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Where the Law Comes From

Much is being made of the the enthusiastic and successful bedding of the Justice Department by the MPAA and the RIAA. There are also more subtle changes afoot, and what dangers lurk — I cannot say for sure. But beware. Take a look at the bill (H.R. 1417) overhauling the Copyright Arbitration Royalty Panel (CARP) system for determining royalties under several copyright act provisions for compulsory and statutory licenses. The basic idea of the bill, which has been passed by both houses, is to replace complex and expensive proceedings in front of CARPs with less complex, more streamlined proceedings in front of Copyright Royalty Judges.

Here’s the odd thing. The new bill says that the C.R. Judges “may consult with the Register of Copyrights on any matter other than a question of fact.” (new copyright act section 802(f)(1)). And, if the C.R. Judges (or the parties) have questions about the law, then any “material question of substantive law” can be referred to the Register of Copyrights for decision, and “the Copyright Royalty Judges shall apply the legal interpretation embodied in the response of the Register of Copyrights in resolving material questions of substantive law.” (new copyright act section 802(f)(1)(A)(ii); my emphasis). This procedure is entirely novel. There’s nothing like it in the current CARP statute.

What happens if one of the parties to the royalty proceeding doesn’t like the answer? The C.R. Judges’ decision can be appealed to the Court of Appeals for the D.C. Circuit. This continues existing practice. But: The existing law (section 802(g)) provides that CARP rulings may be modified or vacated only if the court “finds, on the basis of the record before the Librarian [of Congress, to whom the Register of Copyrights reports], that the Librarian acted in an arbitrary manner.” The new bill does not include a standard of review for the court.

What does this mean? I can’t imagine that the absence of a standard of review from the new bill means that Congress intends that the DC Circuit should engage in plenary (i.e., full-scale) review of CRJ decisions. That defeats the point of the reform. So assume that CRJ decisions can get challenged successfully in court only if they are arbitrary. Remember that if the CRJ confronts a “material question” of copyright law, it can ask the Register of Copyrights — that’s the Copyright Office — for the answer. The CRJ has to apply the Copyright Office interpretation of the law, and the Copyright Office’s decision, I mean the CRJ’s decision, can be challenged in court only if it is arbitrary.

Interpretation of the statutory and compulsory licenses under the copyright act involves some contentious legal issues — among them last year’s Third Circuit opinion on webcasting in Bonneville Int’l v. Peters (pdf link here). Senator Leahy is selling the CARP reform as cheaper and therefore as better for small webcasters. The Attorney General now has IP enforcement tools that the RIAA and MPAA want him to have. Has Congress just handed over interpretation of copyright law that applies webcasters to the Copyright Office? Have broadcasters now gotten Congress to take away from courts the legal tools that small webcasters and consumers might like them to have?