The Federal Circuit decided Friday that the Copyright Royalty Judges would be unconstitutional federal officers unless the Librarian of Congress could fire them at will. So the court found unconstitutional the part of the law making it almost impossible to remove a CRJ from office, leaving them terminable will. This was a victory for the alliance of high school, college and other nonprofit webcasters who would otherwise be required to pay what the Copyright Royalty Judges decided was the right market price for a blanket license to broadcast music on their stations. INTERCOLLEGIATE BROADCASTING SYSTEM, INC., v. COPYRIGHT ROYALTY BOARD AND LIBRARY OF CONGRESS, No. 11-1083 (Fed. Cir. 2012).
The decision saves the copyright statutory royalty rate-making baby from being thrown out with the bath water, but I expect interested parties will probably get into a heated custody battle next. Blanket license rates set for Intercollegiate Broadcasting’s 1000+ school and webcaster users of music were a default rate of $500 per educational or other noncommercial webcaster, but Intercollegiate wanted “small” and “very small” categories with different pricing.
The Copyright Royalty Board takes years to set rates in many highly specialized contexts. This one began in 2008 when SoundExchange started proceedings for determining default webcasting rates for the years 2011-2015 and the rates were issued last year. Well into the second year of that span, Intercollegiate’s win gives it the right to now begin new negotiations. I expect it will not be a two-party dialogue. The Board will be offered input from the major players in recorded music and publishing, and it’s hard to imagine them Intercollegiate’s members to pay less.
The court recognized the Copyright Royalty Judges “mere” ratemaking power “can obviously mean life or death for firms and even industries.” The ruling means CRJ’s now serve at the will of the Librarian of Congress, and the Librarian is appointed by the President subject to advice and consent of the Senate. Although members of Congress are not necessarily shy about taking positions on issues over which they have no power, the ruling certainly clarifies things for them. If members of Congress wish to express displeasure about the decisions of any CRJ, they know who to call.
Any finding of unconstitutionality of part of a federal law by a court of appeals is news, but we don’t have a final result in this case. Time will tell what collateral effects may result. In this process, collegiate webcasters and major players in the music industry will have much different resources at their disposal.