80_FR_76813 80 FR 76577 - Copyright Royalty Judges' Ability To Set Rates and Terms That Distinguish Among Different Types or Categories of Licensors

80 FR 76577 - Copyright Royalty Judges' Ability To Set Rates and Terms That Distinguish Among Different Types or Categories of Licensors

LIBRARY OF CONGRESS
Copyright Office

Federal Register Volume 80, Issue 236 (December 9, 2015)

Page Range76577-76581
FR Document2015-30910

The Copyright Royalty Judges (``CRJs'') referred a question of substantive law to the Register of Copyrights for resolution. The question asked whether section 114 of the Copyright Act or any other applicable provision of the Act prohibits the CRJs from setting rates and terms that distinguish among different types or categories of licensors. In a written opinion that was transmitted to the CRJs, the Register determined that the question was not properly presented in the proceeding and therefore the Register did not opine on its merits. That opinion is reproduced below.

Federal Register, Volume 80 Issue 236 (Wednesday, December 9, 2015)
[Federal Register Volume 80, Number 236 (Wednesday, December 9, 2015)]
[Notices]
[Pages 76577-76581]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-30910]


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LIBRARY OF CONGRESS

Copyright Office

[Docket No. 2015-5]


Copyright Royalty Judges' Ability To Set Rates and Terms That 
Distinguish Among Different Types or Categories of Licensors

AGENCY: U.S. Copyright Office, Library of Congress.

ACTION: Final order.

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SUMMARY: The Copyright Royalty Judges (``CRJs'') referred a question of 
substantive law to the Register of Copyrights for resolution. The 
question asked whether section 114 of the Copyright Act or any other 
applicable provision of the Act prohibits the CRJs from setting rates 
and terms that distinguish among different types or categories of 
licensors. In a written opinion that was transmitted to the CRJs, the 
Register determined that the question was not properly presented in the 
proceeding and therefore the Register did not opine on its merits. That 
opinion is reproduced below.

DATES: Effective Date: November 24, 2015.

FOR FURTHER INFORMATION CONTACT: Stephen Ruwe, Assistant General 
Counsel, U.S. Copyright Office, P.O. Box 70400, Washington, DC 20024. 
Telephone: (202) 707-8350.

SUPPLEMENTARY INFORMATION: The Copyright Royalty Judges are tasked with 
determining and adjusting rates and terms of royalty payments for 
statutory licenses under the Copyright Act. See 17 U.S.C. 801. If, in 
the course of proceedings before the CRJs, novel material questions of 
substantive law concerning the interpretation of provisions of title 17 
arise, the CRJs are required by statute to refer those questions to the 
Register of Copyrights for resolution. 17 U.S.C. 802(f)(1)(B).
    On October 14, 2015, the CRJs, invoking 17 U.S.C. 802(f)(1)(B), 
referred to the Register the question of whether section 114 of the 
Copyright Act or any other applicable provision of the Act prohibits 
the CRJs from setting rates and terms that distinguish among different 
types or categories of licensors. The same day, the Register issued an 
order inviting the participants in the proceeding and other interested 
parties to file supplemental briefs on certain specified issues. On 
November 24, 2015, the Register issued a memorandum opinion in which 
she determined that the question was not presented within the meaning 
of 17 U.S.C. 802(f)(1)(B), and therefore the Register did not opine on 
the question's merits. To provide the public with notice of the 
Register's response, the Memorandum Opinion is reproduced in its 
entirety below.

    Dated: December 2, 2015.
Maria A. Pallante,
Register of Copyrights.

Before the U.S. Copyright Office

Library of Congress

Washington, DC 20559

    In the Matter of DETERMINATION OF ROYALTY RATES AND TERMS FOR 
EPHEMERAL RECORDING AND WEBCASTING DIGITAL PERFORMANCE OF SOUND 
RECORDINGS (Web IV), Docket No. 14-CRB-0001-WR (2016-2020) (Web IV)

MEMORANDUM OPINION ON NOVEL MATERIAL QUESTION OF LAW

    In the above-captioned proceeding (``Web IV''), currently pending 
before the Copyright Royalty Judges (``CRJs'' or ``Judges''), the 
Judges will establish royalty rates and terms for webcasters' digital 
performance of sound recordings and making of ephemeral recordings 
under the statutory licenses embodied in sections 112(e) and 114(f)(2) 
of the Copyright Act (``Act''), such rates and terms to apply for the 
five-year period beginning January 1, 2016. The Act requires the CRJs 
to establish rates and terms that ``distinguish among the different 
types of eligible nonsubscription transmission services and new 
subscription services''--that is, among different types of webcasting 
services--but does not include the same instruction vis-a-vis the 
licensors of sound recordings under the relevant licenses.\1\
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    \1\ 17 U.S.C. 114(f)(2).
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    On September 11, 2015, relying upon section 802(f)(1)(B), the CRJs 
referred to the Register of Copyrights the following question:
    Does Section 114 of the Act (or any other applicable provision of 
the Act) prohibit the Judges from setting rates and terms that 
distinguish among different types or categories of licensors, assuming 
a factual basis in the evidentiary record before the Judges 
demonstrates such a distinction in the marketplace? \2\
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    \2\ Order Referring Novel Material Question of Law and Setting 
Briefing Schedule, Docket No. 14-CRB-0001-WR (2016-2020) (Sept. 11, 
2015) (``Referral Order'').

Section 802(f)(1)(B) requires the CRJs to request a decision of the 
Register ``[i]n any case in which a novel material question of 
substantive law concerning an interpretation of those provisions of 
[title 17] that are the subject of the proceeding is presented.'' \3\ 
The Register's decision is to be issued within thirty days after the 
Register receives all of the briefs or comments of the participants and 
her determination becomes part of the record of the proceeding.\4\
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    \3\ 17 U.S.C. 802(f)(1)(B)(i).
    \4\ Id.
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    For the reasons explained below, the Register of Copyrights 
concludes that the question posed by the CRJs is not in fact 
``presented'' in this proceeding, and was therefore not properly 
referred to the Register for decision.

I. Background

    Rates and terms under the statutory licenses set forth in sections 
112(e) and 114(f)(2) are to be to be set under the ``willing buyer/
willing seller standard,'' meaning that the rates and terms should be 
those ``that most clearly represent the rates and terms that would have 
been negotiated in the marketplace between a willing buyer and a 
willing seller.'' \5\ In establishing those rates and terms, the CRJs 
``may consider the rates and terms for comparable types of digital 
audio transmission services and comparable circumstances under 
voluntary license agreements.'' \6\ The Act also specifies that 
``[s]uch rates and terms shall distinguish among the different types of 
[services] then in operation . . . such differences to be based on 
criteria including, but not limited to, the quantity and nature of the 
use of sound recordings and the degree to which use of the service may 
substitute for or may promote the purchase of phonorecords by 
consumers.'' \7\
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    \5\ 17 U.S.C. 114(f)(2)(B); see also id. Sec.  112(e)(4).
    \6\ 17 U.S.C. 114(f)(2)(B); see also id. Sec.  112(e)(4).
    \7\ 17 U.S.C. 114(f)(2)(B).
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    Neither section 114 nor any other provision of the Act includes any 
express language addressing whether or not webcasting rates and terms 
can distinguish among licensors of sound recordings. Since the 
inception of the statutory license for the digital performance of sound 
recordings in 1995, the CRJs--as well as their predecessor, the 
Copyright Arbitration Royalty Panels--have established uniform rates 
and terms for all licensors

[[Page 76578]]

of sound recordings under the section 114 and 112 licenses.\8\
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    \8\ See generally, e.g., Determination of Royalty Rates for 
Digital Performance Right in Sound Recordings and Ephemeral 
Recordings, 79 FR 23,102 (Apr. 25, 2014); Determination of Rates and 
Terms for Preexisting Subscription Services and Satellite Digital 
Audio Radio Services, 78 FR 23,054 (April 17, 2013); Digital 
Performance Right in Sound Recordings and Ephemeral Recordings, 76 
FR 13,026 (Mar. 9, 2011); Digital Performance Right in Sound 
Recordings and Ephemeral Recordings, 72 FR 24,084 (May 1, 2007); 
Determination of Reasonable Rates and Terms for the Digital 
Performance of Sound Recordings by Preexisting Subscription 
Services, 68 FR 39,837 (July 3, 2003); Determination of Reasonable 
Rates and Terms for the Digital Performance of Sound Recordings and 
Ephemeral Recordings, 67 FR 45,240 (July 8, 2002); Determination of 
Reasonable Rates and Terms for the Digital Performance of Sound 
Recordings, 63 FR 25,394 (May 8, 1998).
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    On September 11, 2015, after the close of the record in this 
proceeding, the CRJs issued an order referring the above-cited novel 
material question of substantive law to the Register and requesting 
briefing on the question from the parties.\9\ As noted, the CRJs 
invoked 17 U.S.C. 802(f)(1)(B) as the basis for their referral. That 
provision states that ``[i]n any case in which a novel material 
question of substantive law concerning an interpretation of those 
provisions of this title that are the subject of the proceeding is 
presented, the Copyright Royalty Judges shall request a decision of the 
Register of Copyrights, in writing, to resolve such novel question.'' 
\10\ The CRJs must ``apply the legal determinations embodied in [a 
timely delivered] decision of the Register of Copyrights in resolving 
material questions of substantive law'' and must include the decision 
``in the record that accompanies their final determination.'' \11\
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    \9\ See Referral Order at 2.
    \10\ 17 U.S.C. 802(f)(1)(B)(i).
    \11\ Id.
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    The CRJs delivered the participants' initial and responsive briefs 
to the Copyright Office on October 14, 2015. That same day, the 
Register invited participants in the Web IV proceeding and other 
interested parties to file supplemental briefs on three specific issues 
relating to the novel material question of substantive law:
    1. Is there any evidence in the legislative history of the 1909 
Copyright Act, the 1976 Copyright Act, the Digital Performance Rights 
in Sound Recordings Act of 1995, the 1998 Digital Millennium Copyright 
Act, the Copyright Royalty and Distribution Reform Act of 2004, or any 
other legislation, of an intent by Congress to allow or disallow the 
establishment of rates and/or terms that distinguish among different 
types or categories of licensors?
    2. How might the Register's decision affect other statutory 
licenses, e.g., the statutory license in section 115 for the making and 
distribution of phonorecords of nondramatic musical works? How, if at 
all, should any such broader implications factor into the Register's 
analysis?
    3. Are there administrative law or constitutional considerations 
(including rational basis or due process concerns) that would affect or 
should guide the Judges' ability to adopt rates and/or terms for the 
compensation of copyright owners, featured recording artists, and 
others for the use of sound recordings based on the identity of the 
licensor?

On October 26, 2015, the Office received supplemental briefing from 
participants and other interested parties in response to the above 
questions.

II. Summary of the Parties' Arguments

A. Position of SoundExchange

    SoundExchange, Inc. (``SoundExchange'') is the entity currently 
designated for purposes of sections 114 and 112 to collect statutory 
royalties from webcasting (and certain other) services and distribute 
them to copyright owners and recording artists. In the Web IV 
ratesetting proceedings before the CRJs, SoundExchange served as the 
primary representative of copyright owners and artists, including major 
and independent record labels, featured recording artists, and the two 
artist unions designated under the statute to receive and distribute 
royalties to nonfeatured musicians and vocalists--the American 
Federation of Musicians of the United States and Canada (``AFM'') and 
the Screen Actors Guild-American Federation of Television and Radio 
Artists (``SAG-AFTRA'').\12\ It is undisputed that during the 
ratesetting proceedings before the CRJs, SoundExchange--acting on 
behalf of its constituent interests--proposed rates and terms that did 
not distinguish among licensors of sound recordings.\13\
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    \12\ 17 U.S.C. 114(g)(2)(B), (C).
    \13\ SoundExchange Initial Br. at 2; see also SoundExchange 
Supp. Br. at 2 (``In the proceeding, SoundExchange identified, based 
on the best marketplace evidence, a single royalty rate for all 
commercial licensees utilizing the statutory license.'').
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    Although SoundExchange represented the vast majority of copyright 
owner participants during the Web IV ratesetting proceedings,\14\ it 
has declined to take a position on the question referred by the 
CRJs.\15\ Instead, SoundExchange noted that two groups of its 
constituents--UMG Recordings, Inc., Capitol Records, LLC, and Sony 
Music Entertainment (collectively, ``Major Labels''), on the one hand, 
and the American Association of Independent Music, AFM, and SAG-AFTRA 
(collectively, ``Independent Labels and Unions''), on the other--would 
be filing their own briefs.\16\ These groups are represented by 
separate counsel for the present purpose and, as explained below, take 
diametrically opposed positions on the merits.
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    \14\ George Johnson, an individual sound recording owner, 
represented himself during ratesetting proceedings. See George 
Johnson Initial Br. at 1; NAB/NRBNMLC Response Br. at 1 n.1.
    \15\ SoundExchange Initial Br. at 1; SoundExchange Response Br. 
at 1.
    \16\ SoundExchange Initial Br. at 1.
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    Although SoundExchange has declined to take a position on the 
merits of the referred question, it does, however, stress that 
``[b]ecause segmentation by licensor would raise issues that no party 
has addressed'' in the proceeding, if the Register were to determine 
that segmentation were legally permissible, the parties would need to 
be given an opportunity to further address those issues.\17\
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    \17\ Id. at 2.
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B. Position of Independent Labels and Unions, Music Managers, and 
Webcasters

    The Independent Labels and Unions and Music Managers Forum, along 
with webcasting parties iHeartMedia, Inc., Pandora Media, Inc., 
SiriusXM Radio, Inc., and the National Association of Broadcasters and 
National Religious Broadcasters Noncommercial Music License Committee 
(``NAB/NRBNMLC'') (the webcasting parties collectively, 
``Webcasters''), contend that the CRJs lack the authority to adopt 
different rates and terms for different categories of licensors.\18\ 
These parties argue that the overall structure of section 114 
demonstrates that Congress did not intend for parties to adopt 
differential rates for licensors.
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    \18\ See, e.g., Independent Labels and Unions Initial Br. at 24; 
iHeartMedia Initial Br. at 3; SiriusXM Initial Br. at 1; Pandora 
Initial Br. at 1; NAB/NRBNMLC Response Br.at 2; Music Managers Forum 
Supp. Br. at 1.
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    For instance, these parties note that section 114 expressly allows 
the CRJs to set different rates and terms based on the type of 
webcasting service being licensed, but is silent as to whether the CRJs 
can differentiate among types of licensors. Relying on the canon of 
statutory construction known as expressio unius est exclusio alterius--
that is, the express mention of one subject impliedly excludes other 
subjects--this group urges that this silence was purposeful, and shows 
Congress's intent to withhold from the CRJs the power to adopt 
different rates and terms for different licensors. They

[[Page 76579]]

also point to the provision stating that ``[t]he schedule of reasonable 
rates and terms'' adopted by the CRJs ``shall . . . be binding on all 
copyright owners,'' \19\ and argue that by referring to a single 
``schedule'' that binds ``all'' copyright owners, Congress anticipated 
that the CRJs would maintain a single set of rates and terms for all 
licensors.\20\
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    \19\ 17 U.S.C. 114(f)(2)(B); 17 U.S.C. 112(e)(4).
    \20\ iHeartMedia Response Br. at 2-3, iHeartMedia Supp. Br. at 
9-10; see also Independent Labels and Unions Initial Br. at 5-8.
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    These parties also urge that adopting rates and terms that 
differentiate among categories of licensors would undermine Congress's 
desire for an administrable statutory license. For example, they note 
that the ownership or distribution rights for any given sound recording 
can change hands repeatedly, and that it thus may be difficult to know 
the current owner of any particular recording at a given point in 
time.\21\ According to these parties, it is unlikely that Congress 
would have established a scheme that made it difficult for a licensee 
to know what rates and terms apply to individual sound recordings.\22\
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    \21\ See, e.g., Independent Labels and Unions Initial Br. at 9 
(``[T]he entity or person who owns or control rights of any 
particular recording can be quite fluid and historically quite hard 
to keep track of, as ownership and distribution rights change over 
time.''); Pandora Initial Br. at 5 (explaining that ``ownership of 
sound recordings is hardly static'' and providing examples of the 
different ways a given recording could cross back and forth between 
various categories of owners); Music Managers Forum Supp. Br. at 1 
(``A recording could be made by an artist, licensed to an 
independent label, sold to a major label and then revert back to the 
artist.'').
    \22\ See, e.g., Independent Labels and Unions Initial Br. at 9-
11; iHeartMedia Initial Br. at 3; Pandora Initial Br. at 5-6 
(``[M]ost if not all services would be unable to compute the license 
fees owed to SoundExchange under a differential-pricing regime, as 
they neither possess, nor have ready access to, all of the 
information necessary to determine which sound recordings are owned 
by which licensors, let alone at any given time, and into which 
licensor-category any given record label may fall.'').
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    In addition to arguments about the merits of the referred question, 
the Independent Labels and Unions and Webcasters raise procedural 
concerns of due process under the Constitution and the Administrative 
Procedure Act.\23\ Specifically, they urge that, even if the Register 
were to conclude that the CRJs could adopt rates that distinguish among 
categories of licensors, the CRJs could not actually adopt such rates 
in this ratesetting proceeding.\24\ The Independent Labels and Unions 
and Webcasters argue that they had inadequate notice that the CRJs 
might adopt differential rates.\25\ They point to the CRJs' uniform 
historical practice of adopting rates and terms for webcasting that do 
not distinguish among different categories of licensors,\26\ and the 
fact that no party to the ratesetting proceeding proposed rates that 
distinguish among licensors.\27\ As NAB/NRBNMLC puts it, ``no 
participant had the opportunity, or any reason, to introduce evidence 
or to respond to any such proposal, or to demonstrate the potential 
administrative difficulties or consequences of such rates and terms.'' 
\28\
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    \23\ See, e.g., Independent Labels and Unions Initial Br. at 14-
22; NAB/NRBNMLC Response Br. at 1-2; SiriusXM Initial Br. at 3-4, 
17-18; iHeartMedia Supp. Br. at 3-7.
    \24\ See, e.g., Independent Labels and Unions Initial Br. at 22; 
iHeartMedia Response Br. at 10.
    \25\ See, e.g., NAB/NRBNMLC Response Br. at 1; Independent 
Labels and Unions Initial Br. at 16; iHeartMedia Supp. Br. at 2, 4-
6.
    \26\ See, e.g., Independent Labels and Unions Initial Br. at 11-
13; iHeartMedia Supp. Br. at 3.
    \27\ See, e.g., Independent Labels and Unions Initial Br. at 13-
14; Pandora Initial Br. at 4; iHeartMedia Response Br. at 9; 
SiriusXM Initial Br. at 6, 17; NAB/NRBNMLC Response Br. at 1.
    \28\ NAB/NRBNMLC Response Br. at 1; see also Independent Labels 
and Unions Initial Br. at 13-14.
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    Indeed, the Independent Labels and Unions urge that they agreed to 
be represented by SoundExchange in the ratesetting proceedings on the 
assumption that SoundExchange would seek, and the CRJs would adopt, a 
single set of rates for all licensors.\29\ The Independent Labels and 
Unions suggest that, had the possibility of rates and terms that 
differentiate among licensors in fact been before the CRJs, 
SoundExchange could not have fairly represented all of its 
constituents--who disagree about the desirability of differential 
rates--and the Independent Labels and Unions would have participated in 
the proceedings in their own right.\30\
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    \29\ Independent Labels and Unions Initial Br. at 14.
    \30\ Id. at 14, 23.
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C. Position of the Major Labels and George Johnson

    The Major Labels, supported by George Johnson, an individual sound 
recording owner, contend that the CRJs are permitted to adopt rates and 
terms that distinguish among types or categories of licensors.\31\ 
Citing precedent from the U.S. Court of Appeals for the D.C. Circuit, 
the Major Labels argue that the CRJs have ``broad discretion to 
effectuate their mandate under Section 114 to establish rates that most 
clearly represent the rates negotiated by a willing buyer and a willing 
seller in the marketplace.'' \32\ They stress that no provision of the 
Copyright Act limits the CRJs' ability to adopt rates that distinguish 
among licensors.
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    \31\ Major Labels Initial Br. at 2; George Johnson Response Br. 
at 4-5.
    \32\ Major Labels Initial Br. at 3.
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    In addition, the Major Labels point to provisions of the statute 
that they claim indicate Congress's intent to allow the CRJs to 
establish such differential rates. For example, they argue that the 
willing buyer/willing seller standard ``necessarily contemplates the 
possibility of setting different rates for different kinds of 
licensors, because it directs the Judges to set rates and terms that 
reflect those that would be found in a hypothetical marketplace 
characterized by precisely such differentiation.'' \33\ The Major 
Labels urge that the statutory provisions upon which the Independent 
Labels and Artists, the Music Managers Forum, and Webcasters rely do 
not cabin the CRJs' generally broad discretion to set rates and terms 
as they deem appropriate in light of the record evidence.\34\ 
Furthermore, they dismiss the administrability concerns raised by those 
groups as irrelevant to the question asked, arguing that those 
arguments ``are outside the scope of the [referral order] and 
irrelevant to the pure question of law posed by the Judges.'' \35\
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    \33\ Id. at 6.
    \34\ Id. at 2-8, 12-14.
    \35\ Id. at 16.
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    The Major Labels similarly dismiss the due process arguments raised 
by the Independent Labels and Unions and Webcasters as ``irrelevant to 
answering the question posed'' by the CRJs, which they again emphasize 
to be a ``pure question of law.'' \36\ They further argue that, even if 
those issues were relevant, the CRJs are not foreclosed from adopting a 
rate structure that distinguishes among licensors by crediting evidence 
already in the record. They point in particular to the CRJs' notice 
initiating the ratesetting proceeding, in which the CRJs stated that 
they were `` `open to receiving evidence, testimony, and argument 
regarding any reasonable rate structure,' '' requesting participants to 
``address the importance `of the presence of economic variation among 
buyers and sellers.' '' \37\ The Major Labels suggest that these 
statements provided the parties with sufficient notice that the CRJs 
were willing to consider rates that differentiate among different 
licensors. Even so, the Major Labels do not challenge the assertion 
that no party to the ratesetting

[[Page 76580]]

proceeding pressed for rates or terms that distinguish among licensors.
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    \36\ Id. at 15.
    \37\ Major Labels Supp. Br. at 13 (quoting 79 FR 412, 413 (Jan. 
3, 2014)) (emphasis in orginal).
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D. Position of Music Publishers Regarding Impact on Other Statutory 
Licenses

    In response to the Register's invitation to non-participants to 
offer their views, the National Music Publishers Association, Inc. 
(``NMPA'') and a group comprising the Independent Music Publishers 
Forum, the Association of Independent Music Publishers, and a group of 
nine independent music publishers (this group collectively, ``IMPF/
AIMP''), filed supplemental briefs. NMPA did not take a position on the 
merits of the referred question.\38\ IMPF/AIMP, however, adopted the 
arguments of the Independent Labels and Artists, taking the position 
that ``Section 114 does not permit the Copyright Royalty Judges to 
award different rates based on the identity or categorization of the 
licensors.'' \39\
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    \38\ NMPA Supp. Br. at 2.
    \39\ IMPF/AIMP Supp. Br. at 4.
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    NMPA and IMPF/AIMP also addressed the Register's question regarding 
the implications of the decision here for other statutory licenses.\40\ 
They asked the Register to expressly confine her decision to sections 
112 and 114, and state that the decision does not have any impact on 
the statutory license in section 115 for the making and distribution of 
phonorecords of nondramatic musical works.\41\ According to NMPA, 
``Section 115 is a very different license than Section 114,'' as it 
concerns ``an entirely different type of royalty, and an entirely 
different group of stakeholders.'' \42\
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    \40\ See NMPA Supp. Br. at 3-7; IMPF/AIMP Supp. Br. at 4-5. 
Other parties also addressed this question to varying extents. See, 
e.g., Independent Labels and Unions Supp. Br. at 2-3 (arguing that a 
decision here ``would impact all Copyright Office rate 
proceedings''); SiriusXM Supp. Br. at 5-7 (arguing that any ruling 
here ``should be strictly limited'' to the Web IV proceeding, 
discussing differences between the licenses); Major Labels Supp. Br. 
at 5-8 (arguing that the potential ramifications of any decision on 
other statutory licenses are beyond the scope of the referred 
question and irrelevant to its resolution, discussing differences 
between the licenses).
    \41\ NMPA Supp. Br. at 7; IMPF/AIMP Supp. Br. at 4-5.
    \42\ NMPA Supp. Br. at 3.
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III. Register's Determination

    Having carefully considered the statutory framework and the 
parties' submissions, the Register of Copyrights concludes that there 
is no basis in the context of the current proceeding on which to render 
an opinion on the question posed by the CRJs, as the question does not 
meet the statutory criteria for referral.
    In referring the question to the Register for a written opinion, 
the Judges relied on 17 U.S.C. 802(f)(1)(B). That provision, however, 
requires the CRJs to request a decision from the Register only in a 
``case in which a novel material question of substantive law concerning 
an interpretation of those provisions of [title 17] that are the 
subject of the proceeding is presented.'' \43\ Similarly, section 
802(f)(1)(A)(ii)--which the CRJs did not cite but also could arguably 
apply--gives the CRJs discretion to obtain a formal written opinion 
from the Register of Copyrights concerning ``any material questions of 
substantive law that relate to the construction of provisions of this 
title and arise in the course of the proceeding.'' \44\ Thus, by their 
plain terms, these two statutory mechanisms requiring a written opinion 
from the Register may only be invoked by the CRJs where a referred 
question is actually ``presented'' or ``arise[s]'' in a particular 
proceeding.
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    \43\ 17 U.S.C. 802(f)(1)(B)(i) (emphasis added).
    \44\ Id. Sec.  802(f)(1)(A)(ii) (emphasis added).
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    This reading of the statute is reinforced by its legislative 
history. Originally, when the CRJ system was enacted in 2004, the 
statute allowed the CRJs to refer material questions of substantive law 
to the Register under section 802(f)(1)(A)(ii) when they ``concern[ed] 
an interpretation or construction of those provisions of [title 17] 
that are the subject of the proceeding.'' \45\ On its face, this 
language appeared broadly to permit the referral of questions 
concerning any provision that was generally the ``subject'' of the 
proceeding (e.g., in the current proceeding, sections 112(e) and 
114(f)), regardless of whether the specific question was actually 
implicated by the proceeding. But when Congress made technical 
corrections to the statute in 2006, it qualified section 
802(f)(1)(A)(ii) to clarify that questions may be referred under this 
provision only when they actually ``arise in the course of the 
proceeding.'' \46\ By adding the ``arise'' requirement, the amendment 
brought section 802(f)(1)(A)(ii) more closely into alignment with 
section 802(f)(1)(B)(i), which already contained the ``presented'' 
language. In limiting the referral mechanism in both cases, Congress 
signaled its intent that questions sent to the Register for a written 
opinion--whether novel and/or material--should be confined to matters 
actually at issue in a proceeding.
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    \45\ Copyright Royalty and Distribution Reform Act of 2004, Pub. 
L. 108-419, Sec.  3(a), 118 Stat. 2341, 2346 (2004).
    \46\ Copyright Royalty Judges Program Technical Corrections Act, 
Pub. L. 109-303, Sec.  3, 120 Stat. 1478, 1478-79 (2006).
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    Whether a question of substantive law is actually ``presented'' or 
``arises'' in a particular case will inevitably depend upon the 
circumstances of that proceeding. It will often be readily apparent 
that the question is presented, such as when the question concerns a 
statutory limitation on the CRJs' authority to consider certain types 
of evidence sought to be presented by participants,\47\ whether a 
specific term proposed by a party for adoption in a settlement is 
consistent with the Act,\48\ the extent of the CRJs' continuing 
jurisdiction over a prior determination under the Act,\49\ or whether a 
statutory license extends to a particular activity for which a party 
seeks to have a rate established.\50\ In each of these examples, the 
Register's answer to the question will presumably have an impact on the 
conduct or outcome of the proceeding.
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    \47\ Scope of the Copyright Royalty Judges' Continuing 
Jurisdiction, 80 FR 58,300 (Sept. 28, 2015).
    \48\ See., e.g., Scope of the Copyright Royalty Judges Authority 
to Adopt Confidentiality Requirements upon Copyright Owners within a 
Voluntarily Negotiated License Agreement, 78 FR 47,421 (Aug. 5, 
2013) (in section 115 proceeding, determining that CRJs lacked 
authority to adopt certain provisions imposing a duty of 
confidentiality upon copyright owners).
    \49\ See, e.g., Scope of the Copyright Royalty Judges' 
Continuing Jurisdiction, 80 FR 25,333 (May 4, 2015) (determining 
that CRJs had the authority to issue a clarifying interpretation of 
regulations adopted in a prior ratesetting determination).
    \50\ Mechanical and Digital Phonorecord Delivery Rate Adjustment 
Proceeding, 71 FR 64,303 (Nov. 1, 2006).
---------------------------------------------------------------------------

    Here, by contrast, the Register finds that the question whether the 
CRJs may adopt rates and terms for webcasting that distinguish among 
different types or categories of licensors is merely a theoretical one 
in the context of this proceeding. As noted, the CRJs have not 
previously adopted rates and terms for webcasting services that 
distinguish among licensors. Setting aside the question whether the 
CRJs have the authority to do so, it is clear from the submissions in 
response to the referred question that the various participants 
litigated this case on the assumption that the outcome would be an 
undifferentiated rate structure for licensors. To be sure, in 
initiating the proceeding, the CRJs broadly invited parties to provide 
evidence and argument ``regarding any reasonable rate structure'' or 
``the presence of economic variations among buyers and sellers.'' \51\

[[Page 76581]]

But it is undisputed that no participant in the proceeding in fact 
proposed rates or terms that differentiated among licensors and, 
accordingly, such a structure was not understood to be a subject of 
litigation.\52\ Moreover, based on the parties' briefs in response to 
the referred question and the Copyright Office's review of the Web IV 
docket, there is no indication that the CRJs went beyond their general 
invitation at the outset of the proceeding to require that such 
differentiation be addressed.\53\ As a result, no party addressed the 
question of ``segmentation by licensor,'' \54\ and ``no participant had 
the opportunity, or any reason, to introduce evidence or to respond to 
any such proposal, or to demonstrate the potential administrative 
difficulties or consequences of such rates and terms.'' \55\
---------------------------------------------------------------------------

    \51\ Determination of Royalty Rates for Digital Performance in 
Sound Recordings and Ephemeral Recordings (Web IV), 79 FR 412, 413 
(Jan. 3, 2014). In that notice, the CRJs also referred generally to 
the concept of ``price discrimination'' in free market transactions, 
and invited participants to address ``the potential applicability or 
inapplicability of price discrimination within the commercial 
webcaster segment of the market as well.'' Id. at 413-14. But the 
CRJs' discussion focused on price discrimination by sellers--i.e., 
where sellers charge different prices for identical goods with the 
price differences based on the status of the buyers. Id. at 413. 
That, of course, is the type of price discrimination expressly 
contemplated by the statute, which requires the CRJs to adopt 
``rates and terms [that] distinguish among the different types of 
[services] then in operation.'' 17 U.S.C. 114(f)(2).
    \52\ See NAB/NRBNMLC Response Br. at 1; SiriusXM Initial Br. at 
6; Independent Labels and Unions Initial Br. at 11-12; see also 
Direct Testimony of Kurt Hanson Submitted on behalf of AccuRadio, 
LLC, 16-18 (Oct. 6, 2014); Written Direct Statement of College 
Broadcasters, Inc. (Oct. 7, 2014) (attaching proposed regulations); 
Letter from David Oxenford on behalf of Educational Media Foundation 
to Copyright Royalty Board (Oct. 7, 2014) (joining in the rate 
proposal submitted by NRBNMLC); Written Direct Statement of Geo 
Music Group, 4-5 (Oct. 10, 2014); Written Testimony of Michael 
Papish on behalf of Harvard Radio Broadcasting Co., Inc. (WHRB) 
(Oct. 7, 2014); Written Testimony of Frederick J. Kass on behalf of 
Intercollegiate Broadcasting System (Oct. 7, 2014); Proposed Rates 
and Terms of iHeartMedia, Inc. (Oct. 7, 2014); Written Direct 
Statement of the National Association of Broadcasters, Vol. 1B (Oct. 
7, 2014); Written Direct Case of the Corporation for Public 
Broadcasting, on behalf of National Public Radio, Inc., including 
National Public Radio, Inc.'s Member Stations, American Public 
Media, Public Radio International, and Public Radio Exchange 
Broadcasting, 6-8 (Oct. 7, 2014); Written Direct Statement of the 
National Religious Broadcasters Noncommercial Music License 
Committee, Including Educational Media Foundation (Oct. 7, 2014); 
Proposed Rates and Terms of Pandora Media, Inc.; Written Direct 
Statement of Sirius XM Radio Inc., 1-2 (Oct. 7, 2014); Proposed 
Rates and Terms of SoundExchange, Inc. (Oct. 7, 2014).
    \53\ See Notice of Participants, Commencement of Voluntary 
Negotiation Period, and Case Scheduling Order, Docket No. 14-CRB-
0001-WR (2016-2020), 1 (Feb. 19, 2014) (asking parties to ``address 
expressly issues relating to categories of licensees,'' but omitting 
any mention of issues relating to categories of licensors).
    \54\ SoundExchange Initial Br. at 2. In this regard, it is 
notable that SoundExchange finds itself unable to put forth a 
unified view on the question of differentiated rates. Presumably 
SoundExchange could not have acted as the representative of 
virtually all of the rightsholders in the proceeding if the question 
of a differentiated rate structure was actually in contention. See 
Independent Labels and Unions Initial Br. at 14.
    \55\ See NAB/NRBNMLC Response Br. at 1.
---------------------------------------------------------------------------

    In this regard, the Register further observes that the CRJs are 
statutorily required to make determinations that are ``supported by the 
written record'' \56\ and based ``on economic, competitive and 
programming information presented by the parties.'' \57\ Significantly, 
the U.S. Court of Appeals for the D.C. Circuit has twice vacated CRJ 
determinations that relied on theories ``first presented in the Judges' 
determination and not advanced by any participant.''\58\ Here--
consistent with their rate proposals--the participants' respective 
proposed findings of fact and conclusions of law submitted at the 
conclusion of the proceeding uniformly fail to advocate for statutory 
rates and terms that distinguish among licensors.\59\ Moreover, in 
briefing the question now before the Register, no party has identified 
any basis upon which the CRJs could reasonably rely to adopt a 
differentiated rate structure.\60\ Thus, even assuming for the sake of 
argument that they possess the legal authority to establish rates that 
differentiate by licensor,\61\ it seems that under the current 
circumstances, the CRJs could not meet their basic obligation ``to make 
[a] reasoned decision[] supported by the written record before them.'' 
\62\
---------------------------------------------------------------------------

    \56\ 17 U.S.C. 803(c)(3).
    \57\ Id. Sec.  114(f)(2)(B).
    \58\ Settling Devotional Claimants v. Copyright Royalty Bd., 797 
F.3d 1106, 1121 (D.C. Cir. 2015) (quoting Intercollegiate Broad. 
Sys. v. Copyright Royalty Bd., 574 F.3d 748, 767 (D.C. Cir. 2009) 
(internal quotation marks omitted)).
    \59\ See Proposed Findings and Conclusions of Intercollegiate 
Broadcasting Systems, 13 (July 19, 2015); Proposed Findings of Fact 
of iHeartMedia, Inc., 207 (June 24, 2015); National Association of 
Broadcasters' Proposed Findings of Fact and Conclusions of Law (July 
19, 2015) (attaching NAB's Proposed Rates and Terms); The National 
Religious Broadcasters Noncommercial Music License Committee's 
Corrected Proposed Findings of Fact and Conclusions of Law (June 24, 
2015) (attaching NRBNMLC's Proposed Noncommercial Webcaster Rates 
and Terms); Pandora Media, Inc.'s Proposed Findings of Fact and 
Conclusions of Law, 1-2 (June 19, 2015); Sirius XM Radio Inc.'s 
Proposed Findings of Fact, 1 (June 19, 2015); Proposed Findings of 
Fact of SoundExchange, Inc., 94-96 (June 19, 2015); Proposed 
Findings and Conclusions on behalf of Harvard Radio Broadcasting 
Co., Inc. (WHRB) (June 19, 2015).
    \60\ Although the Major Labels suggest that the CRJs could 
``credit evidence supporting a different rate structure than they 
have adopted in the past,'' they do not point to any actual argument 
or evidence in the record that would support such an approach. See 
Majors Labels Supp. Br. at 14. In any event, as noted, such an 
approach would appear to run afoul of controlling precedent. See 
Settling Devotional Claimants, 797 F.3d at 1121 (reversing CRJ 
determination where theory was ``first presented in the Judges' 
determination and not advanced by any participant'').
    \61\ In considering these procedural issues, the Register does 
not mean to suggest any conclusion concerning the CRJs' legal 
authority to adopt rates and terms that distinguish among licensors.
    \62\ Settling Devotional Claimants, 797 F.3d at 1121.
---------------------------------------------------------------------------

    In sum, given the posture of the case, the question referred by the 
CRJs appears to be only a theoretical one in that the Register is 
unable to discern how a written decision at this juncture could 
substantively impact the conduct or outcome of this proceeding.\63\ 
Indeed, the question itself is presented in hypothetical terms: it asks 
the Register to ``assum[e] a factual basis in the evidentiary record'' 
for a distinction among licensors. As significant as the question of a 
differentiated rate structure for licensors might be under different 
circumstances, the Register does not believe that the statute 
contemplates the issuance of a written opinion when the inquiry is 
wholly theoretical in nature.
---------------------------------------------------------------------------

    \63\ Referral Order at 2.
---------------------------------------------------------------------------

    The language of the Act makes clear that the referral procedure 
under section 802(f)(1)(B) is limited to novel material questions of 
substantive law that are actually ``presented.'' As the Register has 
concluded that the question set forth in the CRJs' September 11, 2015 
order is not actually presented in this proceeding, she leaves the 
answer for another day.
November 24, 2015

Maria A. Pallante
Register of Copyrights and Director, United States Copyright Office

[FR Doc. 2015-30910 Filed 12-8-15; 8:45 am]
BILLING CODE 1410-30-P



                                                                           Federal Register / Vol. 80, No. 236 / Wednesday, December 9, 2015 / Notices                                                        76577

                                                  please visit http://www.nij.gov/                        inviting the participants in the                      Section 802(f)(1)(B) requires the CRJs to
                                                  standards.                                              proceeding and other interested parties               request a decision of the Register ‘‘[i]n
                                                                                                          to file supplemental briefs on certain                any case in which a novel material
                                                  Nancy Rodriguez,
                                                                                                          specified issues. On November 24, 2015,               question of substantive law concerning
                                                  Director, National Institute of Justice.                the Register issued a memorandum                      an interpretation of those provisions of
                                                  [FR Doc. 2015–30974 Filed 12–8–15; 8:45 am]             opinion in which she determined that                  [title 17] that are the subject of the
                                                  BILLING CODE 4410–18–P                                  the question was not presented within                 proceeding is presented.’’ 3 The
                                                                                                          the meaning of 17 U.S.C. 802(f)(1)(B),                Register’s decision is to be issued within
                                                                                                          and therefore the Register did not opine              thirty days after the Register receives all
                                                  LIBRARY OF CONGRESS                                     on the question’s merits. To provide the
                                                                                                                                                                of the briefs or comments of the
                                                                                                          public with notice of the Register’s
                                                  Copyright Office                                                                                              participants and her determination
                                                                                                          response, the Memorandum Opinion is
                                                                                                          reproduced in its entirety below.                     becomes part of the record of the
                                                  [Docket No. 2015–5]                                                                                           proceeding.4
                                                                                                            Dated: December 2, 2015.
                                                  Copyright Royalty Judges’ Ability To                    Maria A. Pallante,
                                                                                                                                                                   For the reasons explained below, the
                                                  Set Rates and Terms That Distinguish                                                                          Register of Copyrights concludes that
                                                                                                          Register of Copyrights.
                                                  Among Different Types or Categories                                                                           the question posed by the CRJs is not in
                                                  of Licensors                                            Before the U.S. Copyright Office                      fact ‘‘presented’’ in this proceeding, and
                                                                                                          Library of Congress                                   was therefore not properly referred to
                                                  AGENCY:  U.S. Copyright Office, Library
                                                                                                                                                                the Register for decision.
                                                  of Congress.                                            Washington, DC 20559
                                                  ACTION: Final order.                                                                                          I. Background
                                                                                                            In the Matter of DETERMINATION OF
                                                  SUMMARY:    The Copyright Royalty Judges                ROYALTY RATES AND TERMS FOR                              Rates and terms under the statutory
                                                  (‘‘CRJs’’) referred a question of                       EPHEMERAL RECORDING AND                               licenses set forth in sections 112(e) and
                                                                                                          WEBCASTING DIGITAL PERFORMANCE OF
                                                  substantive law to the Register of                                                                            114(f)(2) are to be to be set under the
                                                                                                          SOUND RECORDINGS (Web IV), Docket No.
                                                  Copyrights for resolution. The question                 14–CRB–0001–WR (2016–2020) (Web IV)                   ‘‘willing buyer/willing seller standard,’’
                                                  asked whether section 114 of the                                                                              meaning that the rates and terms should
                                                  Copyright Act or any other applicable                   MEMORANDUM OPINION ON NOVEL                           be those ‘‘that most clearly represent the
                                                  provision of the Act prohibits the CRJs                 MATERIAL QUESTION OF LAW                              rates and terms that would have been
                                                  from setting rates and terms that                                                                             negotiated in the marketplace between a
                                                                                                             In the above-captioned proceeding
                                                  distinguish among different types or                                                                          willing buyer and a willing seller.’’ 5 In
                                                                                                          (‘‘Web IV’’), currently pending before
                                                  categories of licensors. In a written                                                                         establishing those rates and terms, the
                                                                                                          the Copyright Royalty Judges (‘‘CRJs’’ or
                                                  opinion that was transmitted to the                                                                           CRJs ‘‘may consider the rates and terms
                                                                                                          ‘‘Judges’’), the Judges will establish
                                                  CRJs, the Register determined that the                                                                        for comparable types of digital audio
                                                                                                          royalty rates and terms for webcasters’
                                                  question was not properly presented in                                                                        transmission services and comparable
                                                                                                          digital performance of sound recordings
                                                  the proceeding and therefore the                        and making of ephemeral recordings                    circumstances under voluntary license
                                                  Register did not opine on its merits.                   under the statutory licenses embodied                 agreements.’’ 6 The Act also specifies
                                                  That opinion is reproduced below.                       in sections 112(e) and 114(f)(2) of the               that ‘‘[s]uch rates and terms shall
                                                  DATES: Effective Date: November 24,                     Copyright Act (‘‘Act’’), such rates and               distinguish among the different types of
                                                  2015.                                                   terms to apply for the five-year period               [services] then in operation . . . such
                                                  FOR FURTHER INFORMATION CONTACT:                        beginning January 1, 2016. The Act                    differences to be based on criteria
                                                  Stephen Ruwe, Assistant General                         requires the CRJs to establish rates and              including, but not limited to, the
                                                  Counsel, U.S. Copyright Office, P.O. Box                terms that ‘‘distinguish among the                    quantity and nature of the use of sound
                                                  70400, Washington, DC 20024.                            different types of eligible                           recordings and the degree to which use
                                                  Telephone: (202) 707–8350.                              nonsubscription transmission services                 of the service may substitute for or may
                                                  SUPPLEMENTARY INFORMATION: The
                                                                                                          and new subscription services’’—that is,              promote the purchase of phonorecords
                                                  Copyright Royalty Judges are tasked                     among different types of webcasting                   by consumers.’’ 7
                                                  with determining and adjusting rates                    services—but does not include the same
                                                                                                          instruction vis-a-vis the licensors of                   Neither section 114 nor any other
                                                  and terms of royalty payments for                                                                             provision of the Act includes any
                                                  statutory licenses under the Copyright                  sound recordings under the relevant
                                                                                                          licenses.1                                            express language addressing whether or
                                                  Act. See 17 U.S.C. 801. If, in the course                                                                     not webcasting rates and terms can
                                                                                                             On September 11, 2015, relying upon
                                                  of proceedings before the CRJs, novel                                                                         distinguish among licensors of sound
                                                                                                          section 802(f)(1)(B), the CRJs referred to
                                                  material questions of substantive law                                                                         recordings. Since the inception of the
                                                                                                          the Register of Copyrights the following
                                                  concerning the interpretation of                                                                              statutory license for the digital
                                                                                                          question:
                                                  provisions of title 17 arise, the CRJs are                 Does Section 114 of the Act (or any                performance of sound recordings in
                                                  required by statute to refer those                      other applicable provision of the Act)                1995, the CRJs—as well as their
                                                  questions to the Register of Copyrights                 prohibit the Judges from setting rates                predecessor, the Copyright Arbitration
                                                  for resolution. 17 U.S.C. 802(f)(1)(B).                 and terms that distinguish among
                                                    On October 14, 2015, the CRJs,                                                                              Royalty Panels—have established
                                                                                                          different types or categories of licensors,           uniform rates and terms for all licensors
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                                                  invoking 17 U.S.C. 802(f)(1)(B), referred               assuming a factual basis in the
                                                  to the Register the question of whether                 evidentiary record before the Judges
                                                  section 114 of the Copyright Act or any                                                                       0001–WR (2016–2020) (Sept. 11, 2015) (‘‘Referral
                                                                                                          demonstrates such a distinction in the                Order’’).
                                                  other applicable provision of the Act                   marketplace? 2                                          3 17 U.S.C. 802(f)(1)(B)(i).
                                                  prohibits the CRJs from setting rates and                                                                       4 Id.
                                                  terms that distinguish among different                    1 17U.S.C. 114(f)(2).                                 5 17 U.S.C. 114(f)(2)(B); see also id. § 112(e)(4).

                                                  types or categories of licensors. The                     2 Order Referring Novel Material Question of Law      6 17 U.S.C. 114(f)(2)(B); see also id. § 112(e)(4).

                                                  same day, the Register issued an order                  and Setting Briefing Schedule, Docket No. 14–CRB–       7 17 U.S.C. 114(f)(2)(B).




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                                                  76578                    Federal Register / Vol. 80, No. 236 / Wednesday, December 9, 2015 / Notices

                                                  of sound recordings under the section                      2. How might the Register’s decision               SoundExchange noted that two groups
                                                  114 and 112 licenses.8                                  affect other statutory licenses, e.g., the            of its constituents—UMG Recordings,
                                                     On September 11, 2015, after the close               statutory license in section 115 for the              Inc., Capitol Records, LLC, and Sony
                                                  of the record in this proceeding, the                   making and distribution of                            Music Entertainment (collectively,
                                                  CRJs issued an order referring the above-               phonorecords of nondramatic musical                   ‘‘Major Labels’’), on the one hand, and
                                                  cited novel material question of                        works? How, if at all, should any such                the American Association of
                                                  substantive law to the Register and                     broader implications factor into the                  Independent Music, AFM, and SAG–
                                                  requesting briefing on the question from                Register’s analysis?                                  AFTRA (collectively, ‘‘Independent
                                                  the parties.9 As noted, the CRJs invoked                   3. Are there administrative law or                 Labels and Unions’’), on the other—
                                                  17 U.S.C. 802(f)(1)(B) as the basis for                 constitutional considerations (including              would be filing their own briefs.16 These
                                                  their referral. That provision states that              rational basis or due process concerns)               groups are represented by separate
                                                  ‘‘[i]n any case in which a novel material               that would affect or should guide the                 counsel for the present purpose and, as
                                                  question of substantive law concerning                  Judges’ ability to adopt rates and/or                 explained below, take diametrically
                                                  an interpretation of those provisions of                terms for the compensation of copyright               opposed positions on the merits.
                                                  this title that are the subject of the                  owners, featured recording artists, and                  Although SoundExchange has
                                                  proceeding is presented, the Copyright                  others for the use of sound recordings                declined to take a position on the merits
                                                  Royalty Judges shall request a decision                 based on the identity of the licensor?                of the referred question, it does,
                                                  of the Register of Copyrights, in writing,              On October 26, 2015, the Office received              however, stress that ‘‘[b]ecause
                                                  to resolve such novel question.’’ 10 The                supplemental briefing from participants               segmentation by licensor would raise
                                                  CRJs must ‘‘apply the legal                             and other interested parties in response              issues that no party has addressed’’ in
                                                  determinations embodied in [a timely                    to the above questions.                               the proceeding, if the Register were to
                                                  delivered] decision of the Register of                                                                        determine that segmentation were
                                                  Copyrights in resolving material                        II. Summary of the Parties’ Arguments                 legally permissible, the parties would
                                                  questions of substantive law’’ and must                 A. Position of SoundExchange                          need to be given an opportunity to
                                                  include the decision ‘‘in the record that                  SoundExchange, Inc.                                further address those issues.17
                                                  accompanies their final                                 (‘‘SoundExchange’’) is the entity                     B. Position of Independent Labels and
                                                  determination.’’ 11                                     currently designated for purposes of
                                                     The CRJs delivered the participants’                                                                       Unions, Music Managers, and
                                                                                                          sections 114 and 112 to collect statutory             Webcasters
                                                  initial and responsive briefs to the                    royalties from webcasting (and certain
                                                  Copyright Office on October 14, 2015.                                                                            The Independent Labels and Unions
                                                                                                          other) services and distribute them to
                                                  That same day, the Register invited                                                                           and Music Managers Forum, along with
                                                                                                          copyright owners and recording artists.
                                                  participants in the Web IV proceeding                                                                         webcasting parties iHeartMedia, Inc.,
                                                                                                          In the Web IV ratesetting proceedings
                                                  and other interested parties to file                                                                          Pandora Media, Inc., SiriusXM Radio,
                                                                                                          before the CRJs, SoundExchange served
                                                  supplemental briefs on three specific                                                                         Inc., and the National Association of
                                                                                                          as the primary representative of
                                                  issues relating to the novel material                                                                         Broadcasters and National Religious
                                                                                                          copyright owners and artists, including
                                                  question of substantive law:                                                                                  Broadcasters Noncommercial Music
                                                                                                          major and independent record labels,
                                                     1. Is there any evidence in the                                                                            License Committee (‘‘NAB/NRBNMLC’’)
                                                                                                          featured recording artists, and the two
                                                  legislative history of the 1909 Copyright                                                                     (the webcasting parties collectively,
                                                                                                          artist unions designated under the
                                                  Act, the 1976 Copyright Act, the Digital                                                                      ‘‘Webcasters’’), contend that the CRJs
                                                                                                          statute to receive and distribute
                                                  Performance Rights in Sound                                                                                   lack the authority to adopt different
                                                                                                          royalties to nonfeatured musicians and
                                                  Recordings Act of 1995, the 1998 Digital                                                                      rates and terms for different categories
                                                                                                          vocalists—the American Federation of
                                                  Millennium Copyright Act, the                                                                                 of licensors.18 These parties argue that
                                                                                                          Musicians of the United States and
                                                  Copyright Royalty and Distribution                                                                            the overall structure of section 114
                                                                                                          Canada (‘‘AFM’’) and the Screen Actors
                                                  Reform Act of 2004, or any other                                                                              demonstrates that Congress did not
                                                                                                          Guild-American Federation of
                                                  legislation, of an intent by Congress to                                                                      intend for parties to adopt differential
                                                                                                          Television and Radio Artists (‘‘SAG–
                                                  allow or disallow the establishment of                                                                        rates for licensors.
                                                                                                          AFTRA’’).12 It is undisputed that during                 For instance, these parties note that
                                                  rates and/or terms that distinguish
                                                                                                          the ratesetting proceedings before the                section 114 expressly allows the CRJs to
                                                  among different types or categories of
                                                                                                          CRJs, SoundExchange—acting on behalf                  set different rates and terms based on
                                                  licensors?
                                                                                                          of its constituent interests—proposed                 the type of webcasting service being
                                                                                                          rates and terms that did not distinguish
                                                    8 See generally, e.g., Determination of Royalty                                                             licensed, but is silent as to whether the
                                                  Rates for Digital Performance Right in Sound            among licensors of sound recordings.13
                                                                                                                                                                CRJs can differentiate among types of
                                                  Recordings and Ephemeral Recordings, 79 FR                 Although SoundExchange represented
                                                  23,102 (Apr. 25, 2014); Determination of Rates and      the vast majority of copyright owner                  licensors. Relying on the canon of
                                                  Terms for Preexisting Subscription Services and         participants during the Web IV                        statutory construction known as
                                                  Satellite Digital Audio Radio Services, 78 FR 23,054
                                                                                                          ratesetting proceedings,14 it has                     expressio unius est exclusio alterius—
                                                  (April 17, 2013); Digital Performance Right in                                                                that is, the express mention of one
                                                  Sound Recordings and Ephemeral Recordings, 76           declined to take a position on the
                                                  FR 13,026 (Mar. 9, 2011); Digital Performance Right     question referred by the CRJs.15 Instead,             subject impliedly excludes other
                                                  in Sound Recordings and Ephemeral Recordings, 72                                                              subjects—this group urges that this
                                                  FR 24,084 (May 1, 2007); Determination of                 12 17 U.S.C. 114(g)(2)(B), (C).                     silence was purposeful, and shows
                                                  Reasonable Rates and Terms for the Digital                13 SoundExchange    Initial Br. at 2; see also      Congress’s intent to withhold from the
                                                  Performance of Sound Recordings by Preexisting
                                                  Subscription Services, 68 FR 39,837 (July 3, 2003);
                                                                                                          SoundExchange Supp. Br. at 2 (‘‘In the proceeding,    CRJs the power to adopt different rates
                                                                                                          SoundExchange identified, based on the best
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                                                  Determination of Reasonable Rates and Terms for                                                               and terms for different licensors. They
                                                                                                          marketplace evidence, a single royalty rate for all
                                                  the Digital Performance of Sound Recordings and         commercial licensees utilizing the statutory
                                                  Ephemeral Recordings, 67 FR 45,240 (July 8, 2002);      license.’’).                                            16 SoundExchange     Initial Br. at 1.
                                                  Determination of Reasonable Rates and Terms for            14 George Johnson, an individual sound recording     17 Id. at 2.
                                                  the Digital Performance of Sound Recordings, 63 FR      owner, represented himself during ratesetting           18 See, e.g., Independent Labels and Unions Initial
                                                  25,394 (May 8, 1998).                                   proceedings. See George Johnson Initial Br. at 1;     Br. at 24; iHeartMedia Initial Br. at 3; SiriusXM
                                                    9 See Referral Order at 2.
                                                                                                          NAB/NRBNMLC Response Br. at 1 n.1.                    Initial Br. at 1; Pandora Initial Br. at 1; NAB/
                                                    10 17 U.S.C. 802(f)(1)(B)(i).                            15 SoundExchange Initial Br. at 1; SoundExchange   NRBNMLC Response Br.at 2; Music Managers
                                                    11 Id.                                                Response Br. at 1.                                    Forum Supp. Br. at 1.



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                                                                             Federal Register / Vol. 80, No. 236 / Wednesday, December 9, 2015 / Notices                                                       76579

                                                  also point to the provision stating that                   adopt differential rates.25 They point to               adopt rates that distinguish among
                                                  ‘‘[t]he schedule of reasonable rates and                   the CRJs’ uniform historical practice of                licensors.
                                                  terms’’ adopted by the CRJs ‘‘shall . . .                  adopting rates and terms for webcasting                    In addition, the Major Labels point to
                                                  be binding on all copyright owners,’’ 19                   that do not distinguish among different                 provisions of the statute that they claim
                                                  and argue that by referring to a single                    categories of licensors,26 and the fact                 indicate Congress’s intent to allow the
                                                  ‘‘schedule’’ that binds ‘‘all’’ copyright                  that no party to the ratesetting                        CRJs to establish such differential rates.
                                                  owners, Congress anticipated that the                      proceeding proposed rates that                          For example, they argue that the willing
                                                  CRJs would maintain a single set of rates                  distinguish among licensors.27 As NAB/                  buyer/willing seller standard
                                                  and terms for all licensors.20                             NRBNMLC puts it, ‘‘no participant had
                                                                                                                                                                     ‘‘necessarily contemplates the
                                                     These parties also urge that adopting                   the opportunity, or any reason, to
                                                                                                                                                                     possibility of setting different rates for
                                                  rates and terms that differentiate among                   introduce evidence or to respond to any
                                                                                                                                                                     different kinds of licensors, because it
                                                  categories of licensors would undermine                    such proposal, or to demonstrate the
                                                                                                                                                                     directs the Judges to set rates and terms
                                                  Congress’s desire for an administrable                     potential administrative difficulties or
                                                                                                                                                                     that reflect those that would be found in
                                                  statutory license. For example, they note                  consequences of such rates and
                                                  that the ownership or distribution rights                  terms.’’ 28                                             a hypothetical marketplace
                                                  for any given sound recording can                                                                                  characterized by precisely such
                                                                                                               Indeed, the Independent Labels and                    differentiation.’’ 33 The Major Labels
                                                  change hands repeatedly, and that it                       Unions urge that they agreed to be
                                                  thus may be difficult to know the                                                                                  urge that the statutory provisions upon
                                                                                                             represented by SoundExchange in the                     which the Independent Labels and
                                                  current owner of any particular                            ratesetting proceedings on the
                                                  recording at a given point in time.21                                                                              Artists, the Music Managers Forum, and
                                                                                                             assumption that SoundExchange would                     Webcasters rely do not cabin the CRJs’
                                                  According to these parties, it is unlikely                 seek, and the CRJs would adopt, a single
                                                  that Congress would have established a                                                                             generally broad discretion to set rates
                                                                                                             set of rates for all licensors.29 The                   and terms as they deem appropriate in
                                                  scheme that made it difficult for a                        Independent Labels and Unions suggest
                                                  licensee to know what rates and terms                                                                              light of the record evidence.34
                                                                                                             that, had the possibility of rates and                  Furthermore, they dismiss the
                                                  apply to individual sound recordings.22                    terms that differentiate among licensors
                                                     In addition to arguments about the                                                                              administrability concerns raised by
                                                                                                             in fact been before the CRJs,
                                                  merits of the referred question, the                                                                               those groups as irrelevant to the
                                                                                                             SoundExchange could not have fairly
                                                  Independent Labels and Unions and                                                                                  question asked, arguing that those
                                                                                                             represented all of its constituents—who
                                                  Webcasters raise procedural concerns of                                                                            arguments ‘‘are outside the scope of the
                                                                                                             disagree about the desirability of
                                                  due process under the Constitution and                                                                             [referral order] and irrelevant to the
                                                                                                             differential rates—and the Independent
                                                  the Administrative Procedure Act.23                        Labels and Unions would have                            pure question of law posed by the
                                                  Specifically, they urge that, even if the                  participated in the proceedings in their                Judges.’’ 35
                                                  Register were to conclude that the CRJs                    own right.30                                               The Major Labels similarly dismiss
                                                  could adopt rates that distinguish                                                                                 the due process arguments raised by the
                                                  among categories of licensors, the CRJs                    C. Position of the Major Labels and                     Independent Labels and Unions and
                                                  could not actually adopt such rates in                     George Johnson                                          Webcasters as ‘‘irrelevant to answering
                                                  this ratesetting proceeding.24 The                                                                                 the question posed’’ by the CRJs, which
                                                  Independent Labels and Unions and                            The Major Labels, supported by
                                                                                                             George Johnson, an individual sound                     they again emphasize to be a ‘‘pure
                                                  Webcasters argue that they had                                                                                     question of law.’’ 36 They further argue
                                                  inadequate notice that the CRJs might                      recording owner, contend that the CRJs
                                                                                                             are permitted to adopt rates and terms                  that, even if those issues were relevant,
                                                                                                             that distinguish among types or                         the CRJs are not foreclosed from
                                                    19 17  U.S.C. 114(f)(2)(B); 17 U.S.C. 112(e)(4).
                                                    20 iHeartMedia                                           categories of licensors.31 Citing                       adopting a rate structure that
                                                                      Response Br. at 2–3, iHeartMedia
                                                  Supp. Br. at 9–10; see also Independent Labels and         precedent from the U.S. Court of                        distinguishes among licensors by
                                                  Unions Initial Br. at 5–8.                                 Appeals for the D.C. Circuit, the Major                 crediting evidence already in the record.
                                                     21 See, e.g., Independent Labels and Unions Initial
                                                                                                             Labels argue that the CRJs have ‘‘broad                 They point in particular to the CRJs’
                                                  Br. at 9 (‘‘[T]he entity or person who owns or             discretion to effectuate their mandate                  notice initiating the ratesetting
                                                  control rights of any particular recording can be
                                                  quite fluid and historically quite hard to keep track      under Section 114 to establish rates that               proceeding, in which the CRJs stated
                                                  of, as ownership and distribution rights change over       most clearly represent the rates                        that they were ‘‘ ‘open to receiving
                                                  time.’’); Pandora Initial Br. at 5 (explaining that        negotiated by a willing buyer and a                     evidence, testimony, and argument
                                                  ‘‘ownership of sound recordings is hardly static’’         willing seller in the marketplace.’’ 32                 regarding any reasonable rate
                                                  and providing examples of the different ways a
                                                  given recording could cross back and forth between         They stress that no provision of the                    structure,’ ’’ requesting participants to
                                                  various categories of owners); Music Managers              Copyright Act limits the CRJs’ ability to               ‘‘address the importance ‘of the
                                                  Forum Supp. Br. at 1 (‘‘A recording could be made                                                                  presence of economic variation among
                                                  by an artist, licensed to an independent label, sold         25 See, e.g., NAB/NRBNMLC Response Br. at 1;          buyers and sellers.’ ’’ 37 The Major
                                                  to a major label and then revert back to the artist.’’).
                                                     22 See, e.g., Independent Labels and Unions Initial
                                                                                                             Independent Labels and Unions Initial Br. at 16;        Labels suggest that these statements
                                                                                                             iHeartMedia Supp. Br. at 2, 4–6.
                                                  Br. at 9–11; iHeartMedia Initial Br. at 3; Pandora           26 See, e.g., Independent Labels and Unions Initial
                                                                                                                                                                     provided the parties with sufficient
                                                  Initial Br. at 5–6 (‘‘[M]ost if not all services would
                                                                                                             Br. at 11–13; iHeartMedia Supp. Br. at 3.               notice that the CRJs were willing to
                                                  be unable to compute the license fees owed to                27 See, e.g., Independent Labels and Unions Initial   consider rates that differentiate among
                                                  SoundExchange under a differential-pricing regime,
                                                  as they neither possess, nor have ready access to,         Br. at 13–14; Pandora Initial Br. at 4; iHeartMedia     different licensors. Even so, the Major
                                                  all of the information necessary to determine which        Response Br. at 9; SiriusXM Initial Br. at 6, 17;       Labels do not challenge the assertion
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                                                                                                             NAB/NRBNMLC Response Br. at 1.
                                                  sound recordings are owned by which licensors, let
                                                                                                               28 NAB/NRBNMLC Response Br. at 1; see also
                                                                                                                                                                     that no party to the ratesetting
                                                  alone at any given time, and into which licensor-
                                                  category any given record label may fall.’’).              Independent Labels and Unions Initial Br. at 13–14.
                                                                                                               29 Independent Labels and Unions Initial Br. at         33 Id. at 6.
                                                     23 See, e.g., Independent Labels and Unions Initial

                                                  Br. at 14–22; NAB/NRBNMLC Response Br. at 1–               14.                                                       34 Id. at 2–8, 12–14.
                                                                                                               30 Id. at 14, 23.                                       35 Id. at 16.
                                                  2; SiriusXM Initial Br. at 3–4, 17–18; iHeartMedia
                                                  Supp. Br. at 3–7.                                            31 Major Labels Initial Br. at 2; George Johnson        36 Id. at 15.
                                                     24 See, e.g., Independent Labels and Unions Initial     Response Br. at 4–5.                                      37 Major Labels Supp. Br. at 13 (quoting 79 FR

                                                  Br. at 22; iHeartMedia Response Br. at 10.                   32 Major Labels Initial Br. at 3.                     412, 413 (Jan. 3, 2014)) (emphasis in orginal).



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                                                  76580                     Federal Register / Vol. 80, No. 236 / Wednesday, December 9, 2015 / Notices

                                                  proceeding pressed for rates or terms                      In referring the question to the                   material—should be confined to matters
                                                  that distinguish among licensors.                       Register for a written opinion, the                   actually at issue in a proceeding.
                                                                                                          Judges relied on 17 U.S.C. 802(f)(1)(B).                 Whether a question of substantive law
                                                  D. Position of Music Publishers                                                                               is actually ‘‘presented’’ or ‘‘arises’’ in a
                                                                                                          That provision, however, requires the
                                                  Regarding Impact on Other Statutory                                                                           particular case will inevitably depend
                                                                                                          CRJs to request a decision from the
                                                  Licenses                                                                                                      upon the circumstances of that
                                                                                                          Register only in a ‘‘case in which a
                                                     In response to the Register’s invitation             novel material question of substantive                proceeding. It will often be readily
                                                  to non-participants to offer their views,               law concerning an interpretation of                   apparent that the question is presented,
                                                  the National Music Publishers                           those provisions of [title 17] that are the           such as when the question concerns a
                                                  Association, Inc. (‘‘NMPA’’) and a group                subject of the proceeding is                          statutory limitation on the CRJs’
                                                  comprising the Independent Music                        presented.’’ 43 Similarly, section                    authority to consider certain types of
                                                  Publishers Forum, the Association of                    802(f)(1)(A)(ii)—which the CRJs did not               evidence sought to be presented by
                                                  Independent Music Publishers, and a                     cite but also could arguably apply—                   participants,47 whether a specific term
                                                  group of nine independent music                         gives the CRJs discretion to obtain a                 proposed by a party for adoption in a
                                                  publishers (this group collectively,                    formal written opinion from the Register              settlement is consistent with the Act,48
                                                  ‘‘IMPF/AIMP’’), filed supplemental                      of Copyrights concerning ‘‘any material               the extent of the CRJs’ continuing
                                                  briefs. NMPA did not take a position on                 questions of substantive law that relate              jurisdiction over a prior determination
                                                  the merits of the referred question.38                  to the construction of provisions of this             under the Act,49 or whether a statutory
                                                  IMPF/AIMP, however, adopted the                         title and arise in the course of the                  license extends to a particular activity
                                                  arguments of the Independent Labels                     proceeding.’’ 44 Thus, by their plain                 for which a party seeks to have a rate
                                                  and Artists, taking the position that                   terms, these two statutory mechanisms                 established.50 In each of these examples,
                                                  ‘‘Section 114 does not permit the                       requiring a written opinion from the                  the Register’s answer to the question
                                                  Copyright Royalty Judges to award                       Register may only be invoked by the                   will presumably have an impact on the
                                                  different rates based on the identity or                CRJs where a referred question is                     conduct or outcome of the proceeding.
                                                  categorization of the licensors.’’ 39                   actually ‘‘presented’’ or ‘‘arise[s]’’ in a              Here, by contrast, the Register finds
                                                     NMPA and IMPF/AIMP also                              particular proceeding.                                that the question whether the CRJs may
                                                  addressed the Register’s question                                                                             adopt rates and terms for webcasting
                                                                                                             This reading of the statute is
                                                  regarding the implications of the                                                                             that distinguish among different types
                                                                                                          reinforced by its legislative history.
                                                  decision here for other statutory                                                                             or categories of licensors is merely a
                                                                                                          Originally, when the CRJ system was
                                                  licenses.40 They asked the Register to                                                                        theoretical one in the context of this
                                                                                                          enacted in 2004, the statute allowed the
                                                  expressly confine her decision to                                                                             proceeding. As noted, the CRJs have not
                                                                                                          CRJs to refer material questions of
                                                  sections 112 and 114, and state that the                                                                      previously adopted rates and terms for
                                                                                                          substantive law to the Register under
                                                  decision does not have any impact on                                                                          webcasting services that distinguish
                                                                                                          section 802(f)(1)(A)(ii) when they
                                                  the statutory license in section 115 for                                                                      among licensors. Setting aside the
                                                                                                          ‘‘concern[ed] an interpretation or
                                                  the making and distribution of                                                                                question whether the CRJs have the
                                                                                                          construction of those provisions of [title
                                                  phonorecords of nondramatic musical                                                                           authority to do so, it is clear from the
                                                                                                          17] that are the subject of the
                                                  works.41 According to NMPA, ‘‘Section                                                                         submissions in response to the referred
                                                                                                          proceeding.’’ 45 On its face, this
                                                  115 is a very different license than                                                                          question that the various participants
                                                  Section 114,’’ as it concerns ‘‘an entirely             language appeared broadly to permit the
                                                                                                                                                                litigated this case on the assumption
                                                  different type of royalty, and an entirely              referral of questions concerning any
                                                                                                                                                                that the outcome would be an
                                                  different group of stakeholders.’’ 42                   provision that was generally the
                                                                                                                                                                undifferentiated rate structure for
                                                                                                          ‘‘subject’’ of the proceeding (e.g., in the
                                                  III. Register’s Determination                                                                                 licensors. To be sure, in initiating the
                                                                                                          current proceeding, sections 112(e) and
                                                                                                                                                                proceeding, the CRJs broadly invited
                                                     Having carefully considered the                      114(f)), regardless of whether the
                                                                                                                                                                parties to provide evidence and
                                                  statutory framework and the parties’                    specific question was actually
                                                                                                                                                                argument ‘‘regarding any reasonable rate
                                                  submissions, the Register of Copyrights                 implicated by the proceeding. But when
                                                                                                                                                                structure’’ or ‘‘the presence of economic
                                                  concludes that there is no basis in the                 Congress made technical corrections to
                                                                                                                                                                variations among buyers and sellers.’’ 51
                                                  context of the current proceeding on                    the statute in 2006, it qualified section
                                                  which to render an opinion on the                       802(f)(1)(A)(ii) to clarify that questions               47 Scope of the Copyright Royalty Judges’

                                                  question posed by the CRJs, as the                      may be referred under this provision                  Continuing Jurisdiction, 80 FR 58,300 (Sept. 28,
                                                  question does not meet the statutory                    only when they actually ‘‘arise in the                2015).
                                                  criteria for referral.                                  course of the proceeding.’’ 46 By adding                 48 See., e.g., Scope of the Copyright Royalty

                                                                                                          the ‘‘arise’’ requirement, the amendment              Judges Authority to Adopt Confidentiality
                                                                                                                                                                Requirements upon Copyright Owners within a
                                                    38 NMPA    Supp. Br. at 2.                            brought section 802(f)(1)(A)(ii) more                 Voluntarily Negotiated License Agreement, 78 FR
                                                    39 IMPF/AIMP    Supp. Br. at 4.                       closely into alignment with section                   47,421 (Aug. 5, 2013) (in section 115 proceeding,
                                                     40 See NMPA Supp. Br. at 3–7; IMPF/AIMP Supp.        802(f)(1)(B)(i), which already contained              determining that CRJs lacked authority to adopt
                                                  Br. at 4–5. Other parties also addressed this           the ‘‘presented’’ language. In limiting               certain provisions imposing a duty of
                                                  question to varying extents. See, e.g., Independent                                                           confidentiality upon copyright owners).
                                                  Labels and Unions Supp. Br. at 2–3 (arguing that
                                                                                                          the referral mechanism in both cases,                    49 See, e.g., Scope of the Copyright Royalty

                                                  a decision here ‘‘would impact all Copyright Office     Congress signaled its intent that                     Judges’ Continuing Jurisdiction, 80 FR 25,333 (May
                                                  rate proceedings’’); SiriusXM Supp. Br. at 5–7          questions sent to the Register for a                  4, 2015) (determining that CRJs had the authority
                                                  (arguing that any ruling here ‘‘should be strictly      written opinion—whether novel and/or                  to issue a clarifying interpretation of regulations
                                                  limited’’ to the Web IV proceeding, discussing                                                                adopted in a prior ratesetting determination).
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                                                  differences between the licenses); Major Labels                                                                  50 Mechanical and Digital Phonorecord Delivery
                                                                                                            43 17U.S.C. 802(f)(1)(B)(i) (emphasis added).
                                                  Supp. Br. at 5–8 (arguing that the potential                                                                  Rate Adjustment Proceeding, 71 FR 64,303 (Nov. 1,
                                                  ramifications of any decision on other statutory          44 Id.§ 802(f)(1)(A)(ii) (emphasis added).          2006).
                                                  licenses are beyond the scope of the referred             45 Copyright Royalty and Distribution Reform Act       51 Determination of Royalty Rates for Digital
                                                  question and irrelevant to its resolution, discussing   of 2004, Pub. L. 108–419, § 3(a), 118 Stat. 2341,     Performance in Sound Recordings and Ephemeral
                                                  differences between the licenses).                      2346 (2004).                                          Recordings (Web IV), 79 FR 412, 413 (Jan. 3, 2014).
                                                     41 NMPA Supp. Br. at 7; IMPF/AIMP Supp. Br. at         46 Copyright Royalty Judges Program Technical       In that notice, the CRJs also referred generally to the
                                                  4–5.                                                    Corrections Act, Pub. L. 109–303, § 3, 120 Stat.      concept of ‘‘price discrimination’’ in free market
                                                     42 NMPA Supp. Br. at 3.                              1478, 1478–79 (2006).                                 transactions, and invited participants to address



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                                                                             Federal Register / Vol. 80, No. 236 / Wednesday, December 9, 2015 / Notices                                                       76581

                                                  But it is undisputed that no participant                  administrative difficulties or                          [a] reasoned decision[] supported by the
                                                  in the proceeding in fact proposed rates                  consequences of such rates and                          written record before them.’’ 62
                                                  or terms that differentiated among                        terms.’’ 55                                                In sum, given the posture of the case,
                                                  licensors and, accordingly, such a                           In this regard, the Register further                 the question referred by the CRJs
                                                  structure was not understood to be a                      observes that the CRJs are statutorily                  appears to be only a theoretical one in
                                                  subject of litigation.52 Moreover, based                  required to make determinations that                    that the Register is unable to discern
                                                  on the parties’ briefs in response to the                 are ‘‘supported by the written record’’ 56              how a written decision at this juncture
                                                  referred question and the Copyright                       and based ‘‘on economic, competitive                    could substantively impact the conduct
                                                  Office’s review of the Web IV docket,                     and programming information presented                   or outcome of this proceeding.63 Indeed,
                                                  there is no indication that the CRJs went                 by the parties.’’ 57 Significantly, the U.S.            the question itself is presented in
                                                  beyond their general invitation at the                    Court of Appeals for the D.C. Circuit has               hypothetical terms: it asks the Register
                                                  outset of the proceeding to require that                  twice vacated CRJ determinations that                   to ‘‘assum[e] a factual basis in the
                                                  such differentiation be addressed.53 As                   relied on theories ‘‘first presented in the             evidentiary record’’ for a distinction
                                                  a result, no party addressed the question                 Judges’ determination and not advanced                  among licensors. As significant as the
                                                  of ‘‘segmentation by licensor,’’ 54 and                   by any participant.’’58 Here—consistent                 question of a differentiated rate
                                                  ‘‘no participant had the opportunity, or                  with their rate proposals—the                           structure for licensors might be under
                                                  any reason, to introduce evidence or to                   participants’ respective proposed                       different circumstances, the Register
                                                  respond to any such proposal, or to                       findings of fact and conclusions of law                 does not believe that the statute
                                                  demonstrate the potential                                 submitted at the conclusion of the                      contemplates the issuance of a written
                                                                                                            proceeding uniformly fail to advocate                   opinion when the inquiry is wholly
                                                  ‘‘the potential applicability or inapplicability of       for statutory rates and terms that                      theoretical in nature.
                                                  price discrimination within the commercial                distinguish among licensors.59                             The language of the Act makes clear
                                                  webcaster segment of the market as well.’’ Id. at
                                                  413–14. But the CRJs’ discussion focused on price
                                                                                                            Moreover, in briefing the question now                  that the referral procedure under section
                                                  discrimination by sellers—i.e., where sellers charge      before the Register, no party has                       802(f)(1)(B) is limited to novel material
                                                  different prices for identical goods with the price       identified any basis upon which the                     questions of substantive law that are
                                                  differences based on the status of the buyers. Id. at     CRJs could reasonably rely to adopt a
                                                  413. That, of course, is the type of price
                                                                                                                                                                    actually ‘‘presented.’’ As the Register
                                                  discrimination expressly contemplated by the
                                                                                                            differentiated rate structure.60 Thus,                  has concluded that the question set
                                                  statute, which requires the CRJs to adopt ‘‘rates and     even assuming for the sake of argument                  forth in the CRJs’ September 11, 2015
                                                  terms [that] distinguish among the different types        that they possess the legal authority to                order is not actually presented in this
                                                  of [services] then in operation.’’ 17 U.S.C. 114(f)(2).   establish rates that differentiate by                   proceeding, she leaves the answer for
                                                     52 See NAB/NRBNMLC Response Br. at 1;
                                                                                                            licensor,61 it seems that under the                     another day.
                                                  SiriusXM Initial Br. at 6; Independent Labels and
                                                  Unions Initial Br. at 11–12; see also Direct
                                                                                                            current circumstances, the CRJs could                   November 24, 2015
                                                  Testimony of Kurt Hanson Submitted on behalf of           not meet their basic obligation ‘‘to make               Maria A. Pallante
                                                  AccuRadio, LLC, 16–18 (Oct. 6, 2014); Written
                                                  Direct Statement of College Broadcasters, Inc. (Oct.        55 See
                                                                                                                                                                    Register of Copyrights and Director,
                                                                                                                       NAB/NRBNMLC Response Br. at 1.
                                                  7, 2014) (attaching proposed regulations); Letter           56 17
                                                                                                                                                                    United States Copyright Office
                                                                                                                      U.S.C. 803(c)(3).
                                                  from David Oxenford on behalf of Educational                 57 Id. § 114(f)(2)(B).                               [FR Doc. 2015–30910 Filed 12–8–15; 8:45 am]
                                                  Media Foundation to Copyright Royalty Board (Oct.            58 Settling Devotional Claimants v. Copyright
                                                                                                                                                                    BILLING CODE 1410–30–P
                                                  7, 2014) (joining in the rate proposal submitted by
                                                                                                            Royalty Bd., 797 F.3d 1106, 1121 (D.C. Cir. 2015)
                                                  NRBNMLC); Written Direct Statement of Geo Music
                                                                                                            (quoting Intercollegiate Broad. Sys. v. Copyright
                                                  Group, 4–5 (Oct. 10, 2014); Written Testimony of          Royalty Bd., 574 F.3d 748, 767 (D.C. Cir. 2009)
                                                  Michael Papish on behalf of Harvard Radio                 (internal quotation marks omitted)).                    OFFICE OF MANAGEMENT AND
                                                  Broadcasting Co., Inc. (WHRB) (Oct. 7, 2014);                59 See Proposed Findings and Conclusions of
                                                  Written Testimony of Frederick J. Kass on behalf of                                                               BUDGET
                                                                                                            Intercollegiate Broadcasting Systems, 13 (July 19,
                                                  Intercollegiate Broadcasting System (Oct. 7, 2014);
                                                                                                            2015); Proposed Findings of Fact of iHeartMedia,
                                                  Proposed Rates and Terms of iHeartMedia, Inc.             Inc., 207 (June 24, 2015); National Association of
                                                                                                                                                                    Information Collection; Request for
                                                  (Oct. 7, 2014); Written Direct Statement of the           Broadcasters’ Proposed Findings of Fact and             Public Comments
                                                  National Association of Broadcasters, Vol. 1B (Oct.       Conclusions of Law (July 19, 2015) (attaching
                                                  7, 2014); Written Direct Case of the Corporation for      NAB’s Proposed Rates and Terms); The National           AGENCY: Executive Office of the
                                                  Public Broadcasting, on behalf of National Public         Religious Broadcasters Noncommercial Music              President, Office of Management and
                                                  Radio, Inc., including National Public Radio, Inc.’s      License Committee’s Corrected Proposed Findings
                                                  Member Stations, American Public Media, Public                                                                    Budget.
                                                                                                            of Fact and Conclusions of Law (June 24, 2015)
                                                  Radio International, and Public Radio Exchange            (attaching NRBNMLC’s Proposed Noncommercial             ACTION: Notice and request for
                                                  Broadcasting, 6–8 (Oct. 7, 2014); Written Direct          Webcaster Rates and Terms); Pandora Media, Inc.’s       comments.
                                                  Statement of the National Religious Broadcasters          Proposed Findings of Fact and Conclusions of Law,
                                                  Noncommercial Music License Committee,                    1–2 (June 19, 2015); Sirius XM Radio Inc.’s
                                                  Including Educational Media Foundation (Oct. 7,
                                                                                                                                                                    SUMMARY:   In compliance with the
                                                                                                            Proposed Findings of Fact, 1 (June 19, 2015);
                                                  2014); Proposed Rates and Terms of Pandora Media,         Proposed Findings of Fact of SoundExchange, Inc.,
                                                                                                                                                                    Paperwork Reduction Act of 1995 (44
                                                  Inc.; Written Direct Statement of Sirius XM Radio         94–96 (June 19, 2015); Proposed Findings and            U.S.C. 3501 et seq.), the Office of
                                                  Inc., 1–2 (Oct. 7, 2014); Proposed Rates and Terms        Conclusions on behalf of Harvard Radio                  Management and Budget (OMB) invites
                                                  of SoundExchange, Inc. (Oct. 7, 2014).                    Broadcasting Co., Inc. (WHRB) (June 19, 2015).
                                                     53 See Notice of Participants, Commencement of
                                                                                                                                                                    the general public and Federal agencies
                                                                                                               60 Although the Major Labels suggest that the CRJs
                                                  Voluntary Negotiation Period, and Case Scheduling                                                                 to comment on a revision of an
                                                                                                            could ‘‘credit evidence supporting a different rate
                                                  Order, Docket No. 14–CRB–0001–WR (2016–2020),             structure than they have adopted in the past,’’ they    approved information collection, Form
                                                  1 (Feb. 19, 2014) (asking parties to ‘‘address            do not point to any actual argument or evidence in      SF–SAC, that is used to report audit
                                                  expressly issues relating to categories of licensees,’’   the record that would support such an approach.         results, audit findings, and questioned
                                                  but omitting any mention of issues relating to            See Majors Labels Supp. Br. at 14. In any event, as
                                                  categories of licensors).                                 noted, such an approach would appear to run afoul
                                                                                                                                                                    costs as required by the Single Audit
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                                                     54 SoundExchange Initial Br. at 2. In this regard,     of controlling precedent. See Settling Devotional       Act Amendments of 1996 (31 U.S.C.
                                                  it is notable that SoundExchange finds itself unable      Claimants, 797 F.3d at 1121 (reversing CRJ              7501 et seq.) and 2 CFR part 200,
                                                  to put forth a unified view on the question of            determination where theory was ‘‘first presented in     ‘‘Uniform Administrative Requirements,
                                                  differentiated rates. Presumably SoundExchange            the Judges’ determination and not advanced by any
                                                  could not have acted as the representative of             participant’’).
                                                                                                                                                                    Cost Principles, and Audit
                                                  virtually all of the rightsholders in the proceeding         61 In considering these procedural issues, the
                                                                                                                                                                      62 Settling Devotional Claimants, 797 F.3d at
                                                  if the question of a differentiated rate structure was    Register does not mean to suggest any conclusion
                                                  actually in contention. See Independent Labels and        concerning the CRJs’ legal authority to adopt rates     1121.
                                                  Unions Initial Br. at 14.                                 and terms that distinguish among licensors.               63 Referral Order at 2.




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Document Created: 2015-12-14 13:32:18
Document Modified: 2015-12-14 13:32:18
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionFinal order.
ContactStephen Ruwe, Assistant General Counsel, U.S. Copyright Office, P.O. Box 70400, Washington, DC 20024. Telephone: (202) 707-8350.
FR Citation80 FR 76577 

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