Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board and Library of Congress, No. 11-1083, 1012 WL 2609324 (July 6, 2012)
In Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board and Library of Congress, No. 11-1083, 1012 WL 2609324 (July 6, 2012), a panel from the District of Columbia Circuit eliminated portions of the Copyright Act which it found Unconstitutional. Intercollegiate Broadcasting, Inc. (“IBS”) is an association of webcasters who transmit digitally recorded music over the internet in educational environments. The Copyright Royalty Board (“CRB”) is a three-judge board which determines the rates and terms for compulsory or “statutory” copyright licenses including the default royalty rates and terms applicable to Internet-based “webcasting” of digitally recorded music at issue here. A statutory license allows an individual or company to use a copyrighted work without the owner’s consent, but the user must pay the owner a set fee for the license.
At issue here was whether CRB Judges appointments violate the U.S. Constitution’s Appointments clause which requires that all principal officers who hold “significant authority” be confirmed by the President and confirmed by the Senate. Under the Copyright Act, the Librarian of Congress appoints CRB Judges. The court found that CRB Judges were principal officers. They exercised considerable power in ratemaking with billions of dollars and the fates of entire industries riding on their decisions. Further, “principal officers” as opposed to “inferior officers” are often characterized by their lack of supervision. Here, although the Librarian and the Register of Copyrights to some extent supervise the CRB Judges, the Judges maintain broad discretion over exercising their powers to set rates and terms and the Librarian may only remove Judges in limited circumstances.
However, rather than striking down the entire system, the court decided to remove only enough to make the system Constitutional. Specifically, the court removed the statutory language which limited the Librarian’s authority to remove Judges for cause. With “unfettered removal power, the Librarian will have the direct ability to ‘direct, supervise,’ and exert some ‘control’ over the judges’ decisions.” This change transformed the CRB Judges from “principal officers” to “inferior officers,” which Congress may properly authorize the Librarian of Congress to appoint, removing the Constitutional problem.
Finally, because the Board’s structure was unconstitutional at the time it issued its determination with respect to webcasting of digitally recorded music, the rates were deemed void.
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