IBS

Intercollegiate Broadcasting System Inc. (IBS) late last month filed a "petition for writ of certiorari" with the U.S. Supreme Court, arguing it should have been Congress, and not an appeals court, that restructured the law to make CRB judges' appointments constitutional.

The Copyright Royalty Board is the panel of judges that (among other duties) determines the industry "statutory" royalty rate webcasters must pay the owners of copyright sound recordings to peform them publicly.

As news source Law360 reports, IBS is accusing the D.C. Circuit of overstepping its authority when it revised the law to fix issues of the constitutionality of the CRB.

The appeals court in July ruled the Librarian of Congress' appointment of CRB judges violated the U.S. Constitution's appointments clause (see RAIN here), as the law required the judges to be appointed by the president with Senate confirmation. To fix that, the court simply changed language in the law (the Copyright Royalty and Distribution Reform Act) to make CRB judges "inferior officers," which don't require presidential appointment, thus making the Librarian's appointment of the judges constitutional.

IBS, which represents educational and noncommerical broadcasters and webcasters, says the court overstepped its authority by changing the law. The petition also asks the Supreme Court to determine if the newly-revised law is itself constitutional.

Read more in Law360 here.

On Friday RAIN reported (here) on the U.S. Appeals Court finding that the appointments of judges to the Copyright Royalty Board were unconstitutional. We have follow-up today from industry attorney David Oxenford:

This case involved the last webcasting case, which set royalties for the period 2011-2015. Every party had settled out of the case, but for the Intercollegiate Broadcasting System (IBS), which represents certain small webcasters associated with colleges and high schools. It challenged the constitutionality of the Copyright Royalty Board (taking up the argument that Live365 made earlier in the case, before itself settling out of the case -– note that I was counsel for Live365), that the Board’s structure was impermissible under the Appointments Clause of the U.S. Constitution (see RAIN's coverage here). The Court ruled that the CRB was in fact unconstitutional, but the ruling will likely have little practical effect. The constitutional issue was whether the Board was properly appointed by the Librarian of Congress. Under the constitution, "principal officers" of the U.S. have to be appointed by the President. The Court determined that the CRB, as originally set up, had enough power so that its Judges were principal officers and should have been appointed by the President. But rather than striking down the whole scheme and sending it back to Congress to straighten out, the Court took it upon itself to remedy the problem: simply by striking the portions of the statute that limit the power of the Librarian of Congress to remove the Copyright Royalty Judges without cause. By determining that this single provision was the provision that gave the CRB too much power, the Court decided that it was this section that was unconstitutional. So while the Judges were improperly appointed, by striking that section of the law, the Court determined that it could remedy the constitutional issues. Going forward, it seems like the Board can function as it has -– the only difference being that, theoretically, the Judges can now be removed by the Librarian at any time. All in all, it appears to have been much controversy with little practical effect. IBS will get a remand, as their case was decided by a Board that was unconstitutional. But it looks like other cases can go forward in the normal course, including the next webcasting royalty proceeding that will begin in 2014, and the satellite radio royalty case that is currently under consideration. Many webcasters had thought that this case might force Congress to take another look at the CRB process. The CRB not only sets webcasting royalties, but also the royalties paid by background music services, satellite radio, and others. It also distributes the royalties collected by the Copyright Office by cable and satellite television distributors (which are paid to copyright owners of programs on TV stations distributed by these systems). If the Court had found the Board to be unconstitutional, and had not applied the "fix," Congress would have had to act so that these matters could be resolved. Many had hoped that Congress would look at many of the other issues that parties have had with the CRB and the rates that it has set. But, by applying the "fix," that impetus for Congress to act immediately has been removed. This decision can be appealed -– through a request for a rehearing by all of the judges on the D.C. Circuit of the Court of Appeals, or to the Supreme Court. If not appealed, the issue of the CRB’s constitutionality may have finally been settled.

Finally, IBS CEO/COO Fritz Katz said after the decision, "This is another big win for IBS and the second time the D.C. Circuit has vacated the $500 minimum fee for IBS noncommercial webcasters... IBS will also be moving to remove the CRB requirement for 'census' (100%) reporting of use, which is uneconomic for the artist as it costs more to process the data than the now vacated $500 minimum, and certainly much more than the actual use of the statutory license by IBS Members which is about $20 a year."

David Oxenford is a Washington, D.C.-based partner at Wilkinson, Barker, Knauer, LLP.

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.

DAR.fm has partnered with Net radio platform provider Backbone Networks to provide time-shifting and recording technology to the nation's largest network of college and high school radio stations.

Now, Backbone announces, "sporting events, news and other community focused programs can be captured and then played back at a convenient time for listeners on PCs, smartphones or tablets making it accessible to a wider audience."

DAR.fm (think "DVR," but with "A" for audio instead of "V" for video) is entrepreneur Michael Robertson's company which enables online radio listeners to schedule and record live content for listening at different times and/or on other devices (much like a DVR works for television). Robertson was a panelist at our recent RAIN Summit West event. See video of his panel (and all the Summit content) here.

The Intercollegiate Broadcasting System is a not-for-profit association of educational institution-based broadcasters and webcasters. Its IBS Student Radio Network is operated by Backbone Networks.

Read the press release here. 

Last month (here) we reported that the U.S. Court of Appeals for D.C. heard oral arguments regarding the constitutionality of appointments to the Copyright Royalty Board. Intercollegiate Broadcasting Service (IBS) is appealing the CRB's final royalty determination for 2011-2015, arguing that the judges who make up the CRB were not properly appointed.

Today Terry Hart at Copyhype digs deeper into the details of this matter. If you're interested in an easy-to-read, point-by-point analysis, please read his article here.

The "TL;DR ("too long, didn't read")" bottom line: Hart thinks "the odds are stacked against IBS... No court has yet to be convinced that Copyright Royalty Judges are appointed unconstitutionally," and, interestingly, that the Library of Congress is indeed an executive, not a legislative, agency.

Again, read Hart's analyis 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.