the parties and the public interest, the Court decides whether or not to issue a Stay. In this case, as there was no more than the pro forma Order, we do not know what shortcomings the Court perceived in the Motion seeking the Stay, but no reasons are required as the Court can merely decide not to exercise its equitable discretion in a case.
Thus, with only days to go before the obligation to pay the new higher royalties kicks in, webcasters’ hopes are limited to Congressional actions or voluntary agreements to stay these new obligations. While the appeal will continue and be fully briefed and argued over the course of the coming year, none of the due dates for these actions, much less an anticipated date for a Court decision, has been set. The due date for the royalties does not mean that negotiations necessarily end, or that lawsuits will follow the next day if a webcaster does not pay on time, but the potential liability for obligations will be looming over each webcaster, as well as the potential for lawsuits for collection of royalties and copyright infringement against those who do not timely pay. It will obviously be of interest to all webcasters to watch and see how the parties act in these coming days. Will there continue to be talks – or will the recording industry take a hard line? We will see.