Appellate Court Rules on Webcasting Appeal

The United States Court of Appeals for the District of Columbia Circuit (court) has made a ruling in the case of Intercollegiate Broadcasting System, Inc. (IBS) v. Copyright Royalty Board (CRB) and the Library of Congress (LOC). CBI made an appearance in this proceeding in order to comment upon the validity of its settlement with SoundExchange which was adopted by the CRB. CBI also reached a settlement under the Webcaster Act of 2009. The later is not impacted by this ruling.

IBS appealed the CRB Webcasting decision for the rate period of 2011-2016 on three grounds.

The board’s final determination is void because unappealable.
The board is unconstitutionally constituted.
The board erred in failing to treat small educational webcasters as a distinct type of non-commercial service.

With respect to the first ground, the court decided that “we need not address this objection because it has no bearing on Intercollegiate’s case” because the basis of the claim from IBS was that the court did not have the ability to rewrite the CRBs decision, but no party to the proceeding asked the court to rewrite the decision (“no party has asked us to enter our own determination, but rather to review the decision for compliance.”). The court also stated, “We note, incidentally, that power to make our “own determination” would appear to present no problem on an issue as to which the law permitted only one option.”

This is where it gets a little complicated. On the second matter, the court agreed with IBS (primarily based on previous arguments untimely raised by others) about the constitutionality of the CRB. The court had a number of potential remedies available to it. Some of those options could have been very problematic and the court realized that when they stated, “accordingly provide a remedy that cures the constitutional defect with as little disruption as possible”. The court decided to invalidate a portion of the statute that restricts the ability of superiors (namely the LOC) to remove judges in order have the board be constitutional constituted. Going forward, this removes any further potential appeals of the CRB decisions based on the constitutionality of the board. There have been previous appeals on this issue, but they were not addressed because , as the court said, “we never resolved them because they were not timely raised by the parties.”

Now that the court has seemingly resolved the issue of constitutionality of the CRB, the issue that remains is the third claim by IBS. “The board erred in failing to treat small educational webcasters as a distinct type of non-commercial service.” The court said, “[b]ecause the Board’s structure was unconstitutional at the time it issued its determination, we vacate and remand the determination and do not address Intercollegiate’s arguments regarding the merits of the rates set therein”.

There are some interesting items to note. The court did not specify how the CRB should handle the remand. In a previous court decision that remanded a CRB decision, the CRB did not have procedures in place to handle a remand. As a result, the CRB created the following regulation.

37 CFR § 351.15

Remand.

In the event of a remand from the United States Court of Appeals for the District of Columbia Circuit of a final determination of the Copyright Royalty Judges, the parties to the proceeding shall within 45 days from the issuance of the mandate from the Court of Appeals file with the Judges written proposals for the conduct and schedule of the resolution of the remand.

There are also a number of parties to this case and any of them could decide to further litigate the issues at hand before the CRB has an opportunity to open proceedings on the remand.

Updates: On 8/20/2012 IBS filed an appeal of the courts decision with the court en banc. On 8/28 that appeal was denied. No other parties appealed the decision of the court. This matter will likely now go to the CRB for rehearing or be appealed to the Supreme Court.

It is also interesting to note that the composition of the CRB has changed since its determination in this case. The Chief Judge has been replaced.

This ruling has also sparked discussions in legal circles about the impact of the ruling as it could be read as very vague and not only impact the rate setting proceeding at hand, but ALL decisions the CRB has ever reached. Additional speculation includes that this ruling could impact other administrative judges.

This remand will likely result in various parties, including CBI, filing proposals concerning the conduct of the proceeding and what issues are ripe for consideration and even potentially some parties filing an appeal to the court or even the Supreme Court. Regardless, the CBI-SX settlement under the Webcaster Act of 2009 (with nearly identical terms to the CRB adopted regulation) is NOT subject to review by the CRB and still stands. The adoption of that settlement by the CRB (with minor changes) could be called into question.

SoundExchange collects the annual minimum fee every year in January. Assuming that your station paid in January, 2012, you are likely current and this ruling will not have an immediate impact on you. CBI will provide additional information as warranted. If you have questions, please contact us.

Watch this space for updates and additional interpretations of the ruling from the court as this is an initial assessment from a non-lawyer who is not offering legal advice, rather informed opinion.

To read the actual court documents, click the links below.
20120706_judgment
20120706_order

20120706_ruling

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