constitutionality of copyright royalty board

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Could the Copyright Office become an independent agency with rulemaking power? Congress is examining all phases of copyright law, as well as the functioning of the Copyright Office. In connection with that review, the Register of Copyrights Maria Pallante (the head of the Copyright Office) sent a letter to John Conyers, the Ranking Member of the House Judiciary Committee, explaining her views on this topic. The letter was sent at the request of the ranking member, made at a recent hearing reviewing the functioning of the Office. In the letter, the Register suggests that the agency be made into an independent agency, like the FCC, to overcome constitutional issues about its powers and to allow it to act as an expert agency to more quickly respond to issues that arise under the copyright laws.

So what are the issues that this proposal raises? The constitutional issue that is mentioned in the letter is similar to the issue that faced the Copyright Royalty Board a few years ago, where a Court of Appeals decision concluded that the Copyright Royalty Judges were not constitutionally appointed under the Appointments Clause of the US Constitution. We wrote about the arguments in that case here. While the specific issue addressed in the CRB case, about the Judges being subject to the supervision of the head of a government agency, do not seem to arise in the appointment and supervision of the Register, another aspect of the Appointments Clause has raised from time to time, asking whether the Librarian of Congress, who oversees both the CRB and the Copyright Office, is truly the head of a department of the executive branch of government. In a government organization chart, the Library technically reports to Congress, not the President, and thus the arguments are that the Library is not a true executive agency (though the President does appoint the Librarian of Congress). While these issues generally have been resolved in favor of the Copyright Office, the fact that they have come up, and never been resolved by the Supreme Court, suggests the constitutional issues which the letter addresses. While this may be very theoretical there are more practical issues that would arise from an independent Copyright Office as well.
Continue Reading Copyright Office Calls for Greater Independence – What Would that Mean?

Last week, the Copyright Royalty Board published in the Federal Register its decision on Internet radio royalties for 2011-2015.  The question that I received many times since the publication last week is “huh, didn’t we already see that decision a long time ago?”  Indeed we did – the original decision setting the rates was reached in December 2010 (which we wrote about here and here).  But, as many will remember, there was also an intervening decision finding that the CRB had been unconstitutionally established.  The Court remedied the unconstitutionality by changing the law’s provisions dealing with the ability of the Librarian of Congress to remove the Judges, and sent the decision back to the CRB to redo the 2010 decision.  The redo is the result that was released last week.  While the new decision did not change the rates for webcasters, it did contain some new analysis that presents some interesting insights into the Judge’s thought processes that may be relevant to webcasters who will be affected by the recently started proceeding to determine rates for 2016-2020.  As the three Judges on the CRB have all arrived on the CRB since the 2010 decision, this rewritten decision provides some insight as to how they are approaching the new proceeding. 

By the time the decision declaring the unconstitutionality of the “old” CRB was reached, the only party left fighting the decision was Intercollegiate Broadcasting Systems, a group of college broadcasters.  All of the commercial broadcasters had either settled their royalty disputes, or dropped out of the proceeding (see our summary of the rates entered into by parties as part of the Webcasters Settlement Acts).  Thus, no commercial webcasters participated in the remanded proceeding before the CRB.  The CRB noted the lack of any challenge to the commercial rates, and given that they were not challenged, and that they fell in a zone of reasonableness, they were adopted.  But, in determining that the rates were in the zone of reasonableness, the CRB did not just pay lip service to reviewing the prior decision, but it instead did a full review of that decision.  And, some of the discussion that they offered may arise again in the new proceeding.
Continue Reading Copyright Royalty Board Reissues Decision on Internet Radio Royalties for 2011-2015 – Same Rates But New Analysis

The Copyright Royalty Board makes many important decisions, yet for the last several years, there has been a cloud over its operations, as there have been questions as to whether its members were constitutionally appointed (see our articles here, here and here). Well, the question is before the Courts again – this time squarely in front of the US Court of Appeals for the District of Columbia – a Court one step below the Supreme Court. The Copyright Royalty Board sets the royalty rates to be paid by Internet radio stations for the public performance of sound recordings, and in doing so, they have made some controversial decisions over the last few years. They also set royalties for other digital non-interactive music services, including Sirius XM, music services that come with cable and satellite television services, and background music services. The Board also oversees the distribution of funds that are collected for the retransmission of distant television signals by cable systems. It also sets the rates under Section 115 of the Copyright Act for the reproductions of musical compositions made by record companies when producing musical recordings or downloads, by digital music companies in connection with on-demand music services, and by wireless carriers in selling ringtones. 

The case before the Court involves a seemingly small matter – the appeal of Intercollegiate Broadcasting Services from the CRB decision setting default rates for Internet radio services that are not covered by one of the many Webcaster Settlement Act agreements (about which we wrote here and here). IBS essentially is objecting to the fact that the Board would not lower the annual minimum royalty fee paid by some of IBS’ smaller members below $500. But, in connection with its appeal, IBS raised the issue of the constitutionality of the appointment of the Judges, and the Court this week heard an oral argument on the issue – mentioning the rate questions only in passing while concentrating on the constitutionality of the appointment of the Judges.Continue Reading Constitutionality of Copyright Royalty Board Argued Before the US Court of Appeals – How Will It Affect Future Music Royalty Rate-Setting?

The US Court of Appeals for the District of Columbia today released its decision for the most part rejecting the appeals of webcasters of the 2007 decision of the Copyright Royalty Board setting Internet Radio royalty rates for the use of sound recordings.  The Court generally upheld the Board’s decision, finding that the issues raised by the appealing parties did not show that the decision was "arbitrary and capricious" – a high standard of judicial review that the Courts accord when reviewing supposedly "expert" administrative agency decisions.  On only one issue did the Court have concerns with the CRB’s decision – that being the question of the $500 per channel minimum fees that it had required that webcasters pay.  The Court found that per channel fee, which could result in astronomical fees for some webcasters regardless of their listenership, was not supported by the record evidence, and remanded that aspect of the case to the CRB for further consideration.

The Court surprised some observers by not reaching the constitutional issue of whether the Copyright Royalty Judges were properly appointed.  As we wrote before (see our posts here and here), issues were raised by appellant Royalty Logic, contending that these Judges should be appointed by the President, and not by the Librarian of Congress.  In the recent Court decision on the CRB rates for satellite radio, where the issue had not even been raised, one Judge nevertheless wrote that he questioned the constitutionality of the CRB.  The Court here decided not to decide the issue – finding that it had been raised too late by Royalty Logic, and raised too many fundamental issues (including whether the Register of Copyrights should herself be appointed by the President, potentially invalidating many copyrights) to be decided on the minimal briefing accorded it by the parties.Continue Reading Court Rejects Webcaster Challenge to Copyright Royalty Board Decision on Internet Radio Royalties – And Does Not Rule on Constitutional Issue of CRB Appointment