Fall 2009 Washington Update

Constitutionality of the Copyright Royalty Board

The constitutional standing of the CRB has been under attack.  It began on May 13, 2008, when Royalty Logic, LLC, filed a supplemental brief with the D.C. Court of Appeals in Intercollegiate Broadcast System v. Copyright Royalty Board asking the court to vacate the CRB's decision in the webcasting rate proceeding based on their argument that the appointment of the Copyright Royalty Judges by the Librarian of Congress is unconstitutional as the appointment violates the Appointments Clause of the Constitution. The RIAA's appeal in the mechanical rate proceeding before the same court was held in abeyance until the constitutionality issue was decided.  

On July 10, 2009, the Court of Appeals declined to rule on the constitutionality question 'on the basis of hasty, inadequate and untimely briefing.'  While the court also expressed an ongoing concern regarding the appointment of the CRB Judges, the court's decision was a short reprieve and allowed the affected parties a chance to resolve the issue through legislation.  

However, on August 31, 2009, LIVE365, an aggregator of digital radio stations and a participant in the webcasting royalty proceedings, filed a Complaint for Declaratory and Injunctive Relief with the United States District Court for the District of Columbia challenging the constitutionality of the Copyright Royalty Board.  LIVE365 argues that the appointment of the CRB judges by the Librarian of Congress violates the Appointments Clause because either the CRJs are principal officers who must be appointed by the President; or the CRJ’s are inferior officers who must be appointed by the Head of a Department, and the Librarian of Congress is not the Head of a Department.  LIVE365 is asking the court to declare that the CRB is unconstitutional and is seeking a preliminary injunction staying all current and future proceedings before the CRB.  The Department of Justice is defending the CRB, and Sound Exchange filed a motion to intervene on Friday, September 11, 2009.  

NMPA has already been in a dialogue with key Congressional staff about introducing legislation to make it clear that the CRB is constitutional and we will continue to work with them to find the best solution and the best time to introduce the legislation, given the speed in which the district court is moving.  

Google Book Settlement

In 2004, Google entered into agreements to digitize books and other writings in the collections of some of the most prominent libraries in the United States.  Known as the “Google Library Project” (or, GLP), Google digitized over seven million books.  In response, the Authors Guild and the American Association of Publishers filed a copyright infringement class action lawsuit against Google.  The parties to the class action lawsuit agreed to settle the case in October 2008.  The class action settlement, if approved, will bind a Class consisting of all persons who have a U.S. copyright interest in a Book or Insert (as defined in the agreement), whether currently in print or not, prior to January 5, 2009.  

Although the settlement specifically excludes “Sheet music and other works that are used primarily for the playing of music,” songwriters and music publishers’ works will be implicated  since the definitions of “Book” and “Insert” include certain bootstrapping references to and definitions of music and lyrics.  

A book satisfies the definition of “book” in the settlement if not more than 35% of the pages contain more than 50% music notation, with or without lyrics.  To be clear, this limitation only involves lyrics to the extent that they are interspersed with music notation.  Thus, books consisting almost entirely or substantially of lyrics alone would arguably fall within the definition of “books.”  “Inserts” are defined as excerpts from other works that are embodied or incorporated within a Book, including excerpts containing musical notation and/or lyrics.

The deadline to Opt Out of the Google Book Settlement was September 4, 2009.  The court will hold a fairness hearing on October 7, 2009.  Additionally, the Department of Justice is investigating whether the settlement violates antitrust law and has until September 18 to make any statements on the issue.

The House Judiciary Committee held a hearing on the Google Book Settlement on September 10, 2009.  Witnesses included David C. Drummond, Google; Paul Misener, Amazon.com; Marc Maurer, National Federation of the Blind; John M Simpson, Consumer Watchdog; Paul Aiken, Authors Guild; Marybeth Peters, U.S. Copyright Office; Randal Picker, University of Chicago Law School; and David Balto, Center for American Progress.  The witnesses’ testimony may be found at http://judiciary.house.gov/hearings/hear_090910.html .  In her written testimony, the Register of Copyrights, Marybeth Peters, stated that the Copyright Office opposes the settlement and is “greatly concerned by the parties’ end run around legislative process and prerogatives, and we submit that this Committee should be equally concerned.”  

Ranking Member of the House Judiciary Committee Lamar Smith submitted a question for the record to all of the witnesses:  

It is my understanding that under the settlement, a book satisfies the definition of “book” if not more than 35% of the pages contain more than 50% music notation, with or without lyrics.  Is this accurate?  If so, how do you think the settlement will affect music publishers and songwriters?

NMPA looks forward to receiving the witnesses’ answers, especially Google.  

Net Neutrality

NMPA signed the Content Creation Industry Statement on Net Neutrality:

Rampant theft of creative works on the Internet diminishes creativity, costs American jobs, weakens our economy, and clogs broadband networks.  Unless carefully managed, an increase in broadband penetration may simply increase the scope of the problem, with no corresponding benefit for Internet users.

As federal policymakers consider whether to establish nondiscrimination rules governing the Internet, we believe it is essential that Internet service providers be permitted, and indeed encouraged, to implement reasonable network management techniques to protect against the theft of creative works and other unlawful activity.

On July 31, 2009, Rep. Ted Markey (D-MA) and Anna Eshoo (D-CA) introduced the Markey-Eshoo Net Neutrality bill, HR 3458. The bill imposes nondiscrimination among legal content on the Internet Service Providers and addresses network management by allowing the Federal Communications Commission (FCC) to define it.  It amends the Communications Act of 1934 to set forth policy of the United States related to net neutrality. It also includes a section saying nothing in this act shall be construed to affect prohibited or unlawful activity including theft of content. This bill has been referred to the House Energy and Commerce Committee.

The FCC is currently in litigation with Comcast over net neutrality.  The cable provider is appealing a court decision by challenging the FCC’s authority to penalize the company for limiting web traffic to its consumers.  Recently, the new FCC Chairman, Julius Genachowski, stated that the FCC will support net neutrality and will enforce any violation of net neutrality principles in order to further his position to “keep the Internet fair, free and open to all Americans.”

Sound Recording Performance Right

Performing artists and record labels have asked Congress to enact legislation that will establish a performance right for sound recordings in terrestrial radio.  On May 13, 2009, the House Judiciary Committee passed the Performance Rights Act, H.R. 848.  NMPA worked with Congressman John Conyers (D-MI), Chairman of the House Judiciary Committee and sponsor of the Performance Rights Act, and his staff to include important songwriter protection language in the bill, ensuring that songwriters are not harmed in the process of creating this new performance right for performers and record labels.  The next step is consideration by the full House of Representatives.  

The Senate has a similar bill (S. 379) that has not yet been reported out of the Senate Judiciary Committee.  On August 4, 2009, the Senate Judiciary Committee held a hearing on the Performance Rights Act (S. 379).  The witnesses included performing artist Sheila Escovedo (Sheila E); Robert Kimball with RealNetworks, Inc.;  Marian Leighton Levy, founder of Rounder Records; Steve Newberry with the National Association of  Broadcasters (NAB); and Ralph Oman, former Register of Copyrights and Professorial Lecturer in Intellectual Property and Patent Law, The George Washington University Law School.  Senator Dianne Feinstein (CA) chaired the hearing, and attendees included Senators Pat Leahy (VT), Al Franken (MN), John Cornyn (TX), and Dick Durbin (IL).  Both Senators Feinstein and Leahy stressed that songwriters must be protected in the legislation.  

During the hearing, Robert Kimball (with RealNetworks) expressed concern with the proposed songwriter protection amendments, that were included in the House bill and that we are asking to be included in the Senate version.  NMPA, ASCAP, BMI, SESAC, SGA, and NSAI drafted a letter responding to these criticisms, and it was submitted into the hearing record.  Advocates of the Performance Rights Act hope that the Senate will mark up its version of the bill this fall.

Public Performance in an Audiovisual Download

Songwriters and composers collect a public performance royalty any time their music is included in any audiovisual work, including movies, television, videos or video games.  However, when the audiovisual work is digitally distributed as a download, no public performance royalty is paid.  NMPA is working with the Performing Rights Organizations - ASCAP, BMI, SESAC, and the Songwriter Groups - NSAI, and SGA to ask Congress to clarify the law that a musical work public performance royalty should be paid on Audiovisual downloads.  No legislation has been introduced.  

Orphan Works

Orphan works legislation passed the Senate in the 110th Congress, and Senator Leahy will attempt to move this legislation at some point this Congress.  In the House, Chairman Conyers will be the lead on orphan works legislation, and NMPA has met with Cong. Conyers’ staff and Senator Leahy’s staff to discuss our position on orphan works and to stress that it is very important to include protections for copyright owners.

Anti-Piracy Enforcement

NMPA is a part of the Chamber of Commerce’s Coalition Against Counterfeiting and Piracy (CACP), which includes over 600 businesses and associations working to stop piracy.  Through this group, we are working to secure funding of the PROP IP Act, anti-piracy legislation that was enacted in 2008, and are working with the House and Senate Judiciary Committees and Finance Committees to bolster the protection of intellectual property.