774 F.3d 1000
D.C. Cir.2014Background
- Copyright Royalty Board set 2013–2017 SDARS and PSS rates; SoundExchange and Music Choice appealed.
- SDARS rate previously 8%; SoundExchange proposed 12–20%, Sirius XM proposed 5–7%.
- PSS rate previously 7.5%; Judges set 8.5% (8% in 2013 rising to 8.5% by 2017) after adjustments.
- Issues involved defining Gross Revenues and deductions, including non-music programming and pre-1972 recordings.
- Judges relied on Section 801(b) factors, prior determinations, and prevailing rates to determine reasonableness.
- Court reviews the Board de novo only to ensure decisions are not arbitrary or capricious and have substantial record support.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| SDARS rate reasonableness | SoundExchange: benchmarks invalid; 13% obsolete; rate too low. | Board within discretion; used interim guideposts and 8% base; considered prior determinations. | upheld |
| Gross Revenues and deductions for SDARS | SoundExchange: non-music and pre-1972 deductions improper or duplicative. | Board's definitions reasonable; deductions properly allocated and not duplicative. | upheld |
| PSS rate reasonableness | SoundExchange: 7.5% rate should be adjusted upward; benchmarks lacking. | Judges properly starting from 7.5% and adjusting via 801(b) factors; benchmarks not controlling. | upheld |
| Musical works benchmark departure | Music Choice argues musical works benchmarks should guide rate. | Judges properly distinguished musical works rights from sound recordings; depart with explanation. | upheld |
Key Cases Cited
- SoundExchange, Inc. v. Librarian of Congress, 571 F.3d 1220 (D.C. Cir. 2009) (deferential review and statutory factors in setting rates)
- Recording Industry Ass'n of America v. Librarian of Congress, 176 F.3d 528 (D.C. Cir. 1999) (distinguishes market-rate notion from statutory license framework)
- Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965 (D.C. Cir. 1999) (agency deference in balancing multiple objectives)
- Intercollegiate Broad. Sys., Inc. v. Copyright Royalty Bd., 574 F.3d 748 (D.C. Cir. 2009) (departure from precedent with reasoned explanation allowed)
- R.I.A.A. v. Librarian of Congress, 176 F.3d 528 (D.C. Cir. 1999) (statutory framework for rate-setting and 801(b) factors)
- U.S. v. ASCAP, 627 F.3d 64 (2d Cir. 2010) (predictive judgments in licensing contexts)