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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

In light of the recent decision upholding the FCC’s right to sanction licensees for violations of the FCC’s Indecency rules for "fleeting expletives" in the Golden Globes and Billboard music awards, i.e. isolated profanity on the airwaves, the Supreme Court also remanded the Janet Jackson case to the Court of Appeals.  The one sentence remand (see page 2 of the list of orders) was so that the Court of Appeals could consider the impact of the fleeting expletives case on the Court of Appeals decision throwing out the FCC’s fine on CBS for the fleeting glimpse of Jackson’s breast during the Super Bowl half-time program.  The Third Circuit Court of Appeals that heard the Janet Jackson case had reached a decision very similar to the Second Circuit’s decision in the Golden Globes case – finding that the FCC had not justified its departure from a policy of not fining stations for fleeting instances of prohibited speech or pictures, where the words or pictures were isolated and their broadcast was not planned by the station.  Given that the Supreme Court has remanded the case to the Court of Appeals, the lower court will now need to consider the same constitutional issue that the Second Circuit will consider in the Golden Globes case – while the FCC may not have violated administrative procedures in justifying its actions, are the FCC’s indecency rules so vague and enforced in such a haphazard manner that they chill free speech or are otherwise unconstitutional?  Based on an analysis of the various concurring and dissenting opinions in the Golden Globes case, the Supreme Court might well decide the constitutionality issue against the FCC.  Could the final ruling in these cases have an impact far beyond the indecency question?

Two of the Davis Wright Tremaine attorneys involved in some of the indecency cases have written this memo, summarizing the Supreme Court decision in the Golden Globes case – pointing out how Justice Thomas seemed to imply that the constitutional basis of the FCC decision was suspect – even though he sided with the majority in finding that the FCC was justified in its administrative decision to find violations.  Justice Thomas seems ready to come down against the FCC on the constitutional issue were it to be squarely presented, questioning whether the Red Lion decision, justifying lesser First Amendment protections for broadcasters than other media outlets based on frequency scarcity, has continuing vitality.  Were this precept underlying the regulation of broadcast content to be undermined, the justification for much FCC content regulation could be in doubt.Continue Reading Janet Jackson Case Sent Back to Court of Appeals – Could There Be An Even Greater Impact on Broadcast Regulation?

In a decision released today, the US Supreme Court upheld the FCC determination that fleeting expletives in the televised broadcasts of the Golden Globes and Billboard Music Awards violated the FCC’s indecency rules.  In this case, called Federal Communications Commission v Fox Television Stations, Inc., the Supreme Court overturned the decision of the Second Circuit Court of Appeals, which had found the FCC decision to be arbitrary and capricious. The Supreme Court, in a 5-4 decision, determined that the FCC had adequately justified its departure from prior decisions in determining that it could sanction a station for a single "F-word" or "S-word" broadcast on that station outside of the 10 PM to 6 AM safe harbor.  However, the Supreme Court specifically declined to rule on the constitutionality of the indecency finding, as the Second Circuit had not made its decision on that ground.  The Supreme Court sent the case back to the Second Circuit for further consideration, recognizing that the constitutional issues with the FCC’s enforcement policy might well be back before it again, "perhaps in this very case."

Thus, this decision was made on a very narrow basis – that the FCC had justified its decision to change its prior policies to find that a single fleeting expletive was actionable.  Decisions of administrative agencies like the FCC are given great deference by the Courts, as long as the agencies provide a rational basis for their decision, and as long as their decisions do not violate their statutory mandate or the constitution.  Here, the Court found that the Commission had provided a rational explanation of its departure from prior precedent., and had otherwise provided an explanation of its decision, so the Court was willing to find that the FCC had the power to make the decision that it did, overturning the Second Circuit’s conclusion that the decision had not been rationally justified. Continue Reading Supreme Court Upholds FCC Process in Deciding Fleeting Expletives Were Indecent, But Sends the Case Back to Court of Appeals to Decide Constitutionality

While all the details are not out yet, the trade press has been filled with announcements this evening reporting that SoundExchange and the National Association of Broadcasters have reached a deal on Internet Radio Royalties.  This deal will apparently settle the royalty dispute between broadcasters and SoundExchange for royalties covering 2006-2010 which arose from the 2007 Copyright Royalty Board decision, as well as the upcoming proceeding for the royalties for 2011-2015.  According to the press reports, the royalties are slightly reduced from those decided by the CRB for the remainder of the current period, and continue to rise for the period 2011-2015 until they reach $.0025 per performance in 2015.  According to the press release issued by the parties, there was also an agreement between the NAB and the four major labels that would waive the limits on the use of music by broadcasters that are imposed by the Digital Millennium Copyright Act.

These limits, referred to as the performance complement, set out requirements on how many songs from the same artist or same CD can be played within given time periods which, if not observed, can disqualify a webcast from qualifying for the statutory license.  If a webcaster cannot rely on the statutory license, it would have to negotiate with each copyright holder for the rights to use the music that it plays.  The performance complement imposed requirements including:

  • No preannouncing when a song will play
  • No more than 3 songs in a row by the same artist
  • Not more than 4 songs by same artist in a 3 hour period
  • No more than 2 songs from same CD in a row
  • Identify song, artist and CD title in writing on the website as the song is being played

It will be interesting to see the details of this agreement setting out what aspects of these rules are being waived.Continue Reading SoundExchange and NAB Announce Settlement on Internet Radio Royalties

The US Court of Appeal for the District of Columbia has set the briefing dates on the appeal filed by various webcasting groups seeking review of the decision of the Copyright Royalty Board setting Internet radio royalties for the period 2006-2010 for the use of sound recordings (see our coverage of this controversy here, and…