CRB

The U.S. Court of Appeals has found that the judges that determined webcasting royalty rates were appointed unconstitutionally -- but also immediately rectified that by striking part of the statute.

The Copyright Royalty Board is the panel of judges, appointed by the Librarian of Congress, that sets the default royalty rates for Internet radio's use of copyright recordings. Intercollegiate Broadcasting Services, which represents educational institution-based broadcasters and webcasters, appealed the CRB's final royalty determination for 2011-2015 (specifically, the $500 annual minimum royalty fee) (prior coverage here). As part of its appeal, the IBS argued the Librarian's appointment of the judges violated the Appointments Clause of the Constitution, and thus its determinations null and void.

In its just-released decision in that case, the Court agreed with IBS that the CRB appointments were indeed unconstitutional. However, that problem was solved by the Court by simply striking the language of the statute that limited the Librarian's ability to remove judges without cause -- thereby satisfying the Appointments Clause.

What's this mean for webcasters and royalty rates? Apparently, not much. The vast majority of webcast services operate not under the actual CRB-determined compulsory, but under agreements reached between SoundExchange and various groups of webcasters, published in the Federal Register. These agreements remain in effect.

However, the $500 minimum fee argued against by IBS has been remanded back to the (now-Constitutionally-appointed) CRB for review.

We're looking for more clarification on this story from authoritative sources, and will follow up as warranted. Read the decision itself here.

"We're nothing to be afraid of," chuckled David Carson, General Counsel of the U.S. Copyright Office, during RAIN Summit West 2012. Carson was interviewed on-stage by industry attorney and Davis Wright Tremaine partner David Oxenford. "Are you to be feared?" Oxenford had asked, on behalf of the webcasters and broadcasters in the audience.

Carson insisted the answer is "no." In fact, he said the Copyright Office has "hardly anything to do with" what is perhaps the biggest copyright-related sore spot among webcasters: setting royalty rates. That job is mainly handled by the Copyright Royalty Board.

However, Carson (pictured) did explain that the Copyright Office can review the CRB's decisions for "legal error," and any corrections can become legal precedents in the future. The CRB can also consult the Copyright Office about legal questions, and the Copyright Office makes recommendations about who should serve as a judge on the CRB.

In fact, Carson was part of a panel that just recently recommended the new CRB judge, Suzanne Barnett (RAIN coverage here).

The Copyright Office does take stances on copyright issues, though, and makes recommendations to Congress. One such issue -- "the most glaring," in Caron's opinion -- is the broadcast radio performance royalty. Carson said that since before 1978, the Copyright Office has "taken the position that sound recordings should be entitled to a performance royalty just like musical compositions are... We are one of the few countries on earth that doesn't actually provide a performance royalty for sound recordings [played on AM/FM broadcast radio]." (Internet and satellite radio in the U.S. do pay performance royalties.)

To the Copyright Office, explained Carson, broadcast radio's performance royalty exemption "seems sort of bizarre" and "strange."

Oxenford questioned Carson about whether the Copyright Office has, or should, consult broadcasters about that stance. "That's what Congress does," answered Carson. "We advise Congress." And while sometimes Congress requests the Copyright Office to conduct studies and discuss the matter with stakeholders, more commonly "we're actually directed not to talk to stakeholders. 'We want your expert advice,' [instructs Congress]... and as often as not they thank us for our recommendations and then go off and do something else."

All that said, "we can expect no copyright legislation this year," predicted Carson, thanks in part to the election.

Carson also discussed the situation on pre-1972 sound recordings, and offered his thoughts on the recent SOPA debacle (when "suddenly politics wasn't played by the usual rules").

You can watch the entire interview with David Carson thanks to RTTNews here.

The Librarian of Congress today announced that Suzanne Barnett will be the new Chief Judge for the Copyright Royalty Board (CRB). Barnett is currently a superior court judge of King County in Seattle, Washington.

"This is the first new judge on the three-judge CRB since the judges were first appointed in January 2006, soon after Congress first created the CRB," writes Davis Wright Tremaine partner David Oxenford. He also notes that at least one royalty case has been postponed until after the new judge assumes her role at the CRB.

Oxenford has more details -- including info about the law governing who should make-up the CRB -- at the Broadcast Law Blog here.

David Oxenford will interview U.S. Copyright Office general counsel David Carson at RAIN Summit West 2012, which takes place this Sunday, April 15 (more info here).

Representatives of the music industry (labels and publishers) announced yesterday the settlement of a Copyright Royalty Board proceeding for "Section 115," or "mechanical" royalties digital music services pay to reproduce a musical work (read more in The Wall Street Journal here).

It is important to note that these are not the "public performance" royalties webcasters pay SoundExchange for the use of copyright sound recordings. Also known as "Section 114" royalties, those rates will be set with a proceeding beginning in 2014 (to settle by late in 2015) for the period from 2016-2020," explains industry attorney David Oxenford in Broadcast Law Blog.

Yesterday's settlement involves digital music services's use of music outside of "non-interactive" webcasting: sales of digital downloads, ringtones, on-demand streaming, "cloud" services, and "conditional" downloads (e.g. listening to Spotify offline).

Moreover, "mechanical royalties" are "payments made to the composers of songs -- those who write the words and music of the songs -- usually represented by a publishing company," Oxenford (pictured) explains.

By the way, satellite radio provider SiriusXM, like Internet radio, also pays Section 114 royalties. They're currently in a rate-setting proceeding for the 2013-2017 term. Oxenford predicts a decision in that case by the end of this year, "which could give some preview of what webcasters can expect in their upcoming case." Read more from Oxenford in Broadcast Law Blog here.

David Oxenford is a Washington, D.C.-based partner at Davis Wright Tremaine, and an expert on broadcast and Internet radio law and royalty matters. He'll sit down for a one-on-one discussion with U.S. Copyright Office general counsel David Carson on Sunday at RAIN Summit West in Las Vegas. More information, and the registration link, is here.

The outcome of SiriusXM's lawsuit against SoundExchange and A2IM may be "very important to the future of digital music" -- webcasters included -- according to industry attorney and Davis Wright Tremaine partner David Oxenford (pictured).

The direct licenses SiriusXM has been trying to obtain could impact future CRB rulings, Oxenford writes, as such deals "between music users and rights holders are traditionally the best evidence of the value of music." That's a good reason why SoundExchange and A2IM would oppose such direct deals, says Oxenford.

He writes:

"Were SiriusXM to be successful in its suit, and if it is in fact able to negotiate direct music licenses for substantial catalogs of music at rates lower than what it has paid under previous rate decisions, it would presumably introduce such evidence in proceedings before the Copyright Royalty Board (which is now in the process of setting the rates for the public performance of sound recordings by SiriusXM over its satellite service for the next 5 years), and argue that these direct deals are the best evidence of what a willing buyer and willing seller would agree to in a competitive marketplace."

But direct licensing deals between SiriusXM and rights holders could also impact future Internet radio royalty rate decisions.

"One of the biggest issues in all rate proceedings heard before the CRB has been establishing what a willing buyer and willing seller would agree to pay in a competitive marketplace like the one for which the rates are being set," writes Oxenford. "In most cases, as there are no direct licenses, the CRB has to extrapolate what willing buyers and willing sellers would pay for sound recording performance royalties in a noninteractive market from evidence of what companies pay in other markets...

"Lower direct licensing rate could impact not only the rates paid by SiriusXM, but also other proceedings dealing with the sound recording royalty rate, including potentially proceedings for webcasting royalties (proceedings that will also affect the rates that broadcasters pay for streaming their signals)."

The next CRB proceeding for Internet radio begins in 2014 to set royalty rates for 2016-2020.

You can find Oxenford's full analysis of the SiriusXM lawsuit at the Broadcast Law Blog here.

Oxenford will interview U.S. Copyright Office General Counsel David Carson on-stage at RAIN Summit West 2012 in Las Vegas, on Sunday, April 15. You can find out more here.

The U.S. Court of Appeals for D.C. is being asked to consider whether the judges who serve on the Copyright Royalty Board, the body that sets the default royalty rates for Internet radio's use of copyright recordings, were appointed in accordance with constitutional law.

Intercollegiate Broadcasting Services, which represents educational institution-based broadcasters and webcasters, is appealing the CRB's final royalty determination for 2011-2015 (specifically, the $500 annual minimum royalty fee). As part of the appeal, the Appeals Court (just a step below the U.S. Supreme Court) this week heard an oral argument on the issue of whether the judges who make up the CRB were properly appointed.

Basically, the Appointments Clause of the Constitution requires "Principal Officers" of the government to be appointed by the president, while inferior officers can be appointed by the head of an executive department. However, the Copyright Royalty Judges were not appointed by the president, but by the Librarian of Congress, who himself is not head of an "executive" department (but a department of Congress).

So, what happens in regards to the CRB's past rulings should they be ruled unconstitutionally-appointed? Industry attorney David Oxenford examines the situation further at BroadcastLawBlog.com here.

Read BroadcastLawBlog's coverage of the Copyright Royalty Board's 2011-2015 webcast royalty determination here, and our run-down of the different specific deals different webcaster groups made with SoundExchange for royalties covering this period here.