SoundExchange last week filed an appeal of the Copyright Royalty Board’s decision on webcasting royalties (a decision which we summarized here and here), as reported by a number of trade press articles. Most of these press reports did not note that this was not the only appeal filed. At least two other parties, IBS (Intercollegiate Broadcasting System – representing college and high school broadcasters) and the NRB-NMLC (National Religious Broadcasters Noncommercial Music License Committee – representing noncommercial religious broadcasters) also filed notices of appeal. So what is next now that these appeals have been filed?
The Notices of Appeal that were just submitted to the US Court of Appeals are just “notice” documents – filed to give notice to the other parties, the CRB and the court that these parties will pursue an appeal as they think that the CRB decision was not justified. No detail as to the substance of the appeal need be submitted at this time. Those details will be advanced when the parties file briefs setting out the specifics of their arguments challenging the CRB decision. The exact date for the submission of those briefs won’t be set for months, when the case makes its way onto the Courts docketing schedule. So don’t expect briefs to be filed until the Fall, with an oral argument before the Court to follow. The arguments are simply ones where lawyers for the parties get up before a three-judge panel and make brief presentations about the legal issues involved in the case (and answer the questions of the Judges). No new evidence is taken – at this point the proceeding is just one between lawyers, arguing as to whether the CRB decision was justified. What does the Court review?
As we have written before (see, for instance, our article here), the Court, in reviewing a decision of an “expert” administrative agency charged with making decisions like the ones made by the CRB, does not second guess the agency as to whether it made the right decision. The Court will not pour through the entire record created in the 6 week trial to decide if, in its judgement, the royalty rates should have been higher or lower. Instead, the Court is charged merely with deciding whether the decision was “arbitrary and capricious” or an “abuse of its discretion.” What that means is that the Court is essentially looking to see if there was a substantial basis in the record for the findings of the Copyright Royalty Judges for the conclusions they reached. As the CRJs were the ones who actually heard the oral testimony and thus they could weigh how convincing the witnesses were, great deference is given to their conclusions. Only if the Court finds that there is essentially no evidence in the record to support a decision, or such overwhelming contrary evidence that a rational decision maker could not have reached the decision that it did, will the Court overturn the CRBs decision. The Court also looks for legal errors, to see if the CRB ignored the statutory authority that it has been given to decide a case (or whether the agency itself was improperly constituted as happened in connection with an earlier decision of the CRB – see my articles here and here). Because of this deference given to the decision of the administrative agency, most appeals like this are unsuccessful – most, but not necessarily all.
What is SoundExchange likely to argue here? Their public statement was very noncommittal – just saying that they think that the rates were too low. Presumably, the noncommercial appellants will be arguing just the opposite – that the rates were set too high. But, until we see the briefs in a few months, or until some other public statement is made, we just don’t know. There were two legal issues certified during the course of the proceeding to the Copyright Office for advisory opinions, and some press articles have speculated that these legal nuggets might be the basis of the appeal. But on one of those issues, whether the CRB can decide on different rates for music from independent labels from those set for music from major labels, SoundExchange took no position. As it made no argument on this issue, it is hard for it to now challenge the decision in Court. Another issue, as to whether the CRB could give any credence to the rates set out in direct licensing agreements arrived at in the “shadow” of the prior rates (especially the non-precedential rates set out in webcasters settlement act agreements) was one that SoundExchange did argue, so that may be something that we see in their brief. But we won’t know for sure until the briefs are filed.
Don’t expect a quick decision. With briefing and oral argument, and then time for the Judges to consider the arguments and write a decision, we are probably looking at knowing the results of the appeal at some point in 2017. At that point the Court could affirm the CRB decision, or reverse it. In most cases, if it reverses the decision, it will not itself set new rates, but instead will send the case back to the CRB to make a new decision taking into account the instructions of the Court (see, for instance, our article here on a prior Court decision asking the CRB to review noncommercial webcasters’ minimum fees). Until a decision comes out something like a year from now, the rates decided last December will stay in effect, with a true-up after the fact if the rates change as a result of the Court’s decision. So keep watching to see what happens in this proceeding.