An Internet radio company has filed a straight-on challenge to the constitutionality of the Copyright Royalty Board, the three-member panel that determines the rates companies pay for statutory copyright licenses.
In a complaint filed yesterday at the U.S. District Court for the District of Columbia, Live365, an Internet radio aggregator, argued that the royalty board violates the Constitution’s appointments clause, because its members are selected by the librarian of Congress. The suit argues that because of their significant authority, these non-Article III judges are “Principal Officers of the United States” who must be selected by the president.
The current panel consists of James Sledge, Stanley Wisniewski and William Roberts. All three are lawyers, and Sledge is a former U.S. bankruptcy judge.
Live365 contends that, although Congress can create government offices and choose how they will be filled, “neither Congress nor any department in the legislative branch of government” can appoint individuals to those positions.
The suit quotes from Judge Brett Kavanaugh of the U.S. Court of Appeals for the D.C. Circuit, who wrote on July 7 that the manner in which the royalty board is picked might run afoul of the appointments clause. Lawyers in that earlier case, SoundExchange Inc. v. Librarian of Congress, an unsuccessful challenge to a particular royalty board ruling, did not bring up the argument before the appeals court.
Nonetheless, in a concurring opinion, Kavanaugh opined that the manner in which the board is selected “raises a serious constitutional issue.” He wrote, “[B]illions of dollars and the fates of entire industries can ride on the Copyright Royalty Board’s decisions.” He compared its power to that of the Securities and Exchange Commission and the Federal Energy Regulatory Commission. “But unlike the members of those similarly powerful agencies, since 2004 Copyright Royalty Board members have not been nominated by the President and confirmed by the Senate.”
In a third case, Intercollegiate Broadcast System Inc. v. Copyright Review Board, decided July 10, webcasters and music licensors did attempt to challenge the royalty board on constitutional grounds. However, the court declined to consider the issue because lawyers had failed to address it in their opening brief.
Live365 is represented by a veteran of the Intercollegiate Broadcast System case, Kenneth Freundlich of Beverly Hills, Calif.’s Freundlich Law. He is joined by Davis Wright Tremaine partner Adam Caldwell and counsel Ronald London of the firm’s Washington office.
Freundlich said the constitutional question was clearly ripe. “The issue is there,” he said. “It is the proverbial elephant in the room, and it should be decided before we continue spending lots of money before the Copyright Royalty Board.”