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Latest
Webcasting III Decision: D.C. Circuit Court Resolves Constitutionality Issue of Copyright Royalty Board
July 10thOn Friday, as you may have heard the D.C. Circuit issued a decision in the pending appeal of the “default” 2011-2015 rates set in the Webcasting III proceeding. The appeal was brought by Intercollegiate Broadcasting System (IBS), one of the two college groups that represent certain educational webcasters. In the appeal, IBS challenged two things: (i) The rates for non-commercial webcasters and (ii) the constitutionality of the Copyright Royalty Board (CRB). (The CRB is the panel of judges appointed by the Librarian of Congress that sets the default royalty rates for Internet radio’s use of sound recordings.) Specifically, IBS argued that the Librarian’s appointment of the CRB judges violated the Appointments Clause of the U.S. Constitution.
In its decision, the D.C. Circuit held that the statute creating the CRB did indeed have a small technical constitutional defect, but solved that problem by striking down a portion of the statute limiting the Librarian of Congress’s power to remove Copyright Royalty Judges. With that small change, the D.C. Circuit resolved the constitutional challenge and has put to rest any question about the constitutionality of the CRB.
Importantly, in its decision, the D.C. Circuit declined to address IBS’s arguments about the rates themselves. Instead, the court decided to “vacate and remand” the determination, on the ground that the CRB was unconstitutional when the determination was first issued. In other words, the D.C. Circuit addressed the constitutionality of the CRB, fixed it, and did not address the Webcasting III rates. The determination has been sent back to the CRB to handle as a matter of procedure.
What does this mean for webcasters working with SoundExchange?
The D.C. Circuit’s decision does not have any immediate effect. As a matter of procedure, all parties now have an opportunity to seek “rehearing” before the court’s decision becomes final. All the current rates and obligations remain in effect.
In the event the D.C. Circuit does not change its decision, and vacates and remands the case to the CRB, SoundExchange plans to request that the CRB reissue the same rates and terms without any further proceedings. SoundExchange believes this matter can be resolved simply on remand and expects the CRB to reaffirm its original determination. In the meantime, all licensees are required to continue to make payments under the established rates as they have been.
The Majority of Webcasting Royalties Are Not Impacted by This Decision
It is important to remember that this decision only affects services paying under the default rates and terms set by the CRB for webcasting. Thus, the D.C. Circuit’s decision has no impact whatsoever on services that elected rates and terms under the Webcaster Settlement Act (WSA), such as the pureplay rates and the broadcaster rates that cover the majority of webcasting royalties that we receive.
Assuming the D.C. Circuit returns the case to the CRB later this year, we will provide more guidance in terms of what we expect from licensees operating under the default rates at that time.
