Friday, July 6, 2012 - 11:20am
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.